Is now the time to invest?

[CalvinTy]

The market will continue to go sideways for the next few months... we would get more bad reports/news, and at same time, optimists would point to all of the activity lately that shows "improvement" to our economy. Since we are around the bottom-- any upward movement is naturally expected & some people would try to rally the market with this info, when it's already "logical".

In reality, yes, the stock market would go up before the economy will, sure, but the DOW (not a good measurement to use, IMHO) would stay between 7500-9500 for the next few months anyway, say, about 3 more months until the next quarter reports come in for many companies. At that point, there would be a bigger swing upwards or downwards depending on our expectations of the economy at that time.

* CalvinTy

 

[joeyfitzclick]

Buy an investment property in Newport, RI.

Please.

 

[CalvinTy]

Buy an investment property in Newport, RI, from me.

Please.

Fixed your post. *small grin*

On a serious note, how bad are you affected in the last 6-9 months? I recall you saying you are not betting these days; just am wondering if you had to protect your real estate investments (as in making a move when you didn't want to) in this down market?

* CalvinTy

 

[whalewager]

joey will turn it around soon...hes too smart to not come out strong

 

[joeyfitzclick]

I own 17 properties and 13 of them are currently negative cashflow. I won't go into too many specifics but I have five figure monthly negative cashflow that has all but eliminated my cash reserve.

I will share a few details in the hopes that it helps someone else at some point.

Here, in essence is my problem.

Go back a couple of years and I purchase property A for $500,000 and put 20% down so I have a mortgage of $400,000 and a monthly payment of $3200. The rents coming in are only $2500 but I don't mind because a year from now it will have appreciated $100,000 and I can afford the monthly loss due my large income ( that no longer exists) and cash reserves (that also no longer exist).

Now add a vacancy here, a couple of dead beat tenants there and a burst hot water heater or two and this place is costing me a $1000 a month to own. I can't sell the building because its only worth $350,000 now (the market in down 30% in 4 years) and I don't have the cash to bring to closing. I can't walk away from the property in foreclosure or a short sale because I am $100,000 in cash into it and as a real estate investor/developer my credit is my livelihood and so I continue to pay the $1000 a month until the market comes back and its worth $500,000 at which point I sell and be happy I got money back.

OK now times 13.

Such is life.

I went from retiring at 42 to being broke in just under 5.5 years.

 

[whalewager]

whens the last time you were able to sell a house joey

 

[SSI]

you can control 100oz of gold for $6000 in the futures market...

if you purchase 100oz of gold, it will cost you over $90,000..

you will make or lose the same amount..

had you rather invest $6000 or $90,000?

SSI

 

[joeyfitzclick]

whens the last time you were able to sell a house joey

I had a closing on January 7th - it was a decent sale but I hadn't paid my Remax bill in so long I ended up with what looked like a rental commission.

My last closing before that was my girlfriends Mom who bought a small condo in July.

I sold 41 houses in 2002 - I sold 4 in 2008.

 

[Kruser6]

I had a closing on January 7th - it was a decent sale but I hadn't paid my Remax bill in so long I ended up with what looked like a rental commission.

My last closing before that was my girlfriends Mom who bought a small condo in July.

I sold 41 houses in 2002 - I sold 4 in 2008.

Joey, I am looking into buying some duplexes in Iowa that are being sold under "market value" or assessed amount.
Some of these have tenants already living in them. In your experience what percentage of units does it take you to have a break even point?

I did some math and came up with about 65%. Does this figure sound about right to you?

 

[joeyfitzclick]

Can you rephrase your question ?

I'm not sure what you're asking ?

Thanks.

 

[Kruser6]

Can you rephrase your question ?

I'm not sure what you're asking ?

Thanks.

What % of available units is normally needed to break even.

For instance, you have 10 units available(5 duplexes), does 6 units of the 10 sound right for your break even point?

 

[joeyfitzclick]

Do you mean does having six of them rented = break even.

That would leave you with 4 vacancies ?

 

[CalvinTy]

It all would depend on this "granted not that simple" formula for a given month:

Mortgage of building < (All rent money - maintenance expenses)

Whether the building's value goes up or down, it doesn't help with the monthly bottom line, I'm guessing-- unless you are able to re-structure any mortgage loan during times of low rates.

I imagine that most buildings are already approximately valued based on rent amounts x number of dwellings so if you have 80% occupancy, still not that good because it's income that is missed.

Do I have this thought right, Joey?

* CalvinTy

 

[joeyfitzclick]

If I have even one vacancy it hurts like a bastard.

If I was at 80% vacancy I'd be living under a bridge.

 

[CalvinTy]

If I have even one vacancy it hurts like a bastard.

If I was at 80% vacancy I'd be living under a bridge.

I had said "80% occupancy", just letting you know. I was commenting based on IndiansK6's question about whether 65% occupancy is a break even point, which I doubted.

I was figuring that even 80% occupancy (or 20% vacancy) is not good either?

I wonder, 8 units occupied out of 10 seems more of an impact than 40 units occupied out of 50? Or 80% is just 80% regardless of whether a person owns a 10-unit building or a 50-unit building?

* CalvinTy

 

[jwblue]

Yes this is a good time to invest.

 

[joeyfitzclick]

I had said "80% occupancy", just letting you know. I was commenting based on IndiansK6's question about whether 65% occupancy is a break even point, which I doubted.

I was figuring that even 80% occupancy (or 20% vacancy) is not good either?

I wonder, 8 units occupied out of 10 seems more of an impact than 40 units occupied out of 50? Or 80% is just 80% regardless of whether a person owns a 10-unit building or a 50-unit building?

* CalvinTy

Buildings with immediate positive cashflow (years 1-3) are rare so yes any vacancy would hurt never mind 80% regardless of number of units.

 

[gbogo]

stock market is not the same market as before because companies cant make as much money in the future as they have in the past

people keep saying they want to buy but i think they would buy it goes up abit and then they sell out again

so personally think you have time if your investing for the longer term

this is just a disaster

and Joey sorry to hear about the real estate problems - I just cant imagine having to ride out that swing right now.. best of luck

 

[bellyputter]

My father died a wealthy man, and he never purchased a single stock or mutual fund in his life.

 

[whalewager]

well of course he did belly...arent all your family members millionaires???