“INVESTORS” who haven’t learned their lessons?

[SD Realtor]

Once upon a time someone posted, perhaps Russell about opportunity and that with opportunity there is risk…. let us start there…

********

I need to delineate between investors and little guy investors. The type of investors I am referring to are one of two categories. The first are groups or syndicates of investors that buy in bulk. These groups may or may not have intentions to sell the properties or possibly hold onto them for awhile.

Rich has placed guess posts about a VERY astute investor here in San Diego who does this.

The second type of investor is a smaller group or perhaps even an individual who purchases at trustee sale and then flips.

**********

Now I know in some cases individuals may indeed make a secondary purchase from one of these two types. This purchase may be for a primary residence or it may be for a rental. From what I have seen they have been for primary residences. However I am sure many more lower end homes purchased in this manner are for rentals. That doesn’t concern me though. If some of those start losing a bit of cash flow due to rent then so be it. I don’t see alot of them going belly up a la our current market. I do think mom and pop landlords of today are alot more astute then many people give them credit for.

************

TG a brilliant post. You have not ripped off one of those for awhile and to weave the lakers into it… well I consider that a special treat just for me so thank you for that.

If some of my bitterness at the system showed up what can I say. That is the buyer in me, just like you, just like many here, who is frustrated with the system. My personal strategy… not sure yet. I am still wrestling with the mrs about staying in Cali or pulling outta here. If they could saw the state at the OC boundary then I think I could get her to stay but it doesn’t look good. So honestly I don’t know… Anyways I am not as upset about the game being rigged as I am about prognostications that prices have to be at certain levels in the future because they HAVE to. Because of unemployment or because of the GDP… I don’t see that anymore because of the sheer number of people out there with money. Again I think the arguments make sense within a limited set of parameters. However when you bring a wider set of parameters in, these arguments don’t hold up anymore in my book and they are not discussed. I am not saying buy now but I am saying … Hey wait a minute, something is happening here and maybe things need to be considered within a wider scope… maybe the home price nirvana that we all are hoping for is not going to come like we thought it would, or in the form we thought it would.

To be honest… I just do not know.

A few more thoughts… I don’t know how to make the interpretation you referred to. On the smallish side, I can only offer what I see which is some homes I have seen that went to trustee sale, were then purchased by an individual or a trust or an llc, and then put on the market. There are some losses and some gains. A sale I had last year San Marcos was corporate owned by a company that made trustee purchases in like 07 I think. They took a bath. Another I had last summer in CV was bought at trustee sale and the guy did great. A few homes I have seen for sale in 4S were purchased at trustee sale and flipped for profit. These were not the bulk purchases. Another home on Vista Palma in Carlsbad was purchased at trustee sale and is in escrow. Again my interpetation of this is that right now, there is tremendous upside if it is done fast, if the analysis is done well, and if the buyer does his homework. You have to get it at trustee sale, you have to make sure the numbers work, and it is not for joe first timer to try. However, with this piss poor inventory and these interest rates… it is I believe a risk worth taking.

As for what is happening in your neck of the woods… not my part of town my friend so I actually defer to you. All I can say is that the numbers do not lie and your numbers were pretty damn scary.

Yes the guys with boatloads of money… As sad as this is gonna sound, I think that there are a ton of smart people here. There are even quite a few who have good money. I seriously doubt those with boatloads of money post here, and I don’t think they subscribe to anything posted here. These people make money because they took risks, because they round up investors, and because they can identify opportunity better then us. They do a great job making money, WITH OTHER PEOPLES MONEY. Now what works for them or what is good for them may indeed not work for us because of the deeper pockets they have, and that the loss is not their loss. Obviously they see opportunity where many of us see fear. Conversely they may lose but if they do it may not affect them personally at all. Yes the rich do get richer. It is arguable that there sure the hell are not many decent income generators right now, bonds suck, parking money in cds sucks, the equities markets? jeez who knows where they may be… so maybe these captains of the ss moneyboat see something we dont.

Anyways… I guess that is it… I am not sure of anything at present. I am so worked up about the way things are in this country that I cannot see straight. The real estate market is cuckoo for cocoa puffs right now… Unemployment will indeed go up but to be honest with you, it is a lagging indicator and I have already been contacted by old engineering buddies that some hiring will actually start again later in the summer and picking up in 2010.

As for Lamar…. well if you can figure him out let me know.

[patb]

[quote=SD Realtor]I am not saying that the GDP will not continue to fall or that the economy is in bad shape. That is not a challenging prognostication.

Anyways, tell you what, all I can tell is what I see actually happening verses your predictions of what will happen. Back in 06 lots of people who posted here were cracking lots of great jokes about the 30k inventory levels we would see. Lots of talk about how the lenders would go out of business. Lots of talk about how we would all get fantastic deals. Not much talk that the government would through 12 trillion of our tax money at the lending industry, insurance industry, or *insert industry here*. Not much talk of regulatory moves by the government to stem foreclosures.

My point is that I can only tell you what is happening not what will happen.

However I will go out on a limb and say none of us here, not you, or me, or most anyone else, will get the deals that investors get. Not now, not in the future. When you finally acknowledge the game is rigged you stand a better chance of understanding how to play it, rather then waiting for a level playing field.

[/quote]

money can be made flipping houses in this market, momentarily, but
I see this enormous wave of trouble headed at the financial sector.

The largest wve of troubled Alt-A and Option Arms are still inbound.
If the Chinese start insisting on higher interest rates, this whole
game will unwind fast. the first of the 5 year IO’s, ARMS and
O-As start recasting next year. With ZIRP it’s a good deal for them,
but they are all underwater. If Real rates return, and we are seeing hints of that, all those notes will go bust.

Now most likely we will see mortgage relief through th ebankruptcy code for
reisdences, but, all those speculative condos?

I just drive around clarendon at night, look at dark buildings and now
that next year, I can buy one of those places half off.

Yes the big guys are making money now, but, there is going to be
such a wave of disruption coming, that, dry powder remains a good idea.

[patb]

[quote=SD Realtor]I am not saying that the GDP will not continue to fall or that the economy is in bad shape. That is not a challenging prognostication.

Anyways, tell you what, all I can tell is what I see actually happening verses your predictions of what will happen. Back in 06 lots of people who posted here were cracking lots of great jokes about the 30k inventory levels we would see. Lots of talk about how the lenders would go out of business. Lots of talk about how we would all get fantastic deals. Not much talk that the government would through 12 trillion of our tax money at the lending industry, insurance industry, or *insert industry here*. Not much talk of regulatory moves by the government to stem foreclosures.

My point is that I can only tell you what is happening not what will happen.

However I will go out on a limb and say none of us here, not you, or me, or most anyone else, will get the deals that investors get. Not now, not in the future. When you finally acknowledge the game is rigged you stand a better chance of understanding how to play it, rather then waiting for a level playing field.

[/quote]

money can be made flipping houses in this market, momentarily, but
I see this enormous wave of trouble headed at the financial sector.

The largest wve of troubled Alt-A and Option Arms are still inbound.
If the Chinese start insisting on higher interest rates, this whole
game will unwind fast. the first of the 5 year IO’s, ARMS and
O-As start recasting next year. With ZIRP it’s a good deal for them,
but they are all underwater. If Real rates return, and we are seeing hints of that, all those notes will go bust.

Now most likely we will see mortgage relief through th ebankruptcy code for
reisdences, but, all those speculative condos?

I just drive around clarendon at night, look at dark buildings and now
that next year, I can buy one of those places half off.

Yes the big guys are making money now, but, there is going to be
such a wave of disruption coming, that, dry powder remains a good idea.

[patb]

[quote=SD Realtor]I am not saying that the GDP will not continue to fall or that the economy is in bad shape. That is not a challenging prognostication.

Anyways, tell you what, all I can tell is what I see actually happening verses your predictions of what will happen. Back in 06 lots of people who posted here were cracking lots of great jokes about the 30k inventory levels we would see. Lots of talk about how the lenders would go out of business. Lots of talk about how we would all get fantastic deals. Not much talk that the government would through 12 trillion of our tax money at the lending industry, insurance industry, or *insert industry here*. Not much talk of regulatory moves by the government to stem foreclosures.

My point is that I can only tell you what is happening not what will happen.

However I will go out on a limb and say none of us here, not you, or me, or most anyone else, will get the deals that investors get. Not now, not in the future. When you finally acknowledge the game is rigged you stand a better chance of understanding how to play it, rather then waiting for a level playing field.

[/quote]

money can be made flipping houses in this market, momentarily, but
I see this enormous wave of trouble headed at the financial sector.

The largest wve of troubled Alt-A and Option Arms are still inbound.
If the Chinese start insisting on higher interest rates, this whole
game will unwind fast. the first of the 5 year IO’s, ARMS and
O-As start recasting next year. With ZIRP it’s a good deal for them,
but they are all underwater. If Real rates return, and we are seeing hints of that, all those notes will go bust.

Now most likely we will see mortgage relief through th ebankruptcy code for
reisdences, but, all those speculative condos?

I just drive around clarendon at night, look at dark buildings and now
that next year, I can buy one of those places half off.

Yes the big guys are making money now, but, there is going to be
such a wave of disruption coming, that, dry powder remains a good idea.

[patb]

[quote=SD Realtor]I am not saying that the GDP will not continue to fall or that the economy is in bad shape. That is not a challenging prognostication.

Anyways, tell you what, all I can tell is what I see actually happening verses your predictions of what will happen. Back in 06 lots of people who posted here were cracking lots of great jokes about the 30k inventory levels we would see. Lots of talk about how the lenders would go out of business. Lots of talk about how we would all get fantastic deals. Not much talk that the government would through 12 trillion of our tax money at the lending industry, insurance industry, or *insert industry here*. Not much talk of regulatory moves by the government to stem foreclosures.

My point is that I can only tell you what is happening not what will happen.

However I will go out on a limb and say none of us here, not you, or me, or most anyone else, will get the deals that investors get. Not now, not in the future. When you finally acknowledge the game is rigged you stand a better chance of understanding how to play it, rather then waiting for a level playing field.

[/quote]

money can be made flipping houses in this market, momentarily, but
I see this enormous wave of trouble headed at the financial sector.

The largest wve of troubled Alt-A and Option Arms are still inbound.
If the Chinese start insisting on higher interest rates, this whole
game will unwind fast. the first of the 5 year IO’s, ARMS and
O-As start recasting next year. With ZIRP it’s a good deal for them,
but they are all underwater. If Real rates return, and we are seeing hints of that, all those notes will go bust.

Now most likely we will see mortgage relief through th ebankruptcy code for
reisdences, but, all those speculative condos?

I just drive around clarendon at night, look at dark buildings and now
that next year, I can buy one of those places half off.

Yes the big guys are making money now, but, there is going to be
such a wave of disruption coming, that, dry powder remains a good idea.

[patb]

[quote=SD Realtor]I am not saying that the GDP will not continue to fall or that the economy is in bad shape. That is not a challenging prognostication.

Anyways, tell you what, all I can tell is what I see actually happening verses your predictions of what will happen. Back in 06 lots of people who posted here were cracking lots of great jokes about the 30k inventory levels we would see. Lots of talk about how the lenders would go out of business. Lots of talk about how we would all get fantastic deals. Not much talk that the government would through 12 trillion of our tax money at the lending industry, insurance industry, or *insert industry here*. Not much talk of regulatory moves by the government to stem foreclosures.

My point is that I can only tell you what is happening not what will happen.

However I will go out on a limb and say none of us here, not you, or me, or most anyone else, will get the deals that investors get. Not now, not in the future. When you finally acknowledge the game is rigged you stand a better chance of understanding how to play it, rather then waiting for a level playing field.

[/quote]

money can be made flipping houses in this market, momentarily, but
I see this enormous wave of trouble headed at the financial sector.

The largest wve of troubled Alt-A and Option Arms are still inbound.
If the Chinese start insisting on higher interest rates, this whole
game will unwind fast. the first of the 5 year IO’s, ARMS and
O-As start recasting next year. With ZIRP it’s a good deal for them,
but they are all underwater. If Real rates return, and we are seeing hints of that, all those notes will go bust.

Now most likely we will see mortgage relief through th ebankruptcy code for
reisdences, but, all those speculative condos?

I just drive around clarendon at night, look at dark buildings and now
that next year, I can buy one of those places half off.

Yes the big guys are making money now, but, there is going to be
such a wave of disruption coming, that, dry powder remains a good idea.

[patb]

[quote=PadreBrian]Blackstone announced this last winter they have a HUGE fund to buy some of this stuff up.

[/quote]

SFH’s make lousy investor properties for large investors.

a Multi Unit building justifies a Superintendent, you have a maintenance
schedule on roofs, gutters, furnaces, you have a central line for plumbing,
so it’s all very formal and manageable.

A house? who knows what’s happening next. Look if you live in the area
and can swing by keep an eye out, it’s fine, but, if you don’t, it’s just awful.

[patb]

[quote=PadreBrian]Blackstone announced this last winter they have a HUGE fund to buy some of this stuff up.

[/quote]

SFH’s make lousy investor properties for large investors.

a Multi Unit building justifies a Superintendent, you have a maintenance
schedule on roofs, gutters, furnaces, you have a central line for plumbing,
so it’s all very formal and manageable.

A house? who knows what’s happening next. Look if you live in the area
and can swing by keep an eye out, it’s fine, but, if you don’t, it’s just awful.

[patb]

[quote=PadreBrian]Blackstone announced this last winter they have a HUGE fund to buy some of this stuff up.

[/quote]

SFH’s make lousy investor properties for large investors.

a Multi Unit building justifies a Superintendent, you have a maintenance
schedule on roofs, gutters, furnaces, you have a central line for plumbing,
so it’s all very formal and manageable.

A house? who knows what’s happening next. Look if you live in the area
and can swing by keep an eye out, it’s fine, but, if you don’t, it’s just awful.

[patb]

[quote=PadreBrian]Blackstone announced this last winter they have a HUGE fund to buy some of this stuff up.

[/quote]

SFH’s make lousy investor properties for large investors.

a Multi Unit building justifies a Superintendent, you have a maintenance
schedule on roofs, gutters, furnaces, you have a central line for plumbing,
so it’s all very formal and manageable.

A house? who knows what’s happening next. Look if you live in the area
and can swing by keep an eye out, it’s fine, but, if you don’t, it’s just awful.

[patb]

[quote=PadreBrian]Blackstone announced this last winter they have a HUGE fund to buy some of this stuff up.

[/quote]

SFH’s make lousy investor properties for large investors.

a Multi Unit building justifies a Superintendent, you have a maintenance
schedule on roofs, gutters, furnaces, you have a central line for plumbing,
so it’s all very formal and manageable.

A house? who knows what’s happening next. Look if you live in the area
and can swing by keep an eye out, it’s fine, but, if you don’t, it’s just awful.

[(former)FormerSanDiegan]

[quote=davelj][quote=FormerSanDiegan][quote=peterb]As sticky as rents can be, if this economy continues to contract at its present rate, there will be increased vacancies and downward pressure on rents. [/quote]

If the economy continues to contract at its present rate, our GDP will go to zero by 2025.

[/quote]

Actually, if you keep compounding it you’ll find that it never reaches zero. Just a mathematical observation.

Which reminds me of a friend of mine who got divorced for the third time several years back. Each time, he lost half of his substantial net worth. “The upside,” he told me, “is that if I keep dividing by two, I still won’t get to zero.”[/quote]

I assumed a contraction of X dollars per year.

I just wanted to imply that projecting a continuation of current conditions at the same rate is the same error made by those who purchased real estate at the peak.

[(former)FormerSanDiegan]

[quote=davelj][quote=FormerSanDiegan][quote=peterb]As sticky as rents can be, if this economy continues to contract at its present rate, there will be increased vacancies and downward pressure on rents. [/quote]

If the economy continues to contract at its present rate, our GDP will go to zero by 2025.

[/quote]

Actually, if you keep compounding it you’ll find that it never reaches zero. Just a mathematical observation.

Which reminds me of a friend of mine who got divorced for the third time several years back. Each time, he lost half of his substantial net worth. “The upside,” he told me, “is that if I keep dividing by two, I still won’t get to zero.”[/quote]

I assumed a contraction of X dollars per year.

I just wanted to imply that projecting a continuation of current conditions at the same rate is the same error made by those who purchased real estate at the peak.

[(former)FormerSanDiegan]

[quote=davelj][quote=FormerSanDiegan][quote=peterb]As sticky as rents can be, if this economy continues to contract at its present rate, there will be increased vacancies and downward pressure on rents. [/quote]

If the economy continues to contract at its present rate, our GDP will go to zero by 2025.

[/quote]

Actually, if you keep compounding it you’ll find that it never reaches zero. Just a mathematical observation.

Which reminds me of a friend of mine who got divorced for the third time several years back. Each time, he lost half of his substantial net worth. “The upside,” he told me, “is that if I keep dividing by two, I still won’t get to zero.”[/quote]

I assumed a contraction of X dollars per year.

I just wanted to imply that projecting a continuation of current conditions at the same rate is the same error made by those who purchased real estate at the peak.

[(former)FormerSanDiegan]

[quote=davelj][quote=FormerSanDiegan][quote=peterb]As sticky as rents can be, if this economy continues to contract at its present rate, there will be increased vacancies and downward pressure on rents. [/quote]

If the economy continues to contract at its present rate, our GDP will go to zero by 2025.

[/quote]

Actually, if you keep compounding it you’ll find that it never reaches zero. Just a mathematical observation.

Which reminds me of a friend of mine who got divorced for the third time several years back. Each time, he lost half of his substantial net worth. “The upside,” he told me, “is that if I keep dividing by two, I still won’t get to zero.”[/quote]

I assumed a contraction of X dollars per year.

I just wanted to imply that projecting a continuation of current conditions at the same rate is the same error made by those who purchased real estate at the peak.

[Author]

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