I was curious to what everyones experiences and outlook on the current real estate market is. I do keep-up with the news and read the WSJ regularly so I’m not looking for the obvious answer of “the real estate market is down, it’s a buyer’s market!” but rather how the current market has adjusted your strategies?
What is the average turnaround when flipping your properties now? What was it before the recession?
Some “experts” say that the high-end market hasn’t been hit as hard by the recession, while others I talk with say first-time home buyers have stayed fairly strong because of the lower costs…
I have located a few potential properties in my city but am wondering how long, on average, I should expect before a flip sales. Some are in middle class neighborhoods and others in higher-end areas and I’ve been trying to determine which property type would be best for pursuit.
The “market” really depends solely on your specific area.
Back when I was an active trader, it was an understood rule that you don’t trade based on the news, because the market makers already had factored any news into the market.
In other words, I wouldn’t base any real estate investing based on information in the WSJ or on cable news.
You can get a better pulse for your area by looking at comps and time on market which is in the comps.
(Obviously there’s more to it than that, but you get the point)
Thanks for the input Pilot. I actually have a degree in Finance on May13th and the opportunity to work in a wealth mgmt firm so I did already know that whats in the news has already been discounted into the market (theoretically) However, if that were always true then people like Buffett, Soros (the most powerful individual in the world thats not a politician), and Lynch wouldn’t have gotten the returns they did the last 30yrs+. Surely they didn’t always make decision based on insider information (Lubrizol).
Guess it depends on which side of the coin you stand on… MPT and its efficient market theory or Benjamin Graham.
I am looking for some insight into how you guys evaluate your markets? I mean I know how to find time on market, etc and could spends hours gathering data, figures, statistics, averages, means, and medians but since I am a green horn I have trouble putting it all into perspective. Buffett uses the same info as everyone else yet gets 25%-30% per year while everyone else struggles to get 10%; it’s not what I need to find is the problem.
In Dallas, the job market has always been decent compared to most other places in the country, however we still have had our share of foreclosures and that continues to drive down prices in most “sub markets” around the Dallas area - with a few exceptions to say the Park Cities and such. I am ready to rehab & sell like you can’t imagine, but for now I am just building up a portfolio of debt free rentals — because cash talks in this market. I know a rehabber who sold a house in 3-days, in a not so great part of town, so it can be done. But I also know a guy who has set on a house for a year or longer! And lots of new home builders have folded around here for a reason … it’s a buyers market and prices can only go so low before you start losing money (as a builder, or rehabber). So personally I am going to postpone my rehabbing / selling plans for another year or two. However I am getting a hell of a lot of experience rehabbing my rentals! I am sure I can rehab / sell a house without blinking now…but I am waiting for prices to appreciate again.
Thanks motivatedceo, thats exactly the type of info. I was hoping to get. I live in Knoxville, TN and we have done alright through the recession as well. Thanks to a lot of large state and federal employers in the area as well as manufacturers that didn’t get hit to hard.
I hear some people say, “the experienced investors are sitting on the sidelines right now” and other says “now is an incredible opportunity to invest,” so I just wanted to get a feel for what people’s game plan was right now. I have found some financial backing to jump into REI even more than I already am but am a bit hesitant to try and flip because of the slow market and don’t want to tie all my available cash up with rental properties (though I do like them).
What is the best way for a newer investor to leverage their available capital right now without tieing it up for the long-term?
What is the best way for a newer investor to leverage their available capital right now without tieing it up for the long-term?
It depends on your cash, credit, experience & risk tolerance (e.g. rehabbing in this market, vs waiting until the market improves).
I am what an average joe would call an “extremely risky” investor, but I am what an experienced real estate investor might call a “somewhat conservative but still sophisticated” investor. I don’t take stupid risks, but I only will accept very high yields. Any risk I take is well researched on my part … and I like to know what I am doing. So what is my strategy right now? To pay cash for rentals, sometimes for $0.25 on the dollar, and rent them out until the market comes back. My main business gives me plenty of cash, and financing terms are too rigid to justify leveraging myself - and there are too many all cash deals that are too good that would never happen with leverage (e.g. banks won’t finance trashed properties going for $0.10 on the $1.00, which after getting fixed up give you a basis of $0.25 on the $1.00). When the market gets better I will continue to hold the properties or possibly liquidate them for millions. Once appreciation starts to occur more in my market, and it switches from a buyer’s to a seller’s market, then I will begin rehabbing & selling as well … which is actually my dream business. Eventually I would like to do major (new residential & commercial) real estate development too, but that is down the road a ways.
To answer your question the best way to leverage your capital is to form relationships with a couple of local/state banks. They will have the most programs available for what you are looking to do.
Regardless of what you read here banks know a good deal when they see one and if you already have a relationship with a bank in place then once one of these deals falls in your lap you will be ready to move quickly.
I am always looking at trends and figures in order to establish which real estate niche is the better investment at the moment.
See my report, which I hosted in my Linkedin profile, about Real Estate Trends 2011
Also I just wrote a blog post about Mid 2011 Trends and Figures
I personally think that short sales are on the way down for residential, however I am steering my attention to Commercial Properties for short sales and buying notes - there is a crisis on the commercial real estate front, since refinances are hard and these mortgage notes are becoming due.
Definitely it is a market for Buy and Hold - new construction and rehab/flip are not a good idea right now. Wholesaling “as is” properties and notes are the way to go.
Average turnaround time for flipping properties is still the same, although you need to make sure you have a good buyers’list in place for the type of properties that you are selling, since time, as always is of the essence.