Old days
Good times I remember
Fun days
Filled with simple pleasures
Drive-in movies
Comic books and blue jeans
Howdy doody
Baseball cards and birthdays
Take me back
To a world gone away
Memories
Seem like yesterday
Old days
Good times I remember
Gold days
Days Ill always treasure
Funny faces
Full of love and laughter
Funny places
Summer nights and streetcars
Take me back
To a world gone away
Boyhood memories
Seem like yesterday
Old Days — Chicago
I wrote this in Brio New World “Previous generations had a formula for a “normal,” happy life. You used to save your money until you had a 20% downpayment, then you bought a house, and if you had increases in income, you could move up to a nicer place. Home ownership was a symbol of success. It proved you could save to reach a goal; it proved you were responsible; it made you happy. It was also a ticket to financial security as your home equity would become a savings account you could use to fund your retirement when you downsized to smaller accommodations. These were the rules of old.”
Today’s property is an example of someone living by the old formula.
Asking Price: $799,000
Income Requirement: $199,750
Downpayment Needed: $159,800
Purchase Price: $112,500
Purchase Date: 8/23/1979
Address: 9 Williams, Irvine, CA 92620
Beds: 4
Baths: 2.5
Sq. Ft.: 2,101
$/Sq. Ft.: $380
Lot Size: 6,030 sq. ft.
Type: Single Family Residence
Style: Contemporary
Year Built: 1979
Stories: Two Levels
Area: Northwood
County: Orange
MLS#: S457142
Status: Active
On Redfin: 407 days
Unsold in 90+ days
From Redfin, “HUGE CULDESAC LOT! Northwood charmer! Spacious home, well located, in quiet neighborhood. Downstairs den can easily be converted to 4th bedroom. Cathedral ceilings! New Appliances. Tons of storage space. Two fireplaces (Living Room & Master Bedroom). Walk-in closets in Master & guest rooms. Ceiling fans throughout. Over-size living area! Balcony off Master bedroom! Huge back and side yards with Gazebo style Jacuzzi! Close to shopping, schools, and freeways. NO MELLO ROOS AND NO ASSOCIATION FEES!!”
INTERMITTENT caps LOCK!
Exciting EXCLAMATIONS!!!
Tons of storage space? Mixing measures, weight and volume?
.
.
This is the quintessential example of an owner who does not need to sell. The house was purchased in 1979 for $112,500. There is a first mortgage for $62,400 that is probably nearly paid off. The owners have a mailing address in Grants Pass, Oregon which is likely where they are living in their retirement.
They have two choices:
- They could rent this place for an easy $3,000 a month, or
- They could sell the place and put the proceeds in the bank at 5%.
Surprisingly enough, either choice nets about the same income depending on the amount of capital gains taxes. It does make me wonder if they have a renter in the house now. You would think that if they decided to sell the place, they would lower the price to sell it immediately or take it off the market and get a renter in there. Sitting empty, this house makes them nothing.
If this were your retirement nest egg, what would you do?
Dump it and dump it quick. Take the money and run. Should have sold in 2006 like I did, but get out while you still can.
—–
a) These folks should drop the price to $450,000 so that it would sell in the next 60 days. It is probably worth about that much. Dealing with renters from a distance is no fun………….
b) As more and more homes come on the market as rentals, rental prices will start to fall. I track all sorts of rental properties and when they are above $2,500 they sit and sit on the market for months and months. Again if they want to rent the place rapidly, in the next 2 months, it would have to be offered at about $2,500 per month.
c) With regard to the profitability renting versus selling; There does seem to be some doctrine of equivalence here. I have the money from selling my Irvine residence, and the interest pays for rent.
I suspect that this is one of those families that planned their escape from Irvine for years and years. They finally did it and are hoping to sell their home for a great profit to fund retirement. As time goes on and they are not able to sell their home, their expectations will start to lower. When the stock market was going nuts, there were lots of people that made similar moves,,,,,,,,,(including my parents), and then when the bubble burst, they had to lower their expectations.
So this has been on the market for over a year? Either the owner is stupid or got very bad advice from the agent.
If it is currently vacant then it will degrade quickly – houses need to be maintained.
Why only one pic of the outside – wonders what the inside and backyard look like. The wood fence that I can see in the front is thrashed and probably full of termites. This place definetly needs to be tented.
6000 sq ft lot is only big relative to the other tiny lots in the area. The house is also in a bad location in the tract – the front is in the direct path of a cars headlights.
450k
So the downstairs can be a bedroom, so why not market it like a bedroom now & count it into the price? Sorry, people, that’s not legal. This REA should know better.
More than a year & it looks trashed? 800K?
Does Oregon have really high altitude or something?
There is not a single reason in the world for a house to sit more than one hundred days on any market, let alone 407, other than improper pricing. If these people are not generating income on this asset, they need to dump–immediately.
Unfortunately, by letting this sit for over a year, any sober price reduction (I’d think in the neighborhood of 200k) will just add wariness to the tiny pool of already hypervigilant buyers. The listing agent’s failure to motivate earlier price reductions does not speak highly of him or her. I am impressed, though, that they’ve not gotten themselves a new MLS number, to mask the DOM count. That shows integrity, if only a little.
THe house is worth maybe $525K. At $800K it will be for sale for the next 6 to 8 years.
They should set the price at $1.2 Mil. The results will still be the same.
renting or putting the proceeds in a CD or equivalent to yield 5% might provide the same income but renting is much riskier, just takes one bad tenant to stop the income or mess up the property. at their age (retirement it seems) they should just put it in a diversified high yielding account rather than rent, to lower their risk.
Dump it. Bail. Cash out. Amscray. Be the comp killer. The lead domino. Make all your ex-neighbors pissed off. Think in terms of an exit strategy. Is that clear enough?
Whatever it takes, convert this real estate asset to liquid, and never look back. When you are in retirement, as these Oregonians are, living many hundreds of miles away, you gotta have a clean break with the past. Getting a phone call from the Irvine police department that a group of hopped up methamphetamine squatters has decided to bash out every window in your homestead, disassemble the copper plumbing, stuff garbage in the duct-work, dump benzene solvent in the back yard, and assault the neighborhood children and oh by the way as absentee landlord you are responsible? Eff That Noise! Get a new agent, cut the price on a weekly basis, and get out while you can. And never. Look. Back.
Bank of America Earnings Drop on Loan Writedowns (Update5)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBVtMh86m9xo&refer=home
Subpar Earnings: Companies Blame Housing, Credit Problems for Weakness
http://online.wsj.com/public/resources/documents/info-retro-subpar20070925.htm?&s=2&ps=false&a=up
As companies prepare or release their quarterly earnings statements, many are blaming the subprime meltdown, housing slowdown and credit crunch for weaker-than-expected results. Here’s a selection of companies that have cautioned of an impact in recent months. This chart will be updated as more companies report.
If you can still get the income tax exclusion of 250 or 500k off of the gains, you HAVE to grab that. That is an extra 75k that goes away in the future if you don’t.
Even if that is out of the picture, I would still do everything I could to sell.
Bail – And this is from personal experience (very recent). Just had to evict a “rent whore” from my Irvine rental. Stopped paying in July and it took ’til September to get the loser out. He fought it in court (pro per, of course) just to steal a few extra weeks of rent. Place was left OK, but I’m out four months rent while I get it painted, carpeted, etc.
By the way, Wells Fargo Morgage still wanted their payment while the rent theif was living there for free.
I love this entry.
Hearing all you make suggestions about how these owners should price their property is like hearing a wolf tell the farmer where he should keep his flock.
Keep smokin’ the bounty of the Oregonian crop.
It really depends on the rest of their portfolio. If they are low on real assets, it probably makes sense from a diversification standpoint to hold onto the property.
Just read the book Freakonomics which mentioned real estate terminology… this one looks like it would be referred to as “well-maintained,” which I always thought was a compliment, but in fact it means the owner has had the place forever and it is dated!
I bet shag carpeting is throughout and there’s corkboard in the kids’ rooms. Possible wood paneling in the den, most assuredly cobwebs in the cathedral ceilings….
No pix of the inside speaks volumes, esp. since the agent has had well over a year to get in there.
Final Answer: Sellers Cannot Provide Downpayment Assistance
http://www.absnet.net/include/showfreearticle.asp?file=/headlines/2.htm
That’s a hard decision. On one hand, Irvine was founded by baby boomers, and a lot of them may be selling in coming years. On the other hand, Greenspan foresees inflation, and the house would be a good inflation hedge.
Probably should be driven by other concerns (ex. current and anticipated health of the owners and their ability to play landlord, desire to worry about and upkeep a place in another state). They could always just sell it, wait a few years for Oregon prices to drop, then pick up some rental properties closer by in Oregon if they really wanted to be in the rental market I guess.
Burned by Real Estate, Some Just Walk Away
But Abandoning Investment Property to Foreclosure Carries
A Very High Cost; Slashed Credit Scores, Vulnerable Assets
http://online.wsj.com/article/SB119266868024662861.html?mod=todays_us_personal_journal
One of the first effects of walking away from a mortgage is an assault on one’s credit. The foreclosure could remain on your credit report for years and will sharply reduce your credit score, experts say. “This makes it more difficult or extremely costly, and in some cases impossible, to do more financing in the future,” says Jack Guttentag, a professor of finance emeritus at the Wharton School of the University of Pennsylvania who operates a mortgage-advice Web site.
In some cases, lenders can go after an investor’s other assets to satisfy a loan if the borrower defaults. But that often depends on the loan agreement, which sets out what recourse the lender has in the case of a default. In a nonrecourse loan, lenders can take only the property itself to satisfy the debt. Most loans, however, are recourse loans, which means that the borrower’s other assets may be at risk.
Individual investors may even be on the hook if they borrowed through a limited liability company or a partnership. Principals of LLCs, or general partners of partnerships, can be personally liable if they act as guarantors; lenders often require personal guarantees as part of the loan agreement.
“Banks want the individuals on the hook,” says New York lawyer Gideon Rothschild. Partnerships and LLCs are good to “protect you against slips and falls on your property,” adds Jay Adkisson, a Newport Beach, Calif., lawyer, but they offer little protection if a lender requires you to sign a personal guarantee.
What’s more, whether other assets, such as insurance policies and personal residences, are shielded from creditors varies widely by state. In Florida and Texas, for instance, your home, life-insurance policy, annuity or retirement plan are generally shielded from creditors. California, by contrast, offers much less protection for debtors. (More details about your state’s laws are available at http://www.assetprotectionbook.com/state_resources.htm.)
Of course, investors can take steps to shield their assets from creditors. But setting up fancy structures, such as offshore trusts designed to keep property off limits from creditors, typically only works if done before creditors appear on the horizon, says Beachwood, Ohio, lawyer John E. Sullivan III. Similarly, assets in a 401(k) are generally protected from creditors if the plan was already in existence. “If you plan when the coast is clear, you should be OK,” says Mr. Sullivan. “If you choose to wait, it could be too late.”
Mr. Adkisson, the Newport Beach, Calif., lawyer, says he has received about 30 calls a week in recent months from real-estate investors seeking to shield their assets, just as lenders are beginning to chase after them. “There’s just an absolute flood of people seeking asset protection, and it’s all after the fact. It’s like buying auto insurance after the car wreck.”
Perhaps they are dead, and their greedy, stupid children or grandchildren are just trying to maximize their profits.
http://www.southoctracker.com/2007/10/shall-we-compare.html
Did anybody see this? Its a real cool thing with news stories from the last bubble. the articles are alot like the ones about what we are in now
I would have sold in 2005.
I begged my mother, who lives in Summerlin just on the edge of Las Vegas to sell her home in 2005. I begged her to.
Now she wants to sell.
Oops.
Timing is everything. Unlike my mother, it would appear these folks have the luxury of not being forced to live in the property they’re selling. Good for them.
As for what else I would do, well, I’d have to know a lot more about them personally to make any kind of intelligent decision.
Yes, I saw it 😉 It’s scary that some of the same issues/discussions that are going on today also played out in the late ’80s-early ’90s…even down to the claims of “pent-up demand.” Since I wasn’t old enough back then to fully realize what was going on, it was interesting to see what people were saying and relate a lot of it to now.
Geez, I must be living in a dream world. 8 years of being a landlord of 2-3 homes in the dreaded IE, two-thirds of that time while living in the Bay Area, and I have yet to experience a bad tenant. I’ll count my blessings after reading some of these posts.
Goodbye subprime, hello FHA
At mortgage conference, lenders push back-to-basics theme for industry in coming years.
http://money.cnn.com/2007/10/15/real_estate/mba/?postversion=2007101517
Interview with Shiller on PBS.
Housing, Credit Crunch, Oil Prices Spur Economic Jitters
http://www.pbs.org/newshour/bb/business/july-dec07/jitters_10-16.html
August sales contracts for new housing in Orange County
http://lansner.freedomblogging.com/2007/10/18/aug-sales-contracts-for-new-housing-off-47/
Here’s the August breakdown:
76 single-family home contracts were signed in August, up from 71 the year before; the median sales price was $1.1 million, down 6.5% from the year before.
24 condo contracts were signed, down from 81; the median price was $450,000, up 20%.
42 contracts for townhomes, duplexes, triplexes and other “plexes” were signed, down from 117; the median price was $518,000, down 9.9%.
Rents on the rise as home prices slip
Some of the increase is attributed to the crisis in the housing market.
http://www.latimes.com/business/la-fi-rents18oct18,0,6262683.story?track=mostviewed-storylevel
Hey, it’s no problem to rent a place out as long as you’re not picky about the tenants. Take my next door neighbors. They have 4 small, screaming children and they rented the two bedroom condo next to mine which had just been gutted and refurbished. I’m sure it’s their dream place. Oooh, wait, maybe it isn’t such a dream for the landlord… or the neighbors…
online petition to your congress-dude for more responsible lending/financial practices. interesting RE discussion on govt regulation earlier this week. i wish i could find info on the sponsoring organization.
http://financialpetition.org/
you are absolutely right. this time capsule from 1979 is not worth a penny less than $799K based on nostalgia alone. Jimmy Carter was a good man. Down with the Shah!
these folks need a good retirement: where did all the greater fools go??
Which leads me to believe that we’ll be doing this again in 10-15 years, complete with another run-up in housing prices followed by a loud, familiar popping sound.
I don’t think it makes any sense to hold on to this property. No rental income and no appreciation. Why is it vacant? Family Guy, I think that our suggestions about lowering the price are completely warranted given the fact this property has been on the market for a YEAR.
Do we know when the owners moved out? As long as they were living here within the last 5 years they can still sell it as a primary residence and avoid capital gains taxes.
…and another straw is stacked on top of the dead camel.
I wonder if anyone will actually get in trouble for this.
You’re the one who signed up for the mortgage. NOT your tenant. The amount of money you’re asking in the name of “rent”, qualifies you as a thief just as well. Why do you expect someone else to pay for your mortgage? May I say you’re a greedy asshole?
“Family Guy, I think that our suggestions about lowering the price are completely warranted given the fact this property has been on the market for a YEAR.”
LM – I always enjoy reading your posts so please don’t be offended when I say that you are misconstruing the meaning of my statement.
Looking at the neighborhood, there was a sale 9/4 (post credit crunch news coverage BTW) quite literally right around the corner. It’s a 3/3 with app. 500 additional SF built in the same year. So make whatever adjustment you will based on the slight variations, but this house sold for $671k.
I agree they need to reduce the price to sell this home, but do not agree on the extent to which they will need to do so.
No you may not. Disagreeing with an opinion is one thing; calling names is another. Please stop.
This older couple did well. They held thru the housing cycles and didn’t blow their equity. They probably have a lot of equity on their Grants Pass home too and other assets. I’m also retired and have homes in Irvine and Breckenridge CO purchased decades ago…that have never been intended as investments. I’ve also owned many rentals SFR and those are LONG term investments…though I have liquidated 75% of my holdings recently. IMHO they should convert to rental, do all the repairs and remodeling (costs are deductable) and prepare for the day when oil hits $150/bbl (next 5 years) when they will sell Grants Pass and move back to a more practical abode.
If you could buy the house for cash then I’d possibly consider this home a possible inflation hedge; however homes are purchased with debt and not paper dollars. Inflation will cause long term rates and profit margins to increase which will increase mortgage rates and put downward pressure on prices.
How certain are we of this lending information? It is highly possible that the mortgage is simply not showing on title, especially if there was a cash out refinance. They could also have a “silent” mortgage from a private party which wouldn’t report on credit.
Someone else also mentioned that the original owners could even possibly be deceased. This sounds plausible. They beneficiaries may not want to sell.
I stand corrected. Thanks. Buster you are not an asshole, just greedy. Keep up the good work. Please continue insinuating that tenants are nothing but thiefs. Landlords are superior in every ways to lowlife tenants.
PS
IrvineRenter! I would be delighted if you could find some Black music as well to relate to this tragic real estate times upon your intros of your daily postings. Thank you much!
Could also mean that the REA just isn’t bothering anymore.
Sorry, Dr. Ruth, but $2,175 for a 4-bed, 2-bath SFR in Irvine actually qualifies as more than reasonable, I believe. OK, it’s in the Willows and is old, but it is neat and clean. The mortgage is less than $1,400, but after taxes and insurance I don’t think the return on investment is excessive nor do I think anybody’s getting “gouged” here. It’s a fair deal all around, IMO. It’s been constantly rented since 1991, so if the rent were so “unfair” it would seem to be empty more often.
Right now there are three people who want it when the paint and carpet are done and, no, I’m not pitting one against the other to jack up the rent. I raised the rent to $2,275 to cover the cost of repairs, and I’ll rent it to the most qualified in terms of creditworthiness – fair and simple.
This is probably a good time to air bad news no matter the cause. Just blame it on the subprime crash.
Er, I think she was joking. Please tell me she was joking.
It’s been on the market for over a year. It’s empty. It’s not in foreclosure. So I’m not seeing distress. In fact, I’m seeing a rather careless attitude toward the thing.
Neither Buster nor Dr. Ruth can spell. “thieves”.
Dr. Ruth, if you have been lurking for any amount of time,
you know that a lot of the posters are pro-renter.
They are anti not paying the rent you agreed to pay.
Thanks Liz.
Very nice words from an eviction lawyer. Obviously buster is not one of them pro-renter posters for sure. His opinion goes so deep as to call pro renters “rent whore” and “thief”.
Yeah, global warming’s due to the subprime crash….
… oh wait, if people are forclosed and downsize, that’s less emission from home heating coal
… and less from their economy rental car after their new SUV got repo’d
… damn, it’s not working!
Dr. Ruth – you’re not Kirk’s sister by any chance, are you :)?
Yeah, but if you got a 30-fixed at 6.5% and then inflation went double digit, you’d be sitting pretty.
I was also thinking the owners could be deceased. It would seem strange that the house has sat on the market without any price reductions for such a long time.
Global Warming? I like warm summers. Pass the 91 octane supreme unleaded please.
But I kinda meant whatever dirty laundry you’ve been carrying on your books and trying to figure out what to do about. Take the write off now. It’ll be invisible, buried with all your subprime losses. And no one who doesn’t line by line your 10Q will ever know about it.
She was not joking. “…could find some Black music…”
You are right Dr Ruth, Buster is just The Man keepin you down.
Cool article. By ’87-88 in Florida, we had gotten over the damage done by the super high interest rates of the late 70s early 80s.
Things were going up gradually but nicely, rates were coming down,
everything in the housing world was fine (of course there were foreclosures due to jobs loss or medical bills, but these were individual tragedies only), and this continued until the buying panic started in the last 3-4 years.
There were a few real estate investors around, who accumulated rental properties, but they expected to at least break even. A lot of them did really well are a result of getting a lot of cash out due to
hurricane Andrew.
Certainly everybody wasn’t a flipper.
This present housing hurricane seems to be involving half the country.
You are very very lucky, or are an excellent judge of character,
or both.
Yes as far as your payments are concerned you are correct.
Michael Vick?
Perhaps some Asian or Persian music…after all, this is Irvine demographics.
MBA sees loan volume dropping through ‘09
http://mortgage.freedomblogging.com/2007/10/18/mba-sees-loan-volume-dropping-through-09/
I used to be a real estate lawyer who did the occasional eviction. Did one this morning. Now I seem to be a real estate litigation lawyer. Evictions are only a small part in that.
Does Dr Ruth really think that non-payers should stay there indefinitely? Or, if somebody wants his house back because he or she wants to live in it, or have a relative live in it and the lease term is over, that the tenant should be able to flout the landlord’s wishes?
In short, does she believe that one should not honor one’s word, which is in the form of a contract?
Yes, yes, I know she’s Kirk’s spiritual sister, but I think Kirk just likes to jerk chains, and I get the feeling that Dr. Ruth
really means it.
I’m not ashamed of doing collections. It’s no different than collecting garbage, it is not pleasant, but has to be done.
Oops, “evictions” not collections.
Nothing wrong with doing collections either.
That’s why there’s no picture of the backyard!
thanks for the link
speaking of Asian/Persian music, I wonder about the impact of the drastic demographic shift that has occurred and continues to occur in Irvine: it is becoming an enclave of Asian/Persian immigrants.
I say this change in demographics cannot occur indefinitely without some impact on the housing prices. there are only so many immigrants that can pony up 799K for this 1979 POS featured today. Having said that, the Persians i know are unusually well-educated and hard-working: we got the cream of the crop, the ones that came over here to make something of themselves. same thing for my Asian neighbors. but as much as i like and admire them, it makes for an unfamiliar neighborhood.
Where the heck do these people get their crystal ball projections?
Does anyone check to see if their predictions are accurate?
What, for example, were they saying last year or the year before about this year?
I wonder when watching this blood bath of a housing market will no longer be fun and we are all just to depressed to write on these blogs anymore!
This house is worth $369,000.00 if there is no HOA…
Unless you’re over extended on real estate, why would you possibly want to sell a property with a tax basis of about $150,000?
Given that it’s on the market 400+ days and has no interior photos, I would guess that the property has a long term renter in place.
Maybe do a 1031. Maybe just turn it over to OC Property management and get a regular check in the mail.
But sell? Never. Unless of course, I could sell it tax free for about 2X what it is going to be worth in a couple of years.
Thank goodness for “eviction” attorneys. People who don’t pay the rent they agree to are thieves.
“Fair” rent is whatever the two involved parties agree to.
This isn’t blood. Yet. This is just the start. It will be running in the streets.
If you look at Vancouver, BC as an example, near Churchill (the equivalent of University High up there, the best HS in Vancouver), it’s the Asian area of choice. The prices are sky high and remain so.
So, if anything, the immigrant influx might permanently raise the values (as long as the school marks stay high – which is self reinforcing if the high prices select for professionals smart enough to earn enough money to buy a place there, and then they fork out more $ for tutors and such).
You ever think “subprime” could enter the popular lexicon as slang?
Ex. “I hate that dress, it’s so subprime”. 🙂
Great Video, Chicago is one of my favorite bands. Old Days and Beginnings are great songs. Saw them in Hawaii in 79′.
Looks like the depreciation curve is starting to steepen.
Keep fighting the good fight.
I would have sold it in 2006 (like we did)! And then financed my retirement further…
“An influx of homes on the market, along with the subprime mortgage situation, has slowed activity, but homes are still being sold,” says 2007 Association President and REALTOR® President Tracey Saizan…If you have good credit and want a lifetime investment, now is an excellent time to buy. The credit crunch is contributing to the notable inventory and negative press is a major factor keeping inexperienced buyers at bay,” continues Saizan, “but REALTORS® who have experienced these market fluctuations are patient and will endure the softness in this market.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ad0OvQgcATwI&refer=home
The Berkshire chairman said he was in contact with Calabasas, California-based Countrywide as the company’s stock fell in August amid a cash shortage brought on by the worst housing slump in 16 years. The company lacked a comprehensive plan that might have interested Berkshire, Buffett said.
He never bought any shares of Countrywide or Hovnanian Enterprises Inc., the largest U.S. luxury homebuilder and the subject of takeover speculation. The Red Bank, New Jersey-based company has dropped 70 percent this year. Neither stock is undervalued, he said.
Buffett said he was skeptical about the U.S. Treasury’s plan to create an $80 billion fund to buy distressed assets from structured investment vehicles linked to home lending.
“I don’t see any way that pooling a bunch of mortgages, changing the ownership, is going to change the viability of the mortgage instrument itself — whether people can make the payments,” he said. “It would be better to have them on the balance sheets so everyone would know what’s going on”
Great comment!
I couldn’t say it better.
I have, for the past two years, been seeing stuff sit on the market for 400, 500, 600 days here in Chicago in my area. I made lowball offers on a couple of attractive condos that were grossly overpriced, and you would have thought that I had tried to break into the places and squat in them, the way the sellers acted.
Now, Stupid, if I start hearing that usage, I’ll know who started it.
You have my sympathy on your tenant woes, as a friend of mine here is drowning in a tank full of alligators. You name it, he has it- severe negative cash flow on overpriced properties in truly crummy neighborhoods, and non-paying tenants that it takes time and lots of legal fees to evict and who leave the properties trashed.
None of this, strangely, has abated his enthusiasm for rental property. To him, real estate is “it”, and any pullback in prices is not a sell signal but a “buying opportunity”.
Having said all this, I will say to you, in all sympathy, that being a landlord is not for you or my friend, but is really only for professional property owners who are really businesslike in their approach to the whole thing and accumulate properly priced multifamily bldgs. and manage them professionally.
Single family homes usually don’t pencil out too well as rentals, and small landlords usually don’t have the expertise or resources make their properties work for them.
I rent in a large, well-run, and beautiful 1920s-vntge building that is very well-managed and maintained. The rent is cheap, the apt beautiful, the tenants are great-altogether a lovely place to live with many long-term, high-quality people living in it and a great building culture. This is because my landlord bought a rundown building very cheaply, and rehabilitated the place intelligently and managed it carefully. This is a seasoned,careful, well-heeled property owner who can walk through any building and know down to the penny what it will cost him and how much rent he can collect vs what he will need to be profitable.
Small landlords, conversely, try to rent out their houses or extra units in their 2-flats and get burned because they don’t have the experience or wherewithal to get good professional management and good legal advice, very necessary to avoid getting bad tenants who squat for 6 months rent-free while you jump through umpteen million legal hoops to evict them. And DON’T ever do that without a lawyer, for in most municipalities you have many laws and regulations governing landlord -tenant relations, and if the landlord runs afoul of them by just one tiny procedural violation, the tenant not only gets to live there another month or so for free, but often collects $10K worth of “punitive damages” on top of it. Learning from trial and error as a small landlord is financially very destructive and often financially lethal.
Viewing it that way, and counting your gains vs your losses very honestly, you can see you are better off just dropping the price and selling.
Yup, if you want to know when it is an excellent time to buy a home, ask a realtor.
Prices aren’t really coming down. It is just the media.
Give it another couple of years and they will be begging you to make any offer at all.
Irvine is quite a bit larger than a single high school district in Vancouver so my point remains that Irvine will plateau because of its skewed demographics. Newport Beach is noticeably more expensive than Irvine and remains the “familiar” sort of America that I grew up in, for better or worse. And I say that if Newport Beach were to become Irvine-zed with respect to its demographics, the prices would drop.
That’s Vancouver, BC the large metropolitan city in Canada.
Not Vancouver, WA the little town.
Also, that’s a rather narrow POV to assume that the all white areas will always be the best wth the most money. Perhaps you missed Templeton’s forcast that in 2030, China will have the largest GDP in the world.
There are 18 high schools in Vancouver (http://www.vsb.bc.ca/schools/Secondaryschools/default.htm)
as opposed to 6 in Irvine.
Interesting. Hadn’t been to http://realestate.yahoo.com/ awhile to check out their forclosure tool, so dropped by. If I type in “Irvine, CA” and click on the foreclosures option button, I get a lot more results than I used to.
Using an inflation calculator on the web, the $112K purchase price in 1979 is equivalent to around $330K in 2006 dollars.
That’s not to say the original owners didn’t overpay back in 1979 when they bought the place.
Use of subprime will be so divine. I’ll start using it in Florida
and you’ll use it in Cal. and we’ll see if it ends up in the midwest or northeast
Not always, my nice tenants who didn’t pay, didn’t pay after they unexpectedly got sick and lost their jobs. They left right after I filled eviction, and didn’t try to fight it. At least they improved the house.
Any forecast that says China’s GDP will be so high is not
taking into account the degradation of the environment into
acct. They are, effectively eating their seed corn.
Right now for me it isn’t fun. My fun graph went like this:
—
—
—-
—-
————-
——————
^
| —-
FUN
| ——
——————–
ETC
Well, that didn’t work.