Buy Now Or Hold Onto Cash?
I'm trying to get a pulse on the market in Southern California. Speculation is making me crazy.
I hear "this is a cooling off period but the market will not crash" to "sell everything you have and rent an apartment until it crashes and you can get some REAL deals."
What are you doing? Are you folks continuing to buy property, or are you holding onto your cash with the hope that prices are going to decrease?
Any and all comments are welcomed.
Marlene :-?
Marlene,
My strategy is essentially buy, hold and trade. Financing is arranged so that I can hold onto properties indefinitely and always with positive cash flow. When the market cools there will be more flexible sellers so there is opportunity to buy at a profit. In the mean time I am still trying to ride the market increases and judiciously investing.
Regards,
Ed[ Edited by edmeyer on Date 08/03/2004 ]
I invest in and around the Los Angeles area. Like you I believe we are in for a market readjustment but I don't think it will occur until at least until 8-12 months from now. We are already seeing a bit of a market slowdown with increased listings in my area, but I am not worried about any major crash in values.
When the market changes, I believe we will see a slowing of appreciation to around 5 to 10 percent per year with some areas seing possible price down turns of as much as 10 percent with maybe a bit more in the less desirable neighborhoods.
I am still investing in deals with the strategy of flipping them. My feeling is if you buy the property at a large enough discount you should be pretty well protected in a slowing market. Real estate is not like the stock market where it can crash at a moments notice. As long as you continue to monitor the trends (i.e. affordability index, number of listings, days on the market to sell) you should be able to adjust your investing strategy accordingly. Just my 10 cents.
Anyone?
Ok, I wont ignore you
.
Let's see. ' is there some way I could get an appraiser to find out how much it's worth without the realtors getting involved?'
I guess, but why not use Realtors? Condos are the EASIEST properties, imho, to comp out. Why? Because there are are exact same comps right in your project.
If I were u and I didn't have mls access myself, I would have the Realtor pull what has sold in the building in the last few months.
As strange as it sounds, I really don't care what appraisors have to say about values.
'And usually if one were to go ahead and purchase a property and do minor upgrades to it, could it then be resold for a higher price? '
Yup, but by your numbers, it's kind of tight. Depends on how much money you put into it. You have a couple of grand for closing costs when you buy. You'll have commissions and closing costs again when you sell as well as holding costs. Also, any rehab money spent. Add those to your purchase price and then subtract it from your probable sales price.
Is it worth it?
'Or what if I decided to hold it for a year or two before selling it, how much can I expect a property to appreciate?'
Zero. You have to buy NOW for a price you can make a profit with NOW. If your going to play the appreciation game, you could just buy anything and just wait.
Hope this helps!
Diane
Thanks Regal,
I'm still wondering though, what's a good way to invest into real estate with 40k - 55k? And are condos/townhomes a good start?
With 45k - 55k, where would some of you recommend I start investing in? What type of properties should I look at investing in first?
You have to be careful with buying condos. You are at the mercy of the association and some of them make the association dues way to high. Your investment either needs to be able to cash flow or sell quickly for a profit. Find out what other untis rent for and sell for. Do homework check with the managers and neighbors. I would prefer to buy a duplex than a condo. That way I am in charge of the expenses not a association.
Good luck
You really only need to look at properties that are worth MORE than what you are prepared to spend.
I don;t mean to be harsh, but if the condo you were looking at for 44.9 is worth 60; why do you think it is still on the market at 44.9?????
Perhaps you would be best served by a realtor that can help you access the comps of the different property types and get you into fresh and new listings where occasionally selling agents make mistakes and list a property for significantly less than it is worth.
To get the great deals, you will have to find a way to make them come to you.
So do you think that maybe buying pre-construction condos and then reselling it after it is built a better investment rather than trying to purchase an existing condo and flipping it for a higher price?
Yep, always buy for the cashflow or if you can realise an immediate profit. Remember profit is always made when you buy not sell!!
alvin
[addsig]
Can anyone elaborate? Does buying pre-construction condos almost always pretty much guarantee prices will go up after they are constructed?
If a "GOOD" deal hits the MLS, it will be gone before the ink dries. Of course there are exceptions but in a free mkt, if something is underpriced it will be snatched up. I believe as an investor you need to identify your "EDGE." An edge is what you have that gives you the opportunity to make $ on a transaction. Is it Price, access to cheap rehab labor, etc. Access to low cost financing?.. The more things you have, the better your edge becomes and the more ways you can profit in a transaction. The less you have the more you need to get a larger margin betw purch price and mkt value. EX. If Price is your only advantage, you find a deal that is under mkt and nail it, then that is your edge. How do you make that happen? Ear to the ground, adopt a realtor or get access to your MLS, pre-approval at the bank, maybe a LOC so you can waive most contingencies. Have a buddy or experienced contractor you can call to see the property and give it a quick once over so you can buy without any contingencies so you can get the property off the mkt. Preperation to seize a deal when it appears is key. Good deals are gone FAST.
_________________
Tom B.
"Nothing To It, But To Do It"[ Edited by roztom on Date 08/05/2004 ]