Real Estate Investing

[freedom.project]

I am currently looking to get started in Real Estate Investing.

I am just kinda curious about how many people in here invest. And why or why not you do it?

[BusinessAdviser]

There is only so much real estate to go around. As the population grows and the amount stays the same, it is common sense that, in the long run, land HAS to appreciate. (There are exceptions and arguments against this idea, but it provides a basic understanding of why real estate is a good investment in general.)

[rogercbryan]

My buddy's dad bought his first house at 17 and now has over 20. He always likes to say, "The only thing they are not making any more of is land". If you can buy a piece of property right you'll see good returns. Remember the profit is in the buy not in the sale.

[kiddoso]

Watch out for timing though. Right now real estate values in a lot of markets are seeing a TEMPORARY peak (although real estate values in general rise in the long run). There are always deals out there, whatever the condition of the market is, just that right now they are more difficult to find, and required more experience to spot.

[BusinessAdviser]

Watch out for timing though. Right now real estate values in a lot of markets are seeing a TEMPORARY peak (although real estate values in general rise in the long run). There are always deals out there, whatever the condition of the market is, just that right now they are more difficult to find, and required more experience to spot.

You're right that there are always deals out there, though they are more difficult to find right now. However, I think you're a little off base with your comment that value are at a peak right now, as we have already seen the peak and values have since slid a bit. Either way, as Roger said, the profit is in the buy, not the sell.

[vrottebe]

Real estate investing can be a good and bad thing right now. As housing markets depreciate you can find a great deal on a purchase for your investment portfolio but on another hand the banking industry is so tight right now unless you can verify income ie Full Doc loans and have down payments to begin the bank most likely will deny your loans.

Are you looking to do 100% financing?
Are you looking to try and do quick loans (No Doc, Stated)

If you answer yes to these 2 questions then you will be shot down every single time. Also remember the headache that comes with investing in real estate, I have had my share of court time evicting tennants and repair bills in excess of $10,000.

I wish you all the luck in the world but be careful. I know invest in beat up old homes in lower income neighborhoods which I turn into section 8 properties. Government sends me a check each month but at the same time there is tons of paperwork and headaches with that as well, but what business doesn't have headaches these days. I per say but run down homes either from people waiting to try and move out because of neighborhood status or financial or from someone I know at the sheriffs office who gives me a heads up before homes go up for auction.

My last property was purchased for $3500, I invested $15,000 to rebuild it and sold for $67,000. That is example of my last flip. I keep certain properties or I flip them. Me and my father have been doing this for over 10 years and have done well. The days of buying the better homes and loans etc... is way past us. But to each is own! Need any info PM me...

[Lance_Best]

I help people find prospects for investing. My access to credit data can isolate prospects by finding people who:

Own their home
Have high revolving debt
Have low credit scores
Have low income
Have low loan to value

These prospects can be contacted with home offers via phone or marketed to by email campaign.

If you find these prospects and have hard money lenders/cash heavy investors you can start a very healthy business. However in this market you need to purchase very far below value to ensure a good return!

If I can help you out with data, let me know!

[jandmsolution]

He already has the real estate. He doesn't need help finding that. He is looking to investment.

[kiddoso]

Points taken Jonathan. I should have been clearer on my comment. It seems that commercial real estate values in many markets are at peak right now since the fundamentals are still holding up, however it won't be a surprise if they start coming down in the near future. Residential real estate values though, have indeed seen their peak and have started to come down.

[BusinessAdviser]

Points taken Jonathan. I should have been clearer on my comment. It seems that commercial real estate values in many markets are at peak right now since the fundamentals are still holding up, however it won't be a surprise if they start coming down in the near future. Residential real estate values though, have indeed seen their peak and have started to come down.

My mistaken understanding as well.

You are quite right that residential real estate, to which I thought you were referring earlier, has hit it's peak and is now headed back down. The result of this is that good deals are very hard to find, even when dealing with foreclosures. Why? First, most houses being foreclosed do not have much equity built up in them. When you combine this with the fact that their values have dropped, the result is a scarcity of money-making opportunities out there. My advice: Purchase properties that will provide sufficient rental income to cover all expenses (including mortgage, taxes, upkeep, insurance, etc.), wait for the market to slowly rebound (possibly a year or two from now), and THEN spend some money to fix it up and "flip" it. I guess I would call this strategy a "tenant-financed extended flip." Maybe it'll catch on!

With regard to commercial real estate, I don't know that we have even reached a peak yet. Although commercial properties are still going strong, especially when compared to residentials, I haven't seen any evidence strongly indicating a turn in the market. However, analyses of data are all relative to the analyzer.

[BusinessAdviser]

On what do you base your identification of "undervalued properties?" What are your criteria for determining whether a property is "undervalued" or not?

[Gaulkin]

On what do you base your identification of "undervalued properties?" What are your criteria for determining whether a property is "undervalued" or not?

sold comps, active comps, and many more factors

[kiddoso]

I am a little confused by the value determination you suggested. Why would the value of a property be tied to the loan amount in any way? The value shouldn't have anything to do with the form of financing should it?

[BusinessAdviser]

Are you trying to say i dont know what im talking about?...

Value is determined by LTV or loan to value and most buyers are looking for around 70-55%.

Yes, that is EXACTLY what I am trying to say.

But easy there, champ. Let's stop being defensive and take a look at things:

I asked:

"On what do you base your identification of 'undervalued properties?' What are your criteria for determining whether a property is 'undervalued' or not?"

Essentially, I asked the same question in two different forms:

"How do you determine whether or not a property is undervalued?"

Value is subjective term. A number of different values can be placed on a single thing, and all of these different values can be justified based on the criteria which the appraisers (general term for someone estimating the value of something) use to determine the value.

For example, in valuing a business for purchase, you might use an asset valuation approach (business assets less business liabilities) while I might use a discounted cash flow approach (estimating cash flow out into the future and discounting it back to determine the present value of the cash flows). We will likely arrive at different values, but neither of these is "right" and neither of these is "wrong" - they are different.

Now, regardless of which approach I may use to determine the value of the business, I better damn well be able to support my valuation. Hence, if I tell my client that I valued the business and that it is priced attractively for purchase, I better be ready to explain the value that I reached and how I arrived at that value.

And if my client were to not inquire as to my basis for making such a recommendation, I don't know that I would want to be working for such in unintelligent, naive client.

You are now in the same situation. You are recommending that others purchase a property based on your valuation of the property and comparison to the asking price. I would question the sanity of any person who acts on your recommendations without knowing the basis for your valuation of the properties.

And for future reference, value is NOT determined by a loan-to-value ratio. Value is something that you have to know IN ORDER TO DETERMINE a loan-to-value ratio. You are WAY off base, as in on another planet.

Moreover, based on your response of "Are you trying to say i dont know what im talking about?" to my simple question regarding how you value your properties, I would go so far as to advise that no YE member use your services. You are unprofessional, you lack a reliable basis for valuing properties, and your recommendations are likely garbage. (I added "likely" only because even a blind squirrel finds a nut every once in a while.)

Now, take your best personal shot back at me. That's fine, I don't care. I will be the first to stand up and take the best that you have to protect any member here from making a huge mistake by doing business with you or even relying on your recommendations.

If instead of taking a shot at me for pointing out your aggresively-defensive attitude and inability to support your valuations and recommendation, you offer answers to the very simple and reasonable questions that I posed, I will gladly offer a contrary opinion to my observations here (provided you DO have a rational basis for your valuations and recommendations). But if you are unable to do so, politely leave and try to pull the wool over the eyes of people in another forum. Good day, sir.

[BusinessAdviser]

I am a little confused by the value determination you suggested. Why would the value of a property be tied to the loan amount in any way? The value shouldn't have anything to do with the form of financing should it?

You've got it, kiddoso. This guy is full of it. He is recommending "undervalued" properties but has no clue how to value a property. How can you possibly determine whether a property is undervalued if you don't even know what its value IS?! His recommendations are garbage, and I suggest taking your money AND TIME and running in the opposite direction.