Prices must come down!
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Prices must come down! (by GKARL [PA]) Jan 14, 2024 7:59 PM
       Prices must come down! (by NE [PA]) Jan 14, 2024 8:09 PM
       Prices must come down! (by ned [AL]) Jan 14, 2024 8:32 PM
       Prices must come down! (by GKARL [PA]) Jan 14, 2024 8:40 PM
       Prices must come down! (by Ken [NY]) Jan 14, 2024 8:47 PM
       Prices must come down! (by Bonanza [NC]) Jan 14, 2024 8:57 PM
       Prices must come down! (by Robin [WI]) Jan 14, 2024 10:10 PM
       Prices must come down! (by MikeA [TX]) Jan 14, 2024 10:32 PM
       Prices must come down! (by S i d [MO]) Jan 15, 2024 8:19 AM
       Prices must come down! (by WMH [NC]) Jan 15, 2024 9:16 AM
       Prices must come down! (by tryan [MA]) Jan 15, 2024 9:37 AM
       Prices must come down! (by tryan [MA]) Jan 15, 2024 9:41 AM
       Prices must come down! (by NE [PA]) Jan 15, 2024 9:44 AM
       Prices must come down! (by GKARL [PA]) Jan 15, 2024 10:40 AM
       Prices must come down! (by Tony [NJ]) Jan 15, 2024 11:00 AM
       Prices must come down! (by Oregon Woodsmoke [ID]) Jan 15, 2024 12:04 PM
       Prices must come down! (by 6x6 [TN]) Jan 15, 2024 1:08 PM
       Prices must come down! (by 6x6 [TN]) Jan 15, 2024 1:09 PM
       Prices must come down! (by Ed [CA]) Jan 15, 2024 3:11 PM
       Prices must come down! (by S i d [MO]) Jan 15, 2024 4:46 PM
       Prices must come down! (by Robert J [CA]) Jan 15, 2024 4:54 PM
       Prices must come down! (by Larry [MN]) Jan 15, 2024 7:06 PM
       Prices must come down! (by Hoosier [IN]) Jan 16, 2024 2:38 AM
       Prices must come down! (by zero [IN]) Jan 16, 2024 7:25 AM
       Prices must come down! (by GKARL [PA]) Jan 16, 2024 10:02 AM
       Prices must come down! (by NED [AL]) Jan 16, 2024 6:22 PM
       Prices must come down! (by Robert,OntarioCanada [ON]) Jan 16, 2024 10:27 PM
       Prices must come down! (by Don [FL]) Jan 17, 2024 7:26 AM
       Prices must come down! (by Robin [WI]) Jan 17, 2024 8:53 AM
       Prices must come down! (by Ken [NY]) Jan 17, 2024 9:26 AM
       Prices must come down! (by Ray-N-Pa [PA]) Jan 18, 2024 6:14 PM

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Prices must come down! (by GKARL [PA]) Posted on: Jan 14, 2024 7:59 PM
Message:

I think a get real moment is coming. I was just analyzing an 8 unit where they were asking $ 1.5 million. NOI is like 66K or a 4.5% cap. This is in a C class area. If you were to finance this with the normal 20% down at prevailing interest rates, you'd be cash flow negative around $ 30,000 annually. If you self managed, you'd be about $ 20,000 negative. You might be able to push rents up a bit, but not to that extent. The only way to make this work is to put more cash down, but that makes no sense when you can just get a high yield checking account that pays 5% without the hassle of managing. No one's going to buy that unless its newbie desperate for "a deal".

I'm figuring at current financing rates, this place should be going for about half of what they're asking. There's going to be a huge reckoning coming. It may take a minute though. In the interim, it will be best to keep one's powder dry.

--209.122.xx.xxx




Prices must come down! (by NE [PA]) Posted on: Jan 14, 2024 8:09 PM
Message:

If thereís one thing Iíve learned doing this is that nothing should surprise you. I have seen similar places and said to myself similar things about how they wonít sell and then they do. You never know why someone buys or why someone sells. --24.152.xxx.xx




Prices must come down! (by ned [AL]) Posted on: Jan 14, 2024 8:32 PM
Message:

I know in my area there are still some sellers shooting for the moon.

The building next to one I own... they want 1.5 mil... I wouldn't pay over 750k --74.132.x.xx




Prices must come down! (by GKARL [PA]) Posted on: Jan 14, 2024 8:40 PM
Message:

I believe it may take a minute before everyone adjusts to the new realities. Most people assume recent history is also the future, so this won't happen tomorrow, but at some point, beliefs and perceptions will shift and rationality will return and when it does, it will do so with a vengeance IMO. --209.122.xx.xxx




Prices must come down! (by Ken [NY]) Posted on: Jan 14, 2024 8:47 PM
Message:

The time is coming, i keep doing flips but i am looking to keep a few single families but not finding anything i can justify buying --74.77.xx.xx




Prices must come down! (by Bonanza [NC]) Posted on: Jan 14, 2024 8:57 PM
Message:

The people doing 1031 flips will do it because they don't want to pay the taxes. That's who is buying the ones that don't make sense. --65.188.xxx.xxx




Prices must come down! (by Robin [WI]) Posted on: Jan 14, 2024 10:10 PM
Message:

I also wonder where all the money is coming from.

I considered doing cash-out refis when rates were 3% so we could grow, but property values were so high that it negated any savings from low interest rates. I'm still bidding, but the prices are outrageous. I just saw a property sell for $100K that would pull in $1200/mo tops, in a class C neighborhood. That's about an 8% rate of return IF you do the managing yourself.

Why? I think most of us on the forum are relatively small fish. Why would an investor be happy with such a low rate of return? Do they know something about impending runaway inflation that we don't? --104.230.xxx.xxx




Prices must come down! (by MikeA [TX]) Posted on: Jan 14, 2024 10:32 PM
Message:

Refigure that deal carrying it at 8% the first year, 5% the second year, and 3% for the remaining years. Then add 3% appreciation year over year and you will see what they are betting on.

A lot of people believe that we will get back to very low interest rates since that is what we have had the last few years. History would tell you otherwise. --209.205.xxx.xx




Prices must come down! (by S i d [MO]) Posted on: Jan 15, 2024 8:19 AM
Message:

"Must" .... such a fun word!

Prices WILL comes down when SUPPLY and DEMAND force prices down. Right now, supply is still super low and demand is still relatively high.

We may look back on the prices of 2023-2024 some day and wish we'd bought more back when things were "cheap."

Do they make investment sense for mom and pop investors using current metrics? No. But mom and pop aren't the only buyers in the game.

Buy when it makes sense for YOU. No one else dictates your investment strategy.

There are at least a dozen gurus who sell courses on how to buy houses that are underwater (i.e. more owned on them than they are worth). Those deals should--theoretically--be impossible, but if you dig into the details on how they work.... they do manage to channel money to the middle man. Who is to say there isn't a way to do something similar with the prices we're seeing today?

--184.4.xx.xx




Prices must come down! (by WMH [NC]) Posted on: Jan 15, 2024 9:16 AM
Message:

Did anyone see the 60 Minutes episode on all the empty commercial space in NYC? Incredible. Life-changing. --173.28.xx.xxx




Prices must come down! (by tryan [MA]) Posted on: Jan 15, 2024 9:37 AM
Message:

Well I said on other threads the last sale in the hood a young buck accepted a $400-500 monthly NEGATIVE cashflow and that's only mortgage , insurance and taxes. Maintenance, water, vacancy only make this worse.

Word from my realtor ... he's evicting the S8 grandma to get rents up. GOOD LUCK WITH THAT!! --198.168.xx.xxx




Prices must come down! (by tryan [MA]) Posted on: Jan 15, 2024 9:41 AM
Message:

This market has been in the "bigger fool syndrome" for a few years now. --198.168.xx.xxx




Prices must come down! (by NE [PA]) Posted on: Jan 15, 2024 9:44 AM
Message:

You canít really be surprised about inner cities emptying out. Anybody with any sense is already gone. After the extended draconian, lockdowns in libtard cities and business closures combined with riots going unchecked. Who would stay there? The bigger question is who benefits? --24.152.xxx.xx




Prices must come down! (by GKARL [PA]) Posted on: Jan 15, 2024 10:40 AM
Message:

WMH, I watched that report yesterday. Huge changes on the commercial real estate front in New York City as well as other cities. I think there's a lot of an opportunity in conversions. However if it were me I'd focus on conversions in smaller areas. Of course, I'm not operating with billions, but the same opportunity exists on a smaller scale. --209.122.xx.xxx




Prices must come down! (by Tony [NJ]) Posted on: Jan 15, 2024 11:00 AM
Message:

The selling price is the benchmark - not the asking price. --73.215.xxx.xx




Prices must come down! (by Oregon Woodsmoke [ID]) Posted on: Jan 15, 2024 12:04 PM
Message:

On the west coast, we buy for very small return, or even negative return and wait and end up making a lot of money. Different areas, real estate investing works differently.

Maybe that building will go to a California buyer. Someone who is new to investing in PA. Or someone who doesn't like the inflation and knows that real estate has always been a hedge against inflation.

8 units for $1.5 million seems fantastically cheap to me, living here in the west. It must look really a bargain to someone from California or Seattle. --76.178.xxx.xxx




Prices must come down! (by 6x6 [TN]) Posted on: Jan 15, 2024 1:08 PM
Message:

--73.190.xxx.xxx




Prices must come down! (by 6x6 [TN]) Posted on: Jan 15, 2024 1:09 PM
Message:

"What goes up must come down." --73.190.xxx.xxx




Prices must come down! (by Ed [CA]) Posted on: Jan 15, 2024 3:11 PM
Message:

They're worth buying for landlords who are doing a 1031 from a property they bought 25 years ago for pennies. --108.201.xx.xx




Prices must come down! (by S i d [MO]) Posted on: Jan 15, 2024 4:46 PM
Message:

Ed, great point! We Mid-Westerners don't get the same run up in values, and so we forget about resetting our depreciation schedules from scratch once our properties are fully depreciated. It can be done, just takes longer.

Buy a house for $50,000.... let it appreciate to $250,000 over 27.5 years. Now you're fully depreciation. So you 1031 exchange into another $250,000 property. Now magically you start the tax savings process all over again.

This is why I say depreciation is a TAX concept that has no basis in the real world.

--184.4.xx.xx




Prices must come down! (by Robert J [CA]) Posted on: Jan 15, 2024 4:54 PM
Message:

In my 45 years of being a real estate investor, etc., I've lived thru three complete up/down cycles. But the last few years have been a big "joke"! The stupid buying at crazy prices and paying high interest rates--only to loose money in the short run.

I've been on the side lines waiting to pick up deals, that failed to materialize.

When us investors buy something, we already have plans and backup plans. Here in Los Angeles it can take up to 1 year to successfully obtain a building/demo permit, and I'm a contractor knowing the in's and out's.

So I got permission before buying an old shack to tear it down and build units. I purchased the property for cash. Then pulled a demo permit. Only to be stopped midway thru the demolition phase. If I continued I'd be fined big time. So for the last 3 years the project just sat there. I put a chain link fence around the property with signs. Vandals cut holes in the fence and the homeless took up residency.

The City has send me violation after violation. Each time I to to get the Donuts brigade, know as the LAPD to do something but they won't. Housing says I have to find homes for these homeless. So I waited until the homeless burnt the place to the ground trying to make some heat.

I sent the City a bill for my lost interest I could have made on my money and for the clean up.. So when the GM asked what I was thinking, I said I tried to build units but the City stopped me in my tracks.....go figure. --47.155.xx.xxx




Prices must come down! (by Larry [MN]) Posted on: Jan 15, 2024 7:06 PM
Message:

If people are waiting for prices to come down they will likely be disappointed. Interest rates are expected to come down a bit. We will never see 2 and 3% rates again, but if we get to 5% that will cause another frenzy of buying. Lots of people waiting on the sidelines. --172.58.xx.x




Prices must come down! (by Hoosier [IN]) Posted on: Jan 16, 2024 2:38 AM
Message:

IMO the days of "safe" 5% returns on checking/savings accounts is slowly coming to an end. Savers have had a good run for the past 12-18 months with rates that high. I've been trying to find non-callable CDs that pay that high for long periods, but they are discounted rates when the call-protection feature is attached. Fortunately I bought some 3-5 year call protected CDs within the past year. --99.92.xxx.xxx




Prices must come down! (by zero [IN]) Posted on: Jan 16, 2024 7:25 AM
Message:

I dumped some money into an 8 month certificate at 5.5%. Has to sit for 60 days or I lose principle.

Put it in and then two weeks later bought the newest place.

Oops.

It's not a great return at all but better than leaving it in the savings account. --107.147.xx.xx




Prices must come down! (by GKARL [PA]) Posted on: Jan 16, 2024 10:02 AM
Message:

I have a high yield savings account that's paying me 4.5%. I jumped on the I bonds when they were above 9%. Current rate is about 5%. I think the higher rate levels are here to stay. What we perceive as higher are actually more normal. Even if mortgage rates drop to 5%, many of these places still won't cash flow at their asking prices and there are only so many 1031 buyers around. The only way the one property I was looking at makes sense, is if you could boost NOI and that was not possible. --209.122.xx.xxx




Prices must come down! (by NED [AL]) Posted on: Jan 16, 2024 6:22 PM
Message:

Exactly...the prices I'm seeing don't make sense even if I can borrow at 5%.

In light commercial / retail / office / small warehouse space stuff...I'm finding inventory, but high prices. --199.36.xxx.xxx




Prices must come down! (by Robert,OntarioCanada [ON]) Posted on: Jan 16, 2024 10:27 PM
Message:

If all utilities are separated out then the value goes up as operating costs drop. The long term there is shortage of rental housing where new rentals and converting existing structures to residential rentals is necessary. Look at population increase where housing is needed. --207.236.xxx.xxx




Prices must come down! (by Don [FL]) Posted on: Jan 17, 2024 7:26 AM
Message:

I am shocked at what people are paying for properties to earn a one or two percent return or even a negative return. Tbills are paying roughly 5% risk with with no effort. S&P was up 23% last year. Why go through the headache of managing a rental with better financial opportunities are available. --72.184.xxx.xx




Prices must come down! (by Robin [WI]) Posted on: Jan 17, 2024 8:53 AM
Message:

I was talking with my genius handyman about this yesterday. His opinion was that the smart people are seeing property as a hedge against currency collapse. If the dollar collapses, at least you'll still own something tangible.

Now THAT'S a scary thought! --104.230.xxx.xxx




Prices must come down! (by Ken [NY]) Posted on: Jan 17, 2024 9:26 AM
Message:

Robin,if that happened what good is a rental if the tenant cant pay? I would rather have guns,ammo,firewood,gas in that scenario --74.77.xx.xx




Prices must come down! (by Ray-N-Pa [PA]) Posted on: Jan 18, 2024 6:14 PM
Message:

a bit late to this string.

On the commercial side of the house, Cap Rates are slowly creeping up. In December alone, the average Cap Rate that sold was up eight basis points. Sales volume is down and inventory COMERCIALLY is slowly growing.

1031 volume is down significantly and people are getting more creative. I saw a Dollar General for sale with assumable 4.5% financing. I like seeing that approach - when the prices get to high, make money with the financing. Now I saw where the asking price was six figures too high, but the seller is looking to make a buck.

I am hoping folks in this group are looking for a creative way to make that extra dollar.

Do I think SFH will come crashing down around here? That is going to take a considerable amount of time based on the number of units that are getting listed. It is going to take well over a year for inventory on the residential side to get stuck in a log jam. I like GKarl, though am seeing some crazy MFH prices that simply have me scratching my head. --24.101.xxx.xxx



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