When should you buy????????

I’m going to put this out there for the hell of it. Everything you will read is MY opinion. It’s worth whatever YOU think it is…

As you all know I think we’re entering a dangerous time in this market. WHY???

If we look at what happens in market cycles we can see that PEOPLE consistantly react in the same manner as these things run their course.

We’ve all just lived through the boom phase so I won’t bore you with that. The phase we are in now I call the “realization phase”
During this time SOME people are starting to see signs that things are not going well, it hasn’t gotten bad yet, but things are definitely SLOWER. This is interesting because some people aren’t sure if things WILL get worse or just level off here. Usually some type of catalyist is needed to nudge the market in a direction.

The next phase to come is the FEAR phase. To me that is when you really ramp up your buying. Reading this forum, I really don’t see that fear yet. There are pieces of it popping up, but the real FEAR will arrive when the majority of folks think buying real estate is CRAZY. Now remember, during the boom EVERYBODY either knew someone or they themselves were INVESTING. These people now own Florida condo’s which they purchased pre-construction with ARM loans and most purchased 2 or 3 units. Hey, it was a “once in a lifetime opportunity” When THESE folks finally throw in the towel the FEAR will enter the market in full force. THEN will be the time to buy, buy, buy. Now don’t get me wrong, the Florida real estate market IS NOT going to cause a national bust. It’s just an EXAMPLE of what went on in many places.

Need PROOF???Look no further than the dot com bust. If you had entered that market at the HEIGHT of the panic you would be sitting on a PILE of cash. What you have to imagine is having the sack to enter THAT market at THAT time. Remember this because real estate could get THAT bad and the bottom of the market will be the exact point at which FEAR is the greatest. At the peak of this fear people will be worried about how much FURTHER prices could fall. It almost an exact inversion of sentiment.

Real Estate, stocks, classic cars (who wanted a HEMI/CUDA in 1978???) it’s all the same.

Buy when no one wants it!!!


The question maybe be How Are Lender’s Selling or how do I make money in the current market.

Residential Sales were up 39.2% for a select few who know how to sell properties fast last year, they are not Realtor’s, Brokers or Real Estate Agents or Creative Investors.

Personally I would be looking at ways to make hay while the sunshines, if an investor is working short sales and want a fast rapid return within 30-45 days and even be able to convince the lender you can turn the property within this period of time with just an option on the property and a price the lender will accept, I am sure they will listen. This is just one example of what can be done using this method and is being done by the way.

Just look around at who is thriving in the current market or here is a little hint and they have no problem sharing in the deal not just this company’s url that I listed but many different company’s around the country and they are even in your own backyard:


John $Cash$ Locke

The difference for me is I DON’T NEED to make money in this market right now. And the reason is the RISK outweighs the REWARD. I don’t want to own a bunch of homes in a falling market that I bought for a small discount.

As far as short sales go, that is a VERY tough way to make money in this market. Inorder to do what you say. you have to find a property the bank will take substantially less than owed on, then find a wholesaler or rehab buyer who is willing to pay more than you can get it for, most foreclosed homes need work. The retail buyer has MORE TO CHOSE from than in the last 20 YEARS. We’re talking about NICE homes that are not selling. I can’t compete with that on a time decaying optioned shortsale. The problem with that strategy is most assute investors know how to play that game, and the old days of the TV show watching flippers are OVER.

I live in a very small state, my local paper today listed 275 foreclosures!!! …275!!! Short sale my *ss. Who’s your buyer??? The investor??? My buddies in the business up here have seen this movie before, we’re waiting for the DVD to come out. No thanks. I can make $20,000 on each addition I build for homeowners who have the cash. Hey, they can’t sell their house to buy a bigger one so they add on!! I spend NOTHING but my time. I risk Nothing, and all the while I BUILD CASH!!! I never LIVED on the money I made flipping houses. It was all gravy. If that gravy train has dried up, no problem, I’m patient, lived through this whole show before. LEARNED A LOT!!!

From my experience the banks have not hit the PAIN threshold YET. In my area banks are placing these foreclosed homes on the market. The ones that are selling are doing so at much lower prices than the initial mortgage amounts. 2008 will see a HUGE increase in foreclosures due to the ARM mortgage resets. The banks do what banks do in every down turn…
they hold on until they can’t hold on.

Before I get 50 replies to this post saying “I’m making money”
I know that, you can make money at ANYTIME in real estate. My point is… Better times lie ahead for us as investors.

The examples I’ve used concerning Florida (in other posts) relate to “followers” these people are NOT investors, they had neighbors, relatives, friends who initially made money on these insane condo investments and like Lemmings they just “followed” their lead. The unfortunate part of this is that BANKS loaned money to developers who were selling out phases as quick as they got approvals. these projects WEREN’T EVEN IN THE GROUND yet and they were SOLD OUT!!! That happens when people are buying 3 or 4 at a time and have NO intention of EVER living there. Now we have a mess. It’s the same with sub-prime and ARM’s, these people were sold a line of BS. They ASSUMED as long as prices comtinued to increase they could refinance later at a locked in rate. The funny thing is some VERY SMART people bought into this crap. Look no futher than NJREstudents posts on the sub=prime and CDO markets.


Umm…so should we buy?? :banghead I am thinking about buying a house for on 12k, new electrial, plumbing,furnace,roof, windows. It need Drywall, flooring, and cabinets. The guy needs to sell due to financial trouble and couldn’t finish the job. Property has no liens. It would be free and clear after purchase…is this a good buy? New houses are going up in the area…Bad news…the house is in Michigan…lol


I would (and am) buying now, but I’m not paying more than 50 cents on the dollar. In my opinion, this is a time to buy with a lot of equity. That equity is your margin of safety.

If you wait for economic conditions to be great, that might be many years from now, especially if the economy melts down like Petemfa (and I) believe. Moreover, while I believe that a serious recession is due at any time, I could be wrong. Our economy is increasingly based on consumer spending and the government is pulling out the stops to keep consumer spending strong, even though that spending is causing the consumer to go broke (negative savings rate). I will not wait until all this bottoms out before I continue buying. I’m still building my business, but I’m being very picky about what I’m buying! Lots of equity and good cash flow are the order of the day!

You’ve got to live for today but plan for tomorrow.


the banks in a year will low ball those reo’s,its too early now



ss now is suicide in my opinion

p.s. the union talks are coming up…this will be a circus sideshow when the unions get screwed

my 2 cents

Robert A. Doncaster, Jr. - “RAD”
Import/Export Entrepreneur & Investor

Chicago Illinois USA
& sometimes Salzburg, Austria

Thanks Mike!

i guess one key note here to keep in mind is having your buyers list.

if you have a big enough buyers list and you bring them what they want, the current market condition should not have that big of an impact.

i also once read “a deal is a deal is a deal”.

so between a buyers list and having investors who are currently buying, “on your team” should help reduce the risk.

hope all is well petemfa :smile