Update - "Its been a month"

I know I have seriously lacked in my responsibilities updating this blog, but I do have a good excuse. As some of you may know I work for a very large multifamily management company. I have recently shifted gears with them and have assumed responsibility of over 2000 units. Naturally, this has consumed a majority of my time and has left little spare time. I LOVE what I do very much and it comes very easy to me, so I am not complaining. I just have a passion for this stuff and leading people. Nonetheless, any spare time I have had has been spent looking at houses (Saturday mornings) and spending time with my family.

I continue to make offers, although not as many as I used to. I don't write about each and every offer since almost all are not accepted. The reason I am not making as many offers as I used to is because the market here is shifting into a buyers market and I really feel like there are going to be some great deals down the road. If you think I was picky before, well then you have not seen anything yet. Sure, there are a lot of houses out there and yes, I could make money on them. But, if it is going to be worth my time I have to stick to my rules.

DeKalb County House a "No Go"

Don't you just love banks. After submitting our short sale paperwork, having the rep tell us that they were taking it directly to the supervisor due to the short time frame, they came back and said, "All short sale paperwork must be submitted at least 30 days before the schedule foreclosure auction date." Huh? Well thanks a lot for telling us that when we started all this, you could have saved us the time. I really think that was just their way of politely saying no, but since when did banks become polite. Anyway, that's the way it goes and I am off chasing more deals. Of course I am going to follow up on this house to see if it sold at the steps and make an offer it didn't. I don't go away to easily.

Happy 4th of July

I just wanted to wish everyone a happy 4th of July and say thank you to everyone who is currently serving, has served (myself included), and has sacraficed for this wonderful country.
GOD BLESS AMERICA!

Good News for the Rental Market

Yesterday Witten Advisors published their 1Q report for their clients regarding the national apartment market and I have to say the news is good. Rental demand is up and 2006 - 2009 is expected to be the best ever for the apartment industry. One point of note is the rent vs. buy spread, which I have written about before. This is the spread between median apartment rent and a median house payment (P&I). Today that spread is almost double. Which means a payment on a median price house is almost double what it would cost you to rent an apartment. Thus, driving more people to rent vs. buy. The last time in history this occurred was back the 80's when we saw double digit mortgage rates. Furthermore, the share of all consumer's income to afford a house payment has grown to 28%, while a rental payment only requires 15% of their income. Nonetheless, the homeownership rate is declining and is in negative territory. Again, the last time this happened was in the 80's.

Employment numbers are strong, but expected to weaken slightly through 2008 then rebound in 2009. Largest numbers of people are moving to Florida, Georgia, Texas and Arizona. Home price appreciation is slowing, but still appreciating and Seattle, Dallas & Houston are among some metros that realized an increase from 4Q 2005 to 1Q 2006.

What does this mean? Along with an expected 4% rent growth, I am glad I am in this for the longterm. If I continue to buy the house right and provide a good quality place to live, I should not have any difficulty in maintaining 100% occupancy and getting a little cashflow.

"See a lot of houses, make a lot of offers."

The great John Adams (not the former president) taught me this one. He is what I consider the father of real estate investing here in Atlanta. He said, "In order to be successful in this business you have to do two things. See a lot of houses and make a lot of offers." Although I do not write about it every week, I do see a lot of houses and make a lot of offers. I usually spend the week identifying properties that fit my criteria and every Saturday morning I am out looking at property. Then, on Monday, I am making offers (if I haven't done so already).

This weekend wasn't any different. I loaded up my 2 year old son and off we went. He loves looking at houses. This week I had limited my search results to only two properties. The first house we saw was an in-town property that had already been rehabbed. This house will be going into foreclosure in August and accoding ONLY to the listing price had considerable equity. Unfortunately, when I pulled up I didn't even want to get out of the truck. I knew from the outside that this house was not going to be worth what they wanted, but I had already set an appointment to see it. The problem? They had taken too many short cuts and did not pay attention to detail. Unfortunately, if I were to buy this house, I would have to tear out all of their improvements and start over. I really feel sorry for these investors because they already owe more than they are asking for it and are going to take a bath on this one.

The second house was a home run. It is located in DeKalb County and like the first one, needs very little rehab. This one only needs the grass cut, new carpet, and appliances (plus damages outlined below). Although, I will probably put on a new roof just to be safe. (A new roof is really not that expensive considering the long term benefit and the great curb appeal it will add to the property) This is scheduled for auction on July 5th. We will attempt a short sale with the bank, so cross your fingers. The sad part is kids have already broke into the property. Half the back door was missing and the window frame around the side window had been torn off. It is a nice neighborhood (less the vandalism to this house) and is right across the street from an elementary school.

The offer is at 64% of the ARV. Therefore, I should be able to buy the house, fix it up, 80% refinance, cash out my original investment plus about $5k, leaving $30k in equity and cashflow $200 a month in rent. Not too bad :))

Stick that in your pipe and smoke it!!!!!!

Climbing interest rates and cooling speculative demand is putting pressure on the housing boom, but as long as jobs continue to be created and builders curb production, the sector will experience a soft landing, according to Harvard's Joint Center for Housing Studies.

"Strong household growth, combined with record incomes and wealth, will lift housing investments to new highs next decade," Eric Belsky, executive director of the center, said in the news release.

Two quotes from an article published on the RealEstateJournal.com http://www.realestatejournal.com/buysell/markettrends/20060615-hoak.html

I love the nay sayers who have posted comments on other real estate investor's blogs. You can hear the jealousy in their comments. They are mad at the world or disgruntled because life just isn't fair. I ask why would someone find it compelling to post a negative comment to someone's blog slamming their success? These are probably the same people who expect the government to take care of them.

The way I see it is if you are investing in real estate for the long term you will do just fine. Any person who bought a property just in the hopes that it is going up 20% next year and thought they were going to sell it aren't investors. I call those people speculators. I know investors who have been buying and selling houses since the seventies. They survived unheard of interest rates, gas shortage, and three economy collapses. Today they are very wealthy and doing just fine. Why? Well I guess all you nay sayers will just have to sit back and watch to find out as I continue to buy houses below market value, fix them up, and hang on to them for LONG TERM appreciation. Oh, and I only assume an average appreciation of 5% per year in my models.

YUP! HUD Foreclosure

Well, it seems as though I was correct. My agent has confirmed that the house had been foreclosed on in April. It is a HUD foreclosure, which explains why it hasn't been locked up yet. It usually takes them about two months before someone makes it out to winterize the house. I'm not sure what they are going to list it for, but I can tell you that it will be too expensive for me.

Since my agent feels real real bad and very embarrassed, she is giving me first peak at the next few deals to make up for her mistake. I am going to look at a house that she is going to list this weekend. It is supposed to be foreclosed on in August. I have until Saturday afternoon before it hits the MLS.

Note to self: Check the tax record before I look at the house. LOL