Real Estate Hold or Sell?

[chadly]

What are your predictions for the future of the real estate market? I’ve not kept anything new for rentals in about a year and a half. I’ve bought and sold four so far this year and I’m just getting started on the fifth one. I’m considering keeping it for another rental. I also have the opportunity to sell one of my rentals for a good profit. Should I be selling what will sell while I still can or stick to my original plan and hold on for long term wealth?
Chad

 

[Steve V]

I am in the process of selling my house and trying to buy another at the same time. My realtor says the property values will go down a bit for the next 6 mons to a year because the banks have a bunch of foreclosures that have not hit the market yet.

We got a contract Sunday and countered it. The buyers refused a counter and stuck to the orginal offers. So we let it go.....our house has been on the market just over 2 weeks and we have had 7 showings so far.

Interesting to see what the experts have to say about the future of real estate.

 

[UNGN]

If you can sell something now for a good profit, I'd do that now and invest the money into Low mileage GN's, which appear to be downright cheap.

I have no idea what real estate will do in the next 5 years, but low mileage, unmolested GN's will likely go up at a higher rate for the next 5 years.

Real estate will eventually come back, but it may flounder around for a while, first, as today's unemployed start to walk away from their mortgages. The Mortgage "crisis" occurred with 5.X% unemployment. It's going to be 10%+, soon. Maybe not in Iowa, Nebraska or Texas, but in the rest of the country.

And, the economy is still sheading jobs. The media gets whipped into a frenzy the recession is over when job losses slow, but that isn't the same as companies actually hiring.

I still remember the 55K mile LS-5 4 speed Chevelle I could have bought for $6K during the "recession" of 1991. Don't be like me.

 

[et10sec]

real estate

i would sell the one with the profit, then go buy more, there is alot of deals out there right now, buy cheap and fix it up, then rent it until you need the money. i keep all the real estate rented, you will never sell them. i have 20 units and they are always rented. :smile:

 

[RobsIron]

The way to make big money in real estate is to have the means to hold on to it long term. Many investors did well quick flipping properties, but are sucking wind now.

I predict the market will not get better in 2010. If the houses change hands in the Nov. 2010 election things should pick up in mid 2011. Should have a few years plus of property values increasing.

This all depends if the predictions of the commercial market crashing within a few months are true.

As stated earlier if you can sell for a nice profit now I would re-invest it in others properties and avoid gains tax. If you are sick of being a landlord...buy gold.

 

[ALVAROG1983]

Hold on to it

what are your predictions for the future of the real estate market? I’ve not kept anything new for rentals in about a year and a half. I’ve bought and sold four so far this year and i’m just getting started on the fifth one. I’m considering keeping it for another rental. I also have the opportunity to sell one of my rentals for a good profit. Should i be selling what will sell while i still can or stick to my original plan and hold on for long term wealth?
Chad

rent is about the only great long term retirement there is always going to be renters looking for a place.

 

[Little6pack]

buy

 

[GregInAtl]

If you dont need to sell to buy, then go buying!
If you have to sell calculate $ of loss you may have to take to gain $ of possible appreciation on the next property. ex;
Lets say my house 2 yrs ago was $175K, and today is $125K = $50K loss
Now the house/prop/RE you want was $300K and you can get it for $225K= $75K Potential appreciation. If I was looking to buy a larger house I would take the loss to the smaller one and risk the appreciable value in a larger scale.
There are no definates. You have to check your markets. We are already seeing starter homes recovering w/ a ton of foreclosure sales and 1st time buyers. The ones in the middle price range are not coming around as fast especially the $200K-300Ks....that seems to be the size many people were jumping to in my area when everything went sour. (and yes, I am RE licensed, but I only really can speak about my area )

 

[bison]

Sell it for a large profit or hold it. Do not do what UNGN advised and buy a bunch of TR's unless you can sell them at a profit almost instantly. Buying a bunch of cars that need to be climate stored and insured is way more expense than potential gain. If you sell the real estate take the money and buy good used cars that will sell at or under $5k. Thats where the quick high margin profits are and it is easy to sell a car if you have it and the title on hand. People dont have a lot of $ to spend on used cars these days. Good under $5k cars are hot items. Especially when you can find deals and pay $2-3k and sell for $4-5k within a weeks time in most instances. No other legal BS involved like there is with real estate. If you did 20 cars a year and netted $800 ea. you would have $16k more cash. You will not gain $16k clean cash in a year buying low mileage TR's. You would have to invest a lot more short term and and have to sit on it for years to see any good gains while your net goes in the toilet storing/maintaining and insuring. You would be better off holding and renting your real estate as long as you are not taking a monthly loss after expenses. You want quick cash deals and nothing where the transaction goes over $10k on paper! Sometimes you can take the potential buyers beater on a partial and sell that for a very good profit compared to what you gave them in trade. You would be suprised the POS kids will buy these days. Ive bought POS high mile rot box 90's Honda Civics and Toyota Corrolla's for nearly nothing to $500 and sold them for 2-3x that in one day. Having liquid cash and good credit will make you unstoppable when it comes to quick high profit deals. DONT LET TOO MANY FRIENDS OR FAMILY KNOW WHAT YOU ARE DOING ESPECIALLY IF THEY ARE DEBT WHORES. They will get jealous and want a slice of the pie. Keep your deals a secret.

 

[V8Assassin]

The way to make big money in real estate is to have the means to hold on to it long term. Many investors did well quick flipping properties, but are sucking wind now.

I predict the market will not get better in 2010. If the houses change hands in the Nov. 2010 election things should pick up in mid 2011. Should have a few years plus of property values increasing.

This all depends if the predictions of the commercial market crashing within a few months are true.

As stated earlier if you can sell for a nice profit now I would re-invest it in others properties and avoid gains tax. If you are sick of being a landlord...buy gold.

rent is about the only great long term retirement there is always going to be renters looking for a place.

Let's expand on these a little. First of all if you are sick of being a landlord, that's good advice. Being a landlord can be tough, it's not for everybody.

It is a good long term investment if, like any other long term investment, you are not over leveraged. Rate of return is very important, but it doesn't sound like this is a problem for you. Selling the property right now at a nice profit could be a good idea if there are available properties to turn the money over into. I would look at a couple of things, is the rate of return increased if you sell and buy, is there a positive cash flow difference if you sell and reinvest, and what equity change is there as a result. Equity can be decieving and ultimately captial structure and cash flow are better determining factors. How has the market changed in your area, Florida has been one of the worst hit and has seen values cut in half, but in my area there has been only a small decrease in housing properties except for those in foreclosue and the mobile home market which obviously experienced significant down trends. Some markets don't move much even in great or terrible times, these markets have less chance of making one a real estate mogul, but more chance of slow growth and long term cash flow without much risk in collapse.

Someone told me a few years ago that 10 rentals would kill you, but 100 would make you wealthy. If it is your plan to have rental income as retirement I would advise to focus on growth.

 

[V8Assassin]

Having liquid cash and good credit will make you unstoppable when it comes to quick high profit deals. DONT LET TOO MANY FRIENDS OR FAMILY KNOW WHAT YOU ARE DOING ESPECIALLY IF THEY ARE DEBT WHORES. They will get jealous and want a slice of the pie. Keep your deals a secret.

There's some wisdom in this statement. The only thing I would say different is if you have enough collateral the banks don't care what the credit is

 

[bison]

There's some wisdom in this statement. The only thing I would say different is if you have enough collateral the banks don't care what the credit is

People (most potential buyers) dont have collateral. They have nothing to show for anything and a bunch of debt. I was referring mostly to a well off individual who doesnt have any revolving debt. An example is you have $60k tied up in used cars and have no more $ on hand and have to tap a line of credit for a couple weeks because you cant lose a great deal on a car you see for sale.

 

[V8Assassin]

People (most potential buyers) dont have collateral. They have nothing to show for anything and a bunch of debt. I was referring mostly to a well off individual who doesnt have any revolving debt. An example is you have $60k tied up in used cars and have no more $ on hand and have to tap a line of credit for a couple weeks because you cant lose a great deal on a car you see for sale.

It's always smart to keep a line of credit open for good deals when they come through. You are right though, most people see credit as a means of buying stuff instead of a tool.

 

[nickb]

By all means if you can hold on, hold on to for the long term. If you are worried about selling something now while you can, I wouldnt worry too much. If someone is willing to buy it in this market.... imagine what you can make when things get better. The planet isnt getting any bigger. Always run in the opposite direction of everyone else (the market), (if you can). When people are buying like crazy, you should be selling like crazy. Obviously prices will be high because of demand. When people are selling like crazy, you should be buying like crazy. Obviously prices will be low because of demand. Get the point As long as you do it within your means, and you can afford it.... you will be a step ahead of everyone. All of this applies toward long term investments.

 

[SGRIM]

If you can make money on it I would sale it now and buy as much acreage somewhere as possible. Just sitting land that doesn't require maintenance... Forestry or something like that... Remember DIRT is one thing they are not making more of

As Adam said being a landlord is not for everyone. I am, have done it before and do not really plan on doing it again unless there is a no maintenance clause in the rental agreement. People can F up some stuff quick...

I think housing prices are going to continue to fall for at least 2-3 more years and I personally think it will be longer before they really start to climb...

 

[chadly]

Lots of good stuff here and I appreciate all the replies. I’ve been a landlord for about five years now. I jumped in blind and I’ve learned a lot. It has its perks and downfalls but if you plan for disasters you will be prepared for when they happen. I flip homes for a living and keep one here and there that are nice and offer good cash flow. Living in Iowa the market has stayed flat. While prices were sky rocketing in Florida we were going up at about 3%/year and over the last two years while the markets have dropped we have stayed the same. No appreciation right now but no real drops either.
I guess my original question I was just looking for some reassurance. I’m still very new at what I’m doing and while I now hold a lot property its easy to sometimes get a little nervous. I’ve slaughtered several cash cows in the past that I have regretted. I used to be of the impression that if a good profit could be made, make it and move on. But really if the profit is not needed is there really a reason to sell? I’m thinking not.

 

[ALVAROG1983]

Keep in mind landlords who you rent too it will save you money in the long run you've got to do your job and investigate to see what kind of people they are.

 

[UNGN]

Sell it for a large profit or hold it. Do not do what UNGN advised and buy a bunch of TR's unless you can sell them at a profit almost instantly. Buying a bunch of cars that need to be climate stored and insured is way more expense than potential gain. If you sell the real estate take the money and buy good used cars that will sell at or under $5k. Thats where the quick high margin profits are and it is easy to sell a car if you have it and the title on hand. People dont have a lot of $ to spend on used cars these days. Good under $5k cars are hot items. Especially when you can find deals and pay $2-3k and sell for $4-5k within a weeks time in most instances. No other legal BS involved like there is with real estate. If you did 20 cars a year and netted $800 ea. you would have $16k more cash. You will not gain $16k clean cash in a year buying low mileage TR's. You would have to invest a lot more short term and and have to sit on it for years to see any good gains while your net goes in the toilet storing/maintaining and insuring. You would be better off holding and renting your real estate as long as you are not taking a monthly loss after expenses. You want quick cash deals and nothing where the transaction goes over $10k on paper! Sometimes you can take the potential buyers beater on a partial and sell that for a very good profit compared to what you gave them in trade. You would be suprised the POS kids will buy these days. Ive bought POS high mile rot box 90's Honda Civics and Toyota Corrolla's for nearly nothing to $500 and sold them for 2-3x that in one day. Having liquid cash and good credit will make you unstoppable when it comes to quick high profit deals. DONT LET TOO MANY FRIENDS OR FAMILY KNOW WHAT YOU ARE DOING ESPECIALLY IF THEY ARE DEBT WHORES. They will get jealous and want a slice of the pie. Keep your deals a secret.

I wasn't telling him to start a new business, only saying that real estate in Iowa wasn't going to appreciate significantly in value any time soon. It didn't go up significantly during the "boom", so there is zero reason for it to go up significantly, now, post boom.

Cars have always been a poor long term investments and until the last 5 years, real estate has been a good long term investment. At this time, neither is a good long term investment (unless you are buying at 7-10 years ago pricing), but T/R prices are depressed more than housing prices in Iowa and have a greater long term up side on a percentage basis, considering what similar "muscle cars" have done in the past.

If it were me, and I could sell real estate right now for a good profit, I would... them spend the next few months looking for a better property to invest in... then wait until October/November to see if the market crashes and buy then... or buy stocks at a 40% discount right after the crash.

The economy is currently sucking wind and the government and media are whistling through the graveyard. Cash will be king until inflation rears its ugly head during the "recovery".

We both agree to take the money and run with it.

 

[bison]

I wasn't telling him to start a new business, only saying that real estate in Iowa wasn't going to appreciate significantly in value any time soon. It didn't go up significantly during the "boom", so there is zero reason for it to go up significantly, now, post boom.

Cars have always been a poor long term investments and until the last 5 years, real estate has been a good long term investment. At this time, neither is a good long term investment (unless you are buying at 7-10 years ago pricing), but T/R prices are depressed more than housing prices in Iowa and have a greater long term up side on a percentage basis, considering what similar "muscle cars" have done in the past.

If it were me, and I could sell real estate right now for a good profit, I would... them spend the next few months looking for a better property to invest in... then wait until October/November to see if the market crashes and buy then... or buy stocks at a 40% discount right after the crash.

The economy is currently sucking wind and the government and media are whistling through the graveyard. Cash will be king until inflation rears its ugly head during the "recovery".

We both agree to take the money and run with it.

Even in chit times there are deals to be found whether real estate or cars. You just have to find them and have the buying power. Inflation will be a big problem when the obama admin starts printing money to cover their ass

 

[V8Assassin]

Lots of good stuff here and I appreciate all the replies. I’ve been a landlord for about five years now. I jumped in blind and I’ve learned a lot. It has its perks and downfalls but if you plan for disasters you will be prepared for when they happen. I flip homes for a living and keep one here and there that are nice and offer good cash flow. Living in Iowa the market has stayed flat. While prices were sky rocketing in Florida we were going up at about 3%/year and over the last two years while the markets have dropped we have stayed the same. No appreciation right now but no real drops either.
I guess my original question I was just looking for some reassurance. I’m still very new at what I’m doing and while I now hold a lot property its easy to sometimes get a little nervous. I’ve slaughtered several cash cows in the past that I have regretted. I used to be of the impression that if a good profit could be made, make it and move on. But really if the profit is not needed is there really a reason to sell? I’m thinking not.

A flat market like yours and mine doesn't make for huge gains, but it is easier to predict what something will actually be worth. Also, it gives you a better idea of how to plan cash flows.

Yeah those cash cows are easily done away with, and hard to replace. Don't forget just cause you are in the black doesn't mean you can't be flat on your back...........Mind The Cash Flows First!!!!