Charles Patterson, Property Management Services
Dear Readers:
Having valiantly controlled my gag reflex after swallowing, in the name of research, this saccharine PR bloggage about a Trumanesque Pleasantville , Florida blog (give me a moment here, I just threw up a little in my mouth again from the off after taste), I am now adding not just a few grains but a whole shaker's worth of iodized rock salt and a bit of freshly ground black pepper.
OK I'll admit it's true, there seem to be some indicators that it may be a better time to buy real estate now than, say, during the Black Abyss Days of mid-2008. Trying to be fair here, guys.
So let's cede a few points to the apple-cheeked Pleasantville optimist exhorting us to "buy Florida Real Estate now":
So sales are up a titch (17% supposedly), mortgage rates are down in the 5's, and it's nice to get up to $8 large off 2009 taxes for those hens teeth buyers, namely neo-credit worthy first time home buyers - but golly gee whiz I just have trouble with the Gov's pronouncement: "It does not get much better than this. You don't want to wait. Prices have gotten as low as they can. Now is the time, while the deals still exist." Trust me, the deals will continue to exist.
Realtor quotes that "savvy investors have returned to our market. But we're also seeing a lot of young families, who are buying a home to settle down and establish roots in the community. That's a sign that people aren't leaving the area, aren't leaving Florida" Segued by the Gov's: "of course they are (establishing roots) -- it's Florida. Why would they go anywhere else?" sound like self-serving pap or a tree house full of scared children singing in the dark. Actually, the Gov was saying thanks to them for keeping on in a losing business.
But the cheery homilies being bandied about are not entirely accurate. People are leaving Florida for the Carolinas and elsewhere, and savvy investors are still trying to dump their depreciated properties left and right. And is this the bottom of the market? In a Pig's Eye.
Where do I start. How about here: How can one support a stance of level or rising property values with foreclosures continuing unabated, more and more homes in REO buckets of hapless lenders, the vacant property count increasing like shrunken heads on a medicine man's loin cloth and deteriorating neighborhoods becoming unsafe and unattractive? The grim hedge fund reapers are scraping devalued properties into their distressed asset portfolios by the hundreds of millions.
Everyone's financial stress is exacerbated by credit companies' tactics of raising interest rates into the high 20% range after one late payment or an (allowed) over-the-limit purchase paired with dropping unused credit limits down to actual balances at the slightest provocation. The scrutiny of mortgage applicants could not be greater. The bail-out trillions paid to the banks disappear like water in sand --- no "trickle down" effect going on.
True, not every neighborhood is the same - and maybe this is an issue of geographic pockets; some with rising and some with dropping values. But the Florida market is not sustained by pockets like a wheel of Swiss cheese, some parts with cheese and some with just bad smelling air. The golden, creamy center of the real estate market must be whole and sweet to merit a call of stable or rising home values. Well enough of the food-related metaphors. You want to know if I recommend buying real estate.
Er -- generally, no. With some exceptions. Here they are, in a nutshell:
1) You buy 40% or more under market value. And yes, the property can have some work to be done. Nothing terminal, mind you. If the market drops some more, you have bought at tomorrow's value. With a cushion.
2) You do not need to make a chunk of change quickly from flips. You are OK with living in the home or renting it out for a couple of years. This isn't a seller's market.
Yes some people claim to be flipping and making money. I do not know of any that are doing really well with this. I do know investors that are trying to sell older inventory and flips, but it's not easy going since buyers are not easy to qualify.
3) You understand that in exchange for the quality of life home ownership grants you, you may be in a home that does not appreciate and possibly depreciates and you may pay more overall than for a rental of comparable amenities. But you will not have a landlord, you can have your pets, you can live with your partner of choice in peace, and you can get thirty year fixed rate mortgage money at the lowest rates in decades -- if you qualify under the new loan standards, that is.
4) Hail, Intrepid Investor, I bow to your valor. Cash is king and if you can fling around some of it you will find amazing deals. Yes do read number 2 above.
5) If you can buy discounted equity portfolios or form an investor team to do so, do so. I would if I could. Maybe I will. Want to participate? How does 30 cents on the dollar of property value sound?
6) Nothing wrong with lease options or (gift) wrap financing by sellers. If it drops too much all you lose is your option money. Keep it low. Meanwhile you will have a nice place to live. I would expect there are some homes one can pick up for a couple thousand in walkway funds. Do it five times with a $2,000 bill and you have five investment homes. Play the rental game right and you might just have a cash flow. Risky but doable.
I am out of steam and apparently not riding along on the "this is the bottom -- buy buy buy" band wagon. I do want to mention that I can help you select properties that will fit like the proverbial camel through the eye of this particular needle. I must further confess to picking off some properties in the $40,000 range that are renting nicely for $1,100 per month. Value in the low $100's, cash flow $400.00-plus per month. I find them almost every day. I want to buy more. So am I saying it's time to buy or not? Charlo speaks with forked tongue?
Yes I suppose, I am saying to buy -- if you do it like this.
But buy at market? You must be kidding.
More to come.....
No comments:
Post a Comment