[surveyor]

north county times article

http://www.nctimes.com/articles/2007/01/23/business/perry/19_58_561_22_07.txt

Here’s an article about that very same subject (albeit short).

[surveyor]

congrats

congratulations on your purchase! i doubt you will be sorry (although others on this board will tell you otherwise).

[surveyor]

philippines

We already own a beautiful house(no mtg.) in Metro Manila, Philippines. I love The Philippines and it’s also where my wife’s family is based.

The Philippines is absurdly cheap and you can live like a rock star there on a social security stipend, but i’ve heard too many horror stories about philippines to really want to retire there.

Besides the idea of having every relative my wife or I could possibly be related to in a line outside my door asking for a handout, the ability and frequency of my relatives or any other person there willing to screw me over is just too much.

[surveyor]

re investing…

if you are looking to buy anything in San Diego or California, you probably can’t buy anything that will make money for at least six years or more.

If I had $500k of equity, I would buy several properties, all multi-units that cash flow, in Texas, North Carolina, Georgia, and Denver.

If you are taking money out of your home, you should probably refi (do not HELOC) and get a 10 year interest only or a 30 year fixed. Make sure the cash flow you get from the new properties will offset the additional mortgage amount you would have to make under the new loan.

i posted in another thread about a real estate class here: http://piggington.com/re_fi_equity_out_buy_later

Make sure you learn more before doing this. It sounds like you have a lot of questions.

[surveyor]

LTV

all i really advocate is for gnosis to take the class and to learn how to leverage and use equity to invest. the class lets you use your own judgement and comfort level as to how much to invest, whether 80% LTV or less. i don’t really know what gnosis’s comfort level, sophistication, or ability to take on risk is.

using an 80% LTV is not in and of itself a bad thing, but you have to know how to use it in the best way possible.

[surveyor]

educate

i think you need more information before you start doing that kind of stuff. I recommend taking lisa vander’s real estate investment workshop (www.pacblueinvestments.com). She also has a radio show on AM 1700 on Thursdays, 8:00a.m. to 9:00a.m. If you call up on a Thursday and tell them that you heard about the workshop on AM 1700, they will give you a discount so that the workshop will cost $299 (i think) vs. $599.

With $600-$700k worth of equity, you can probably buy about $3.0 million worth of investment properties around the country, but you should really take the class and they will show you how to do it.

If you are interested, pacblue investments will have a free teleconference with lisa vander this wednesday at 12:00p.m. Call 858-704-0462 to register.

I was in the same boat as you a few years ago. I took the class and learned a lot. I wish I had taken it sooner, then I wouldn’t have had to make to many mistakes to learn from.

[surveyor]

history

The stock market taken as a whole has beaten the RE market -as a whole- over ANY 20 year period in history.

When this statement is uttered, it is with certain qualifications. For one thing, it does not take into account the tax deductions that the real estate market provides, and it also does not usually include the cash flow that a rental property provides. For the stock market to make a more equivalent analyses of returns for itself and the real estate market, it has to either account for the cash flow and tax deductions or eliminate the use of dividends in its returns calculations.

[surveyor]

inflation

A 10% national housing appreciation rate has been bandied about (non-inflation adjusted) in some publications, so a 6% appreciation can be considered normal. Some other post quoted a 9.3% rate for San Diego pre-bubble.

But that’s the whole point for this thread – with the easy money running around, the feds printing money, there could a stealth inflation that might actually hold up housing prices (and other asset/commodity prices) and cause a price drop to be at least negligible.

[surveyor]

….

the stock market is a far better investment

Well, now, I wouldn’t say that… And certainly it’s not been my experience…

[surveyor]

Discounts

Lisa has a radio show on Cash 1700 AM on Thursdays at 8:00a.m. to 9:00a.m. It’s good listening, but no substitute for her classes.

If you call Pac Blue and sign up for their workshop on a Thursday and say that you heard her on Cash 1700, they will give you a discount on the class cost.

Interestingly enough one call today was a orange county real estate agent who deplored the lack of good property managers in other locations.

Good luck.

[surveyor]

New article

I found this: http://www.housingpredictor.com/top25.html

But like I said originally, you should make your decision based on other criteria, not whether or not a city is going up in price.

[surveyor]

inflation vs. housing price

One further thought on this. The studies that I have done comparing real rates to housing historically, would suggest that housing prices will not drop based on their current relationship to real rates, they actually would rise if they do what they have historically done. It is almost impossible for me to believe that could happen, but it is what my research has told me. Of course that is based on the CPI, which seems to be a joke as far as what it tells us inflation is currently.

I have thought that same exact thing and I thought it strange that while there is a general consensus on this board that inflation will rise, gold will rise, but yet many believe that housing prices will go down 50%. It has been pointed out many times that housing prices track inflation, but inflation has been going up, not down (especially when you consider the amount of money being printed by the feds).

In my calculations, when I apply a rate of inflation towards housing prices and calculate a 50% drop over six years, housing prices will hold up at least moderately well (my test case $400k house lost 20k over 6 years, which is not a whole lot). I’m probably missing something in my calculations, but it seemed like an interesting case to see how the years pan out and how that calculation fares.

But who knows what will happen in the future…

[surveyor]

housing cachet

I agree that home is where you live, not what you have, but there is a historical reason why Americans have that respect of home ownership. Home ownership has always been synonymous with freedom and success. Real estate (properly used) has historically been the best avenue to financial success.

America’s use of home ownership and land ownership was one of its reasons for being the successful nation it has become. A person who owns real estate had a bigger stake in it and therefore took care of it accordingly. So there is a reason why there is respect for home-ownership.

disclaimer: no i am not saying to buy in san diego.

[surveyor]

Rates, Appreciation

I would think that other forces would make your decision for you regarding where you want to live, but oh well.

Here’s money magazine’s forecast: http://money.cnn.com/popups/2006/fortune/invguide_realestate/index.html

It’s based on Moody’s information. As for San Diego appreciating 9.3% over 30 years vs. Georgia’s 4.9% that does sound correct (maybe the numbers do not indicate the “bubble” territory). But those numbers are probably only valid if you keep the house for 30 years, which may or may not happen.

Georgia is a real nice appreciating market right now, because of all the people fleeing Florida, so the prices might approach a bubble in a few years. Maybe.

The Denver real estate market has been terrible for the last few years, but it’s been seeing a lot of activity. Certainly you can pick up foreclosed homes in Denver real easily. There are certain signs that say that it has maybe one more year of bottom, and then it will start going up.

Depending on your capabilities and situation, if I were you, I would buy a four-plex and live in it. This method will allow you to access all sorts of tax deductions, as well as reaping the benefits of appreciation and cash flow.

[surveyor]

1. How long have you been managing property in this area?
2. What are the vacancy rate fluctuations in a ten year cycle?
3. What are the typical drops in rent when the market softens up?
4. Are you willing to provide monthly statements for the property to include all income sources, itemized expenses and receipts for repairs?
5. Are you willing to send digital pictures of the condition of property you are managing every 6 months to include interior and exterior of the building?
6. Do you have any tenants and clients I can talk to as references?
7. What is your criteria for good tenant applicants?
8. What charges do you have for evictions?
9. Do you have a lawyer on retainer to help you with evictions?

Those are just a few basic questions to ask.

If you are serious enough about investing in real estate, out of state or no, I recommend taking the real estate work shop class that lisa vander gives. She does a good job of helping real estate newbies go into real estate and shows you how real estate actually makes money. She actually does anticipate down markets and tells you what to do during those markets. She also has the network that you can access (without charge) and can help you get in touch with people who can find you properties. Anyways, I highly recommend her. If I had taken her classes earlier, I would’ve have made as many boneheaded mistakes as I have made. You can go to http://www.pacblueinvestments.com and see what they can offer you.

Good luck.

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