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taddyangle

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Reply with quote  #61 
Quote:
Originally Posted by Suzanne

"upside down" The word sends shivers.  Does anyone know how San Bernardino County and the Desert is doing in terms of foreclosures, auctions, builders?

 

 

 

I am usually in the desert (Coachella Valley) on the weekends.  A couple of weekends The Desert Sun had a huge front page spead about how bad the market is there, I was truly suprised since most of there revenue apprears to be generated from realtor advertising.  The sports section has homes for sale, as does the business and virually every page of that paper.  In any event, I have no numbers, but based on my observations it appears that homes are taking a greater hit out there compared to San Diego. 

 

In 1998 you could have purchased a 2 bedroom condo in Palm Springs for about $70k.  In 2003 they were going for $130k, and at the peak $240k. I think they are going to take it hard, given the increases, which to me seem greater than San Deigo.

 

 


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Suzanne

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Reply with quote  #62 
Thanks Taddyangle.  In spite of the title of this thread (use of the term "bad times"), do you not think there are signs of opportunities ahead?  I would think that there may be good opportunities coming up or perhaps good opportunities available now.  What do you think about investor buying opportunities in the Coachella Valley area at this point in the market cycyle? Suzanne
HungryBear

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Reply with quote  #63 

Happy Halloween, guys & gals!  Here is another scary story:

 

http://forum.richdad.com/forums/tm.asp?m=559746&p=1&tmode=1&smode=1

 

I'll try to make a long story short.

Basically, my business partner and I purchased several downtown condo's over the last couple of years during the boom, most all of which had equity built in when we bought them. The idea was to hold onto them for a few years (despite $200-$300 negative cash flows on each) in hopes of gaining a little extra appreciation.

Things haven't exactly gone as planned, and due to property taxes increasing and having to refinance some of the properties to finance other business ventures, the negative cash flows have gone from averaging $300 per month, to over $500 per month each. Take $500 times 13. OUCH.

I have a business that I am revamping that will hopefully begin to produce a some profit in the next 4 months or so, and I have an interest in a piece of commercial property that has the potential to pay off SOMETIME in the future, but I can't count on anything at this point.

So, the question is, what is the best way to eliminate this negative cash flow situation?

I have studied up on lease options, and tried to market a small studio condo that way with no success. I don't know if it's the market, the size of the unit, or what, but it didn't go anywhere for me. I still want to give it a shot, but it doesn't look too promising at this point.

Should I look into offering them for sale with owner financing? Any other ideas? I don't need to extract any equity, I just need to cover payments.

I have spent the past decade using creativity to build what I have and get myself out of bad situations. THERE HAS TO BE A WAY. Looking for any and all suggestions to get my creative juices flowing. Thanks in advance!
  Report Abuse |  Date 10/22/2006 8:33:47 PM
nordicnomad | RE: Need CREATIVE solutions to solve... (in reply to bigspeekr
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Wow... $500 negative cashflow a month over more than a dozen units... $500 is more than the actual RENT for most places in my area, but anyway creativity...

Some of these may be off the wall, but it seems like you're wanting ideas outside of the box.

1) Have you looked into an extended stay sort of set up for business travelers? It wouldn't require much of a conversion, you could adjust rates to demand throughout the year, and you'd probably only have to market to a few sources that do a lot of business in your area.

2) With that much bleeding, amputation should always be an option. So how about sitting down with your tenants that have been there a while, and you know are keen to stay but are renting for one reason or another, and offer them a lease to own contract? They'd take over all utilities, taxes, and maintenance and build an equity position for themselves at a break ever, or slightly positive price for you.

3) Are taxes done by the appraised value of the property in your area? It might be worth it to hire an appraisor to see how the location has dropped in value, and then argue the decrease to the county tax office to get a break on your taxes. That should atleast get you down to your target sustainable negative cashflow level.

4) Raise the rent so that it reflects the increase in your expenses over target. If you tell people their options are take the increase in rent or go look for another place when lease comes up, you should get enough takers to make ownership of the money pits bearable.

5) Look into a conversion that would make the units more appealing to people running businesses from their homes, i.e. Massage Therapists, crafting types, web designers, sales people, and other IT freelance types. Offer to build the units to suit their needs if they sign a long term lease agreement with rents that will make up your missing cash flow. Point out that they won't need office space and are in a convenient downtown location to keep their businesses profitable.

That's about all that I can think of, good luck.

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taddyangle

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Reply with quote  #64 

$500 a month negative on studios and one bedrooms.  Times 13.  Ouch.

Those responses to "try and help" were useless at best. I can't even see how this could come to anything but a bad ending. How can this end on an upnote?

 

 


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Subcranium

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Reply with quote  #65 
I find it kind of sad that every month we hear from the NAR that "the worst is probably over."

The bulk of the coverage today said the economy was down because the housing numbers "were worse than economists predicted" and "surprised economists."

Come on. There have been plenty of economists saying this was coming. Apparently, the media has been listening to the wrong ones.

The way to make money is to be brutally honest and not allow anyone with a vested interest to feed you a line. There's going to be a "right" time to buy. When the right time comes, I'm going to have money ready.

duane1x

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Reply with quote  #66 
Quote:
Originally Posted by loaner

 My words were similar as JDSU fell through 140....120....80....50....20...5. 

 

And as I watched Enron fall into the single digits I said to myself, Self, it is time.

 

Obviously it wasn't.

 

JohnVosilla what makes you think it is time for JDSU?

JohnVosilla

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Reply with quote  #67 

<>

 

Doubt it ends okay for the current owner. Most likely debt cleansing and a cramdown give a vulture investors some bargains in a few years. Real estate in the end is about cash flow..


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John Vosilla
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Reply with quote  #68 

'JohnVosilla what makes you think it is time for JDSU? '

 

Fiber optic sector has been basing for five years now, JDSU is the undisputed leader and has a great balance sheet.  Never ever try to catch a falling knife on a stock with tons of debt like Enron with high volume as it plunges..

 

I'm more of a trader with tight stops if things go against me  but there are always exciting and new things going on.  Staying away from the latest fad everyone is talking about is some advice I was once given and is so true and energy trading in 2000 was just another bubble with a major misallocation of capital with reckless due diligence and fraud.. 

 

So everyone was going to get rich easy and fast from tech in 1999 and coastal real estate in 2005.  What is next cause I've had to get rich the slow and methodical way one step at a time and would like to ride that next wave for a couple of years without doing anything?  All those hundreds of real estate rehab/flip deals and thousands of stock trades sure add up but it is 'work'


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John Vosilla
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Reply with quote  #69 
What I have noticed is allot of my clients properties have went back to being worth what they were selling for 12 months ago.  I guess the big question is how low will they go?  Below are just a few examples of files that I have seen on my desk in the last two weeks.  My ultimate concern is the people with short term ARM mortgages that bought in the last 12 months or pulled all the equity based on inflated values.

Murrieta property - $680,000 appraised value 5 months ago and 2 model matches selling for $595,000 active on MLS.

Murrieta property - $710,000 appraised value 3 months ago. Model match closed 2 days ago for $679,900.

Temecula property - $550,000 appraised value.  2 model matches on the market for $479,900 and another for $489,000.

Murrieta property - Purchased for $479,900 11 months ago.  Current comps show property value at $450,000.

La Mesa property - Refinanced 100% cash out 12 months ago and current comps at $550,000.

Escondido property - Refinanced to 95% CLTV 8 months ago.  Current comps show property value @ 5% less than the 95% cash out transaction.

Temecula property - Purchase price $650,000 with $65,000 (10% down) 14 months ago and recent appraised value $595,000.

taddyangle

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Reply with quote  #70 

Who knows how low they will go, but I imagine this is just the beginning.

 

I like to see the numbers because it gives a better representation as to what is happening in the real world vs. what the NAR or CAR will have you believe.

 

Seems to me that we have already lost 10% in soCal over the last year. 

 

I get a HOA newsletter for a condo we own in soCal and every quarter (maybe every month) they have a listing of the units that are on the market and that have sold.  I just got one yesterday, and from the peak it is down 15-20%.  So for me I won't be suprised to see another 15-20% in another 12-18 months. 

 

 


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RobertCampbell

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Reply with quote  #71 

BrokerBrian,

 

I spoke at a real estate investment club in Corona, CA a month ago.

 

The full-time investors there told me that prices for Temecula/Murrietta had dropped over 10% since May 2006. 

 

For flippers, that falling price trend made them factor in a continuing 10% fall during their holding period prior to finding a seller and closing the sale.

 

Thus, for flips and cosmetic rehabs in Temecula/Murrietta, investors were looking to offer only 60% to 65% of ARV in order to clear a 10% profit.

 

Robert Campbell

 

duane1x

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Reply with quote  #72 

John you are looking pretty sage on the JDSU call.

 

I looked at it but couldn't pull the trigger. :-( 

steveM

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Reply with quote  #73 
Quote:
Originally Posted by duane1x

John you are looking pretty sage on the JDSU call.

 

I looked at it but couldn't pull the trigger. :-( 

 

What is JDSU?...???

 

Fidelity says its an unknown symbol, so it must not be a stock?

Gekko

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Reply with quote  #74 

-

 

http://tinyurl.com/yn5kxv

 

 

duane1x

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Reply with quote  #75 

Wow look at that ride. (chart posted by Gekko). It's good to be reminded of what it looked like, historically. I know a lot of people who traded JDSU but I never did.

 

The important piece of it is this:

http://finance.yahoo.com/charts#chart4:symbol=jdsud;range=5d

 

John went in 10/25 see above in this thread. And he's up 15-20% in a week. Who wouldn't like some of that? Still, I didn't understand it then, and I don't now, so I sit on the sidelines and watch. The 8-K that caused the gap up shows flat revenues and a narrowing loss.

 

Well, it's better than losing more money, right? I see 900M of LTD on the balance sheet, enought debt and current liabilities to wipe out current assets and it's not the kind of company I like to chase. But I can toast those who (successfully) do.

 

John will you be buying WFMI?

Subcranium

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Reply with quote  #76 
I made tens of thousands on JDSU calls back in the day. Maybe 100's of thousands. Then I lost about the same on JDSU calls. I don't really feel like looking back at the numbers. It makes me sick.
Richard4009

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Reply with quote  #77 

The Bonnie and Clyde of Mortgage Fraud

http://biz.yahoo.com/special/housing110706_article1.html

Paul

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Reply with quote  #78 
Here's an interesting message thread on Elitetrader.com that I'm going to follow. The OP claims he saw a 1400 sq ft, new constuction home in Northern California for $375,000. While chatting with a sales person, she asked how much he'd be willing to pay. The OP said "$200,000". The sales person said, "We can do that."
http://www.elitetrader.com/vb/showthread.php?threadid=80524

Greg

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Reply with quote  #79 
Quote:
Originally Posted by Paul
Here's an interesting message thread on Elitetrader.com that I'm going to follow. The OP claims he saw a 1400 sq ft, new constuction home in Northern California for $375,000. While chatting with a sales person, she asked how much he'd be willing to pay. The OP said "$200,000". The sales person said, "We can do that."
http://www.elitetrader.com/vb/showthread.php?threadid=80524



Maybe this is something we should move over to a general discussion on finding deals. If it is instructive we can get it out of the yawn category.  But you left out the part about being in "the middle of nowhere". I'd really like to know  if this is closer to Eurekea or San Jose. Still a thread on deals from developers or something like that might be good.. Care to start one?
Greg



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Reply with quote  #80 
Realtor Association: 'It's a Great Time to Buy or Sell a Home'


What could be a worse omen than this full page ad? My wife saw it in the WSJ and started laughing. Funny and sad at the same time.

I'm expecting a follow-up ad in a couple months...

"Sellers, drop your damned prices!"
Paul

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Reply with quote  #81 
Quote:
Originally Posted by Greg

Maybe this is something we should move over to a general discussion on finding deals. If it is instructive we can get it out of the yawn category. But you left out the part about being in "the middle of nowhere". I'd really like to know if this is closer to Eurekea or San Jose. Still a thread on deals from developers or something like that might be good.. Care to start one?
Greg


I think the OP is a little unclear about the location as he states he was on his way to visit a lot and noticed the homes while on the freeway. I just checked the message string and there's no update since my link. Sometimes, off topic posts on elitetrader go nowhere. If the string shows more life, I'll gladly post as you suggested.



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Reply with quote  #82 

Not sure why Greg locked the thread "For Sale over a year".  There aren't a lot of specific posts & observations about what is going on in San Diego neighborhood-by-neighborhood.   I didn't see that as a bad thread.

 

I have watched recently a particular duplex in a decent area drop from $570k, to $540k now to $509k.   Also, I've been doing research on bank owned properties in San Diego, I check the sales history through the title records and see what the buyer bought it for and now what the bank has it listed for.  I'm seeing some houses bought for $700,000 in '05 that are now being sold by banks for $550k!

 

 

RobertCampbell

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Reply with quote  #83 

 

SamZell,

 

Thanks for the info.  My sources support your findings.  Those kind of discounts are occuring.

 

Best wishes,

 

Robert Campbell

AgSurfer

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Reply with quote  #84 

Quote:

I'm seeing some houses bought for $700,000 in '05 that are now being sold by banks for $550k!

 

Can you tell us which banks are agreeing to these discounts?

BayPark

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Reply with quote  #85 
Quote:
Originally Posted by AgSurfer

Quote:

I'm seeing some houses bought for $700,000 in '05 that are now being sold by banks for $550k!

 

Can you tell us which banks are agreeing to these discounts?

 

I think these are probably cases where the banks are not agreeing to discounts, but are simply putting them on the market after foreclosure as REO.  An example in the neighborhood where my rental resides :

2443 Burgener Blvd, 92110

sold 10/25/04 for $725K

sold 10/3/05 for $790K (was unoccupied for the most part from what I observed)

 

Foreclosure in June 2006.  Bank (Countrywide) took possesion at a recorded value of value of 670K.  Currently on the market as REO for 614K.  Great neighborhood, crappy house.  Probably not a great deal at 614K.  But getting there. 

taddyangle

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Reply with quote  #86 
Quote:
Originally Posted by BayPark
 

I think these are probably cases where the banks are not agreeing to discounts, but are simply putting them on the market after foreclosure as REO.  An example in the neighborhood where my rental resides :

2443 Burgener Blvd, 92110

sold 10/25/04 for $725K

sold 10/3/05 for $790K (was unoccupied for the most part from what I observed)

 

Foreclosure in June 2006.  Bank (Countrywide) took possesion at a recorded value of value of 670K.  Currently on the market as REO for 614K.  Great neighborhood, crappy house.  Probably not a great deal at 614K.  But getting there. 

In a year the price went from $790k to $614k?  That is a 22% decrease.

 

If you have the time, can you keep us posted on this property.  I am always interested in seeing what is really happening on the ground. 

 

 


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russ

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Reply with quote  #87 

"Not sure why Greg locked the thread "For Sale over a year". There aren't a lot of specific posts & observations about what is going on in San Diego neighborhood-by-neighborhood. I didn't see that as a bad thread."

Ignoring real estate declines seems like an excellent way to lose one's shirt, as opposed to a way of learning about successful "creative investing."

 

 

Greg

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Reply with quote  #88 
Quote:
Originally Posted by russ

"Not sure why Greg locked the thread "For Sale over a year". There aren't a lot of specific posts & observations about what is going on in San Diego neighborhood-by-neighborhood. I didn't see that as a bad thread."

Ignoring real estate declines seems like an excellent way to lose one's shirt, as opposed to a way of learning about successful "creative investing."



Unlocked now. Let's see some discussion there.
Greg

BayPark

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Reply with quote  #89 
Quote:
Originally Posted by taddyangle
Quote:
Originally Posted by BayPark
 

I think these are probably cases where the banks are not agreeing to discounts, but are simply putting them on the market after foreclosure as REO.  An example in the neighborhood where my rental resides :

2443 Burgener Blvd, 92110

sold 10/25/04 for $725K

sold 10/3/05 for $790K (was unoccupied for the most part from what I observed)

 

Foreclosure in June 2006.  Bank (Countrywide) took possesion at a recorded value of value of 670K.  Currently on the market as REO for 614K.  Great neighborhood, crappy house.  Probably not a great deal at 614K.  But getting there. 

In a year the price went from $790k to $614k?  That is a 22% decrease.

 

If you have the time, can you keep us posted on this property.  I am always interested in seeing what is really happening on the ground. 

 

 

 

Taddy -  Will try to update when it sells.  Heck, if they drop it another 75-10%, I might buy it.  In this particular example, the buyer at 790K overpaid by about 10% in my opinion.  Since that time, they have not maintained the property, inlcuding the pool, so the 22% drop includes two factors : 1) Buyer overpaid by about 10%, and 2)They have let the property sit and rot.  These have combined to get the 22% drop.  If the property was properly cared for, I believe it would not be that low.  The real drop in that neighborhood might be more like 10% currently. 

BayPark

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Reply with quote  #90 
Quote:
Originally Posted by BayPark

 Heck, if they drop it another 75-10%, I might buy it.  

 

oops, meant to say either 75K or 10%.

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