should i invest now in real estate or wait a little longer?

Asked by Skint, California Tue Feb 17, 2009

should i invest now in real estate or wait a little longer? what is the best strategy in this current market?

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Dp2’s answer
Dp2, , Virginia
Wed Feb 18, 2009
David, thanks for the shout-out; your comment made my day. :) Also, know that I'm picking up a lot of goodies from you, Dunes, Bill Eckler, and NonRealtor.

Natalee, I agree with most of what you wrote, but I'm not sure your statement, "An Investment is something that will bring you a profitable return and that is not necessarily right now. . . ." If you meant that it's possible to purchase a property with a negative cash-flow that will eventually yield a positive cash-flow in time, then I agree it's possible. However, I don't think I'd go as far as to call that kind of investment a good one for everyone. Yet, it could be a good investment for high net-worth individuals looking for some tax deductions.

Skint, before attempting to answer your questions, you need to determine your risk tolerance and exit strategy. Do you prefer short- or long-term strategies? How much money do you want to invest, and for how long? What kind of yield are you looking for? How liquid would you like for your investment to be? Many people think of real-estate as an illiquid asset. However, it's possible to invest in real-estate without actually buying a property. (Google on tax liens and note buying/selling for 2 examples of how to invest in real-estate without actually buying a property.)

After having answered those questions, then you'll be in a much better position to address and answer your own questions.
3 votes
Bill Eckler, Agent, Venice, FL
Thu Feb 19, 2009
Skint,

This is the time for "fence sitters" to make a decision.

Let's look at what's going on around us........

inventory is high
sellers are motivated
interest rates are extremely favorable
home prices in most areas have declined greatly
the market is flooded with short sales and foreclosures
The government is giving money away to home buyers

What is the benefit of waiting?

Oh, wait for the economy to improve and all of the positive features mentioned above to evaporate.

NOW is the time to buy................
2 votes
Michelle Tho…, Agent, El Dorado Hills, CA
Wed Feb 18, 2009
It is an excellent time to buy! Interests rates are still low, and there are great opportunities available! A Realtor can show you local trends and locate properties that are listed under market value. The media is usually a few months behind in reporting. By the time they report that the market has turned around, it is too late!
1 vote
Hugo Torres, Agent, Arcadia, CA
Tue Feb 17, 2009
What would be the point of waiting. If you are waiting for prices to get a little lower you may be passing by some great deals. For most, they will see the bottom long after it actually occured. Find a good REALTOR to work with and move on opportunities as they occurr.
Web Reference:  http://www.c21ab.net
1 vote
Monique and…, Agent, Beverly Hills, CA
Tue Feb 17, 2009
Hello Skint,

I think this year IS the time to buy. Don't wait until next year. Rates are low, prices are low. If rates go up then your dollar will not stretch nearly as far. If you can buy then buy now. Most investors only regret is that they didn't buy more property when the market was down :) and I am not just saying that because I'm a real estate agent. I've started to see an influx of buyers from China and Europe buying multiple properties for a lot less. Even if all you can afford is 100k or 1 mil, there are great deals out there and we just don't know how soon the market will go up.

Best,

Monique Carrabba
Keller Williams Hollywood Hills
Phone: 323.899.2900
mcarrabba@kw.com
The Carrabba Group
1 vote
Natalee Thur…, Agent, Marysville, WA
Sun Apr 11, 2010
Absolutely right now.....We have historical low rates and prices , this actually may be the chance of a lifetime. Also, when investing if you are not of retirement age, though have somewhere you would love to retire to. Look into those areas as well. You can use it as a vacation or rental home now and if it is a destination desired area, then possibly furnish and use it as a vacation rental too. Block out the weeks you want to stay there. :) Maybe you want to live in the city someday ? Condominiums in the city are at wonderful prices and make great temporary housing for large corporate employees in the city. Buy now, live in it later ! Just throwing out ideas......
0 votes
Marlon Young, Home Buyer, Los Angeles, CA
Sat Apr 10, 2010
Now is the time for sure. How much more obvious can that be. The train is coming down the track and if you don't get on now, or very soon, you will be stranded on the tracks upset at yourself that you missed that ride! I am buying now and I sure don't have money to burn or waste. But just completing an MBA tells me that I need to act now. Stocks hit 11,000 yesterday and we were around 7,000 last March. Things are changing fast. Don't miss out.
0 votes
, ,
Wed Sep 9, 2009
Hi Skint,

It is a good time, but don't make the mistake that many people, whom called themselves investors, made. Many so-called investors bought properties for investments with little to no money down. This created a Negative Cashflow every month for them. They relied on their speculation that the Real Estate prices will continue to go up (without any corrections, or drops in the process). When they couldn't continue to afford the Negative Cashflow, then they ended up losing their investment properties, and many times their own primary residence. My main advice will be to find a property that will provide you with Cashflow every month (even better, if you can save the money for any possible emergencies -like new roof, water heater, etc...). Many Investors whom I know don't worry so much about the price, but they want excellent terms. There are many ways to invest (as Dp2 has pointed out Tax Liens, another great investment tool). I'd say take some classes (learn from the experts), so you're mistakes don't cost you more money. I'd highly recommend checking out IRCA in Culver City, which they meet the first Tuesday of the month, and it's free. If you're interested in more of the group's information, then feel free to let me know and I'll try to get you connected to receive more information on the group.
0 votes
Dp2, , Virginia
Fri Feb 20, 2009
I've been around real-estate for years, because my parents and maternal grandparents own multiple properties. I spent some time running away from real-estate, because I couldn't stand dealing with the constant maintenance headaches, nosy neighbors, nazi city-inspectors, and crazy tenants. (In fact, that experience helped to push me to be a renter-for-lifer for a few years.)

As for the tax liens, let's just say that's how I got my feet wet getting back into real-estate on my own (this time by my choice).

Each county government has its own way for handling tax liens and sales, so there isn't a single source online or otherwise to go to for obtaining them. Some counties (like Maricopa County in AZ) have highly organized records, and a streamlined process that you may access online or via phone. Other counties, . . . you'll need to make a few phone calls, some more calls, and some more calls, before you reach the right person for information on their tax liens and sales.

There is a caveat: some states are tax lien states (like AZ), and others are tax deed states (like OH). Both issue liens that one may purchase, but the process for collecting on the unpaid taxes differs between the 2. In general, tax deed states typically require the lien holder to participate in a tax sale either to reclaim the deed via an auction, or to reclaim the back taxes from the proceeds of that auction. In general, tax lien states can be further classified into 2 groups: judicial or non-judicial. The judicial states require lien holders to go to court and file a lawsuit to reclaim the deed or back taxes (which the primary mortgage lien holder typically will pay in order to take over your position). The non-judicial states require lien holders to simply report the fact that the taxes remain unpaid, and don't require any court action to reclaim the deed or back taxes. Also keep in mind that the details varies (sometimes wildly) from county to county.
0 votes
Skint, Home Buyer, California
Thu Feb 19, 2009
dp2 thanks for the info! but hey where can we find this tax lien or tax sale any ideas where to go online? did you ever invest in this kind of business?
0 votes
David Chambe…, , Saint Petersburg, FL
Wed Feb 18, 2009
Your welcome Dp2, I just felt someone new to investing might benefit from your experiences.
0 votes
Steve, , Rohnert Park, CA
Tue Feb 17, 2009
Not in California.

This market is a train wreck. There's a glut of vacant homes, a glut of shadow foreclosed inventory and a glut of pent up seller demand ("we're gonna ride out the market....").

Rents are falling, and yet in most areas rents are still well below historic price/rent ratios . Unemployment is rising... rapidly.

Unprecedented government intervention in the form of depressed interest rates, tax credits for buyers and forced delays of foreclosures have completely failed to stem the downturn in prices. All these waste-of-money policies have done is delayed the inevitable return of economically viable income, rent and home prices and ratios.

We have an Option ARM reset in it's early stages. There's a commercial real estate catastrophe poised to hit, as is a credit card debt crisis -- with us in the most over-leveraged consumer debt state in the country. We're poised for a vicious combination of unprecedented state tax increases and spending cuts to try to (partially) balance a state budget shortfall that would paralyze many nations. We're about to cover $31bil of the $42 bil shortfall via drastic service cuts and tax increases... though most analysts expect an additional $7-$9 billion shortfall to appear in the next few months. And continuing onward after that.

We're 6 to 9 months into a national recession that will last far longer (in my opinion, another 2 years or so) as the country de-levers from a net zero/negative savings rate and an economy built almost entirely on consumption slowly adapts.

Perhaps most damning - the real estate move-up market has been effectively destroyed for the foreseeable future with the nearly unimaginable destruction of paper wealth. That fact alone will shortly wipe away the "real estate is local!!!" mantra tossed around here so often. Low neighboring prices is the great equalizer.

On the plus side, prices are a whole lot better than the hyper-inflated 2003-2004 prices (though still nowhere near rational income/price ratios). And apparently, per the Trulia forums, Europeans and Chinese are buying stuff all over the place (I'm actually laughing at that one).

Seriously, what do you see in this market? Even ignoring the recession/unemployment/budget mess/etc... looking at area incomes, rents and so forth -- does anything actually look 'cheap' or worthy of a good investment? If you wipe out any prices reflected from 2002-2006, an obvious anomaly, do you see anything out there suggesting it's a good time to buy based on historic prices?

Wait another 12 months minimum and reassess at that time. We've yet to near the home price trend line as the bubble continues to deflate. Odds are we'll not only return to that trendline, but shoot down below it for some time due to the severity of this mess.
0 votes
Natalee Thur…, Agent, Marysville, WA
Tue Feb 17, 2009
Dear Skint,

Now is a great time to INVEST in Real Estate **** An Investment is something that will bring you a profitable return and that is not necessarily right now ****.

Interest rates are still great, there are a lot of homes to choose from and they are in great areas, that before might not have been as attainable price wise. The key is to get a great value in this market. There are still a lot of complexities to Investing. If you are looking to truly invest in Real Estate, look at the areas , schools, location and just because it is at a cheap price, does not necessarily make it a great value. If you are waiting for the bottom, it will be too late.

Really look at what you want to do and if is a fixer you are looking at , pay the money to have a Pre-inspection. If you Pre-inspect the home, then you know what you are getting into and if it is going to take a lot of money to complete the work, then you want to negotiate that right at the time of making the offer. Not to mention, you have the documentation to back your offer. I wish you the very best and by all means...do not be one of those,
" Should have, would have, could haves ". Right now is the time and the time is now !

Take care and find the right Realtor® to work for you .....
0 votes
David Chambe…, , Saint Petersburg, FL
Tue Feb 17, 2009
Are you financialy ready to buy? It all depends on your ability. Read Dp2's answers: http://www.trulia.com/voices/profile/Other-Central_Office_Ri…

He has some of the best investment strategies I have seen to date.
0 votes
Skint, Home Buyer, California
Tue Feb 17, 2009
i wish i could find those great deal you were talking?
0 votes
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