Existing home sales lowest since '97

Sales of existing homes fell in January to their lowest levels in nearly 12 years, with a real estate group saying buyers delayed purchases in anticipation of government programs to boost the housing market.

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bullshit.

people are losing jobs and are afraid to buy.


time to make a killing here folks... blood's about to run in the streets

Randall,

What part of Jersey are you from? Do you ever poke around over the bridge? Any thoughts?

We have been flying back a forth a good bit - starting to ask around for REO players in the city. It seems like the hammer might finally be ready to fall up three - a bit anyway. I don't think it will be as severe as most but it certainly might be a great opp to get some sick deals.

I am so looking forward to digging my nails into that market - just have to re-learn the ropes.

I even purchased PhiladelphiaRealEstateWealth.com the other day

congrats on that domain purchase. Flights are pretty cheap these days from FL to PHL... just booked a week at disney for the 4 of us and decided not to use my rewards points for the flights.


and I think you're right about 'the hammer ready to fall' in RE for a number of reasons I've detailed in other threads

phila has a couple of good things going for it in that there are a lot of city, state and municpal workers and 2) RE taxes are relatively low.

the problems however I see with Phila (I was in the NE today) is the quality of tenants are atrocious. It's a very difficult market to attract good tenants unless you're in center city near the hospitals (or near UPenn Presb or CHOP) and to get good quality tenants typically move to the burbs to avoid some of the wage taxes.

also - there are a lot of vacant properties again. I worked at 11th and washington for almost a year just out of college and remember how I wanted to jump in the RE game at that time.... I remember some of those prices in the mid 90's and I think we're going approach those levels again.

( I have 8 units in Overbrook near St Joes and luckily I am doing ok for now... but these properties have had a lot of tenant turnover)

I have a meeting with a broker who works a lot in Trenton and its surrounding areas on Friday and I have another meeting next week in NYC with a money manager who can help raise $....

the parameters I have laid out for these brokers are simple: I am buying anything and everything at 1995 pricing.... this is the only way I'll be able to raise the cash to buy the buildings.

Exactly. We aren't buying anything unless it is on super-sale. The good news is - we are seeing responses from these banks like never before. We make some really low offers and these banks are still paying attention. We heard recently that a certain large bank is now accepting up to 30% reduction from list price (REO).

I hear you on the tenant population throughout the city - it can be tough. I have major concerns about straying too far from center. We are in Queen Village and Nothern Liberties and I wonder what it will take to dig up deals in hoods like that. The key is to be first in line. I wonder about places like Fishtown and Northern Liberties - which have experienced substantial growth over the past 10 years. The areas are now gentrified so all the 'hipsters' want to be there but people definitely overspent. It's all going to come down to rental dollars. My husband likes South Philly. His family is there and he knows it well. You have to know the streets over there - a few blocks makes all the difference. Lots of learning to do.

JAX --> PHL flights are fantastic. We have been paying $59 one way on SW. Hope it stays that way cause we are going to need to come back south a good bit.

It sounds like I need a 'money manager'!

Have a blast in Orlando!

phl-

consult TD Bank (formerly Commerce) ... I've been told by the commercial division people who've I been working with that they are getting somewhat aggressive with their lending BUT the bank is relying on the capacity to pay - in other words, liquidity is king-

also - I just met with a broker and investor who say short sales are the only way to go. But since they are very labor intensive and take a lot of time the brokers are looking for larger than the norm cuts of the deal.... he assured me deals are out there to be made on properties that were once 200k are now 75k. I told him the proof is in the pudding and bring the deals to me.

Next week is an important meeting with some money people. I'll keep you in the loop.

You rock, Randall. Thanks. I will definitely put a call in to TD. We fly up again next week - hope to get a few meetings in.

Short sales.....ughhh. I wish I had the patience. A good friend of ours is an expert down here - been doing it for almost 10 years - he keeps telling us to give him a week and he will teach us the ropes before we head back north. Tempting but I have to focus.

I hope your meeting goes well. Let me know how those deals look. 200 --> 75 sounds like a potential winner to me.

Have you guys looked over the bridge in Camden?...i got about 10 rentals over there and the houses are pretty much in line with Philly prices but the rents are about $300-400 more...i have 2 bedrooms renting for $900-925...you cant even get that for a 4 bedroom in Philly unless its like C.C. or Fishtown etc...granted Jersey taxes are higher but the headaches are the same (if you choose to be a landlord it comes with the territory) and if u make the tenants pay their own water bill and file for eviction as soon as they are late or even better...get sect 8 tenants...you can make a decent income...my houses are in Fairview which is not as bad as some of the other areas but if you have the fortitude for low income rentals then there are definitely some deals to be had...I just picked up one for 32k put 11k worth of work in it and can sell it for 65-70k...(i think im gonna keep it though for the free and clear cashflow)

hey Boo-

is it ok if we correspond by telephone this week? I already have a few projects kicking into motion and want to pick your brain a little bit . I've considered gloucester county in the past....

if it's ok to send me your phone number, just PM me. thanks

Randall

I really don't rock... that was a previous life. lol

one main concern I have regarding short sales is that some people are already effing up their houses (removing fixtures, pipes, etc) vs. REO properties which definitely have clean titles and allow typical acquisition procedures (deed clean up) etc. I will learn a bit more now this guy is on my speed dial

We took a serious look at Camden about 5-6 years ago? At the time, they were talking about building a big golf resort over in Camden. haha... funny to think about that now.

The cash-flow was there but, in many of our showings we kept seeing illegals sleeping on cardboard boxes. I have to admit, it freaked me out, at the time. I wasn't prepared to deal with immigration type issues - determining who was legal and who was not. I forget what they called the section of town we were in.

Despite the crime, I think the area has great potential. You just can't beat the proximity to the water, the city, etc. I just don't know what it will take to get them out of the top 3 every year for crime.

It's certainly worth a look. Thanks for mentioning it.

I'm not sure I follow you here? I agree that shorted properties often have damage but then, so do REOs, right? All of our REO purchases are 'as is'.

In my experience, you have an opportunity to work out title issues in either case (short sale or REO).

Just my VERY LIMITED experience, but...

REOs tend to be more messed up than short sales. Previous REO owners lost their homes to foreclosure, and had no incentive to keep them livable. Short sale owners, on the other hand, were working hand-in-hand with the banks to get the properties sold, and generally consider it in their best interest to ensure the new buyer is happy (that's the only way a short-sale will go through).

Plus, short sale owners tend to be very concerned about deficiency judgments and destroying their property only risks their owing more money once the short-sale is completed (because the short-sale generates less return for the bank).

Also, most short sales are occupied almost until closing, whereas REOs have likely been vacant for many months (or more). So, REOs are almost always in worse condition, if only due to outside forces...

Again, just my experience...

Moving thread to more visible location ...

Ditto... REO's sometimes haven't been occupied for 12-18 months... They've usually been completely robbed of their appliances (Most of the time by the former owner), may have burst pipes from utils being shut off in winter, and are generally destroyed from top to bottom. It's rare anymore to find an owner who doesn't completely rip out the cabinets and anything else they can sell on Craigs List before the bank shows up.

Short sales are in better shape, but in my experience -- are not even close to as good of a deal as you get on REO's. Since 9 times out of 10, I want to demo granny's cabinets and pull down her 1970's wood paneling -- I'd rather just start with the REO and get the better price. The bank assumes you want to live in the property usually when they are trying to short sale you, which is dumb on their part.

- Hakrjak

If you saw alot of illegals then most likely you were in East Camden...which coincidentally has appreciated better than most other parts of the city...also those illegals make some of the best tenants because they usually have their whole family living there (aunts, uncles, grandma, cousins)and they all contribute to the rent and they pay cash...they dont want any problems i guess because of their immigration status...despite all those people living in the unit...the women tend to be pretty clean and the men will fix damn near anything that goes wrong with the place while they live there without calling u...Other than a section 8 tenant...this is as close as you can get to a sure thing in Camden...In regards to the crime...well i dont know what can be done but if the residents of the city are aware of it and still choose to live there then i guess it doesnt concern me much...just send me my rent and dont break nothing!!

Finding deals in east camden are kinda tight right now because all the tenants want to live either there or in Fairview (i have units in both areas) but they are there...my advice if you are looking to buy and hold would be to put 20% down on a unit and have the major issues checked out (plumbing, electrical, roof, heating, and for some damn reason the sewage lines in these places back up often) but whatever you find...get it fixed or replace it...then get a sect 8 tenant (sect 8 in the city is easy and they get the tenants in fast) and just collect your checks...you should be cashflowing nicely...most tenants move in and stay for 5+ years which is perfectly fine with me...the only hassle is the yearly inspections...sect 8 dont play...if u fail inspection and dont have the issues resolved within a timely manner...they stop your checks...In NY they hardly ever come out to inspect my units and if they do find something they dont stop payment...but NY is a totally different beast.

I had bought an REO in the past and was able to negotiate the price accordingly.

yes, appliances and fixtures were removed but the price accounted for just that but most importantly to me was that there was a clean title and no hassle in cleaning up the title.

Short sales are a long process that cost a lot of time while the REO is already primed for sale. Some banks/sellers have a strict policy about turning on electric and water but there are ways around it if you have friends in public service works ;-)