What's the best way to invest when market goes - Posted by Adam (Austin)

Posted by Deb on August 26, 2002 at 15:40:19:

Thanks M!
Deb

What’s the best way to invest when market goes - Posted by Adam (Austin)

Posted by Adam (Austin) on August 25, 2002 at 20:34:43:

What is the best strategy for investing in RE when the local market’s SFH values AND RENTS are going DOWN ?

We’re in a buyer’s market, in Austin. Specifically, in my part of town, there are tons of house, both for sale and for rent.

Thanks,
Adam.

It’s just the opposite here in the northeast - Posted by Tim_ME

Posted by Tim_ME on August 26, 2002 at 11:25:20:

The prices are still going up here in southern Maine. I guess people here chose not to participate in the recession. There aren’t many opportunities here (on the surface at least) compared to a year ago.

Tim

Be a Transaction Engineer - Posted by M

Posted by M on August 26, 2002 at 10:58:32:

CREI is all about being a transaction engineer. You are in a service industry really, not so much real estate. No matter what the market is doing, transactions still happen (or need to). It’s all about applying the right technique to the situation at hand.

I would think as the market goes down, the number of motivated sellers (and hence CRE opportunitie for the savvy investor) will go up. That means many more opportunities for sub 2, discount mortgages, L/O, k for deed, etc.

I know plenty of equity traders who have made a fortune over the past 2 years by short selling as opposed to buying and holding. Worst stock market in years, yet the savvy still making millions. Volatility means opportunity.

Re: What’s the best way to invest when market goes - Posted by John H.

Posted by John H. on August 26, 2002 at 10:06:46:

You might want to ask these folks…

Austin Real Estate Investors Club
Contact: Robert S. Guest
Telephone: (512) 671-8828
When: First Tuesday of each month - 6:50pm
Where: OMNI SouthPark Hotel
IH35 & Ben White, Austin

Good Luck -

JH

Re: What’s the best way to invest when market goes - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 25, 2002 at 23:05:16:

Adam–(TX)-------------------

Is there anything wrong with sitting and waiting? You don’t have to be buying all of the time.

You don’t indicate whether you are a long-term investor or quick-turnover investor. If you buy for the long term, you might want to wait until you feel the market has reached a bottom and can only go up from there–after bouncing along on the bottom for a while, of course. Then buy properties cheap.

The sellers who just have to sell then become the targets for you. That could include REOs, preforeclosure, probate, tax sales, etc.

If you want to be active in buying and selling, you just need to be sure that you are buying enough below FUTURE market value to allow a profit. Project what you think prices will be in 6 months, and buy based on assuming that you will resell then.

This might also be a good time to be buying long-term options on properties, if you can pull it off. Those that run for 5 or 7 or more years.

Good InvestingRon Starr*

Re: Be a Transaction Engineer - Posted by Deb

Posted by Deb on August 26, 2002 at 13:31:40:

Hello M,
When you say equity traders made a fortune by short selling, do you mean quick flips? Or a short sale with the bank? Can you give an example?
Trying to learn as much as I can.
Thanks,
Deb

Re: What’s the best way to invest when market goes - Posted by Adam (Austin)

Posted by Adam (Austin) on August 26, 2002 at 08:15:09:

Thank you for the response.

It’s always been conventional wisdom that it’s virtually impossible to “time” the market.

Prices are low (compared to 1 1/2 years ago, but it’s very possible that they may go lower.

My strategy is to buy Subject To existing fin., and sell on lease option.

I don’t have any doubt about my ability to find properties to control, but I’m worried about being able to put tenant buyers in them.

I ran a text book ad (straight from the Conti book) in our weekly paper (90,000 readership) last week… not one call. Not even a hang up.

As I write this, I’m thinking that perhaps the way to go is that, with so many houses on the market, just choose the ones that are available at a deep, deep discount, and then offer rents at below market value?

What are your thoughts?

  • Adam.

Re: Be a Transaction Engineer - Posted by M

Posted by M on August 26, 2002 at 15:34:34:

Actually that was a reference to equity traders in the STOCK market during the recent dismal past (means borrowing stock to sell, then buying it back later to pay back the lender…done when you expect the price to go down).

Was just trying to make the point that money can be made during any market if you employ the right technique.

Re: What’s the best way to invest when market goes - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 26, 2002 at 12:36:54:

Adam–(TX)----------------

Interesting. I think that the lease/option program is predicated upon a rising real estate marketplace, both recent past rises and probable future rises. The pontential buyers probably will not be interested in buying a house with a L/O when they anticipate a decliine in the future market values of the properties. They will just rent and wait and see. Maybe they will be able to buy somehing in a year or so when prices are lower and sellers are more desperate.

If you have been doing the lease-option to get rid of properties, I assume that this no response advertisement was a new thing for you, otherwise you would have mentioned it?

I don’t see offering renters rents much below market value. I do like to rent at the low end of market rates, say about $575 when everybody else is getting $600-%625. Enough to be noticable to the renters, but not enough to cheat me.

Now, if you buy at a deep discount you can either hold, as you mention, or you can resell at a price that will be attractive to the few buyers out there. Your choice. The difficulty, of course, is that it is always difficult to buy for more than 20% below the market value. You have to have a system and work it hard.

I like Austin. Been there a couple of times. Seems like a good place to live and invest.

Good Investing**********Ron Starr**************

Re: What’s the best way to invest when market goes - Posted by Al (NJ)

Posted by Al (NJ) on August 26, 2002 at 10:05:33:

I would try going outside of my prefered area. Place an ad in a paper in a neighboring county. If you get call backs, maybe you could invest there until the market becomes more faverable. Just my thoughts.

Good Luck!

Al (NJ)