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Thread: Are the property owners from this site in trouble?

  1. #1
    Sid23 is offline
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    Default Are the property owners from this site in trouble?

    Things around the board have been pretty quiet lately as far as real estate goes. I'm wondering if some of the most successful people on this site who own substantial amounts of property (SteveO, RussH, GLC56, etc) are having major issues with their holdings? I'm certainly not saying this to criticize or ask anyone to share personal details, but I think we all hold those people to such high regard on this site and could learn a lot from how they are dealing with the current crisis. Especially if it is hitting home on their apartments, B&Bs, etc. Again, just a thought and certainly no need to respond if they don't want to.

    Best,
    Sid23
    Faith is taking the first step even when you don't see the whole staircase.
    -Martin Luther King, Jr

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    Dhappy is offline
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    Default Re: Are the property owners from this site in trouble?

    I'm not one of the big guys you posted about, but in my neck of the woods this small guy is doing fine. It takes a little longer to rent a place and rents have came down some. I Have been full for some time now,so I'm just out looking for the next deal,fishing and enjoying my kids..

  3. #3
    hakrjak is offline
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    Default Re: Are the property owners from this site in trouble?

    In the house flipping business -- I went from flying high to almost going completely broke and losing everything on 1 deal this year. When you are skating on thin ice already, 1 unusually long hold can break you. It REALLY didn't help that I ended up having to pay for my own wedding (Thanks to our wonderful families..... Who can suck it....) -- and that I got blindsided with $10k of attorney fees for my child custody case, which hit as soon as my crazy ex found out I was getting married. It's literally funny how bad life will kick you when you are down sometimes! I was laughing hysterically through all of this, because if I didn't -- I would have been sobbing... haha

    I have a sale that is supposed to close next week that should hopefully allow me to pay everything off, and basically start over with almost nothing.... Which is better than the alternative I guess (Declare bankruptcy and completely go out of business for 7 years). Hey look on the bright side -- I'm now one of the most skilled home remodelers in Colorado Springs, with almost no real competition... The only problem is -- I don't have any money, and am going to have to take out hard money LOAN SHARK money at 12% and 5% up front to rebuild my business.... Just Great! I don't think we're ever going to get rich struggling to make $10k a house every 6 months though.... Time to regroup!

    My rentals are still cashflowing pretty well, and I haven't had a vacancy in a couple years now (Knocking on wood)... So atleast that side is working, even though it's not bringing in that much in the way of spendable income each month. (I have all of that cashflow siphoning into an account where it stays in case of emergency vacancies, so I don't get broken if I suddenly start having to pay $2k a month in mortgages).

    Cheers,

    - Hakrjak
    Shop 'til you drop - DEAD! -- http://www.GrampsGifts.com

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    acb123 is offline
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    Default Re: Are the property owners from this site in trouble?

    Yikes Hakrjak,

    Sucks to be you right now but it sounds like you've got the proper mindset/attitude to get you through this speed bump.

    Markets are cyclical and hopefully things will start trending up soon for you.

    God Bless.

  5. #5
    MJ DeMarco is offline
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    Default Re: Are the property owners from this site in trouble?

    One of my friend's parents were lifelong real estate investors -- I think at their peak they owned 33 SF rentals. Now they are at near bankruptcy and moved out of their $2 million dollar home into a $150K starter. Rents are depressed and their units wont rent for the loan amounts ... and of course, they can't sell them. They're F*CKED.

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    Sid23 is offline
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    Default Re: Are the property owners from this site in trouble?

    The story that MJ tells scares the crap out of me. What I don't understand is, though, why some investors are facing that horrible reality, while others report no problems.

    What are the two groups doing differently? Or is it just luck of the draw?

    One of my biggest fears is growing a multimillion dollar portfolio and then losing it (like the couple above) when I'm essentially too old to recover. They were obviously smart enough to build a massive portfolio...where did they go wrong? Lack of diversification once they had millions?
    Faith is taking the first step even when you don't see the whole staircase.
    -Martin Luther King, Jr

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    Runum is online now
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    Default Re: Are the property owners from this site in trouble?

    I'm not one of the big dogs you referred to but I'm not having any real problems. Vacancies are lasting longer and rents have dropped. The advantage I have is about half of my properties are paid off. The cash flow from them easily makes up for any other properties that are barely making it. I am looking to buy more properties but not looking to finance any.

  8. #8
    Dhappy is offline
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    Default Re: Are the property owners from this site in trouble?

    Having all my rentals free and clear makes a big difference in this market. If I had listened to all the real estate pros and used leverage I would be singing a different tune right now.

    Sorry to hear that,I feel your pain and know you can pull it out.

  9. #9
    hatterasguy is offline
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    Default Re: Are the property owners from this site in trouble?

    I'm doing fine, and the investors I know and deal with are doing well. Actualy this has been a pretty good year for all of them. Lots of good deals to buy, money is cheap, and knock on wood rentals and spec houses are holding their own.


    The ones that are SOL are the guys that were over leveraged. Those are the ones that always go belly up when rents drop and times get tough.
    "Starvation is God's way of punishing those who have no faith in Capitalism."
    R. Cobb

  10. #10
    hatterasguy is offline
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    Default Re: Are the property owners from this site in trouble?

    Quote Originally Posted by Sid23 View Post
    The story that MJ tells scares the crap out of me. What I don't understand is, though, why some investors are facing that horrible reality, while others report no problems.

    What are the two groups doing differently? Or is it just luck of the draw?

    One of my biggest fears is growing a multimillion dollar portfolio and then losing it (like the couple above) when I'm essentially too old to recover. They were obviously smart enough to build a massive portfolio...where did they go wrong? Lack of diversification once they had millions?

    It all comes down to margins, leverage, and experiance.

    Those that have a reasonable level of debt, do well. Those that have to much go under.
    "Starvation is God's way of punishing those who have no faith in Capitalism."
    R. Cobb

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    Cat Man Du is offline
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    Default Re: Are the property owners from this site in trouble?

    Quote Originally Posted by PhxMJ View Post
    One of my friend's parents were lifelong real estate investors -- I think at their peak they owned 33 SF rentals. Now they are at near bankruptcy and moved out of their $2 million dollar home into a $150K starter. Rents are depressed and their units wont rent for the loan amounts ... and of course, they can't sell them. They're F*CKED.
    HELP is on the way !!!

    Wellll Shut my mouth !!! Finally HELP for the little guy !!

    Fed housing program encourages short sales

    WASHINGTON – Dec. 1, 2009 – The Obama Administration, through the Treasury Department, announced new housing guidelines yesterday. While a series of announcements highlighted different programs, the National Association of Realtors (NAR) focused on changes that will make it easier for real estate associates to deal with short sales and “deeds in lieu of foreclosure.”

    The program’s official name is the Home Affordable Foreclosure Alternatives Program (HAFA), and it’s part of an existing initiative, the Home Affordable Modification Program (HAMP). HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which cover over half of all U.S. mortgages; however, Fannie and Freddie will issue their own versions of HAFA in coming weeks.


    While HAFA’s goal is simple – increase the number of short sales and “deeds in lieu of foreclosure” by simplifying the process – the rules are complex, and it comes with 43 pages of guidelines and forms. Among other things, HAFA:

    • Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

    • Prohibits servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).

    • Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed.)
    • Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors.

    The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on Dec. 31, 2012.
    For more information, read the Nov. 30 HAMP news release: "javascript:HandleLink('cpe_0_0','CPNEWWIN:NewWind ow^top=10,left=10,width=500,height=400,toolbar=1,l ocation=1,directories=0,status=1,menubar=1,scrollb ars=1,resizable=1@https://www.hmpadmin.com/portal/docs/news/hampupdate113009.pdf');"

  12. #12
    MonTexan is offline
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    Default Re: Are the property owners from this site in trouble?

    You want to know what causes the downfall of almost every business that fails - real estate or otherwise?

    *CASH FLOW PROBLEMS*

    Speculating on appreciation, extensive over-leveraging, and chasing a quick buck catches up with people in times like these. Buying solid rental property that cash flows well (and I'm not talking just about rent minus mortgage payment!) is generally a great recipe for building wealth over time.

    But believe me, someone with 33 rent houses shouldn't be living in a $2MM house and driving a Rolls. Let's say they NET $400 per month per door - this would be excellent and is probably unlikely. $400 x 33 x 12 = $158,400 per year. That ain't rich and won't afford you an MTV Crib.

    Unless of course you live in Cali, take out a 50 year adjustable rate, negative amortizing mortgage with zero down...then it might. For a while.

    When the vacancies creep up, rents soften a bit, and they actually have to start paying interest on their Crib, CASH FLOW becomes a problem and it's back to the burbs...
    "The harder I work, the luckier I get." - Ben Franklin

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    Cat Man Du is offline
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    Default Re: Are the property owners from this site in trouble?

    Quote Originally Posted by Montexan View Post
    You want to know what causes the downfall of almost every business that fails - real estate or otherwise?

    *CASH FLOW PROBLEMS*

    Speculating on appreciation, extensive over-leveraging, and chasing a quick buck catches up with people in times like these. Buying solid rental property that cash flows well (and I'm not talking just about rent minus mortgage payment!) is generally a great recipe for building wealth over time.

    But believe me, someone with 33 rent houses shouldn't be living in a $2MM house and driving a Rolls. Let's say they NET $400 per month per door - this would be excellent and is probably unlikely. $400 x 33 x 12 = $158,400 per year. That ain't rich and won't afford you an MTV Crib.

    Unless of course you live in Cali, take out a 50 year adjustable rate, negative amortizing mortgage with zero down...then it might. For a while.

    When the vacancies creep up, rents soften a bit, and they actually have to start paying interest on their Crib, CASH FLOW becomes a problem and it's back to the burbs...
    $5.00 millionaires !

  14. #14
    hakrjak is offline
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    Default Re: Are the property owners from this site in trouble?

    Rentals still seem like a solid way to make your living.... But if you are renting houses in ridiculous speculative markets like San Francisco -- You are going to live by the bubble, and die by the bubble!

    Become a slumlord in Omaha, or San Antonio, or Albuquerque, or gasp Colorado Springs

    Step outside of the bubble.

    Thanks for the encouragement folks

    I'm really hoping I'm able to rebuild my home flipping business in 2010 after my wife completes her PHD internship. I've decided to shut it down until then, because I'm supporting both of us, the kids, and the crazy ex all on a crappy W2 salary... Atleast until she can get a post-doc job and start raking in the cash. It would be ridiculous for me to over extend myself when we're barely scraping by. I simply don't have the cash to do it. Very sad about having to take this break, because I believe it's something I was getting very good at. It's always hard to walk away from something that you love, and you are passionate about!



    Cheers,

    - Hakrjak
    Shop 'til you drop - DEAD! -- http://www.GrampsGifts.com

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    kwerner is offline
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    Default Re: Are the property owners from this site in trouble?

    Quote Originally Posted by hakrjak View Post

    I'm really hoping I'm able to rebuild my home flipping business in 2010...

    Hak -

    If a schmuck like Trump can go to the brink of disaster and make a comeback, you certainly can too.

    Here's to wishing you a prosperous 2010
    "If you want to be rich, add VALUE to people's lives."
    - Brian Sher

  16. #16
    Sid23 is offline
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    Default Re: Are the property owners from this site in trouble?

    Quote Originally Posted by hakrjak View Post
    Rentals still seem like a solid way to make your living.... But if you are renting houses in ridiculous speculative markets like San Francisco -- You are going to live by the bubble, and die by the bubble!

    Become a slumlord in Omaha, or San Antonio, or Albuquerque, or gasp Colorado Springs

    Step outside of the bubble.
    Actually, San Francisco wasn't in a bubble. Some of the far surrounding burbs, yes. But the city itself, no. It, like Manhattan, holds its value extremely well, even in these times.

    Southern California, San Diego, Orange County and Central Valley = BUBBLE.
    Faith is taking the first step even when you don't see the whole staircase.
    -Martin Luther King, Jr

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    MonTexan is offline
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    Default Re: Are the property owners from this site in trouble?

    Actually, San Francisco wasn't in a bubble. Some of the far surrounding burbs, yes. But the city itself, no. It, like Manhattan, holds its value extremely well, even in these times.
    This may be true, but I bet you'd be hard-pressed to find a cash-flowing single family rental house to buy in San Fran.
    "The harder I work, the luckier I get." - Ben Franklin

  18. #18
    hakrjak is offline
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    Default Re: Are the property owners from this site in trouble?

    San Francisco has been insanely inflated for the last 20+ years... You don't think SF is a bubble town? Prices skyrocketted there during the dot-com boom, and have been on the decline ever since.

    Like Montexan indicated above... If you can't buy cashflowing rentals there, then that's a clear sign that Real Estate is still way too overvalued in an area.

    - Hakrjak
    Shop 'til you drop - DEAD! -- http://www.GrampsGifts.com

  19. #19
    Sid23 is offline
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    Default Re: Are the property owners from this site in trouble?

    Just because you can't find a cash flowing rental doesn't mean it is a bubble. There are several areas of the US where you can't find a cashflowing rental. Incidentially, in Miami and Orange County, the EPICENTERS of the bubble, you can find plenty today.
    Faith is taking the first step even when you don't see the whole staircase.
    -Martin Luther King, Jr

  20. #20
    Russ H is offline
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    Default Re: Are the property owners from this site in trouble?

    Quote Originally Posted by hakrjak View Post
    San Francisco has been insanely inflated for the last 20+ years... You don't think SF is a bubble town? Prices skyrocketted there during the dot-com boom, and have been on the decline ever since.

    Like Montexan indicated above... If you can't buy cashflowing rentals there, then that's a clear sign that Real Estate is still way too overvalued in an area.

    - Hakrjak
    Um, have to disagree with ya there, Hak.

    RE markets are different all over the world. Some are better for rentals. Others are better for fix/flips.

    The CA market is typically better for the latter.

    Look at home/building prices in Manhattan. Or Hong Kong. Tokyo.

    And of the world's "International Cities" (that includes San Francisco).

    Nearly all of those places have murderous RE prices for residential type RE.

    Doesn't mean they're in a bubble.

    But it does mean the prices shift up and down more.

    But even at their lowest, they're still sucky markets for renting, unless you come in w/a whole lotta cash.

    At least that's what I've seen. Obviously, people still buy these as RE investors. So there is clearly something here I don't know.

    -Russ H.
    Beer & Pancakes 2012-- The EVENT

    "Control everything. Own nothing." -John D. Rockefeller

    "Don't confuse motion with action" -Ernest Hemingway

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