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Author Topic: Real Estate is Still Falling ... and How to Profit  (Read 944 times)
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tamo42
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« on: 2011 Jan 21, 01:02:23 pm »



Over the past few months, there has been a lot of focus on money printing and unemployment, but somehow the real estate picture has taken a back burner.  I guess that's because real estate is not falling as fast it was - but it's still falling.  Yes, the report that came out yesterday said that the number of sales was up, but the price of these sales was lower.  

In inflation-adjusted terms, they are falling even faster.  

As always, the real question is how to we protect and/or profit from the current situation?

If you are looking for a home of your own, it's a pretty great time to buy.  The money pumps have been turned on, so in nominal terms I think we won't see declines too much further.  Again, in inflation-adjusted terms, they still have a ways to go.  But we can't spend inflation-adjusted dollars.

Personally, I am going to an auction tomorrow to see what houses are going for.  I just received a notice from the auction company that all the houses being sold by SunTrust Bank will be absolute auctions.  That means that there is no reserve, highest bidder gets it no matter what.  In the fine print of the auction, it states that anything selling for under $10k must be paid that day. Of course, that implies that there are houses going for under $10k. Pretty exciting stuff!

If you are looking to pick up rentals, this is a great time to be acquiring sold C-class housing. Going forward, people will be looking for cheap places to live. Brick houses and small apartments (i.e. can't be damaged too much by trashy tenants) will provide nice cash flow.

The preponderance of these auctions reminds me of the 1990-era housing liquidations. Yet another reason why cash is king. You can't buy during the panic if you don't have cash!


* Sale.jpg (29.25 KB, 300x200 - viewed 439 times.)
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Neal McSpadden
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« Reply #1 on: 2011 Jan 21, 01:54:33 pm »

houses for under 10.000 Dollar?Huh
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tamo42
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« Reply #2 on: 2011 Jan 21, 01:56:19 pm »

Yep.  The auction I'm going to is a 2-day affair.  I plan on going tomorrow (the first day), and recording how much everything goes for.  I'll summarize the results of what I find out and post them here on LBC.
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Neal McSpadden
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« Reply #3 on: 2011 Jan 21, 01:57:36 pm »

can u say now how many "rooms" these houses would have that sell for 10k?
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« Reply #4 on: 2011 Jan 21, 02:10:55 pm »

If I had to guess, in my market a $10,000 house would have 2 bedrooms, 1 bathroom, a kitchen, and a living room.  So a small 5-room house. Probably around 1100 square feet (100 square meters or so)
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« Reply #5 on: 2011 Jan 21, 02:49:55 pm »

this must be a joke...How crazy did he prices drop there actually? I heared a lot but that is shocking me.
 its impossible to get something like that in europe for that price.
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« Reply #6 on: 2011 Jan 21, 02:58:58 pm »

Well you have to keep in mind that the US is a very large place.  About the same size as all of Europe.  Real estate is always a local market, so there around thousands of different markets across the US.  Each one has its own dynamics.

When we look at nationwide averages, at the peak of the market, the average house sold for around $220k, and it now sells for about $170k.  That's a 22% drop.  But, averages are composed of lots of pieces.  If you look at foreclosures, prices are lower. If you look at auctions of foreclosures, prices are lower still.

Like anything, it's all a matter of finding the opportunities that are out there.

And in Europe, you have a much higher population density and a much more socialized state. So costs will be higher.
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« Reply #7 on: 2011 Jan 22, 05:09:28 pm »

Fascinating information. I have avoided real estate entirely, but if you find a way to make money on it, I might go exploring. Thanks for all this research and reporting you're doing for us! Even if I don't get into it myself, I know lots of people who either are already, or they're thinking of doing it. It will be nice to be able to pass along what I pick up from your articles on it.
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« Reply #8 on: 2011 Jan 22, 11:18:29 pm »

Well, I discovered some interesting things at the auction today. First, auctioneers really do talk like they think you do. Second, the houses put up for auction (or at least at this auction) were in pretty good shape. As a result, they didn't go for super cheap prices. Third, what you can find is great deals on nice places. This is really the most important thing. Houses routinely went for 50% of their non-liquidation market values.

Basically, the auction is a good place to find deals on retail-level properties.

Lastly, there is an ebb and flow to the auction. At first, people are getting warmed up, then they start bidding aggressively, then those birders blow their cash and a lull follows, then a new group of buyers come in, and so on. If you play it smart, you can take advantage of these patterns to pick up overlooked deals. Of course the particulars will vary from auction to auction.
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Neal McSpadden
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