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TomScott1

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Reply with quote  #1 
Were those great time filled with a lot of great deals or what? Think markets like that still exist? Where? 

Anyone looking for that kind of a market. Anyone find one?


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brycewheeler

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Reply with quote  #2 
TomScott1.    The great foreclosure market, in San Diego at least, was already nearing its end in 2011 and 2012 IMO.

The great buys started in mid to late 2008, and was at its peak in 2009 and 2010.  My best buys were in
2009.  My very few scattered buys in 2011 and 2012 did not pencil out nearly as good and by then the big Wall street firms
were the competition, instead of hungry little guys like me.

Even in 2009 and 2010 the competition was fierce among lots and lots of "little" guys with wads of cash.  I missed out on several
buys that I really wanted had I been much more aggressive.  Live and Learan.  Hindsight is great to see where I could have done better if I was clairavouant (sp?).  To get a little extra attention on offers, it was common to offer from $10,000 to $25,000 down payment,  accept anything "as-is"-not even dare ask for termite reports or repairs on many deals.  No nothing for the Buyer except all the risks.  However for the brave or fool-hardy, it was a God-send to enter the fray and come out with a few morsals at all.  

Most all the foreclosures with very few exceptions were fixers, from minor to major, so most every buy "won" took quite a bit of extra cash to make them presentable for rental, or to sell them.

Bryce
rickencin

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Reply with quote  #3 
I bought one SFR rental as a short sale in 2009.  I made a dozen all cash, full price (or above), no contingencies offers before one was accepted.  The banks weren't on board with the majority of the short sale prices being offered.  It has appreciated  in the following years.  San Diego rents have moved up significantly in recent years, although I tend to make big rent adjustments between renters.  It definitely makes sense to buy at market bottoms and hold for appreciation.  But for the fabled "quick flip for a bunch of cash" you would be selling in a terrible market as well as buying.  So for the flippers the question is "is a down market really better than an up market, considering that you have to both buy and sell?"
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Greg

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Reply with quote  #4 
Quote:
Originally Posted by rickencin
I bought one SFR rental as a short sale in 2009.  I made a dozen all cash, full price (or above), no contingencies offers before one was accepted.  The banks weren't on board with the majority of the short sale prices being offered.  It has appreciated  in the following years.  San Diego rents have moved up significantly in recent years, although I tend to make big rent adjustments between renters.  It definitely makes sense to buy at market bottoms and hold for appreciation.  But for the fabled "quick flip for a bunch of cash" you would be selling in a terrible market as well as buying.  So for the flippers the question is "is a down market really better than an up market, considering that you have to both buy and sell?"


Wouldn't the very ideal time to flip be at the rising edge just before the market plateaus or turns down?

Of course we don't know when that is.
larrywww

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Reply with quote  #5 
I disagree.  Taken at face value, this sounds like a conservative approach.

But the best deals were made at the bottom of the market when so many investors were holding back and Bruce was advising them---sounds like you want to jump in now.

Alot of investors did hold back and they did regret it later.

The other thing that you aren't taking into account is the hedge funds----I think like the Terminator they will be BACK!.  (Geez, Greg, how'd you miss that one?  Just joking.)

The next time around you are going to be facing a very limited window due to all of the competition---and that is assuming there will BE a next time around like 2009/2010, etc.

It looks like we will have to wait a long time for the next opportunity.

I know that Rick Solis in particular was very regretful----his partner invested in 2009 (in the Inland Empire anyway---your timing in San Diego probably varies in terms of the timing) and she got these screaming deals at the very bottom of the market---when you had very little competition. That was the absolute sweet spot for us.  The deal that Bruce Norris made in Moreno Valley that was such a screaming occurred early in the cycle. Not sure when we will see that again.

The real question to ask is NOT to rehearse what happened in 2009----before the hedge funds showed up and ruined the market.  Shooting fish in a barrel in a target rich environment isn't a particularly difficult skill set.   But it might have been a once in a lifetime opportunity---Bruce's words.  In my estimation, the best advice Bruce gave is not his 3/2017 report---it was what he was saying in 2009/2010 to encourage investors to jump into the market.  It's bizarre that bruce was begging investors to jump in and alot were too gunshy.

The real question is: Who moved the cheese and where it going to show up next time?  That is a far more difficult question.  Maybe read bruce's most current report and try to figure that out.  But Bruce's report raises far more questions than it answers----so it's not exactly clear what will happen even after reading the report.

If I were planning on investing in San Diego, I would be very nervous----acutely listening for the sounds of stampeding investors at my back, etc.---when and if we do reach another buying opportunity.  For my money there is just way too much pent up demand in that particular market---I am SO glad I do not have to compete with all the buyers in that particular market---living in paradise has its price.
javipa

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Reply with quote  #6 
Quote:
Originally Posted by rickencin


I bought one SFR rental as a short sale in 2009.  I made a dozen all cash, full price (or above), no contingencies offers before one was accepted.  The banks weren't on board with the majority of the short sale prices being offered.  It has appreciated  in the following years.  San Diego rents have moved up significantly in recent years, although I tend to make big rent adjustments between renters.  It definitely makes sense to buy at market bottoms and hold for appreciation.  But for the fabled "quick flip for a bunch of cash" you would be selling in a terrible market as well as buying.  So for the flippers the question is "is a down market really better than an up market, considering that you have to both buy and sell?"



Rick asks an extremely sophisticated question, concerning market cycles.

Let me ask, "Isn't there a difference between 'investing in real estate,' 'real estate speculating,' and 'merchandising real estate?'"  "Flipping" being the merchandising one?

Don't we sometimes invest; other times we speculate; and other times we merchandise?  And sometimes we do all three?

Meantime, those that can't, or won't, learn to do at least one thing, are the ones that sit around mentally masturbating on 'why they can't succeed in real estate.'

I've watched so many people get in and out of "real estate," for the wrong reasons, over the years, that I can pretty much predict who'll quit, or never quite get started, and why.

The common denominator, among those who quit, is a lack of desire.  Desire trumps everything. 

It's like the pimply-faced, horny "retard," in high-school, that kept chasing this one girl, until she finally said "yes" to a date.  We all looked on in disbelief, if not laughing at the site of these two together.


Well, that pimply-faced, horny 'retard' was me.

Just kidding!  No it wasn't.  But that would make a great analogy wouldn't it?

Meantime, it's also not a lack of money or credit, or looks, that will keep a person from succeeding.  These can help, but they're not roadblocks, unless we let them represent that to us.

"Well, so what's this got to do with market cycles?" you ask.? 

Since this is a 'creative real estate investing' forum, let me share/suggest something 'creative' in meeting any market cycle.

I learned to invest in, hold, and/or flip real estate with zero equity starting in about 1990.  In fact, probably 1990 was the "drain water sucking" market cycle of all market cycles.

Financing was essentially non-existent.  Buyer's with credit were essentially non-existent.  Lots of desperate, anxious sellers... including banks.

As it happened I came across two 'creative real estate financing' professionals.  One was a broker, whom taught me about taking over loans, and another whom was using 'taking over loans' as a financing strategy to merchandise housess with no equity.

If I hadn't first learned about taking over loans from the broker, I probably would have sniffed at the flipper whom was 'flipping' the financing on houses, using the same strategy, but...  here I was in a crappy market, with a high vacancy factor, managing (investing in) apartments, and eeking out a cash-flow, and here was this investor doing practically nothing, and putting forty-thousand dollar chunks of cash in the bank, once or twice a month. 

This ...was ...unfair!  Didn't he know that this market sucked!!!!


I found out what he was doing.  He was essentially capitalizing on sellers who couldn't sell, and on buyers who couldn't buy (conventionally speaking), and sandwiching himself between the two, and putting wads of cash in the bank in the process.

It took me awhile to figure out his scheme, but it began to work for me, and I've milked it since then. 

What I didn't know back in the day, was that this same 'scheme' was pretty much called an "FHA Assumption."  Well, when those died, someone had to resurrect them, and I thought "So, why not me." (not really)

Someone is objecting, and saying that there's no such thing as 'loan assumptions' anymore. 

Well, there weren't really any back in the FHA Assumption days either. 

Nope.  If you let your FHA loan get assumed, you remained on the hook for at least three years after you sold the house!  So, if your buyer bailed on the loan, the government had the right to collect its losses from YOU!  Tell me that is a full assumption.  No, it's a 'sub2' deal at it most basic.  One difference today, is that there is no expiration on the seller's liability, taken over, or not.  Whoop dee do.  The loan will be refied before long anyway.


And that's my answer to the risk of flipping in a down cycle.  Did I mention that people who can't get financing, only care about the payments, not the price?  Let that last sentence sink in real deep, and you'll understand how some can make it, regardless of the cycle they're in. 

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Paul

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Reply with quote  #7 

The first house I bought during the past market collapse was a trustee-sale 2/2 in Temecula in July 2010. I flipped it and 27 more – the last one in May 2015. They were all in SW Riverside county, and the majority were Temecula 3/2's. I had a small team – just myself, realtor and handyman. And a lot of excellent subs. I did not use financing.

I found that the market sort of only "allowed" a certain profit during those five years. In
entry-level homes, regardless of price, I would not get offers accepted if I calculated more than $25-30,000 net profit per house. That's net of all expenses. That never varied during those five years, and that number applied to trustee sales, REOs and short sales. The opportunities were much greater in 2010 and 2011, and then the hedge funds entered around 2012, and the trustee-sale opportunities were greatly diminished. But the "allowed" profit was still available in REOs and short sales. There were 4-5 big outliers to the upside, but those were because of luck and some short-sale "advantages." I never bothered with any number other than the possible net profit. I didn't care if the net of $30K was on a $120K house or a $350K house. The holding time was so short that the variation of my net investment and profit as a percent of that investment wasn't critical. 

If you tried to follow the often quoted rule of thumb of buying at 70% ARV, you would have been on the sidelines pretty much the whole time.

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