Posted on November 24, 2009 @ 6:26 pm - Written by BawldGuy
Some random thoughts about what I’ve been hearing/seeing/livin’ recently.
Interest rates have dropped this week. 30 year conforming fixed rates can be had for roughly 4.5-4.62%. So if you’re in the market to buy a home, I’d find one and lock the rate — sometime around 4:30 yesterday afternoon. Investors not ’saddled’ (How stoopid is that?) with four loans will currently pay in the low 5’s. The best fixed rates I’ve seen for investment long term in my 40 years — period. So if you’re contemplating makin’ a move, ya might wanna light a fire under yer booty, cuz it ain’t gonna last. Ya heard it here first. Read the rest of this entry »
Posted on September 21, 2009 @ 11:55 am - Written by BawldGuy
This isn’t about keeping something out of your backyard, it’s about whether or not it makes sense for you to invest your hard earned capital into your own area’s real estate. If you live in San Diego as I do, you know what the history of real estate has been. In a nutshell, if you invested and let it be, depending upon the cycle, sooner or later (never real long) your capital grew — big time. That was the case from the 1970’s ’till late 2005 or so.
For the record, San Diego is not, by any stretch of the imagination, the Lone Ranger in this. It’s true for California in general. Look at where you live. Is the median price of a home affordable for the typical family? No? See, it’s a matter of degree. San Diego is ecstatic cuz their median home price is now under $400,000! What’s your region’s median price? If it’s much over $200,000 the regular folk are beginning to be crowded out. If that’s the case, your 1-4 unit residential income properties are already becoming less attractive.
Enter what appears to be a paradigm shift — in fact two . Read the rest of this entry »
Posted on September 17, 2009 @ 8:02 pm - Written by BawldGuy
So many of you bought a rental home back when, and have owned it for quite some time now. You may have experienced a significant rise in value, even after the last few years. You’re still unhappy with its performance. Some of you are feeding it cash every month. Some are making a little cash flow, but feel like your capital is stuck in quicksand. Most of you have simply realized that owning investment property in San Diego is not what it’s been the last few decades.
• Does this sound like you?
Declining equity, decreased rental income, aging property demanding more and more of your attention, not to mention cash. It’s become crystal clear to you your initial plan hasn’t produced as you’d hoped. Losing 25-40% of your value is a stark reality. You’re not the Lone Ranger. In fact, San Diego isn’t either, as there are plenty of regions experiencing the same woes. Read the rest of this entry »
Posted on September 14, 2009 @ 7:42 pm - Written by BawldGuy
You don’t hafta own debt free income property in San Diego, or Palo Alto, San Francisco, Orange County — heck, the west coast in general, to know how much of a value hit you’ve taken recently. For so many regular folks who’ve called me, the conversation often follows the same script. The good news (no always) is they own free and clear residential income units, usually 1-4 units per property. The bad news is they’ve dropped in value anywhere from 25-50% depending upon where they are and when they were acquired. Ouch and a half!
There are many areas like San Diego, where many of these calls originate. When duplexes are still selling for $300-450,000 with Net Operating Incomes (NOI) of $15,000 or less, the numbers simply don’t work for 90% of the investors out there. When it still requires 35% down just to break even every month, folks tend to look elsewhere — especially these days. There are several pockets around the country where a 20-25% down payment will yield positive cash flow from Day 1. Ironically, those alternative markets are more likely than not to offer better relative locations along with higher quality tenants to boot. Read the rest of this entry »
Posted on September 9, 2009 @ 3:46 pm - Written by BawldGuy
If what we’ve been through as a nation economically has a bright side, it just may be the new and improved eyes now available to investors of all stripes. Real estate investors for sure have, or should have, added much wisdom the last few years. Many have become enthusiastic students of Old School teaching. In markets like San Diego where real estate appreciation is considered both a redundant phrase and a birthright, this has been a most trying time. Since I blew the ink dry on my first license back in October of 1969, making money buying local property has never been fodder for serious debate — ’till now.
A reader, one of my favorites, and a wise, experienced investor, sent me a link showing Phoenix residential rents have been taking a hit, and may continue their downward slide — various reasons were given. On the other hand, the prices have been lower than they have since the boom. Buyers have been paying cash for homes, resulting in lower rents due to the lack of loan payments. They’re buying, for the most part, for capital growth. Cash flow is fine, but not their primary aim. Read the rest of this entry »
Posted on September 1, 2009 @ 3:23 pm - Written by BawldGuy
These pages have seen more than a few posts directly or indirectly aimed at the subject of ‘cap rates’ — capitalization rates. What is a cap rate exactly? Excellent question. Here’s an excellent answer. In its simplest form, if an income property sports a Net Operating Income (NOI) of $8 and the price is $100 — the cap rate is 8%. In other words, if you paid cash, the 8% would be your cash on cash return. I’ve found that’s an easy way to think about it.
Here’s another way. High cap rates generally speaking sport higher cash flow. Also, the higher the cap rate the lower the price is in relationship to the NOI.
I was once asked what I’d do if I had a $50 Million dollar bill.
Having 50 million dollar bills would change everything. I’d be a total hypocrite and buy all the super located NNN leased properties with high cap rates I could get. I’d also acquire a few 5-star mobile home parks, and/or some well located mini-warehouse storage operations. Then I’d make sure all the checks were wired to the correct bank account — which would be my management time each month. 
Read the rest of this entry »
Posted on August 19, 2009 @ 7:50 pm - Written by BawldGuy
Every now and then it’s more than a little interesting to hear from around the country, the answer to the question posed in the title. I understand there are points on the map, Michigan comes to mind, where folks have already headed for the bomb shelter and closed the door behind ‘em, so to speak. Even in that beleaguered state, there are folks who simply won’t take their capital outa there. And they’re doin’ well too. They’re exceptionally experienced pros though, and are the exception, not the rule by any stretch of the imagination. So don’t try this at home.
Anywho, come one, come all, and let me know the opinion you’ve formed of your own backyard. Believe me, there are plenty who wanna hear what you have to say, including me. As much as we’ve been around the bases, there’s nothin’ like hearin’ it from a local, first hand. Read the rest of this entry »
Posted on August 5, 2009 @ 6:22 pm - Written by BawldGuy
Are rates gonna stay down? Is the economy about to recover? Are we in a recovery now? Are real estate prices at the bottom? Will Lassie find Timmy in time? I have the answers for you tonight. No, really, stop laughin’.
Here’s the only answer you can take to the bank — so to speak. Lassie will find Timmy in time. It’s a lock. Count on it. It’ll happen.
Rates? I’m pretty firm in my belief we have from now ’till sometime between next August and the first quarter of 2011. That’s our window based on facts in evidence, discussed here recently. Is it as much of a slam dunk as Lassie and Timmy? Gimme a break, OK? Windows open and windows close. Your magic dust is no doubt as effective as mine. Read the rest of this entry »