Is a Slow Market a Good Time To Buy?

General Real Estate Investing
21

The dumbest people I know are those who know it all.

Malcolm Forbes

Notice when you read my posts they are not ideas that I have read somewhere, or thoughts that I have heard from other people.
My posts are what “I am doing”, so it may seem like bragging I guess. People typically define bragging as talking about ones accomplishments. That would lead me to believe that if I talk about what I am doing (which are accomplishments, then some people would consider that bragging.

If I were a new investor would I want to learn from someone “doing it”, rather than someone who knows something about it?

Notice when I disagree with something you say, that I dont tell you that your wrong because of something that I have read, or something that I have heard, or what has happend in the past. I only tell you that I disagree because of stuff that “I am doing” now. Is there really a better way to make a point then by showing stuff that, I am doing.

Would I be better to agree with you, even though I personally have experienced something opposite of what you are saying?

Would people prefer to hear about stuff I have read or heard, rather than stuff I am doing?

Would I be smarter to follow your ideas?

Here is a quote from you “If history repeats itself, it has a long way to go and will not reach bottom until early 2008. Then, it will take 8 to 10 years before we once again reach the inflation adjusted prices of 2005. That is why a lot of the smart money is sitting on the sidelines. They are waiting for the market to bottom and will begin buying as the market turns upward.”

So if I were to do what your advising and go where the “smart money” is, then I would be on the sidelines. HMMMMM.

If the “smart money” is on the sidelines, then what is the money I am making on the frontlines “dumb money.”?

Your quote
“It is like a game of musical chairs. You don’t want to be the one standing (with a bunch or properties that you can’t sell) when the music stops.”

If your not investing, are you even playing musical chairs? or are you on the sidelines watching with your “smart money”?

Notice in your explanation of how bad things are you tell me of what “you have seen” not what you have experienced or what you have done. I guess if you told me actual stories about your portfolio, then it would be bragging right?

I admit, I am not landlord of the year 2006 nor do I claim to be, after all I am Eric Medemar, and you are the “Property Manager”.

If what you are saying is true about your market and how nothing is moving. Then, I could safely deduce that there is no one in your marketplace that is making any money real estate investing right now?

Pawning my services, I love this one.

Family or work?

If I help people during my work time, shouldnt I be paid what I would normally would be paid during that work time that I am skipping?

Perhaps you could explain a better idea, maybe cut into my family time so that I dont need to be paid?

Lastly, I find it very strange that you dance around the forums always doubting whatever it is that I have to say, with something you have heard, seen, or read. Most of the time when I disagree, it is not because of something I have heard or read, but because of something I have done.

It is strange that your are so suspicious of me. I have sent you my email, my telephone, heck I even offered to pay you to teach me what you know. Yet the only time I hear from you, you are hiding behind your keyboard. My phone numbers are out clear as day, my real estate doings are all in the tax records (I even posted the link).

Feel free to doubt, I never doubt anything that you think. I only disagree with some of what you have to say.

The interesting thing is that all of your doubts about me can all be answered and substantiated.
I dont doubt you, because you have given me nothing to doubt. You can’t doubt what someone believes, you can only doubt what they say they have done.
The problem is I have yet to see you say something you have done, I only see you say what you have heard, seen or read, and I cannot doubt any of these things because they dont involve any doing.

Eric Medemar

p.s Yes I do love mindless banter, and maybe I do have too much time on my hands.

22

Boys, boys, boys.

I doubt anybody is buying with reckless abandon. Nobody ever scored by not being in the game. You’ve got to invest to make money, no way around that.

Before a property is purchased, the wise investor determines how it fits into the portfoilo. Rental, flip, primary residence, etc. The disposition of the property is highly dependant on local market conditions.

Propertymanager said that almost nothing is moving. That would led me to believe that periodically something does sell. If absolutely nothing is selling then fine rent out the properties. That’s fine. At least your investing. When the market turns in 2008 as you assume, you’ve got a ton of properties that you can sell for large gains.

My experience with investing overall, stocks, bonds, real estate is that you buy good stuff when the market stinks and sell when the market is good. Most investors lose their proverbial, and sometimes actual, shirts by purchasing when the market is great and then they freak and sell at the bottom.

IMO, if you got money to buy, then I say buy as a long as it makes sense. Perhaps, there’s nothing available that makes sense. I firmly believe that there’s money to be made on every transaction as long as the deal is structured property and the discounts are sufficient.

Please let’s keep our conversations civil and not get into personal attacks.

Okay, I’ve said all I’ve got to say. Have a blessed day.

23

Eric, how do you go about finding homes that you can pick up at such a discount? Are these short sales? People contacting you or you contacting them??

Question? Once the notice goes into the paper that xzy house will be foreclosed on, on this xyz day, should I be trying to contact those folks or is it to late?

This has been very inlighting, thank you all for your experiences and insights.

:slight_smile:

24

I know you asked Eric, but I’m going to stick my nose in.

I don’t wait for a notice in the paper. The notice in the paper is too close to the sheriff’s sale to get all the work done. I patrol the prothonotary’s office daily and send letters to the property owners as soon as a lawsuit is filed. In PA, we typically have 6 months from the date of the filing until the sherriff’s sale. The newspaper lists properties within 30 days of the sherriff’s sale. Lenders are taking 30-45 days to make a decision on short sales.

I’ve got time, but not a lot and certainly none to waste. Besides, this arena is too competitive to be a johnny come lately.

Paul

25

EastCoastGirl,

In this market, direct mailing and hunting down foreclosures is not necessary to find good deals. You said that in your market there are 5,000 properties for sale and only 300 sales. That is a16 month inventory of properties! Deals should abound in your area, although what will you do if you buy one? Who are you going to sell it to? Any serious investors that are buying in your area can get the deals themselves and don’t need someone wholesaling a deal to them. According to one of his recent posts, Eric is apparently using “dumb realtors” to target newbie investors! Personally, I’m try to run an honest and ethical business and I don’t target naive newbies (although many people certainly do). I have found after many years of being in business that being honest and ethical is the best way to go. Taking advantage of people will eventually come back to get you.

There are an unlimited supply of great deals here in the midwest, but very few buyers to sell them to. Additionally, prices are just beginning to fall. If you buy in a falling market and then can’t sell, you can easily lose money! Here in Ohio, there are an unlimited number of deals to be had at 30 - 50 cents on the dollar. But, what are you going to do with them? The rental market is only now starting to improve; serious investors are moving slowly; and retail buyers are nearly non-existent. Additionally, prices are not even close to the bottom, so buying and holding with the intent of selling on the upswing is not appropriate. For cyclical buyers, much greater profits will be made by buying closer to the bottom

If you want to lose a bunch of money, send me a check and I’ll buy you a bunch of properties at 30 to 50% of market value and then you can try to make some money with them. When you give up, I’ll buy them back for 1/2 of what you paid. I certainly won’t be taking advantage of you because I’m telling you the outcome right upfront.

Good Luck,

Mike

26

Paul, stick your nose in anytime, it is well appreicated. I am hear to ask, listen way things out and learn. The knowledge and experience that is on all these fourms are amazing.

I know from time to time some may not agree with some one else’s advise or imput, but us newbies and maybe some oldies ;D
can as ways learn from those that can have good debates on a subject and walk away agreeing to disagree. It is very interesting to see what has worked for one that may not work for someone else.
Hopefully one day, I can have the experience to be able to debate or share my opinion as well as you guys. ----This is how we learn and grow. Thank all for that!

Propertymanager, I hear what you are saying, that has been one of my concerns, for the most part property values here are still to high, or I have not really learned how to identify the properties with the 30% equity in them.

Today, I will be contacting my local investors, to get a feel of where they are coming from right now. Holding, not buying, owner financing,… or if they are even interested in purchasing any more properties at this time. I guess that will tell me if I can wholesale or not.

As well as this short sale has peaked my interest.

Do you think if I can learn this process, and a friend of mine is a realtor, who does BPO’s, that I could move properties if there was enough equity it in, even in a slow market???

I think that the purchase price to a new buyer would have to be low enough so their monthly payments would have to be very attractive to them. The tax increase has scared people away

My realtor friend did a BPO on a peice of property recently, before listing it called me.
1.75 ac. 3bd 1.5 bath, has a large building next to it that was a work shop but also at one time was set up as duplex. The Hurricanes destroyed it. After repair value, if you put it back as is it would list for $300K. She worked it down to list it at $185K
Even though this might have been a good deal, my biggest fear was that it would set their even after repairs because nothing is moving. I thought about putting a renter into it.
The rent would not be able to support the PITI.

What would you guys have done?

:slight_smile:

27

EastCoast Girl,

Does the property meet your criteria? If yes, buy it, if not walk. One man’s (er person’s) trash is another’s treasure.

28

I find my deals in a variety of ways, the three homes listed in my post were all listed with realtors. I have a network of realtors that will call me when they know that the bank is at rock bottom on price and they are practically ready to give the homes away. Each of the homes listed above started out listed at roughly twice as much as what I purchased them for. I try to network with other realtors, and have them call me when they know something really has to move.

Property manager makes a good point about buying if your market is crashing very very fast. If your in a market where properties are dropping in value at 5%-10% a month you cant afford to buy with the intention of flipping.

Our market here in Michigan has been steadily declining here for quite sometime. My philosophy is too make money when I know when I can make it. If the market is crashing, I will still make money, my strategy just has to change a little. Even in a crashing market you can make money wholesaling so long as you find your buyers before your houses, you cant go wrong with this. Finding buyers might be trickier but it can be done. If there is only one buyer in your market place and you find them, then you can still wholesale.

Wholesaling in a crashing market is a good strategy because you dont keep your contract going unless you already have a buyer and a deposoit in place. There is no way to lose that I can see if you

  1. Find a buyer
  2. Put the home under contract with a 5-10 day out
  3. Make your earnest deposoit payable only after the release of your out.
  4. Show the home that you have under contract to all of your buyers during your out period
  5. If you cant find a suitable buyer during that time use your out.
  6. If you do get a suitable buyer get a deposoit large enough to cover your losses if your buyers leaves and you cant follow through on the contract.
  7. Do all of your paper work correctly.

Eric Medemar

29

That’s what I love about reading this forum; such a divergence of opinion. There are some very smart people here taking the time to give their thoughts and opinions to help others out.
Just wanted to drop a line and let you all know that I for one appreciate it.

30

this is an interesting thread.

on the one hand, you’ve got opinions that are conservative about the market and the other with an opinion that is quite aggressive.

i’m not going to comment on either “side”.

i would point out that it is my belief, that many, many people who are considering real estate investment do what Eric says they do. i mean, that’s no great insight by any stretch - people buy a book or a course like Sheets and end up leaving the course in the box and the book on the shelf.

that has less to do with real estate and much more to do with personal issues. most people just don’t want to make the necessary changes to their lives. it takes a holistic approach - to make the switch from an employee mindset…to an entrepreneur/investor mindset. two TOTALLY DIFFERENT spectrums.

i like what property manager said. i like what paulchase has said. i like what Eric has said. reading the points from property manager will set you straight and give you a realistic look at rei. reading what eric wrote…well it will get you pumped up and off your butt and make you redouble your efforts for investing!

personally, as long as i put the effort forth to find a way…that approach will usually yield positive results!

“make an effort, not an excuse” - Kiyosaki