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Brian Swope's Blog

By Brian Swope | Agent in Columbus, OH

Stocks are down and Rents are UP!!!

Now is the time to buy investment property.  With the current housing mess of the nation, more and more people are renting.  This strong demand means that rents are increasing which will increase apartment values in the near future.  If you are interested in investing in new apartment communities then please feel free to contact me at any time.  Our units are individually deeded so you can buy 1, 4 units or even an entire building.

Brian Swope
Village Communities/Metro Development
614-540-2400  ext. 236
bswope@villagecommunities.com

Comments

By Voices Member,  Thu Jan 22 2009, 10:09
It's still cheaper for me to rent than buy.
By Voices Member,  Thu Jan 22 2009, 14:11
My experience with home shopping in Columbus, Ohio

I have been Columbus market watching since 2006. Throughout 2006, I've been told that "now the best time to buy because the market is hot and if I didn't get in now, I would miss the boat." And let me just tell you how happy I am that I ignored that horrible advice. Something inside of me told me to not buy into the hype. Add this to the fact that I could not afford a 200k + mortgage for a half decent house. Well, I guess I could have afforded that mortgage but didn't want to become house poor like the majority of my coworkers. Instead of buying, I developed a savings plan. My goal was to put 20% down on a house (mostly to keep the payments low and avoid PMI).

Fast forward to January 2009: I am virtually debt free, with excellent credit and a nicely sized portfolio. Like many of us, my 401k and Roth IRA took a huge hit as well as my stocks. But what didn't take a hit was my savings account. Because my rent is so low (I didn't have to pay property tax, an inflated mortgage or PMI) I am able to live extremely comfortably because of my financial situation. I am not a business owner and am from middle class, blue collar family. I am not writing this to brag since I am a very private person ... I am writing this because I want to help other buyers. I want other buyers to be aware of the market conditions and understand that buying a house is one of the biggest financial decisions that you'll probably make so DO IT RIGHT AND DO YOUR RESEARCH.

A few things that I posted earlier have disappeared. Not a problem, since I care about other buyers. I am not a Realtor, investor, etc. I am just a regular person like other buyers in Columbus. So here it goes ... keep this information handy!

Buying at a low interest rate:
Many will tell you that now is the time to buy because of the low interest rates. I disagree with that general statement. It's only the time to buy when you have found a deal that is so unbelievable, you can't pass it up.

EX:

Nancy buys a house tomorrow valued at 200k. Prominent economists are projecting another 20% decline in housing values in 2009. If Nancy buys today at 200k (assuming a 1% down payment) at a 5.5% interest rate, her total payments toward the house (including tax, PMI, and interest) will be 513,600k over the next 30 yrs.

Let's say Nancy waited another year and house values fell 20%. That house that she would've paid 200k for is now valued at 160k. But let's say interest rates increased to 7% in 2010. The total amount over a 30 yr mortgage is 466,500k. In the long run, Nancy would save AT MINIMUM $47,000!

Why do I say at minimum?
Well, remember, YOU CAN REFINANCE an interest rate... You CANNOT REFINANCE THE MORTGAGE! Plus, let's say Nancy decides to ignore my advice and buys a 200k home in Grove City in 2009 at a 5.5% interest rate. What happens when Nancy tries to resale her house after it's lost 40k in value? Yep that's right, Nancy will be in the red and lose a significant amount of money. The housing market appreciates, on average, 3% per year. So does your income and so does inflation. In reality, your house is not that great of an investment when you look at it in these terms.

That's all for now. I have much more to add to my experiences with real estate in the Columbus Ohio real estate market

Take care and buyer beware.

Inform yourself with independent sources!!!
By Voices Member,  Thu Jan 22 2009, 16:43
Prices for homes are not going up 3% by 2010. In fact, we'd be lucky if they stayed stagnant. 3% appreciation in this market ... well that's wishful thinking. Secondly, it does not cost thousands of dollars to refinance. And even if it did, it would be much better to refinance than to pay interest on a 7% loan vs. a 5.5% loan.

I know it's difficult to come across someone who has a different opinion than you. And it's nice to see that you are handling it an open, professional way. I thought you were just trying to silence me since my other comments have been deleted. What were so bad about them?

Oh and I am glad that you finally admit that my advice is great! It's good to see that I am finally on the same page with you!
By Voices Member,  Thu Jan 22 2009, 17:58
So you're showing homes - congrats! As I mentioned before, I am happy that you are showing homes in this market.

There have been 20% drops on homes in Columbus. Take your own advice and realize that it depends on the community. Take for example, the Hilltop area. The average sales price have dropped 19.6% since 2007. The average price per sq foot is $45, which is a 22.4% drop from last year. If you don't like the Hilltop, let's analyze Grove City or the south western side of Columbus. The average sale price dropped 12.1% from last year. Clintonville, on the other hand, had a very small drop of 0.5%. So, you tell me not to make generalized statements, but aren't you doing the same when you say Columbus hasn't seen a 20% drop? Again, I look at the numbers, since the proof is in the pudding.

In 2006, I heard the same sentiment -- that prices would never fall. But yet, here we are. Homeowners are stuck paying more for a house than what it is worth. Secondly, a 20% drop on a 200k house is 160k -- not 140k as you mentioned.

Lastly, my sister just refinanced and it cost her $500 to do so.

Ultimately, it's up to the buyer to decide who's advice to follow. Will they follow the advice of a salesman or someone who really has no reason to lead them wrong?
By Hoang,  Thu Jan 22 2009, 18:46
Let correct Jamie's math.
Mortgage $200,000 at 5.5% interest rate, with 30 years term.
Total payment is $408,808

Mortgage $160,000 at 7% interest rate, with 30 years term.
Total payment is $383,212

Nancy save $25,596 (408,808-383,212 = $25,596) if and only if home's price go down another 20%
By Voices Member,  Thu Jan 22 2009, 19:12
not sure what mortgage calculator that you are using as it looks like we are all getting different numbers... but I got my numbers directly from trulia's calculator, using their normal assumptions with tax, PMI and insurance.

but anyway, the moral of the story is that with current trends and economic conditions, it's best for nancy to wait.
By Hoang,  Thu Jan 22 2009, 19:19
My math is not included tax, PMI and insurance, because the tax code is different from state to state, county to county, however the comments are assumtion only. ;-)
By Brian Swope,  Fri Jan 23 2009, 04:45
I appreciate everyones posts but if you look at the original post, it was talking about investment properties and commercial apartments, not SFR's.
By Voices Member,  Fri Jan 23 2009, 09:54
Brittany, Are you saying house prices have not fallen in New Albany, Gahanna and Canal Winchester?

Secondly, are you saying that my sister should not have refinanced? Doesn't this conflict with your earlier statements about getting the lowest interest rate possible? I thought it was good to get a low interest rate?

For the sake of argument, let's say a refinance costs 2k. It would be in my best interest to spend 2k to save gove or take 40k, right? Remember, we already saved money by waiting for prices to fall so this additional to the money that we saved by waiting for prices to fall.
By Voices Member,  Fri Jan 23 2009, 12:28
Brittany,

You have intentionally misled Columbus buyers. You said suburban Columbus prices were stable and nothing like California etc. But, you left out important FACTS, which seems to be a common practice with you. You left out the fact that there are areas in Columbus that dropped 20%. Hilltop is an example but as you mentioned, that's"urban" Columbus. But what about Grove City and Galloway? What about Hilliard? What about Canal Winchester? Gahanna? New Albany? Westerville? Those suburban areas are not doing nearly as well as Clintonville, Dublin, etc. But yet, you deliver selective facts -- facts that will benefit you. By keeping the confidence in Columbus, people will continue to overpay and you make money. More houses sold = more money in your pocket. And when I do throw out facts that dispute your generalizations, you come back with "Southwestern schools/the west side has been on a decline for many years." But the truth is, you were caught lying to potential buyers who are reading this blog. You are trying to convince them that now is the time to buy so badly that you are leaving out important facts that there are areas in Central Ohio that witnessed a 20% drop.

So where does that leave us? Well, do I honestly think there will be a 20% drop in Clintonville? No. But I do believe that the other suburban areas will have a significant drop. Some will be 20% some will be 10%. Don't be so sure of yourself, Brittany. A 20% drop has already happened in 2008 and I'm excited to see what 2009 brings.

Lastly, as I mentioned on my previous reply (that you deleted from your blog), I received an MBA with a concentration in real estate. I am also a real estate investor. However, you shouldn't be so quick to judge someone based on their background. You have clients who are renters but yet, you think just because I rent, I have no idea what I am talking about. I rent for a reason and trust me, it's paid dividends.

You have no idea what type of investor I am ... I could own a landlord services company... I could own a residential screening company ... I could own subscription based online foreclosure listing website... You, as a Realtor, should understand that there are many other ways to invest in real estate besides owning property. I am surprised, even after you passed your exam, that you don't know this.
By Voices Member,  Fri Jan 23 2009, 13:38
Face it Brittany, you're over your league here. Maybe you should consider a new career. And my advice to any potential buyer is to avoid her. She does not like opposing views and does not deal with renters very well.

And as an FYI - I have found that if I am silent about my investments, more and more buyers will listen to me because they can relate. Before my ventures in RE and before I received my MBA, I was just another blind buyer.
By Voices Member,  Fri Jan 23 2009, 13:41
Take it for what it's worth... I'm not here to educate you, Brittany.
By Voices Member,  Fri Jan 23 2009, 13:45
FYI - It's up to the consumer of who to take advice from:

An MBA graduate with a concentration in real estate OR a person with 1 year of business administration school at Columbus State Community College.
By Voices Member,  Fri Jan 23 2009, 13:46
Brittany, you take things so personal. Why? Because this is how you make money. And judging from the amount of time you spend arguing with on Trulia, you don't have much business...
By Voices Member,  Fri Jan 23 2009, 13:46
Brittany, you take things so personal. Why? Because this is how you make money. And judging from the amount of time you spend arguing with on Trulia, you don't have much business...
By Voices Member,  Fri Jan 23 2009, 13:59
Actually, I am not the one that is bitter, Brittany. I am glad that you like arguing with me :-)

I love how you paint the rosy picture of real estate! I love debating your rosy speculations with facts!

In the future, lets spend more time arguing about something meaningful. Again, you try to throw digs my way about what I do for a living ... It bothers you that you have no idea who I am. For all you know, I could be someone who you worked with at Coldwell.
By Voices Member,  Fri Jan 23 2009, 14:05
Ok Brittany, you can believe whatever you want.
By John the Bruce,  Tue Jan 27 2009, 22:22
Stay strong, Jamie.

Everyone who said it was a great time to buy in 2005, 2006, 2007 and 2008 was.....W-R-O-N-G.

2009? You decide. But, I have yet to meet a Realtor who said it was EVER a bad time to buy.
By Voices Member,  Wed Jan 28 2009, 12:41
Good input John. In my opinion, we will see a "false bottom" this year... I think housing will pick up some steam but with the option ARMs resetting in 2010, we'll see our next wave of foreclosures. Plus, inventory levels are skewed. Banks are overloaded with REOs and haven't been able to keep up with putting them on the market in a timely manner. As an FYI, I've seen newly listed homes (built in 2006) here in Columbus for 95k! These people paid 144k in 06. Amazing. If I keep waiting, maybe I'll get that "free" house Brittany laughed about. LOL!

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