No one, of course, can predict with certainty what will happen.
Serious players know that markets take hits every so often. That is a given.
Where I live in CA, we have earthquakes. Cannot predict when they occur but that they WILL occur. So, you plan according to your tolerance for risk.
After 35+ years of real estate I've survived 4 or 5 crashes. If the deal is right and the cash flow is there, you'll gain and lose equity as markets appreciate and retrace. So, you just build that into your plan.
People who are looking for reasons not to take a certain action ask questions based on fear and doubt to reinforce reasons for not taking a certain action. Nuff said.
The macroeconomic trends that I have read about will not be helpful to real estate. I hope they are wrong.
In a nut shell, the sovereign debt crisis that has been plaguing Europe will eventually come to these shores. That means higher interest rates from a lack of bids for government debt. This translates to higher mortgage rates. In order to roll over loans at ever increasing interest rates local governments will increase property taxes.
Both of these trends are not good for property values.
We can all agree on one thing, "to each is own." Now, is another ****-show on the way? There is always a ****-show within our current global economy. Look at oil. People see low prices at the pump but do not understand how many industries are controlled by oil. When factories shut down and businesses close, jobs are lost. No jobs, no money flowing through the economy. All basics here.
Understand your portfolio, your target audience. Do you rent to our aging population whose health insurance costs will rise in the next 3-5 years which will force them into a decision of rent vs living. College students? Vacation rentals? Saying that you are "out the game" because "the market sucks" what does that mean. If Kobe quits playing because the Lakers are horrible, he would never be Kobe.
If you are or want to be a REI, build your foundation first and perfect the basics. Diversify and execute. Why are you doing this in the first place? It's an amazing industry which can take your soul fast if you let it.
All of the new construction I've seen, and there is a ton of it, is all townhomes and condo's. I haven't seen any SFR's being built at all. And townhomes here, from vinings, to buckhead, are all $700-$800k, it's crazy how expensive they are, while a lot of the condo's are a lot more affordable around $250k
All of the new construction I've seen, and there is a ton of it, is all townhomes and condo's. I haven't seen any SFR's being built at all. And townhomes here, from vinings, to buckhead, are all $700-$800k, it's crazy how expensive they are, while a lot of the condo's are a lot more affordable around $250k
Where are you looking? I see new in-fill SFR construction all over northern ITP, especially Ashford Park/Brookhaven.
All of the new construction I've seen, and there is a ton of it, is all townhomes and condo's. I haven't seen any SFR's being built at all. And townhomes here, from vinings, to buckhead, are all $700-$800k, it's crazy how expensive they are, while a lot of the condo's are a lot more affordable around $250k
There's lot of infill new construction going on, especially in the areas Adam has mentioned. We've done East Atlanta to Decatur and up to Sandy Springs, as well as some OTP...
I used to live in Vinings, and there's plenty of detached new construction there as well...just look a little bit west towards Mableton/Austell...
Yeah I think Mableton is still one of the few affordable places around atlanta where you can still get a decent rent to price ratio. I live in Lenox Park, so near brookhaven, but I haven't driven the neighborhoods to really see single detached building, I have seen townhomes going up near me though. It's also been really hard to find multi's, like duplexes and triplexes ITP above I20 in any decent area under $350k which has been frustrating. I'm trying to house hack and buy one and it's truly been like searching for a needle in a haystack.
I see infill SFRs all over trendy Intown (not so much in the 'transitioning' areas), of the Brobdinagian bungalow variety (great design, great features, just gigantically proportioned), and they're not cheap. (I hope no BP member is the one losing his shirt over the one at East Lake and Second. WHY will they not create a turnaround driveway so the owner doesn't have to back out onto a heavily trafficked street to leave home??)
Vinings and Buckhead are always going to be crazy expensive compared to the more "dangerous" areas closer to downtown (as in, wildly hot Kirkwood, Decatur, Emory area, which are still rapidly rising in price). It's a totally different demographic interested in living there.
Historically as interest Rates just begin to rise prices rise because People feel theY won't be able to afford homes at the higher interest rates. This goes counter to economic theory but how it actually works.
Any perceptions/opinions found here are going to be n=1 (a sample size of one). Meaning that the opinion is based on the opinion of one person in one market. Maybe a few other questions to try instead:
1) what are the key, measurable, factors that tend to drive your market (a commodity like oil, corporate relocations, military bases, start-up technology companies, etc)?
2) within my market, what are the key information sources (business journals, clubs, orgs, etc)?
3) in my market, what business sectors seem to be stable? What sectors seem to be feast/famine? How am I impacted by the various active business sectors?
4) in my market, what are cap rates doing? (high and falling, low and rising..etc)
5) in my market, what real estate types seem to be under/over-served?
6) What do I consider a "deal" to be, in my focus area of RE?
7) in my market, are cycle peaks pointy, or are they gentle? Troughs?
8) are the cycles high magnitude or low? (If you have extremes in both directions, then your risk management needs to be dialed in tight in order to survive the cycle).
If you find an answer please let me know. My crystal ball is broken.
George That is to funny. I been speaking and selling turn Key assets for years. Building my own portfolio along the way. The same question would come up. If I had a dollar for every time I said my crystal ball was broken. I would be Rich and would not have to play the power ball this weekend. Actually since it is over 800 million might as well.
At the same time being a realist and looking out my window. I don't think we have learned our lesson in turnkey rentals and watching retail sales. Prices are again jumping up. New investors jumping in ever day buying rental ( financed ) so I think we will see those same properties recycled in a few years.
Again if you are buying correctly these can and should be a good buy and hold situation. I was buying in Charlotte 2010 -2013. $40 to $50k these were b- products but in c area. Vinyl villages ( 3 be d 2 bath or larger) Was also buying them in Atlanta. Most needed to be fair say $15k rehab we average about 20K ( I over spend ) . Rental market was roughly $1000 to $1200 was our sweet spot. Taxes, insurance roughly $120 month. I still own a few of these. In some areas the values are not going up. So not much on the equity in these but the cash flow is good.( I like free and clear assets and then leave them alone) So I am building New Construction rentals and retail homes currently. Only being in this business for 16 years. I have just seen two cycles come and go. So the signs are out there for us to watch , listen and learn.
I am waiting to see what the hedge funds are going to do with their properties. If they come out for lending for the renters. Middle America is struggling but yet we keep increasing the rents. So again just watching as prices are climbing on the retail side and rentals going up. Just does not make sense.
Yet income and salaries are stagnant. Now bare with me I'm just a back of the woods county guy. The numbers are just not adding up and I think in a few years. A lot of the same properties will be recycled one again. As we all seem to like to play the game hot potato with real estate. Who is going to be left holding the bag.
Would you please briefly explain your plan on doing 1031 exchange into commercial around 2020 to 2022? Does commercial property not affected as much as residential during a market downturn?