House-hunting 3.0

Last week we went to see an old SFR on the market for $320k.  It was home to an old lady and the agent was only allowed to do 3 hours of open house showing.  Yup, 3 hours only.  We were the first to arrive that morning, the house, despite its age, was well maintained and very clean.  We submitted at bid at asking and the following day, we were informed that they had received over 10 bids up to $350k, including multiple all cash bids.

Looking at nearby sales records, there were many investors who bought the nearby old homes for $250k in Summer 2012 at foreclosure auctions, fixed them up and flipped them for $350k in 2-3 months.  However, unlike the flippers during the RE bubble, buyers have higher demands on the refurbishment these days.  If you tried to flip a crappy house for $100k profit, you'd get very few offers.  But if you give the interior a complete makeover (and I mean new kitchen, bathroom, etc), you can expect >10 bids in 1 day.

The issue that we have now is, if we compete and up-bid, the assessed value probably won't match and we'd have to put more $$ down to secure the loan.  At current market, it's cheaper to buy a 500k house than to rent in Cerritos area.  >_>
 
...just got out-bid on another SFR by an all cash offer.  Sent e-mail to seller agent to say that we're really interested to buy the house and to please consider us as the backup offer.  Was told "don't bother".  Guess all cash purchases don't fall out of escrow.  LoL.
 
momopi said:
...just got out-bid on another SFR by an all cash offer.  Sent e-mail to seller agent to say that we're really interested to buy the house and to please consider us as the backup offer.  Was told "don't bother".  Guess all cash purchases don't fall out of escrow.  LoL.
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Sorry to hear about your situation. Don't give up. The right house will come at the right time.
 
Since resale is a barren wasteland... been looking at new floorplans online... but shocked at how much pricing has gone up.

I guess our last hope is Heritage Fields... but looking at the prices for Cypress Village and greedy Branches... it does not bode well.

Where is that tsunami of Shadow Inventory I was promised?!?
 
irvinehomeowner said:
Since resale is a barren wasteland... been looking at new floorplans online... but shocked at how much pricing has gone up.

I guess our last hope is Heritage Fields... but looking at the prices for Cypress Village and greedy Branches... it does not bode well.

Where is that tsunami of Shadow Inventory I was promised?!?
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It's not coming because lenders are strarting to bulk sell their shadow REO inventory to big boy instituitional investors like Blackrock, Apollo, Carlyle, etc. and foreclosure activity is starting to decline.  The tsunami is like that magical unicorn that no one has ever seen.
 
USCTrojanCPA said:
It's not coming because lenders are strarting to bulk sell their shadow REO inventory to big boy instituitional investors like Blackrock, Apollo, Carlyle, etc.
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... and then what??
 
SoCal said:
USCTrojanCPA said:
It's not coming because lenders are strarting to bulk sell their shadow REO inventory to big boy instituitional investors like Blackrock, Apollo, Carlyle, etc.
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... and then what??
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The market will continue to strength if we continue having a lack of inventory.  There is a backlog of buying and the lower that inventory levels go, the more desprate they get and bid up prices.  You also have investors out there who are looking to reasonable returns as they can't find it anywhere else.
 
USCTrojanCPA said:
SoCal said:
USCTrojanCPA said:
It's not coming because lenders are strarting to bulk sell their shadow REO inventory to big boy instituitional investors like Blackrock, Apollo, Carlyle, etc.
Click to expand...

... and then what??
Click to expand...
The market will continue to strength if we continue having a lack of inventory.  There is a backlog of buying and the lower that inventory levels go, the more desprate they get and bid up prices.  You also have investors out there who are looking to reasonable returns as they can't find it anywhere else.
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I think SoCal meant what are the institutional investors going to do with the bulk quantity of homes they buy. Sell or rent?  I don't think those guys are in the business of renting individual homes. So the inventory exists somewhere, when does it get released and how fast is the 64k question
 
qwerty said:
USCTrojanCPA said:
SoCal said:
USCTrojanCPA said:
It's not coming because lenders are strarting to bulk sell their shadow REO inventory to big boy instituitional investors like Blackrock, Apollo, Carlyle, etc.
Click to expand...

... and then what??
Click to expand...
The market will continue to strength if we continue having a lack of inventory.  There is a backlog of buying and the lower that inventory levels go, the more desprate they get and bid up prices.  You also have investors out there who are looking to reasonable returns as they can't find it anywhere else.
Click to expand...

I think SoCal meant what are the institutional investors going to do with the bulk quantity of homes they buy. Sell or rent?  I don't think those guys are in the business of renting individual homes. So the inventory exists somewhere, when does it get released and how fast is the 64k question
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From what I've heard, those of those properties are being put up for rent.  Even those big boys are looking for yield and they have the scale to create in-house property manangement companies for their rental property portfolios.  The rental market is just as strong as the re-sale market right now.  That being said, even if a lot of those MIA homes were put on the market here's plenty of buyer demand out there right now to soak up that additional inventory.  There's not enough homes even for highly motivated buyers.
 
I read that one of the hedgies buying up REOs in Phoenix with an inventory in the low 1000s, has a 53% vacancy rate.  Guess those big boys aren't so great (yet, at least) in managing a huge inventory of SFHs.

 
freedomcm said:
I read that one of the hedgies buying up REOs in Phoenix with an inventory in the low 1000s, has a 53% vacancy rate.  Guess those big boys aren't so great (yet, at least) in managing a huge inventory of SFHs.
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Some will do better than others but all of them can probably fall back on the fact that they bought the homes at steep discounts to the market price.
 
Wow! This thread is filled with information of all kinds now :)
So, I am talking to one of the "investors" in my neighborhood who has bought four all cash properties in Irvine, owns another one. He tells me, there is still time, put all the money you have into real estate.

Tell me guys, if you have a child who will go to college in less than six years, would you gamble that money in real estate or keep it liquid?
 
Cubic, any home that does not cash flow with 20% down is pure speculation and not an investment. I will not buy an sfr investment unless it gives me a minimum of 10% cash on cash return. The strategy now is leverage as much as you can from the banks at a fixed rate and wait for a short term bond and cd laddering. As interest rates rise, I believe that the us dollar will strengthen and will suprise many. Investing in an irvine home is not different to buying gold today at 1600 an ounce.

I like to do the opposite of the crowd and cash will be king in the years ahead with a rising interest rate environment. It is important not to put all your eggs in basket no matter what the market conditions are. Personally for my real estate investment equity portfolio including my primary make up 29% of my networth. Hope this helps.
 
Baby Irvine said:
Cubic, any home that does not cash flow with 20% down is pure speculation and not an investment. I will not buy an sfr investment unless it gives me a minimum of 10% cash on cash return. The strategy now is leverage as much as you can from the banks at a fixed rate and wait for a short term bond and cd laddering. As interest rates rise, I believe that the us dollar will strengthen and will suprise many. Investing in an irvine home is not different to buying gold today at 1600 an ounce.

I like to do the opposite of the crowd and cash will be king in the years ahead with a rising interest rate environment. It is important not to put all your eggs in basket no matter what the market conditions are. Personally for my real estate investment equity portfolio including my primary make up 29% of my networth. Hope this helps.
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Even at the bottom (2009 and 2011) there were very few Irvine property would actually be cash flow positive with 20% down, especially homes in desirable villages of Irvine.
 
USCTrojanCPA said:
Baby Irvine said:
Cubic, any home that does not cash flow with 20% down is pure speculation and not an investment. I will not buy an sfr investment unless it gives me a minimum of 10% cash on cash return. The strategy now is leverage as much as you can from the banks at a fixed rate and wait for a short term bond and cd laddering. As interest rates rise, I believe that the us dollar will strengthen and will suprise many. Investing in an irvine home is not different to buying gold today at 1600 an ounce.

I like to do the opposite of the crowd and cash will be king in the years ahead with a rising interest rate environment. It is important not to put all your eggs in basket no matter what the market conditions are. Personally for my real estate investment equity portfolio including my primary make up 29% of my networth. Hope this helps.
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Even at the bottom (2009 and 2011) there were very few Irvine property would actually be cash flow positive with 20% down, especially homes in desirable villages of Irvine.
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I agree USC
 
Baby Irvine said:
Cubic, any home that does not cash flow with 20% down is pure speculation and not an investment. I will not buy an sfr investment unless it gives me a minimum of 10% cash on cash return. The strategy now is leverage as much as you can from the banks at a fixed rate and wait for a short term bond and cd laddering. As interest rates rise, I believe that the us dollar will strengthen and will suprise many. Investing in an irvine home is not different to buying gold today at 1600 an ounce.

I like to do the opposite of the crowd and cash will be king in the years ahead with a rising interest rate environment. It is important not to put all your eggs in basket no matter what the market conditions are. Personally for my real estate investment equity portfolio including my primary make up 29% of my networth. Hope this helps.
Click to expand...

Diversification is probably the best investment strategy lots of ppl follow.  Have stocks/ETFs in different sectors, bonds, real estate, precious metals, and of course, straight cash.  Be wary of anyone who tells you to "put ALL your money in/on...".  Remember: bulls make money, bears make money, pigs get slaughtered.
 
Went to 3 open houses in University Park Saturday... I think all were attached... most were dated, 2 had some upgrades... lots of traffic... Irvine is ridiculous.
 
Buy now or the new government will find their wealth quickly. HSBC will help Launder. Positive cash flow is not a factor in the decision.

Baby Irvine said:
Cubic, any home that does not cash flow with 20% down is pure speculation and not an investment. I will not buy an sfr investment unless it gives me a minimum of 10% cash on cash return. The strategy now is leverage as much as you can from the banks at a fixed rate and wait for a short term bond and cd laddering. As interest rates rise, I believe that the us dollar will strengthen and will suprise many. Investing in an irvine home is not different to buying gold today at 1600 an ounce.

I like to do the opposite of the crowd and cash will be king in the years ahead with a rising interest rate environment. It is important not to put all your eggs in basket no matter what the market conditions are. Personally for my real estate investment equity portfolio including my primary make up 29% of my networth. Hope this helps.
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You guys will get a kick out of this, there are almost 2x more active rental listings than there are for-sale active listings in Irvine.
 
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