Posted by JohnVosilla on August 07, 2007 at 20:37:38:
I agree on the TX markets for nice stable income. Going to be a flood of former owners becoming tenants even there. I doubt anyplace will be appreciating the next couple of years though as this credit bubble continues to unwind… I’d place my bets that when there is another housing bubble the large metro areas in TX will be where it starts… If you have a 10-15 year time horizon you’ll be sitting pretty…
Investors flood to Value as Spec areas fall - Posted by Kenneth Hocking
Posted by Kenneth Hocking on August 05, 2007 at 15:59:06:
I am very surprised as a developer of duplexes in Houston to have actually had a SPIKE in interest for anything Available to be bought now. ESPECIALLY THIS LAST WEEK
Houston like many other Texas Markets has been missed by MOST of the speculative run up in values that outpaced the Rental Market in most of the hot areas of the RE SPEC markets over the last 5 years
You can still buy properties in Houston for examaple that put off 1% of purchase as month rents ( ex. 235,000 … Brand new duplex that rents out at 1150-1250 a side on Section 8 assisted housing… thats’ 2300-2500 a month Gross rents on a 235K purchase) where in other markets people were buying 400K properties they could not rent for more than 1600-1800…
With all the planned 1031 exchanges for sales that have already happened… I think one will witness a radical flight to value ( Cash-flows) versus appreciation markets and values in the Cash flowing Markets will land much much softer that the run-up and crash areas…
Yes cashflow is not nearly as sexy as double digit appreciation but it will offer a safe haven for those that want to capture their equity and earn income off the gain over the last 5 years or so…
This last Week was not fun for anyone in RE…I myself got caught with Pre-sold units that did not have 20% down required this week to go stated income on non-owner occuppied properties… I have 4-5 duplexes that will likely not close this week do to the new 20% stated Non owner occ requirements for investment propoerties…and I will have to resell them likely to those in the middle of 1031 exchanges
I suspect my phone and e-mail will light up again with those that are fleeing depreciating markets and need value investments…for any bust-outs of mine that they can capture to cash-flow during this burst of the Bubble…
Texas Oklahoma Arkansas all seem to have great job bases and currently Cash flow very very well compared to purchase prices…
If one is to Hunker down and ride the storm out You might consider these Markets to park what ever equity you can pull. or hold out of porperties in declining markets…
Keep in mind as Foreclosures rise so does the requests for rentals… Buffet way to approach this down turn ( implosion) in the market is to buy cashflows ----- Period
Buy cashflows…Move whatever equity you can into cash-flow propeties in value markets… that is the focus to survive until the credit markets settle down.
I will continue to build and sell duplexes in houston until cash-flows stop being positive for investors…
buy with cash – forget debt - Posted by lukeNC
Posted by lukeNC on August 07, 2007 at 06:12:59:
I look at all this and think about my friend who bought 1 large apartment complex for cash some years ago at a foreclosure auction. Back when apartments where losing big money because renters got subrime loans. I’m still kicking myself for not going in with him on that one.
He bought cash and pulls in about $65k per month AFTER expenses.
When the rental market was drying up, he still made about $58k per month. Now, with those same subprime borrowers needing to rent again, he’s back up.
It doesnt matter what the market is, he is not subject to it because he has no debt. He has no loans on the property.
Now…thats the way to be.
Re: …move whatever equity you can… - Posted by Jack
Posted by Jack on August 05, 2007 at 16:59:52:
IMHO, those in the bubble markets should have sold two years ago, it is too late now.
Re: Investors flood to Value as Spec areas fall - Posted by Rich-CA
Posted by Rich-CA on August 05, 2007 at 16:40:20:
Interesting post. I am invested in San Antonio, where property prices are a bit below Dallas, Austin and Houston for the rents they generate. When I did my analysis it looked great. Forgot to factor in the impact of that whopping 3% property tax. Now it only looks good instead of great. But its a lot better than Phoenix (I have a couple properties left there and if you bought after 2004 its hard to make ends meet). I sure am glad I did not get into Tampa or Las Vegas.
I would second the notion that TX is a good place to park your money and bring a little home while its there.
On the financing side, I think your comments are too optimistic. 20% down, at least for the lenders with the lowest rates, is for full doc loans. Stated loan rates are climbing through the roof.