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Race to the bottom

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SteveO

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This article provides information and speculation on what I feel is coming down the road.


I have been waiting for this to materialize for a while.
 

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PizzaOnTheRoof

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I’m planning on buying my first investment/rental property within a few years.

What should I be aware of?
 
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SteveO

SteveO

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I’m planning on buying my first investment/rental property within a few years.

What should I be aware of?
For me it will be all about pricing and opportunity. I want to buy for x and sell for y. There will be a number of options, choices will need to be made and work will need to be done.
 
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SteveO

SteveO

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I’m planning on buying my first investment/rental property within a few years.

What should I be aware of?
When pricing drops, money from lenders will tighten up. Lending becomes sparse when demand is low. You may need to be creative. But this is part of the reason for process dropping.
 

Kak

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So how long does it take to reach bottom? How do you determine when that bottom is close enough to go for it?

Do you think the market is going to be flooded with bank owned property? Or are the banks going to work with the borrowers?

This is one of the few times times where I would wonder if the smart banks are better off just waiting on their borrower to get right, than to foreclose and own a bunch devalued assets.

Who better to ultimately own a home or apartment complex than the one who owes the most money. Even the good operators have gotten beat up through this and I am sure the banks know this. Will the act? I don’t know, they are very binary businesses with tight controls and rules. I have never been able to make a creative deal with a bank.
 

WabiSabi

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It boggles my mind how many people think their homes are an "investment".

Lawn upkeep, property tax, heating and cooling, plumbing repairs, disaster remediation, insurance, homeowner fees, not to mention all the shit you gotta buy to furnish the house. It's a constant drain on time and money.

This gem popped up in my feed today:

"Tee hee! just bought my dream home! It only took 5 years salary and tons of loans! How many likes can I get on this post guiz?" #investment

People buy in at the top of the market because they're told to, then act surprised when their lives turn to servitude.
 
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SteveO

SteveO

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It boggles my mind how many people think their homes are an "investment".

Lawn upkeep, property tax, heating and cooling, plumbing repairs, disaster remediation, insurance, homeowner fees, not to mention all the shit you gotta buy to furnish the house. It's a constant drain on time and money.

This gem popped up in my feed today:

"Tee hee! just bought my dream home! It only took 5 years salary and tons of loans! How many likes can I get on this post guiz?" #investment

People buy in at the top of the market because they're told to, then act surprised when their lives turn to servitude.
Not everyone does it but it is very possible to have your home be an investment. You just need to buy right.
 
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SteveO

SteveO

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So how long does it take to reach bottom? How do you determine when that bottom is close enough to go for it?

Do you think the market is going to be flooded with bank owned property? Or are the banks going to work with the borrowers?

This is one of the few times times where I would wonder if the smart banks are better off just waiting on their borrower to get right, than to foreclose and own a bunch devalued assets.

Who better to ultimately own a home or apartment complex than the one who owes the most money. Even the good operators have gotten beat up through this and I am sure the banks know this. Will the act? I don’t know, they are very binary businesses with tight controls and rules. I have never been able to make a creative deal with a bank.
I don't really follow, nor speculate on what will happen in the single family home market.

Banks don't always have the ability to use logic. They can be bound by regulations that drive their decisions. They have to maintain certain ratios that may require them to move loans off the books. The people that purchase these loans may work with people or not. It all depends on how they are looking to make their profits.

Houses, apartment buildings, and commercial all track differently. I'm watching commercial and apartments right now to see which will present the opportunities.

The bottom is not always obvious nor does it always matter. You just need to search out a deal. That deal may come before or after the bottom. It is harder to find a deal once the curve is climbing out of the other side.

Back in 2010, I was a great operator. That did not stop the financial institutions from foreclosing on me. They did not care about me or what I was capable of.
 

minivanman

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It boggles my mind how many people think their homes are an "investment".

Lawn upkeep, property tax, heating and cooling, plumbing repairs, disaster remediation, insurance, homeowner fees, not to mention all the shit you gotta buy to furnish the house. It's a constant drain on time and money.

This gem popped up in my feed today:

"Tee hee! just bought my dream home! It only took 5 years salary and tons of loans! How many likes can I get on this post guiz?" #investment

People buy in at the top of the market because they're told to, then act surprised when their lives turn to servitude.
Exactly. The wife text me last night and told me about the a/c might not be cooling. What will I do? Replace it. Why? Because I hate wasting time with crap on a house. Replace it...... not worry about it. Now I'm looking for another lawn guy..... 3 haven't showed up. Keep in mind, I never question their price..... they tell me the price, I tell them to do their thing. The big time lawn guys around here do not have small mowers so they do not come to my area to mow, we all have small lawns. Not worth their time. I need to call out an electrician because I think we have a short in the dryer plug. Need a new fence. Had a hail storm so we probably need to get the roof looked at. Driveway needs to be replaced because of tree roots (we had the tree cut down last month). Yeah baby.... living the dream.... NOT!.... this is why I did not want another house. I hate being in a house. I love apartments/ condo's/ what ever you want to call them. A/c problem? Call the office. Lawn? Office handles it. Roof? Office handles it. As soon as the grandson finishes school, we are outa here!
 

Johnny boy

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Now I'm looking for another lawn guy..... 3 haven't showed up. Keep in mind, I never question their price..... they tell me the price, I tell them to do their thing. The big time lawn guys around here do not have small mowers so they do not come to my area to mow, we all have small lawns. Not worth their time.
Why we're doing so well. The competition is garbage. Huge white space for a scalable company to come in and gobble up all the available work and have large margins.
 

minivanman

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Yep. That's what I did with every lawn service I started, and then sold them.
 

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