- This topic has 60 replies, 16 voices, and was last updated 11 years, 6 months ago by
Adame99.
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April 23, 2013 at 8:56 AM #761541April 23, 2013 at 8:59 AM #761543
Adame99
ParticipantSorry, my reply was to spdrun.
April 23, 2013 at 9:08 AM #761544spdrun
ParticipantYes.
April 23, 2013 at 9:12 AM #761545SK in CV
Participant[quote=Adame99]That’s a really interesting point. So it’s not that banks are holding off on short sales and foreclosures because they want to. You’re saying they’re doing it because they HAVE to.
In other words, the inventory is becoming equity sellers and people who need to sell for personal reasons.
Did I understand you correctly?[/quote]
No, the lenders are not holding off on foreclosures because they have to. They’re holding off because they suck at dealing with distressed assets. They have had numerous regulatory delays over the last 5 years, but when those delays expire, nothing changes. They have had almost no regulatory limitations on short sales. They take as long as they do because lenders suck at dealing with distressed assets. They suck when there are regulatory delays, they suck when there are no regulatory delays. All other explanations are incidental.
April 23, 2013 at 9:26 AM #761547ljinvestor
ParticipantIf you have lived in it as your primary for at least 2 out of last 5 years and it would max out the tax free gain of $250k for individual or $500k for couple then I would seriously consider selling especially since your not excited about the idea of being a landlord.
As you have heard from others their are many advantages to holding but I understand its not for everyone.
Where would you reinvest the gain if you sell?
April 23, 2013 at 9:30 AM #761548SD Realtor
ParticipantI agree with SK. I have seen no significant impact on short sale processing or trustee sale quantity due to any regulatory issues in San Diego county. As SK said the quality of the servicing is mediocre at best. Furthermore there is no urgency at all. The bailouts have happened, the accounting for the distress asset has been completed for the most part.
Why should the servicing happen with any expediency or quality when there is no incentive to do so?
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What I find more often then not is that people generally do not have a long term plan. What is your long term plan? Is it to acquire real estate? Is it to invest in equities? Are you trying to time the real estate market? Are you in the process of acquiring rentals? More often then not people do things because the present conditions. Those conditions may be in their personal life, work life, or external market conditions. So they let the external world guide their process. Other people are the opposite. I think the best way is to have a blend of both, to have a long term plan that guides major decisions however the timing of those decisions will be influenced by the present conditions. As I said earlier, really the only reason to sell now is if you belief the market will depreciate substantially in the NEAR future. Additionally if you do not have a solid plan for what to do with your proceeds then that may not be good.
It sounds to me like you are attempting to be a market timer with respect to the San Diego re market. Nothing wrong with that at all. I have not seen any plausible explanations for what will cause a sudden turnaround and won’t waste time arguing those that I have seen. I don’t agree with the timing but you never heard of anyone going broke selling in hot market. Just don’t do something stupid with the proceeds.
April 23, 2013 at 9:31 AM #761546ParticipantIf foreclosures are stalled, then banks have no means of pushing sellers into selling short.
Overleveraged scumbucket who bought with 0.5% down to bankster: “What are you gonna do, foreclose?! HA HA! CAN’T! GOTCHA!”
April 23, 2013 at 9:47 AM #761549no_such_reality
ParticipantDo not sell unless you are clearing out of California in entirety.
IMHO, housing will never, ever, be as affordable as it previously was again.
Not in the short term, probably not in the long term. As long as our fiat currency stands, that house you own today, should NEVER be sold.
NEVER. Do not dream of capital gains, do not dream of of greater returns on other investments. That house, represents perpetual and continual cash flows. Once you sell it, you will never replace it.
April 23, 2013 at 11:05 AM #761552Participant^^^
This ass-u-mes that there are no other good rental properties in the entire world. Say you’re getting 6% on the dollar on a rental in CA, have the option to buy a building that caps at 10% in Tucson. Or a fixer-upper locally that caps at 8% after all repairs are done.
Assuming you wanted to free up the capital, you’d be nuts not to consider either one of two.
You buy a Lexus. Suddenly, BMWs are cheap due to favorable currency exchange. Would you be necessarily wrong to trade one for the other?
Such an attitude ranks right up there with the “you own an apartment in Manhattan. Manhattan real estate will always do well. Don’t ever sell it” attitude. I’ve heard it, and I’m still considering selling in order to free up equity to either:
(1) buy a building capping at 8% in a less-nice (ok, this is relative — everyone still goes to the same schools, and this ain’t the South Bronx) area of a gorgeous small NJ city where I grew up. Such a thing would easily pay my rent in NYC if played right.
(2) buy a larger (2 bdr) apartment in a less upscale but still attractive area of NYC — near Columbia — so I’ll have room to expand when I have kids. No moving to the ‘burbs long term for me.April 23, 2013 at 11:15 AM #761553outtamojo
ParticipantIn a world where the rich seem to get richer and the poor more poor, I prefer prime real estate to slum – er, I mean less desireable areas with higher paper cap rates.I hope my kids can someday trade/leverage our portfolio of rentals in middle class areas into trophy coastal properties or a place in Manhattan. I never could win in Monopoly with those cheap properties anyway…
April 23, 2013 at 11:38 AM #761554Participant“Slum” in this case means a working-class/industrial area of one of the wealthier and better-run small cities in NJ. I mean literally working-class, not welfare class. There’s a bakery that sells bread to many of the local groceries, a bunch of small shops, an old-school Italian restaurant, an auto repair place, a plumbing and electrical supplier and jobber. Many of the employees of the same live locally, within a few blocks. Ironically, there are no vacant shops in that area and haven’t been in years, unlike the main (considered nicer?) downtown drag that has eight or nine storefronts sitting vacant at any one time and bad turnover.
Think “older part of Chula-Vista” rather than “Watts or South Central.” Walking distance to very good schools, fast trains to NYC, the whole 9 years.
That area: 8% cap rate, no problem finding great tenants. Basically, if I’m smart about it, a building like that would pay my rent in Manhattan.
Manhattan: 4% cap rate (or owner equivalent rent)April 23, 2013 at 11:39 AM #761556Participant[quote=spdrun]^^^
This ass-u-mes that there are no other good rental properties in the entire world. Say you’re getting 6% on the dollar on a rental in CA, have the option to buy a building that caps at 10% in Tucson. Or a fixer-upper locally that caps at 8% after all repairs are done.[/quote]
No, this assumes he doesn’t have rentals currently since he’s a move up buyer and didn’t mention buying other rentals.
If you have a 1/2 dozen or more rentals and you want to sell one to buy a better rental in another market go for it.
If you don’t have any other properties you managed and don’t have pretty extensive experience managing multiple properties, IMHO, trading for an out of state property is fools gold.
Also, keep in mind, his cap rate is actually determined by what he paid when he bought it, not what he thinks he can get for it today.
My answer was very much focused on you own one house, you bought a second and don’t need to sell the first, should you? The answer is no, your cost basis is hopefully much lower in the prior house allowing you room to learn the ropes of real estate without negatively impacting your cash flow.
April 23, 2013 at 11:46 AM #761557ParticipantAlso, keep in mind, his cap rate is actually determined by what he paid when he bought it, not what he thinks he can get for it today.
No: it’s determined by current value, since there’s such a thing as opportunity cost. Assuming all-cash for the sake of the argument. You bought a house for $150k that’s capping at 8% based on $150k right now, but is actually worth $300k at this point. Income: $12k.
Sell for $300k, buy something else for $280k (less $20k for expenses incurred in the deal). The new one caps out at 8%. Income: $22k.
Look at INCOME POTENTIAL, not cap rate based on sale price 15 years ago!
April 23, 2013 at 11:53 AM #761559ParticipantRoll back the discussion to the level of the original question.
KISS it and once you understand why the KISS isn’t absolute, you know enough not to ask the question.
Until then, bird in hand is the best advice.
April 23, 2013 at 11:59 AM #761561ParticipantBasically, the advice is:
“Wait until you’re an old fart who can no longer enjoy much to have income from property, instead of horse-trading your way to $50-100k/yr extra by the time you’re 35 or 40.”While I love my work, I have no interest in HAVING to work long-term for basic necessities.
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