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CDMA ENG
10 years ago

Thank you sir.
CE

Thank you sir.

CE

gwideman
10 years ago

Yeah, thanks from me too.
Yeah, thanks from me too. Confirms a suspicion I had.

afx114
10 years ago

Rumor has it that
Rumor has it that urbanrealtor is aging a thick, dark, frothy bottle of Santorum Stout in his cellar. If I were you I’d require that as payment for next month’s charts.

Anonymous
Anonymous
10 years ago

The percentage of Active
The percentage of Active Inventory that is investor-owned and purchased since 2009 would be a useful indicator of overall investor sentiment. Lots of investors became property managers in the last few years. If price appreciation is slowing or even stagnant, is now the time to start booking profits?

an
an
10 years ago
Reply to  Anonymous

mwseverson wrote:The
[quote=mwseverson]The percentage of Active Inventory that is investor-owned and purchased since 2009 would be a useful indicator of overall investor sentiment. Lots of investors became property managers in the last few years. If price appreciation is slowing or even stagnant, is now the time to start booking profits?[/quote]
It depends on why they bought those houses to start with. If they bought to flip in a couple/few years, then probably. If they bought it as a long term rental and are raking in the rents with positive cash flow, probably not.

spdrun
10 years ago
Reply to  an

This assumes that they’re
This assumes that they’re buying for one or the other, and not both. I wouldn’t want to own an underwater property that’s raking in rents, for example, just seems like bad juju.

an
an
10 years ago
Reply to  spdrun

spdrun wrote:This assumes
[quote=spdrun]This assumes that they’re buying for one or the other, and not both. I wouldn’t want to own an underwater property that’s raking in rents, for example, just seems like bad juju.[/quote]But it’s not underwater if you bought in 2009-2011.

However, even if you are underwater, if I’m getting cap rate of 10%+, I probably wouldn’t sell. I would probably buy more. It’s impossible to time things perfectly.

spdrun
10 years ago
Reply to  an

All I’m saying is that if I
All I’m saying is that if I felt prices would fall in future (perhaps with interest rates) and if I felt the risk of being underwater existed, I’d strongly consider selling.

It’s always some combination of rental income and appreciation (or depreciation).

Anonymous
Anonymous
10 years ago
Reply to  an

My question was whether or
My question was whether or not it was possible to track this data. There aren’t that many investors in this situation in San Diego. Cap Rates of 6-7% (forget 10% today), particularly anything above entry-level, are the exception not the rule at this point.

an
an
10 years ago
Reply to  Anonymous

mwseverson wrote:My question
[quote=mwseverson]My question was whether or not it was possible to track this data. There aren’t that many investors in this situation in San Diego. Cap Rates of 6-7% (forget 10% today), particularly anything above entry-level, are the exception not the rule at this point.[/quote]There were plenty of places in San Diego sold between 2009-2011 with cap rate 10%. You’re right that higher end homes have lower cap rate. That has always been the case. But not all of San Diego is high end. As to whether it’s possible to track this data, I don’t think it is. But maybe someone knows.

CA renter
10 years ago

Thank you, Rich!
Thank you, Rich!

CA renter
10 years ago
Reply to  Rich Toscano

Slackers don’t maintain blogs
Slackers don’t maintain blogs like this and do all the work to provide the information like you do. I’m truly grateful for everything you’ve done over the years, and have been reading your work for ~9+ years now (man, are we getting old or what?). I owe you big time! Thank you so much!

Happy Thanksgiving, Rich! 🙂

spdrun
10 years ago
Reply to  Rich Toscano

There are 8% cap rates now in
There are 8% cap rates now in the right places. And what’s wrong with “low-end” stuff? A 1/1 condo or building full of 1/1’s is actually my IDEAL situation — less chance of being in the middle of a roommate catfight than in a 2+ bedroom unit.

ctr70
10 years ago
Reply to  spdrun

I got about a 15% cap rate on
I got about a 15% cap rate on my condos bought back from 2009-2012. But when I sold my ROI on my cash invested was about a 250%+ ROI in about 2-4 yrs! Gotta love that. What I loved about investing in San Diego rentals from late 2008-early 2012 was the downside risk was tiny but the upside HUGE. You could buy below construction costs back then and get stuff for what it was going for in the late 90’s yet get 2013 rents. Yet everyone hated real estate back then. Many of the long winded “financial geniuses” that regularly post on this forum warned me against buying condos back then. Boy were they wrong. Be careful who you get your financial advice from. Make sure you get it from someone with a higher net worth then you.

Anonymous
Anonymous
10 years ago
Reply to  ctr70

ctr70 wrote:I got about a 15%
[quote=ctr70]I got about a 15% cap rate on my condos bought back from 2009-2012. But when I sold my ROI on my cash invested was about a 250%+ ROI in about 2-4 yrs! Gotta love that. What I loved about investing in San Diego rentals from late 2008-early 2012 was the downside risk was tiny but the upside HUGE. You could buy below construction costs back then and get stuff for what it was going for in the late 90’s yet get 2013 rents. Yet everyone hated real estate back then. Many of the long winded “financial geniuses” that regularly post on this forum warned me against buying condos back then. Boy were they wrong. Be careful who you get your financial advice from. Make sure you get it from someone with a higher net worth then you.[/quote]

So you’ve confirmed that at least one investor is taking money off the table. Can I assume this is because you’re doubt sustained price appreciation? What % of your ROI is cash flow?

ctr70
10 years ago
Reply to  Anonymous

mwseverson wrote:ctr70
[quote=mwseverson][quote=ctr70]I got about a 15% cap rate on my condos bought back from 2009-2012. But when I sold my ROI on my cash invested was about a 250%+ ROI in about 2-4 yrs! Gotta love that. What I loved about investing in San Diego rentals from late 2008-early 2012 was the downside risk was tiny but the upside HUGE. You could buy below construction costs back then and get stuff for what it was going for in the late 90’s yet get 2013 rents. Yet everyone hated real estate back then. Many of the long winded “financial geniuses” that regularly post on this forum warned me against buying condos back then. Boy were they wrong. Be careful who you get your financial advice from. Make sure you get it from someone with a higher net worth then you.[/quote]

So you’ve confirmed that at least one investor is taking money off the table. Can I assume this is because you’re doubt sustained price appreciation? What % of your ROI is cash flow?[/quote]

Yes I bought a bunch of condos from 2009-2012 as rentals. Originally the thought was to hold them for the cash-on-cash return. But the prices skyrocketed so quickly I decided to sell a few to hedge my bets and take the cap gain. Most of the ROI is from the Cap gain. But the cash-on-cash from the rent was also phenomenal as I bought these condos for about $130k and they rent for $1,500/mo. These condos are now going for $300k. I put about $35k into each for down payment + closing costs + fix, and each condo is up about $150k in price. So my original investment $35k turned into $185k-$190k gross on each condo. You can’t beat that return many places. And everybody hated real estate and thought I was crazy for buying back in 2009. Even though prices were dirt cheap in San Diego. Isn’t that how it usually goes. Now everyone wants it bad now that it’s gone way up in price. Really it was more like a 300%+ NET ROI after paying Realtor commission, etc on the sale. Everyone was on the Gold bandwagon back then, but the REAL Gold was San Diego real estate.

evolusd
10 years ago
Reply to  ctr70

ctr70 wrote:mwseverson
[quote=ctr70][quote=mwseverson][quote=ctr70]I got about a 15% cap rate on my condos bought back from 2009-2012. But when I sold my ROI on my cash invested was about a 250%+ ROI in about 2-4 yrs! Gotta love that. What I loved about investing in San Diego rentals from late 2008-early 2012 was the downside risk was tiny but the upside HUGE. You could buy below construction costs back then and get stuff for what it was going for in the late 90’s yet get 2013 rents. Yet everyone hated real estate back then. Many of the long winded “financial geniuses” that regularly post on this forum warned me against buying condos back then. Boy were they wrong. Be careful who you get your financial advice from. Make sure you get it from someone with a higher net worth then you.[/quote]

So you’ve confirmed that at least one investor is taking money off the table. Can I assume this is because you’re doubt sustained price appreciation? What % of your ROI is cash flow?[/quote]

Yes I bought a bunch of condos from 2009-2012 as rentals. Originally the thought was to hold them for the cash-on-cash return. But the prices skyrocketed so quickly I decided to sell a few to hedge my bets and take the cap gain. Most of the ROI is from the Cap gain. But the cash-on-cash from the rent was also phenomenal as I bought these condos for about $130k and they rent for $1,500/mo. These condos are now going for $300k. I put about $35k into each for down payment + closing costs + fix, and each condo is up about $150k in price. So my original investment $35k turned into $185k-$190k gross on each condo. You can’t beat that return many places. And everybody hated real estate and thought I was crazy for buying back in 2009. Even though prices were dirt cheap in San Diego. Isn’t that how it usually goes. Now everyone wants it bad now that it’s gone way up in price. Really it was more like a 300%+ NET ROI after paying Realtor commission, etc on the sale. Everyone was on the Gold bandwagon back then, but the REAL Gold was San Diego real estate.[/quote]

Kudos for bucking the trend back then. We had a number of clients that typically invested in commercial real estate shift to residential. We put together a financing package to support their acquisition and medium term hold that worked out really well for everyone involved. Cash flow from rents was there to keep the bank happy and appreciation was amazing over a short period of time as the low end bounced off the bottom.

Anonymous
Anonymous
10 years ago
Reply to  spdrun

Nothing at all wrong with the
Nothing at all wrong with the “low-end”. Most investors start there. How many 8 CAPs could you buy today in SD County? My guess is not many.

spdrun
10 years ago
Reply to  Anonymous

Nothing at all wrong with the

Nothing at all wrong with the “low-end”. Most investors start there. How many 8 CAPs could you buy today in SD County? My guess is not many.

How many do I need? 🙂 I’m not in any kind of rush but will happily offer when I see something good.

ctr70
10 years ago
Reply to  Rich Toscano

There were definitely cap
There were definitely cap rates at 10% (and WAY over 10%) from late 2008 to early 2012. Many of those properties purchased after the crash during the lows are now up $150k-$200k in price. I originally bought to hold long term, but prices went up so much so soon I started selling some of my rentals bought 2009-2011, and just closed on selling my first listing. The ROI was massive with the capital gain. We got appreciation in 1-2 years that I thought was going to take 5-7 yrs! I thought to hedge my bets I better start unloading some of these properties now and lock in some profits. If prices dropped the next few years, I didn’t want to kick myself. When asked once why he was so rich, Warren Buffet responded, “because I always sold too soon”.