Comments on: “And, The Debate Goes On”: To Invest Or Not To Invest In An Upside Down Real Estate World http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/ Learn, Network, Invest Sun, 22 Nov 2009 10:53:57 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Property To Invest http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/comment-page-1/#comment-56789 Property To Invest Tue, 13 May 2008 16:49:02 +0000 http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/#comment-56789 I think every problem is an opportunity in disguise, there is always an opportunity in property, I think every problem is an opportunity in disguise, there is always an opportunity in property,

]]> By: Real estate rant http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/comment-page-1/#comment-56406 Real estate rant Tue, 29 Apr 2008 06:22:05 +0000 http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/#comment-56406 I think investing in real estate would be always beneficial. But for investing in real estate we should have some updated information about real estate marketing trends. I think investing in real estate would be always beneficial. But for investing in real estate we should have some updated information about real estate marketing trends.

]]> By: Real Estate Advocate http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/comment-page-1/#comment-56304 Real Estate Advocate Thu, 24 Apr 2008 16:53:40 +0000 http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/#comment-56304 It's a very good and valid point Charles. New investors need to be extremely careful when they invest in this market. They need to be very selective about their investments. Some Don'ts ... Don't do fix and flips (leave this for the pros) Don't buy anything is a depreciating area with high foreclosure rates etc ... rather wait for these areas to bottom out. Don't invest in any negative cashflow deals. This limits you to a $180K ceiling. Some Does ... Do assign or birddog deals (instead of buying and flipping) Do a maximum of 3 buy and holds in your name Do creative deals like subject to, wrap mortgage and lease option purchases BUT ONLY if they cashflow. Do partner with an experienced investor. It’s a very good and valid point Charles.

New investors need to be extremely careful when they invest in this market. They need to be very selective about their investments.

Some Don’ts …
Don’t do fix and flips (leave this for the pros)
Don’t buy anything is a depreciating area with high foreclosure rates etc … rather wait for these areas to bottom out.
Don’t invest in any negative cashflow deals. This limits you to a $180K ceiling.

Some Does …
Do assign or birddog deals (instead of buying and flipping)
Do a maximum of 3 buy and holds in your name
Do creative deals like subject to, wrap mortgage and lease option purchases BUT ONLY if they cashflow.
Do partner with an experienced investor.

]]> By: And, The Debate Goes On: To Invest Or Not To Invest In An Upside Down Real Estate World | The Long List of Odysseus Medal Nominees | Realtors and real estate, mortgages, lending, investments http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/comment-page-1/#comment-56298 And, The Debate Goes On: To Invest Or Not To Invest In An Upside Down Real Estate World | The Long List of Odysseus Medal Nominees | Realtors and real estate, mortgages, lending, investments Thu, 24 Apr 2008 13:33:13 +0000 http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/#comment-56298 [...] And, The Debate Goes On: To Invest Or Not To Invest In An Upside Down Real Estate World, by Charles Feldman. [...] [...] And, The Debate Goes On: To Invest Or Not To Invest In An Upside Down Real Estate World, by Charles Feldman. [...]

]]> By: charles http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/comment-page-1/#comment-56287 charles Thu, 24 Apr 2008 06:08:55 +0000 http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/#comment-56287 you just proved my point....this is NOT the time for someone to first learn on the job, so to speak. If you are not already an "expert" on real estate investing, best to sit it out a bit till things change for the better....we hope! you just proved my point….this is NOT the time for someone to first learn on the job, so to speak. If you are not already an “expert” on real estate investing, best to sit it out a bit till things change for the better….we hope!

]]> By: Real Estate Advocate http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/comment-page-1/#comment-56285 Real Estate Advocate Thu, 24 Apr 2008 02:33:07 +0000 http://www.biggerpockets.com/renewsblog/2008/04/23/and-the-debate-goes-on-to-invest-or-not-to-invest-in-an-upside-down-real-estate-world/#comment-56285 The problem with this market isn't to decide whether this is the right time to invest or not to invest. We all know this is a buyer's market and we all know that it's time to buy. The real problem is that in today's mortgage market it's very difficult to buy for all but the most creative and most well heeled investor. This is the greatest buying opportunity ever but we as investors can't buy because we can't get any reasonable funding for our deals. It's like being given the keys to the candy store only to find out that you're a diabetic. I personally would love to buy a hundred houses at fifty cents on the dollar right now but it's simply not possible. To be a successful investor today you MUST have cash - huge amounts of cash. Here's the problem if you don't have at least $100,000 in disposable cash: Firstly, no money down loans, stated income and multiple purchase loans have dissapeared for the average investor. This means you need to put 20% down on your deals. That's $40,000 on a $200,000 house plus an additional $20,000 that you need to show as reserves in order to get the loan. Put simply you need $60,000 in cash just to buy a $200,000 house. With $100,000 in cash you can only buy 2 houses. That hurts. Secondly, once you buy the property you have no option but to hold it. The flipping days are dead for now. In order to hold the property you usually need substantial cash to cover negative cash flow, vacancies and living expenses (if you have no other source of income). How many properties can you afford to carry? The end result is that all the investors I know can't buy any more houses. Most of them are lucky to escape from their current investment hell of owning properties that they can't sell and no longer can afford to hold. The good news is that the opportunity always lies in the obstacle. The obstacle is that there's no reasonable finance available for investors. The opportunity is to do creative deals that don't require finance or partner with a money guy. The problem with this market isn’t to decide whether this is the right time to invest or not to invest. We all know this is a buyer’s market and we all know that it’s time to buy.

The real problem is that in today’s mortgage market it’s very difficult to buy for all but the most creative and most well heeled investor.

This is the greatest buying opportunity ever but we as investors can’t buy because we can’t get any reasonable funding for our deals. It’s like being given the keys to the candy store only to find out that you’re a diabetic.

I personally would love to buy a hundred houses at fifty cents on the dollar right now but it’s simply not possible. To be a successful investor today you MUST have cash – huge amounts of cash.

Here’s the problem if you don’t have at least $100,000 in disposable cash:

Firstly, no money down loans, stated income and multiple purchase loans have dissapeared for the average investor.

This means you need to put 20% down on your deals. That’s $40,000 on a $200,000 house plus an additional $20,000 that you need to show as reserves in order to get the loan. Put simply you need $60,000 in cash just to buy a $200,000 house.

With $100,000 in cash you can only buy 2 houses. That hurts.

Secondly, once you buy the property you have no option but to hold it. The flipping days are dead for now. In order to hold the property you usually need substantial cash to cover negative cash flow, vacancies and living expenses (if you have no other source of income). How many properties can you afford to carry?

The end result is that all the investors I know can’t buy any more houses. Most of them are lucky to escape from their current investment hell of owning properties that they can’t sell and no longer can afford to hold.

The good news is that the opportunity always lies in the obstacle. The obstacle is that there’s no reasonable finance available for investors. The opportunity is to do creative deals that don’t require finance or partner with a money guy.

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