Real estate: Time to jump back in?

[sweeps]

Do you think it's time to jump into real estate? I'm a die-hard stock bull and have always avoided real estate but I'm starting to see some really good deals now that the frenzy has died down. I like to zig when the market zags. (Plus I personally think stocks are going to take a breather from this recent run-up so now would be a good time to diversify a bit.) Opinions?

[usnavy_233]

This is all relative. What location are you in? What do you intend to do with the investments (I.E. rentals or flips)? Personally, I think the market will continue to flatten and/or drop slightly through about 2008, but that's just my personal opinion. The good thing about real estate is that there's always a good deal somewhere. Sometimes you just have to look harder and be more deligent to find them. Best of luck to you.

[disneysteve]

What do you mean when you say "real estate?" Are you looking to buy a rental property, a primary residence, a vacation home, stock in home builders, a REIT, or what?

I think there has been some pull back in prices, an increase in inventory of houses on the market and houses spending more time on the market. I certainly don't think that trend is over. In many areas, it has just begun. Personally, I think the market is likely to be flat or down for quite a while. That said, it might not be a bad time to start feeding money into a real estate fund or REIT. Actually, my real estate fund is already up 9.2% YTD and that's on top of the 40.32% it was up last year and the 3-year annual return of 32%. It's been an incredible run, but I can't see it continuing at that rate much longer.

[Scanner]

I agree with Mickey Mouse above - real estate is a vague term. Commerical real estate is actually doing pretty well and fairly stable. However, residential housing I think still has some long term correcting to do. For instance, in my market, real estate corrected in 1989 and didn't recover the original bought prices til about 1997.

I think we may be seeing an similiar market now.

I am holding off on investing in a REIT until about 2008.

I am investing in a commodity this year because I have the same sentiment as you. I bought a silver ETF - SLV is the ticker symbol. So far, it's up from 134 to around 138 but never mind that - it's a long term hold for me anyway.

However, being exposed to one commodity may be too much risk for you - you could just buy a commodity index and get exposure to all commodities - oil, silver, gold, grain, etc.

[thomas70]

What the original poster is asking is, "should I try to catch a falling knife?"

The problem with catching falling knives, is that often times you get IMPALED by them.

If the market keeps dropping, as all the numbers seem to indicate, it would be foolish to rush in too soon to buy a house.

If you buy real estate now, make sure you're not in a "bubble" market. Some areas (i.e., Texas) were never affected by the bubble -- and you can get a 4 bedroom house for $80K or $100K. That's obviously a good deal.

If you couldn't buy a house and RENT IT OUT at a profit -- then the house is too expensive right now. Don't listen to the Realtors (tm) whatever you do! They have all kinds of sucker lines "You'll get priced out of the market" etc.

Always keep fundamentals in mind -- and you'll never be sorry. Same goes for stocks. Look at the P/E ratio, and don't just do "what everyone else is doing". Remember, MOST people lost their shorts in 1929, and it can happen again.

[sweeps]

Lol .

[Ima saver]

I am looking around to buy a piece of property. Land has gone sky high here and I am hoping to get a better price now. What are you lookin to buy sweeps?

[sweeps]

Ima, I'm looking to buy some "as-is" property from some motivated sellers out there. I'm actually even more motivated by the negativity this topic generated. When people are panicking that's the time to start buying.

[kv968]

Originally Posted by sweeps

Ima, I'm looking to buy some "as-is" property from some motivated sellers out there. I'm actually even more motivated by the negativity this topic generated. When people are panicking that's the time to start buying.

If you haven't really dealt with real estate too much in the past an "as-is" property might not be quite the right thing to get you feet wet with. Sure they're cheap but they're that way for a reason. "As-is" usually means a lot more than just needing a coat of paint and a window or two.

[sweeps]

They would be teardowns. Not for putting on a coat of paint.

[disneysteve]

Originally Posted by sweeps

They would be teardowns. Not for putting on a coat of paint.

Do you mean you are looking to buy teardowns? What do you plan to build in their place?

[sweeps]

Never mind, just gauging people's sentiments on real estate. I think people are quickly overreacting on the down side. Looking into where I can take advantage of some of that.

[kv968]

I'm not against investing in real estate however I don't understand what you mean by tear-downs? Are you thinking of buying an "as-is" house, tearing it down and building a new house on it? If that's the case and you want to do that because the market is down a bit I wouldn't be comfortable doing it. I mean it depends on your financial situation and what you're willing to risk but if you're looking for a quick profit you had better do your homework first to make sure it's feasible.

[scfr]

Well ... We think it will be time to buy again fairly soon. We're planning to purchase a primary residence in approx 1-1/2 years. Does that count as "jumping back in to real estate"? I know not everyone sees a primary residence as an investment but rather a place to live; I see it as both. When we bought our previous house (since sold), what we thought about it as an investment was one factor (but certainly not the only factor) in deciding which house to buy.

When we buy our next house, we'll be looking at all of our options, from new construction to foreclosures.

[disneysteve]

Originally Posted by sweeps

Never mind, just gauging people's sentiments on real estate. I think people are quickly overreacting on the down side. Looking into where I can take advantage of some of that.

I'm just not exactly sure what you are asking. Are you looking to buy a property and rent it out? If so, just be sure the local rental picture will allow you to charge enough to cover expenses. A few years ago, investors were willing to have a negative cash flow on the hopes that the property would appreciate and they could sell it at a nice profit. Today, I think that is far more unlikely, so if you can't have a positive cash flow from day one, it probably isn't worth it.

[Elgin526]

Real Estate is very much a local thing. Around here, prices over the last 10 years have climbed, but not at the insane rates of, say, CA. As far as I can tell, prices have leveled off and houses are sitting on the market longer, but are still selling for the most part without the sellers having to reduce asking prices (unless they were asking WAY to much to begin with, of course). And since the market didn't get over-hot, I don't notice an increase in forclosures either, since no one got in over their heads, at least to the extent that they can't make their payments, anyway.

Now, in your area, you could be seeing a record number of foreclosures and inestors selling in panic mode, thus droping prices like a rock. But even if that's the case, it still doesn't mean it's a good time to buy, as the RE market could continue to drop for months or even YEARS and it could take a decade or more to recover (anyone remember the real estate bust in the Northeast in the late 80's?). In a situation like that, if you're looking to do a tear-down and flip it, you could lose your shirt, but if you want it as a place to live for the next 10-15 as well as an investment, it could pan out. If you're looking to rent it, it will depend on what the local rental market is like, and renting posses risks and costs all it's own.

Honestly, it all depends on what exactly you plan on doing with this real estate and what your time frame is, along with the local market conditions. That's something you won't learn here, you'll have to do your own research in your area. Good luck!!!