All Forum Posts by: Michael Zuber

Hi Rich,

1) yes properties are in Fresno

2) I own way too much property to get a bank loan. I swear I walk by a bank and alarms go off. Kind of funny I can't get loans with deals like this but I make do with Private Money

3) Don't care much about resale. I want to stop working someday and thus I won't kill the golden goose. I agree lots of scary things on the horizon but you can either take your shots or just wait. I like the deals I am getting and will take my shots.

Enjoy Cancun

Might just be me but in this context I like it. But again I have been called a Vulture Investor before and I am okay with that.

Nice work as always, quick and clean

I know this is not a good idea as I type this because Rich Weese is The Man as far as I am concerned.

But I wanted to take a stab at his triple whammy and see if I can turn a negative into a positive. Rich please be gentle with the response

1) Real Estate not finding a bottom yet. When you look at the overall market no one can argue with that fact. But lets step back just one step and look at the market that fell first. The Subprime market. I have been buying properties for 2 years now that I am sure had sub prime Neg Am loans on them and I can tell you I am not seeing prices going lower. In fact I just paid 38K for a house I bought for 35K (twice) last year (I own 3 on same street now). Same street, same condition, etc. Now 3K isn't a lot but it is almost a 10% rise in price over last 18 months. Also note my rents are '995-1,025 so I don;t really care if it goes lower, but it is note going lower (I tried to get for 32K but no dice). Another point is 2 years ago I was the only buyer now I am seeing 10-12 offers on properties I am going after. So while the move up market has A LOT more Pain and the High End has A Lot more pain and thus the overall numbers will look terrible for years to come it is ok. My point is look at the part of the market that fell first for the first sign of recovery and you can see clear signs of a bottom, more competition, etc in the market that fell first.

2) Inflation, hard to argue again with this especially as we go into QE3 later in the year. But again last time I checked I am getting fixed rate loans and raising my rental rates so I am not all that concerned about more cash flow every month. Now I know I can buy less with it but I take my chances with fixed rate debt.

3) Unemployment this is tricky as near 10% unemployment sucks no matter how you slice it. But that still means 90% of us are working. Another point that goes unsaid is the low savings return and this is where the magic could come in. Eventually people will start looking for higher returns as inflation decreases the savings return (lets be honest if you have a savings account today you are losing money with inflation). This happens because people are scared and they should be. The debt ceiling, the EU, greece, the latest soft patch, etc. But again the money is being made when other are scared or frozen.

We have at least 5 years of fun ahead with the next 2 years being REALLY dicey in my opinion. The next election cycle should be interesting and could be a catalyst for change or more of the same.

Lets see.

Just to be clear Rich Weese is my Hero!!!

must include dirt and all the CA taxes

I have never seen a California number under $100 (and this for simple 1 story buildings) and a 2nd story and costs go

Latest numbers I have are between $150 and 175. I don't believe those include lot fees but I could be wrong as I haven't looked at the numbers in a long time.

I am currently buying house for under $50 a square foot. so I have lots of room

Rich as you and Bryan know real estate is not really a point in time investment. Meaning there are so many factors going on at any one time it is tough to pick a bottom or a turn in the market until it is several quarters behind us.
So all of this negative press is just part of the process and we will have more pain. Just wait until a big bank or fannie or freddie goes back to the government and says whoops we need another $5B-10B. We have lots of pain a head but when we come out of this in 5-10 years the people that bought at distressed prices will be the ones with all the money.
Time heals all wounds and memories fade with time and so much of the capitalist society is based on Property ownership it will become a good investment again.
I can;t wait until Newsweek or Time magazine has a cover story that says Home Ownership is OVER. They have proven to be great bottom pickers in the past.

I have been called lots of things including a Vulture Investor and that is okay with me. As for spending money on an advertisement you might be better served with Distressed Investments. Or if you really want to be PC you can try Value Add Investments

In the end all the above means the same to me but given the large audience we can be a little sensitive

Replacement cost = Square Footage of House * What it takes to build a home in your market. Mine is about $175 a square foot.

So a 1,000 sq ft house would cost about 175K to build assuming land and lot is free which is not likely.

In the end buy a house that is at least 50% off of replacement cost and then let time, supply/demand and inflation be your friend

Hope that helps

Couple of thoughts:

First Martha I said you "Could" buy in all areas from Baltic to Boardwalk. Not that you "should" and I never "Would" buy in a high crime area. My basic rule still applies, would I get out of car and feel safe and think my car would be safe when I came back in 90 minutes.

As for "Green Houses" being any investment that is bought with the intention of exchanging later. I guess you're close but then other rules kick in, like must cash flow today (and I mean real cash flow not Excel magic). Also in this market if you are not getting at least a 50% of replacement cost you are over paying in my opinion.

So buy investment houses that cash flow today that can't be built for what you are buying and then let time, inflation, etc take over and then exchange into a red hotel (multi family later)

As for green house comments about not being worth it I suspect you are talking about environmental Green Houses and that is not what I am talking about. Sorry for the confusion as a Green House can have multiple definitions depending on which way you take the topic.

Good Investing

As Loretta indicated I use the concept of 'Green Houses" from Monopoly. The idea being that you should acquire some houses today that can be exchanged into larger properties or Red Hotels sometime in the future. The best part is just like Monopoly you can buy in all kind of neighborhood (From Baltic to Boardwalk)
Good Investing