Posted by tom on December 01, 2004 at 20:32:14:
i am looking off shore currently. for this and the currency risk.
but i do have a deal in escrow that is local. but the numbers work on that one so why wouldn’t i.
best,
tom
Are you ramping up, slowing down or as usual? - Posted by Gavin Wilkinson
Posted by Gavin Wilkinson on November 30, 2004 at 15:45:57:
Prices are up 200% to 1000% in my area over prices 5 years ago. I am worried that a bubble has formed and that prices will fall back and stay low for many years. My model is mostly buy and hold, so this would hurt me badly. I am thinking of selling some properties and holding cash for a while.
Are you doing business as usual, or doing fewer deals or doing more than ever?
Re: Are you ramping up, slowing down or as usual? - Posted by sptk
Posted by sptk on December 01, 2004 at 09:08:40:
Even if you are a “buy and hold” investor, there is no reason you should bypass excellent capital gains. Profit is profit. You are only going to be alive so long and you will never be this young again. If some capital gains could make your life better, do it. Be careful, if you need every single penny of cash flow for living expenses.
Perhaps a poker analogy will help. If you are way ahead in the game, pull your original stake off the table and play with house money. If prices go down, your original money is in some low risk investment. If prices go up, you still have lot’s of money on the table. Why not pull some winnings off the table and put them in a low risk investment or simply use them to make your life better?
I just sold one investment that merely doubled in price in 5 years. I spent 10% of the profits on goodies and put the rest in a safe investment until I decide to go back into the market. I still have plenty of real estate. Feels pretty good, actually.
Re: Are you ramping up, slowing down or as usual? - Posted by jasonrei
Posted by jasonrei on November 30, 2004 at 20:23:49:
I’m buying more short-term deals than ever. If I had SFR rentals I’d be unloading them, unless I had a very good reason for not doing so. I am STUNNED at some of the prices I’m getting for houses. Houses that really should comp out at $75k going for $84k. I’ve got a “should go for $90k” under contract for $105k.
Don’t worry, be happy! - Posted by David Krulac
Posted by David Krulac on November 30, 2004 at 18:03:58:
First of all the bubble talk is overstated imho. Secondly, the real estate markets are local and there might be a bubble in one area/region and not in another.
But thirdly and mosy importantly, the Buy and Hold strategy insulates you from those market fluctuations. If you’re buying and holding and not selling, what do you care if the value goes up, down or sideways? It just doesn’t matter. And if the economy worsens and interest rates rise ( like how could they go lower?) then there will be less buyers and more tennats for your buy and hold propeties. Every increase in mortgage interest rates of only 1% takes another 1 million people out of the house buying market. If they are out of the house buying market, then by default they are in the house/apartment RENTING market which is where yo are waiting with quality product for them.
Re: Are you ramping up, slowing down or as usual? - Posted by Gene
Posted by Gene on November 30, 2004 at 17:56:14:
If you are in an area that you think prices might go down, and there is little chance of them going up…Why would you hold???
Why not sell and 1031 exchange into properties in other areas that cashflow and are likely to grow??
I never hold ivestments that limited upside and massive downside…be it stocks or real estate.
Re: Don’t worry, be happy! - Posted by Gavin Wilkinson
Posted by Gavin Wilkinson on November 30, 2004 at 19:28:52:
First, thanks for taking the time to respond.
We are in a “vacation area”, an area where people hold many second homes. So if the economy worsens, people simply will not come on vacation and jobs, and tenants will disappear. If your rental is empty, after a year, you might have to sell into a down market, unless you can afford to pay the mortgage for an empty house for many years…And even if you can…wouldn’t you be better off selling now, and buying from desperate investors in a year or two?
The market prices in my area are ridiculous. The rents/sales price in our area means that even with todays low interest rates you have large negative cash flow. If rents simply stayed steady, unless prices go up, you will lose money. Yes, you have guessed it, I live in California.
If you are a real long term investor, you will be fine. But you would do better if prices are going to fall 25% or more, to sell, bank the money and buy back in later.
If prices don’t fall, or rise further, you will be worse off. However, I just cannot see how people can afford to bid up prices further. They are totally unaffordable now, and most of the market action is people selling one outrageously priced home and buying another. People entering the market are just priced out.
Re: Are you ramping up, slowing down or as usual? - Posted by John V, FL
Posted by John V, FL on December 01, 2004 at 11:36:59:
>Why not sell and 1031 exchange into properties in other areas that cashflow and are likely to grow??>
Are you looking at dirrerent property types locally or specific areas in the inexpensive midwest that should benefit next cycle?
OT- Don’t you just love owning stocks during the seasonal strong period of Nov-Jan. Seems to work every year.
I think you are 100% correct. nt. - Posted by randyOH
Posted by randyOH on November 30, 2004 at 22:35:20:
nt
Re: Don’t worry, be happy! - Posted by David Krulac
Posted by David Krulac on November 30, 2004 at 20:04:09:
Ithought the book “Buy andHold” by David Schumacher was very good. He’s in CA., you might also find it an interesting read. By buying and holding he has amassed at great fortune. Selling and rebuying will get you a big tax bill and selling costs even if you don’t list with a broker.
Re: Are you ramping up, slowing down or as usual? - Posted by Gene
Posted by Gene on December 01, 2004 at 12:06:43:
When things get to expensive in CA, people start moving out of state. AZ, OR, TX, NV, UT, NM are all places that CA people often move to.
Some are more likely to grow than others. I favor UT and TX.
It is easy to find rental properties that will cash flow and both states RE markets are considered by many to be “undervalued”
Vegas has appreciated extremly fast I think it is very risky. But other areas in NV look better.
Re: Don’t worry, BE SMART - Posted by Gene
Posted by Gene on December 01, 2004 at 12:20:35:
I dont think buy and hold is the only way to play. If you have a full time job and you plan on staying in for the long haul you will be ok, but I demand more from my portfolio.
I dont think “buy and hold” is a good way to go when the market might be topped out.
It is can be worth moving investments into another area that is more likely to grow.
I make a lot of my profits from BUYING LOW. Im a full time investor and I do NOT pay retail. The cost of selling a home (and I usually use an agent) are much less than the profit that I build into my deals.
And I dont pay taxes, I just do a 1031 exchange.
There are a lot of ways to play this game. I would look at your particular situation and figure out what is best for you.