[Theseus]

It's definitely been a minute since I've posted on this site, but I know there are some cats on here with a lot of experience in business -especially real estate as agents and/or investors. That's my target market in this post so to speak.

So here's the question for you experienced cats:

With the new Trump administration and where we left off in 2016, what do you think the forecast will be in 2017?

-and I'm talking mainly about residential real estate from both an investor and RE agent perspective.

-Maybe more people will be hesitant on buying
-I heard it'll be more of a seller's market but let's hear some other opinions.

[wi30]

Obligatory meme for saying cat twice:


I think it depends on the market. Here in Colorado (especially the Denver area) the market is crazy right now. Huge buyers market. Houses are selling over list price in a matter of days.

I'm saving up to buy in the near future here and I'm hoping the market starts to level off before I'm out of the market to even afford a condo or shithole fixer upper. I think with weed being legalized in other states, the population spike is bound to slow down eventually. I really hope it does because a tiny 2 bedroom house in the middle of Saudi Aurora is over 200K.

[TheFinalEpic]

I'll speak specifically about the Canadian market, as that's where my expertise lies. I think that the market is still in for falling further, especially with the efforts on both provincial and federal basis to institute carbon taxes and such. 2018 is forecasted to be the year things pick up a little more. But dealing with people that bought in 2011-2013 has been depressing, because they've actually been losing money on their property. Oil is a huge indicator of our market in Alberta, and it's been tough going to say the least.

Real Estate is a localized game though. Is the Detroit market going to pick up from rock bottom? Perhaps. The areas in which job growth is slated to boom will see increases. I'm actually of the mind that silicon valley might become cheaper over the next few years, as people begin to realize that the necessity to be geo-stationed to the industry is an illusion. Seattle was the hottest market for a while, and probably will continue modest growth.

You can look on the macro scale, but I'd advise looking at the markets slated for growth, and zero in on those specifically. There will always be growth markets and those on the down swing. Pick your targets as you would pick the companies you'd invest in.

[jamaicabound]

In my area, Chicagoland I would say it's definately more a sellers market. Things priced right that I was looking at were moving within a matter of days or a week. If I saw a property I liked I would take the day off and go look at places asap as if I scheduled something a few days out or for the upcomming weekend it was under contract before I had a chance to go look and I was even looking at a time of the year when most families would not be moving.

I honestly don't see trump having a big effect one way or the other with the exception of interest rates rising in which case I think we'll see a flurry of buyers trying to buy before they rise.

Personally one of my rental properties has turned into a shit show. I'm in one of the top school districts in the state by kind of the dumpy area of town and specifically my block is a little shady. It's really gone downhill in the past 3 years. I had a family paying $1200 per month, my mortgage is $700. They paid on time every month, nice family, etc.

Fast forward 3 years they move away and every tenant I get is section 8. After having the place sit vacation for 4 months I finally decide to do section 8. First month my tenant is 15 days late and just had to issue a 5 day eviction notice. We'll see what happens. I'll probably just let them skate as the state is paying me $1155. Their security deposit covers 10 months of their rent so I'll let them skate for 10 months and then decide what to do

[MasterBacja]

Semi related- anybody have any thoughts on getting into the mortgage game with what was mentioned about interest rates? I have an opportunity to get a job with a company that pays low crazy for people who can sell mortgages and I have a lot of friends who have done it and made bank - and I'm at least as good in sales as any of them are with a decade long track record of sales in multiple fields.

Is this a bad time to do that or would it be ideal to get in and make as much as possible before anything changes drastically (i.e. bubbles bursting, interest rates rising, etc)? I know very little about mortgage banking but I know the money has been there for the last 5 years at least. It'd be a gamble but anybody who maybe has more experience or knowledge regarding that might be able to chime in.

Hopefully I'm not hijacking too hard, it's somewhat related and I saw somebody mention interest rates so it seemed relevant.

[Nowak]

(01-27-2017 06:56 PM)MasterBacja Wrote:  

Semi related- anybody have any thoughts on getting into the mortgage game with what was mentioned about interest rates? I have an opportunity to get a job with a company that pays low crazy for people who can sell mortgages and I have a lot of friends who have done it and made bank - and I'm at least as good in sales as any of them are with a decade long track record of sales in multiple fields.

Is this a bad time to do that or would it be ideal to get in and make as much as possible before anything changes drastically (i.e. bubbles bursting, interest rates rising, etc)? I know very little about mortgage banking but I know the money has been there for the last 5 years at least. It'd be a gamble but anybody who maybe has more experience or knowledge regarding that might be able to chime in.

Hopefully I'm not hijacking too hard, it's somewhat related and I saw somebody mention interest rates so it seemed relevant.

Not Trump, Yellen ,expect several rate hikes over the next year. I know most people get fixed mortgages, with coming higher interest rates, better get in on it now while people can still get good deals.

[Nowak]

With both rate hikes and a possible Brexit boost due to capital coming in, real estate in NY and the metro area might be something to keep an eye on.

https://www.theguardian.com/cities/2017/...l-business

[Hell_Is_Like_Newark]

Do I hold or sell?

I bought up 2 to 4 unit decrepit apartment buildings back when interest rates were high and prices were cheap. I made a decision to stop buying in 2003 and selling my next project (empty lot I got on tax sale) to pay down debt. The real estate market was out of control, with sale prices greatly exceeding the rent equivalent value. I expected to start buying again after the 2007 crash, but prices went back up again. I see 'investors' buying up properties with FHA loans (>5% down, very low interest rates) by pretending to live in the properties. Also, a Australian pension fund has been buying up properties via a real estate management and development company.

I think this area is again in a bubble. It is an easy commute to NYC, but frankly, the area isn't beautiful and never will be. The housing stock is ugly and the new construction isn't much better (really bad zoning ordinances encourage crap construction). The area has gentrified, so I don't think the dirt cheap prices will ever come back (I paid, adjusted for inflation, about $125k for my first 2 family home). I have new construction condos down the block from me on the market for $450k for a 1 bedroom.. which I just think is not sustainable when interests rates move up again.

My original plan was to hold onto my 4 remaining properties (I live in one) until I reach my early 60s, at which point they will be fully paid off. I am wondering if I sell now, I may make more money than I would 15 years from now (minus the one I live in). I have kids on the way, so I wanted the option of leaving the properties for them. I must admit I also have an emotional attachment to having the properties. I spent many night and weekends busting my ass renovating them on a shoe string budget. My own blood and sweat is embedded in the walls.

The three properties in question are all cash flow positive (excluding major capital improvements). I am leveraged under 50% based on a very conservative property value estimate. The properties were all extensively renovated in the late '90s to early '00s. I can upgrade the apartments further to make them "owner advantaged" (granite counter tops, premium appliance, upgraded floors).

Do I hold or cash out? I conservative estimate after paying off debt and paying for improvements I would cash out about $700k (before taxes).

[BostonBMW]

(02-25-2017 04:25 PM)Hell_Is_Like_Newark Wrote:  

Do I hold or sell?

I bought up 2 to 4 unit decrepit apartment buildings back when interest rates were high and prices were cheap. I made a decision to stop buying in 2003 and selling my next project (empty lot I got on tax sale) to pay down debt. The real estate market was out of control, with sale prices greatly exceeding the rent equivalent value. I expected to start buying again after the 2007 crash, but prices went back up again. I see 'investors' buying up properties with FHA loans (>5% down, very low interest rates) by pretending to live in the properties. Also, a Australian pension fund has been buying up properties via a real estate management and development company.

I think this area is again in a bubble. It is an easy commute to NYC, but frankly, the area isn't beautiful and never will be. The housing stock is ugly and the new construction isn't much better (really bad zoning ordinances encourage crap construction). The area has gentrified, so I don't think the dirt cheap prices will ever come back (I paid, adjusted for inflation, about $125k for my first 2 family home). I have new construction condos down the block from me on the market for $450k for a 1 bedroom.. which I just think is not sustainable when interests rates move up again.

My original plan was to hold onto my 4 remaining properties (I live in one) until I reach my early 60s, at which point they will be fully paid off. I am wondering if I sell now, I may make more money than I would 15 years from now (minus the one I live in). I have kids on the way, so I wanted the option of leaving the properties for them. I must admit I also have an emotional attachment to having the properties. I spent many night and weekends busting my ass renovating them on a shoe string budget. My own blood and sweat is embedded in the walls.

The three properties in question are all cash flow positive (excluding major capital improvements). I am leveraged under 50% based on a very conservative property value estimate. The properties were all extensively renovated in the late '90s to early '00s. I can upgrade the apartments further to make them "owner advantaged" (granite counter tops, premium appliance, upgraded floors).

Do I hold or cash out? I conservative estimate after paying off debt and paying for improvements I would cash out about $700k (before taxes).

Great job with the portfolio, your sensible approach has clearly yielded some amazing results.

As for what to do next: It depends on what you would like to do with the proceeds from the sale? 1031 it? I recommend that you have an airtight plan for the capital proceeds as there may be tax consequences/ROI considerations to keep in mind.

I don't mean to sway you one way or another, however I am keeping my rentals as long as they cash flowing. In some instances, I have accelerated the mortgage paydown on a 15 year basis, even though I have 30 year mortgage.

Also, when I need substantial capital to purchase another buy and hold or do a flip, I have HELOCs ready. So, I can still access the equity, if needed.

You brought at a great time and have substantial equity -- the question is what do what to do with the $$s?

[Troller]

The selling price compared to the rent yeld is bellow 5%? Can you double your money?

I´ve recently sold one apartment and one building. My criterias are the ones stated above. The actual selling price compared to rent was bellow 5%. When I bought it it was around 10%. Now because the price went up. It yelds around 4% according to the actual selling price. I sold both.

Nobody can call the market. The only certainty is any investment should yeld 5%. More than this is good. Less is bad. The moment an asset stops giving this yeld time to sell. Then wait. It´s all cyclical. You sell now. Buy three for the same price in 10yrs.

There are some indicators we are near a top. I´ve been reading about a bubble on commercial real estate. But haven´t seen many 100% mortgages. In 2008. Not only banks were giving 100%. They were also lending for furniture, etc. Haven´t saw this hapening yet.

This guy is shorting Canadian real estate:

https://www.vice.com/en_ca/article/meet-...eal-estate

[BostonBMW]

(02-28-2017 05:04 PM)Troller Wrote:  

The selling price compared to the rent yeld is bellow 5%? Can you double your money?

I´ve recently sold one apartment and one building. My criterias are the ones stated above. The actual selling price compared to rent was bellow 5%. When I bought it it was around 10%. Now because the price went up. It yelds around 4% according to the actual selling price. I sold both.

Nobody can call the market. The only certainty is any investment should yeld 5%. More than this is good. Less is bad. The moment an asset stops giving this yeld time to sell. Then wait. It´s all cyclical. You sell now. Buy three for the same price in 10yrs.

There are some indicators we are near a top. I´ve been reading about a bubble on commercial real estate. But haven´t seen many 100% mortgages. In 2008. Not only banks were giving 100%. They were also lending for furniture, etc. Haven´t saw this hapening yet.

This guy is shorting Canadian real estate:

https://www.vice.com/en_ca/article/meet-...eal-estate

I think what you are describing is a modified version of cap rates. Fundamentally, your reasoning is sound.

Since, this is a real estate thread, I would like to share some of my thoughts regarding interest rates:

I would love to see the interest rates rise up and continue to increase. With the Fed expected to increase interest rates in March (probably by 25 bps) and hopefully a few more times year, we will see housing prices come down. This is a good thing. We have been running in a low interest rate environment for more than decade now and all it has led to is a massive transfer of wealth from Main Street to Wall Street, disincentivizing savers, causing a rush to invetsments (RE, equities etc.) in hopes of chasing returns.

Even if the interest rates were to rise to 7-8% (which they won't; this year), what we will see is:

1. RE prices being forced downwards as more and more people will be unable to afford homes in the 'hot' markets. You can call it a 'crash' however in reality it is more of a return to the historical norm.
2. It is better to buy a lower priced home/investment property with a high mortgage rate because of the following reasons:

a. Interest payments are usually tax deductible.
b. You have an opportunity to refinance should the interest rates decline again in the future
c. If you are buying at a lower price with a high interest rate, you have the opportunity to pay down the mortgage (P+I) faster (if you have extra cash) than the same property that you purchased at an elevated purchase price and low interest rate.

3. Higher interest rates will reduce the pressure for savers to plow their cash into investments, real estate or others.

I am fairly certain that the increase cost of borrowing will elicit howls of protest from Wall Street and other speculators, however what has been going on (low interest rate environment) is nothing short of the Fed robbing the savers and propping a weak economy that has strayed from it's fundamentals.

[HighSpeed_LowDrag]

Anyone interested in diving deeper into the looming bubble that is the Canadian housing market can take a look at this blog: http://www.greaterfool.ca/

It's written by Garth Turner, investment advisor and former Conservative MP when Harper was still in power. He's been making the bearish case for Canadian real estate for years.