Really Great R/E Deals Possible?

Discussion in 'Economics' started by dividend, Sep 2, 2009.

  1. Do you think we will get to a point where there will be really great real estate deals on residential homes? What I mean is in great neighborhoods and great build quality--not in foreclosure land.

    Great deals are half off or more. I think of a time when interest is 12% and a $800,000 space can sell for $200,000.
  2. If you have cash and can prove you will pay 100% of the closing price in cash, you can buy pristine real estate, residential, commercial, office and other, for 10 to 20 cents on the dollar, in most parts of the country.

    Few people have the kind of cash needed to buy higher end properties, and the overwhelming question is, are you buying it to use it, or are you buying it to speculate?

    Factor in the carrying/maintenance cost into the initial purchase price, also, as this can represent a significant additional expense that rivals that initial price, over a period of years.

    Did you know that trophy properties are silently being taken back by banks and lenders so as to avoid bad publicity?

    I'm speaking of properties that everyone here would recognize by name, and the borrowers have defaulted on the underlying note, and there has been a commercial workout, in some cases allowing the borrower/debtor to extinguish their debt and in other cases, they aren't so lucky.

    The last trophy property to be taken back this way was when Harry Macklowe turned over the keys to the GM Building in NY to his bank, and ever since then, things have been kept on the Q.T.
  3. Perhaps you're being sarcastic so I'll temper my remarks in case I'm not getting the joke.

    First off, Macklowe certainly didn't "turn in the GM building's keys" to "the bank." Macklowe sold the property for 2.8 billion to Mort Zuckerman and Ed Linde’s Boston Properties.

    Secondly, where prey tell in L.A., the Bay Area, Seattle, Chicago, Manhattan, Boston or even Tampa are "pristine" residential properties being sold for 20 cents on the dollar.

    Whoever paid 16mil last month for Shaquille O'Neal's home in Miami Beach must really be a chump. Sounds like via your information it could have been had for under 2 million.

  4. buy-sell as usual is fuckin delusional. theres no pristine real estate in this country being sold for 10-20 cents on the dollar. show me any top of the line property in great places being sold for 10 cents on the $ . example a $5 mil home being sold for 500k. and i don't mean the $5 mil home was a shame deal during the bubble.

  5. It was essentially a short sale, induced by the distress Macklowe was having - Zuckerman thought he stole the building, and it's value now is:

    For his part, Mr. Zuckerman seemed to think he’d made the score of the century. “I got great sleep last night,” he told The Observer on June 10, 2008, the day after his firm and junior partners officially closed a deal for the tower valued at $2.8 billion, the most ever paid for an office building in recorded history.

    Had Mr. Zuckerman known how values would decline, he might have gotten tangled in his bedsheets.

    The GM Building, based upon its reported income, is today worth between $1.9 billion and $2.6 billion, according to Dan Fasulo, managing director of Real Capital Analytics. Such is the economic reality for Manhattan’s top office trophies.

    Since the peak years of 2007, the trophies’ values have fallen by somewhere between 25 and 60 percent. Emphasis on modifying words like “somewhere between,” “probably” and “about.”

    As for your other points, I didn't say every property in the universe is selling for 10 to 20 cents on the dollar, as there are still deals going on where buyers are hitting the bid, but if you ask any competent person in the industry, from NYC to California, that's the exception far more than ever, these days.

    Joe Maloof, part owner of The Palm chain of Casinos and the Sacramento Kings, just sold his home for a big, fat loss (that's the rule, now).

    Why would he do that? Ahhhh. That's the more interesting question and an ominous sign. The wealthy are raising cash as fast as ever, which is why a record number of homes are up for sale in the Hamptons (as one example).

    Wealthy resort to no floor auctions to sell properties and raise cash:
  6. "Most parts of the country"?


    Maybe inner city Detroit.

  7. Bad examples. I know that house in Morrison and it is a dump that would need to be taken down to the studs and rebuilt. Probably not even worth saving to tell you the truth. I suspect the only value there is the land itself. Buy it, bulldoze it and rebuild something.
  8. The land is probably contaminated.

    There has to be other issues with the property or a builder would have already scooped it up and bulldozed the house.
  9. Logic


    I think a good deal is typically around .50 to .60 on the dollar - that's for a foreclosure or short sale.
    #10     Sep 4, 2009