Any appraisers buying these foreclosures?

[MNRural]

I'm just curious to see if any appraisers out there are starting to buy up these foreclosures. I am starting to see the prices of homes in the $30,000-$40,000 range. They are nothing great, properties that sold in the $150,000 range during the peak of the boom.

Given a CD pays 3-4% and the stock market doesnt pay anything, I would like to get some input from appraisers who are entering the market as investors.

Are you renting or repairing and reselling? Is the rental market now soft for SF homes due to all the vacant homes? Are you using bank financing or other sources? Are you buying newer type homes or older fixer uppers?

When I went to college for appraisal, the professors all said appraisal is a great place to start for a couple of years while you are learning the investment business. That was 20 years ago and I haven't invested yet.

Would have liked to buy in the 90's and sell in 2003.

 

[Wendy]

I plan to buy around the beginning of next year. I'm looking for rentals to keep for 10-15 years.

I'll be using equity from the sale of my old home (provided it sells w/ some equity left )

 

[DTB]

Buying, keeping and yes even flipping in this market. The key to the flipping is to search "price change" in your MLS. I have gotten 3 properties lately that were listed way above MV and trickled down slowly (bank owned), then sudenly they fell way below MV. Bought them, put in 15K and turned them over, still a little below (new) MV. Cash only, as speed is required.

When I went to college for appraisal, the professors all said appraisal is a great place to start for a couple of years while you are learning the investment business. That was 20 years ago and I haven't invested yet.

Would have liked to buy in the 90's and sell in 2003.


OOPS.

 

[Thern Newbell]

I almost bought a home to rent out a few years, but am glad I didn't. At the time the pricing level of homes had reached a point where renting it out wasn't really feasible as rental rates weren't rising as fast as property values. I think right now, in some neighborhoods, it would be a good time to buy as I would anticipate an increase in demand for rental properties due to the tightening lending requirements. In my city, there is are neighborhoods with government subsidy rental programs where there has been an influx of foreclosures. Many of the houses have been rehabbed sometime within the last five years, so there is not much wrong with them. I believe that a GRM between 50 and 60 or lower is obtainable in this market, and I don't know if the market prices can fall much further.

 

[Craig Farr]

Location. Location. Location. I am watching ONLY a handful of distressed houses, all in unique locations. I truly believe I will be able to buy one or two of them during the winter doldrums at a price that will allow me to sweep-out, hold vacant for three months, and then flip for a 25% profit. I am NOT interested in housing that is simply a commodity, with no meaningful difference from hundreds, thousands of other properties. The potential of being stuck for years with such look-a-like 'project' homes is great. Then you are in the rental business......and THAT is NOT for the squeamish!

 

[aci3910]

I am buying and flipping. It is important to buy the house right. 40 to 50 percent below what they paid for it a year or two ago. Try to do the work yourself and then price it a little below the market when you sell it. I have made $15,000 - 20,000 on two different homes this year and will have another one ready to sell in one month. I have plenty of time because my appraisal business is very slow.

Randy

 

[Last Jack]

I am buying and flipping. It is important to buy the house right. 40 to 50 percent below what they paid for it a year or two ago. Try to do the work yourself and then price it a little below the market when you sell it. I have made $15,000 - 20,000 on two different homes this year and will have another one ready to sell in one month. I have plenty of time because my appraisal business is very slow.

Randy

A better barometer to use in getting in is to by for 65-70% of today's market value minus repair costs...as an appraiser you should be able to determine that. What has been paid in the past is irrelevant and you will get burned eventually using that method.

More importantly today (because getting in low is easy now) is getting out - have your exit strategy in place before buying and make sure that you've researched that your exit strategy is real and feasible.

 

[aci3910]

I agree with you. You have to know your exit plan before you buy. If you want to flip it, you put in a little nicer amenities. If you want to hold it for 2 years and let the market rebound you put in cheaper stuff. It really is a great market to buy rental properties but I flip them to increase my income in these down times.

Randy

 

[AnonApprsr]

I want to so bad....

 

[Mountain Man]

Yeap, still at it, even in this market we are remodeling and flipping. Only have 2 rentals right now, I just don't like the headaches of rentals. However, where we were once doing 10-12 houses a year. We'll probably only end up with 6 this year... the current market made us tighten up our estimates to pick only the very best deals. We are no longer buying anything that is marginal. If I can't see at least a 20% return, then no go. Just bought a lake lot yesterday for $100,000 less than what they were selling for last year. We'll hold that one a year or two, and build a spec. Should make a couple hundred thousand in the near future of that little jewel.