All Forum Posts by: Michael Zuber

Specifically I am interested to know about any changes that either may help or hurt banks as they continue to deal with balance sheet issues and rising liabilities. If they get more flexibility to hold assets at face value that means long foreclosures and short sale timelines. But if they have to move to true Mark to Market then we could see a quick uptick in listings. Maybe there are no changes but with the turning of the new year I thought there might be some external factors I should be looking out for
Good Investing

Mr Scott, When I looked at the future given the data I have today. I see a greater need for Section 8 Housing and as you mention the government/socialists need these types of investors.
But I am a capitalist and a section 8 landlord!!!
I want to move my capital into the path of profit even if it is influenced by crazy government policies.

Peter I am with you. I think my 2010 purchases will be better than the 12 I bought in 2009 (and those weren't bad).
Specifically I am tracking several small commercial appartments 8-12 units. I suspect these banks will eventually take less down (currently asking 25% down) or drop the price significantly for cash buyers.
If the government throws more tax credits at first time buyers I might just 1031 out of the houses into small apartments ...
Should be fun

Given the desire of government to tax the rich and give to the poor (at least for the next 2 1/2 years) how can we turn this into our advantage?
The government in general is slow moving and telegraphs what they are going to do. So as investors we need to think a step a head? I like to say let them play checkers while we play chess!!!

Thoughts on what moves we could do now???

Curious what you think about 2010 becoming a market dominated by Investors as the First Time Buyer programs expire and inventory explodes. Could the government create a program focused on investors? Maybe the could up the loan limit from 10 to 30 or 50 properties? Or they could create a Fix rate loan for anyone buying a foreclosed property?

What program would you like to see?

Should be fun ... I look forward to 2010 ...

Thanks for sharing your experience

As Eddie says every market is different. So I will just reference my market of Fresno. I invest primarily in low income areas for the cash flow. My only rule of thumb is I have to feel safe getting out of my car at 10 PM. But the good news is their are lots of solid rental areas that are not war zones.
I plan to hold most of my properties for a long time. But to the question at hand when the real estate market get hot like 2004-2006 every house will see crazy appreciation regardless of area so buy the investments if your time horizon is 5+ years. If your hoping to flip in low income areas (sell under 5 years) it would likely be a bad investment. But hold for 10 years and you should be very happy.
Good investing

I suspect we just have a timing issue. The most popular trade has been to sell dollars and buy other currencies or assets tied to the dollar like gold or oil. This is a very-very crowded trade and it could reverse in a hurry (See Dubai credit issue). People could flood back to the dollar and US Treasury's driving down rates even lower (Crazy I know).

But to the question at hand I suspect Gold will have its time in the sun through 2010. But then people will realize that Gold just stores wealth and doesn't create wealth and they will go looking for assets that produce returns like real estate and gold will loose 30% in the matter of weeks (Gold takes the stairs up and the elevator down).

Let the lemmings run gold up to $2,500 I will be buying real estate in 2010 and then when the lemmings come back in 2011 or 2012 I take the artificial pop in my net worth ... Should be fun

Thanks for the feedback and the ideas suggested are very helpful.

I like to buy fixer properties but on occasion I come across an opportunity that feels like it might just be too much work. I’ll give you the highlights and you tell me what you think.

I have found a 10 Unit building that is in probate and being sold by the kids (4 of them I believe). Near as I can tell the building has seen no repairs in the last 5 years and has been milked for all it worth. Just a short list: Roof needs work, no paved parking to speak of, all units need 2K-4K of work (half of them are empty and uninhabitable). I also estimate that property has at least 4 big bins of trash and other goodies littering the property.

In the end I could see the building costing 180K, (30K down) and owner carry mortgage at lets say 7% for 5 years because no bank will loan on the property as-is. I suspect the building will cost 50K to rehab and make rent ready. Once full and we perform true tenant selection the building should produce $5,500 a month in income.

So for about 80K we could produce about 2K a month or 24K a year in positive cash flow. If I am doing my math in my head correctly that is a cash on cash return of 30%.

I can run all the numbers I want but something just feels off about this building. It could be that I am just comfortable buying houses and duplexes and not used to the bigger building or it could be my gut telling me that there is a couple of huge and nasty surprises hidden in the building.

Not sure which.

Have any of you stepped up to a bigger purchase that was just outside your comfort zone? How did it turn out?

Good Investing