patrick.net

Will you come over and change my catheter?

[/slowly backs away from thread]

Here in Seattle we have a couple of hard money groups, one called Vestus, that lends the funds for six months for "investors" to flip properties. Last year some of the clients they had began sending back properties they could not sell.

Last year also Obama promised hedge funds blocks of Fannie Mae houses to play with, rent out, and make a return. Real Estate "wholesaling" was also done after the Savings, and Loan scandal.

All in all it seems to me the investor foreclosure market got saturated, and the buyers, of the flips got hip to the tricks, and weren't willing to pay premiums.

We just sold a property in Atlanta for $30K, and if we sold in 2008 it would have been $90K, 2010 $60K.

Some people are calling this sopping up, but I refer to it as fair market value.

I think once the investors are done the Real Estate market will fall by the gravity of no more free money bank loans at these high prices, with historically low interest rates.

David Losh says

they had began sending back properties they could not sell.

ROFL sorry just LMFAO.

Is it a common practice to use "Median List Price / Median Wage" as proxy for whether or not a local market is under/over priced?

Just quickly eyeballing it, to me, Phoenix actually looks like it is properly priced now (median family income is ~$47k per Wikipedia). So the 30% pop in prices y-o-y is a market correction and not a bubble.

OK, they began sending back properties they couldn't sell.

I think it's the same in most distressed market places; the investors come in, flood the market place until buyers get hip, then they move on.

Here in Seattle the same investors are still going strong, but stopped buying in 2009. Cash flow, for now, negative equity tomorrow.

This is interesting - some hedge funds are looking to cash out and EXIT the landlord business at the same time that others are coming in:

http://news.yahoo.com/exclusive-och-ziff-hedge-fund-looks-exit-landlord-211902686--sector.html

Notice though that it's portfolio of 300 homes is in CA, where prices have rebounded sharply.

I'm still convinced CA is a huge bubble that only slightly deflated but has yet to actually pop.

David Losh says

I think once the investors are done the Real Estate market will fall by the gravity of no more free money bank loans at these high prices, with historically low interest rates.

This is already happening. Real Estate historically has been only an average yield investment compared to other vehicles, and "speculators" are beginning to realize in this environment it's also volatile YOY. This volatility won't disappear until the FED f*cks off.

The funny thing is the speculators already learned that lesson in Las Vegas circa 2010, yet here they are again in Phoenix and Atlanta in 2012.

I am still of the camp that considers fundamentals to be important. But I do realize Bubbles Ben the man in charge of the biggest printing press in the world thinks that fundamentals are for fools.

robertoaribas says

I'm one of those investors, most of my places have no mortgage

Where to begin?

First, Vestus lends for three to six months, they will lend what ever makes sense to them, because it is an auction property, and the other bozo, I mean investor is on the hook to get the loan paid off or they take the property. This is flipper heaven, and Vestus charges the up front fees, plus 14% interest. They have a steady stream of both capital, and investors.

So, the flipper investor can't sell, and yes the property goes back to Vestus, you win some you lose some, or the investor refinances and holds the property? No, most people are taking the loss and moving on.

Now, let's go on to where your properties have no mortgages, and you are willing to buy more property. How much cash do you have tied up? How much equity are you willing to lose?

I can see in every market that prices can continue to fall for a very long time to come. I don't think housing will be free, but do think that property pricing will come to twice the average income of an area. If you make $100K the price of property would be $200K.

OK, you want to play hard ball with me and say the price of property should be three times the average income, but I don't see it.

Do you have a construction company? or a company that repairs property? I have, and probably will again this year, and I know that anything built after 1986 is a problem waiting to happen.

I gotta go to work now, but will be back this afternoon.