patrick.net

Or is it OR? I keep forgetting you are up there.

Malcom,

Las Vegas.

Construction lenders are going to have to really watch out for these guys. Next thing you know your borrower runs out of money because his management salary for running the construction site drains the budget. As soon as someone realizes that they won't make a profit selling the houses they do this.

We've been reading about some Vegas whoppers. Did Trump's ex back out of that project she was going to do?

Malcom,

Absolutely true! Sure, they'd rather have outrageous fortunes but "until the market gets turned around" this will do. It's the ugly side of construction lending. Builders live off of borrowed money so they're comfortable with this arrangement.

Trump's ex,

Michael Jordan,

George Clooney

to name a few. It sure was good to see Steve "The Shill" Bottfeld finally admit that just "maybe" something could be wrong in Vegas!

They need hotel rooms, not condos.

On some of the deals I invested in, the broker would maintain 'fund control' and literally would write the checks to the subs as the project proceeded.

That is a nightmare scenario for a lender because not only did you lend on a project that is not worth as much as you thought, to run out of money and not have it finished, and to then end up with the property is a disaster.

My scavenger instinct is really watching this project closely as I believe there will be an opportunity there. The thing that sucks is it is a typical bubble construction where a strip of homes literally have their front door 10 feet from a busy street with the parking in back. There are of course no amenities, but the houses are cute. They look like doll houses, almost like the SF painted ladies.

"My scavenger instinct"

This is what's left at the end of the cycle. Timing your entry point to where everyone else has exhausted their resources and you get to pose with the slain dragon! (Is this my good side?) :)

God that guy is a jerk. So typical. He could sell the good ones to cover the bad ones, but his sleezy atitude is that the good ones are his lifeline, and the bad ones should be someone else's problems. Sure, he should get a bail out. It is actually fun to watch people like him squirm.

Ha DinOR, that is funny. Yup, I'll get Patrick to post a picture of me smuggly standing next to the half finished project with the auctioned deed in my hand. ha ha ha

I do think that I would have an interest bidding in its current state and finishing it. Obviously I would calculate the homes in the 300K selling range not the 600K currently advertised.

Bail Out,

What kind of investment property makes sense when it loses $1,000/mo when it IS rented? We just had a thread about wealth disparity and starving Americans. I can't understand how this guy and people like him don't starve to death. The safety net should have holes just big enough for him to fall through.

The safety net should have holes just big enough for him to fall through.

LOL :lol:

Malcolm,

I bet his 'good' properties are losing money while they rent, too, just not as much. And his little eyes go 'kaching kaching' when he reads the zillow estimates of the appreciating properties.

Appreciation investors are just like dot-com investors. When the bubble popped, I lost some dot com money, but the majority of my investment was still in companies with P/E ratios closer to 30 than to 300. And I sold a half of my dot coms whenever they doubled, so I only really lost on the last few I bought that never hit the double mark. Live and learn.

If any of these 'investors' would do a P/E before buying the houses, they'd know how risky a property was. A slightly negative income property in a place growing jobs in a strong economy might not be a bad long term investment, but you need to figure how you'll carry it. HELOCing your primary residence for carrying costs means you're a damn idiot.

In my hood (San Ramon) the lawns are littered with real estate signs. It's dizzying the number of brightly colored "I'm gorgeous inside" signs. I lost count driving at 25 mph....I need a passenger to count 'em all. This last weekend is when the frenzy began. And the sign twirlers are out in force (still).

We can all go with anecdotes about RE signs, listings on MLS for your local neighborhood and what not, which are fine. However, the real crux is in the true numbers, and looking at the listings numbers at a site like housingtracker.net, the inventory in the SF and San Jose areas continue to go up every week, and they are significantly higher than they were at this time last year. Asking prices remain stable, declining slightly, but are significantly lower than this time last year.

Anecdotally speaking, I will say though, the Peninsula seems stable. There's no dearth of available properties, but on the flip side some places do seem to linger, while some seem to go quickly.

Check i tout - one of my favorite sites now shows data for the Bay Area:

http://www.propertyshark.com/mason/ca_santa_clara/index.html

The amount of detail they reveal is awesome.

"with the auctioned deed in my hand"

Back a few years some golf course developers tired to build south of Oregon City (county seat and end of the historic Oregon Trail). First two guys went belly up. Used to drive by and the rubber tires were literally rotting off the earthmovers. 3rd guy (actually "the city") picked up from there and was able to make it a success! I think about it every time I drive by.

Check it out, the Chronicle has an article just out about the statewide home sales numbers:

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/25/BUGAOPELMV35.DTL

The article is a lot less RE rah-rah than I would have predicted. They even have a nice quote from Thornberg (stating what we here have known all along):

Christopher Thornberg, a principal with Beacon Economics in San Francisco, put it bluntly.

"The median price is a bunch of hogwash," he said. "You can have prices looking like they're up when they're down, because it is incredibly subject to where slowdowns are occurring. If there is more slowdown in a (lower-priced market), then you could show the median price going up just because there is a shift in the type of product being sold."

skibum,

Sorry about the anecdotes. (I thought this was a "Spring Time, Feel Good" thread).

Sorry about the anecdotes. (I thought this was a “Spring Time, Feel Good” thread).

Hey, I'm not dissing them. They have their place, and I'm not trying to be a wet towel on the "Good Spring Times" vibe. Hey, let's break out the PBR, sit back, and watch the FBs go at it!

The safety net should have holes just big enough for him to fall through.

Malcolm,

Keep posting gems like this one, and you might just make a "convert" out of me. ;-)

Actually, I wouldn't want "SDCIA Jeff" to starve to death, but I DO think he should be prohibited from: (a) breeding, (b) ever buying another "investment" property again.

Rowemoore,

Funny, a couple little birdies who keep sharing their agency's sales sheets with me -- on in SF one in Mill Valley -- clearly show that more and more homes are going *UNDER* asking. In Feb., they weren't going under by much; just token amounts. But last month had quite a few going for more than $100K under.

Under is the opposite of _over_.

Just wanted to clear that up for you.

Interestingly, both of my informants have told me that their management have indicated they are to reassure everyone that "the market is red hot again". And the SF guys apparently told everyone there they'd be shot on sight if they so much as peeped a word about under-asking deals. They were told to blatantly lie, and talk about multiple bids and over-asking deals.

Oh yea, they were told to hit the blogs and local papers too.

"let's break out the PBR"

I got NO problem w/ that! Oh other than it's only Wednesday? :(

Kieth over at Housing Panic had Thornberg's presentation on a video link and all I could think about was "peak to trough" decimation. Just calculating the loss of "equity" in this country from say Oct. 2005 to Dec. 2009 is going to be mind bending!

Anyone notice the complete 180 degree change in SDCIA Jeff's attitude about his "investments" from a few short months ago? Back then, he was King of the World, top senior SDCIA member, confidently handing out sage advice to the "younglings". He would politely tolerate comments from us JBRs at arm's length, but it was obvious by his tone always that he was only feeling pity and disdain --for us.

Oh what a difference a few months (and hungry "alligators") makes. Here are the highlights:

"I own three terrible houses in Cape Coral..."
"a series of misjudgments and being taken advantage of (and lied to)..."
"I am losing ~$1000 on month on each of these houses... "
"I am just sick about them and often cannot sleep..."
"Anyway, what should I do?"
"I am too embarrassed..."
"I think about "walking away," but then I think about the credit score hit..."
"I am dizzy thinking of it."
"Please help me! What should I do!?"

HARM,

What's worse (if you read their posts at all) is that they have totally abandoned their "charter". When hot topics gravitate toward "making money in RE through "shorting" the home builders and selected lenders" you have got to know they are just LOSING IT over there!

Sellers are dropping their asking prices in northern Los Angeles, and they have been for a year now. For sale signs are flourishing in almost every neighborhood. Foreclosures are up to the same level as they were last fall.

The local MLS provides different results depending upon how you search. If you have regular Internet access, fewer homes show up. If you have Realtor MLS access, you see far more properties.

Zillow over values crap properties and under values (relatively) higher end listings.

The very same Realtors who wouldn't spit on me if I was on fire two years ago treat me like a King today. Realtors do become testy after I mention the collapsing boom, "I've been doing this for 28 years and prices are NOT falling ..."

Mortgage brokers have become extremely aggressive (I have good credit and a decent savings).

Open houses got little traffic during the previous four months, but since the passing of Easter people have been out in droves. Agents now have Mortgage Brokers at the open houses to greet visitors.

Sellers are rejecting my low ball offers (10-15% below list) outright. Some selling agents are blackballing my use of BuysideRealty. In these instances those homes have not sold since Jan and sit on the market. More listings appear in various places every day.

J. Pake,

You seem to represent the ideal buyer to these realtors b/c you are unencumbered (screwed) by a maxed out FICO and over leveraged property they know they can't sell for what is owed!

Welcome and great feedback!

He leaves a really really nasty letter at my house

If it is not nasty enough to be threatening, ignore it.

If it is threatening, call the police. There are a few ways a professor can lose his tenure.

Okay, that axehole over on the SD investment board pisses me off.

He has 3 properties he's underwater on and are losing money.

He has some SLC properties that are in the green.

He's trying to figure out how to get rid of the aligators without touching his SLC properties. He's talking foreclosure and short sales. WTF? He should sell his goddamn lousy properties AND his good properties, and use anything he makes from SLC to cover his losses in FL. It's so damn obvious a third grader could tell him what to do. Instead, he wants the banks to eat his losses while he keeps his gains.

If he takes any other route than selling and absorbing the cost himself, I hope the banks take his FL properties, his SLC properties, his primary residence, and garnish his wages to make up every last penny, including foreclosure/court costs.

Sales here in our West San Jose neighborhood seem brisk. Two homes were listed and sold in under a week (one in the low $800k range, the other $900k). Very depressing......

CG

"How to make 100k extra in 1 year? Wait and buy in 08!"

Hello Kitty,

I'm making money just blogging. One thing is for sure. Sellers keep trying to execute the same sort of "exit/entry" strategy that j_u_s_t i_s_n_'_t w_o_r_k_i_n_g!

It isn't. That's why we're seeing all these cheap ploys on the sell side. We love to kid about "equity locusts" but in truth most of these punks are scared sh!tless to move out of the neighborhood (let alone out of state). They know prices have plummeted and they are frantically trying to get to the BUY SIDE! Tell Prof. Numbnuts to pound sand, will ya?

I just made a very "toned down" post on that "SDCIA Jeff" thread. My goal was to educate, not flame, gloat or ridicule. Perhaps, some of what I said will sink in for other SDCIA members (hey, it's a long shot I know, but there's always hope ;-) ):

http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1854186&trail=60

HARM,

If that's "toned down" I don't want to see "fired up"!

Seriously, the only thing the guy can say to that is:

Yes Dad. :(

I suggest everyone high tail it over before they take it down in 3, 2, ...

He leaves a really really nasty letter at my house (where im renting) complaining about how this is thier ‘prime window’ to sell and how trashy I make the neighborhood look by working on my truck and/or motorcycle where they can see out their kitchen window! How dare I own a truck and motorcycle.

El Jefe has some good ideas. I've got a few more to add:

If you have a tricked-out car stereo, start blasting it during the guy's open houses. If you don't own one, borrow a friend's pit bull, get a lawn chair, some 40-ouncers in paper bags, break out your best wife-beater tshirt, and sit in the front lawn during said open houses and stare down every BMW-driving yuppie who pulls up to visit whilst grabbing onto your crotch.

SFBB,

Similar situation w/HK's greedy (probably b**mer) neighbor. Just itchin' to get to the BUY SIDE! Sellers that are real touchy now will turn into savages (if) they can get to the BUY SIDE! Now that they know how the game is played. Pffftt.

@DinOR,

:lol: Well... at least I was trying to be toned down!

But, honestly I didn't gloat or insult. Just tried to stick to the facts as I saw them. If that came off as harsh, then maybe, just possibly, it's because reality's a total b*tch. :twisted:

HARM and DinOR,

I thought HARM's post over at the SDCIA site was quite genteel. If anything, it useful, helpful advice for a bunch of folks who seem to have lost their way...

Well HARM certainly didn't mince words, now did he!

I'll agree, it was the same level of sobriety one "should" expect when wrapping a sports car around a telephone pole, crawling from the wreckage and asking where the next BAR is!

Uh... dude, don't you think you need a hospital right now, not another bar?

You have to admire the restraint!

I’ll agree, it was the same level of sobriety one “should” expect when wrapping a sports car around a telephone pole, crawling from the wreckage and asking where the next BAR is!

Dude, when I was on jury duty, this describes almost the *exact* scenario we were deliberating over. Except in my case, the defendant had also plowed into a pedestrian and killed him.