South Salem NY Real Estate Report RobReportBlog
2013 6 months ending 4/25 201224 Sales 19$482,500.00 median sold price $530,000.00$180,000.00 low sold price $247,500.00$1,551,000.00 high sold price $891,000.002932 average size 2576$216.00 ave. price per foot $219.00277 ave days on market 306$619,375.00 average sold price $548,000.0094.62% ave sold to ask 94.95%
As any experienced real estate investor will tell you, not all investment properties are created equal. Homes that might be perfect for a primary residence, for example, might not yield positive cash flows — and without positive cash flows, you’re losing money, not making it.
Here are a few things to think about and properties to avoid when you are ready to invest your hard-earned cash equity capital.
1. Anything that doesn’t generate rental income
These include second homes and land investments. Too many people invest in properties hoping that they will go up in value. But there is an opportunity cost to having money sit in real estate that doesn’t pay any income. Even if the property goes up in value, you’ve got to reconcile and account for all the money you would have earned if your money had instead been in the bank or in stocks and/or bonds.
2. Anything with negative cash flows
If you buy a “prize property” — such as a fancy downtown fancy condo, beach property or vacation rental — it’s probably going to be 20+ years before you get your first dime of positive cash flow. And that’s just no way to invest your hard-earned money. Pencil out any potential deal ahead of time, and buy properties that pay cash flow from day one — the moderately priced properties in non-prize areas.
3.Tenant-in-common (TIC) investments
These were popular from 2005 to 2007 as a way to diversify a portfolio without having to deal with the hassle of owning and managing real estate. But few people ever earned a dime because of all the costs and fees associated with the agreements.
4.Development deals
Development of land is extremely high risk. There are entitlement, construction and market pricing risks, plus countless others. These investments are best left to the extremely wealthy and experienced investors who can take the chance that they’ll never see their money again.
5.Condo-hotels, intervals & time-shares
These aren’t even investments. There’s no ability to predict cash flows, rental income or future value/sales prices. And they are very hard to resell and typically only at a fraction of the original cost.
6.Foreign real estate
You might be OK buying real estate in Canada or Britain – however don’t forget about the foreign currency risk — but foreign countries generally have different real estate laws, protections and fluctuating currencies, making these properties extremely high risk.
Related:
Leonard Baron, MBA, is America’s Real Estate Professor®. His unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.
Fox Business writes:
“We’ll see how the summer goes and that will be a little bit of an indicator but my estimate would be another year until we have a good housing market,” said Joe Gross, national mortgage expert and author. “If employment goes down, within the year the housing market should be in a much better position than we are today.”
There are a few reasons for the rent appreciation. One is that New York has become a much more attractive place to live and work over the last few decades as crime has fallen and other amenities have improved, according to The New York Times’ economic reporter Catherine Rampell.
A second key reason that housing has become so expensive is that as demand for housing from both these occasional visitors and full-time residents has grown, supply has not kept up, writes the Times.
A third key reason housing is so expensive, related to the first one I mentioned, is that a lot of amenities that wealthy people like are bundled into the price of an apartment in New York, including a high concentration of bars, restaurants and theaters, and a greater variety of high-end goods.
Given the better pay in New York, housing costs are actually less onerous than they might seem, writes the Times.
Read the full report by Rampell in the Times here.
Charlotte foreclosure rate falls
Banks and lenders are easing back on lending, putting more drag on the economy, according to The Wall Street Journal.
The decline in lending follows lenders uncertainty about rising health-care costs, fear of another economic downturn and a brutal winter in the Midwest that delayed new investment, the article says.
The Federal Reserve voiced concerns over whether banks can withstand an eventual increase in interest rates after a long, low-interest-rate environment, according to an article in The Wall Street Journal.
A panel of federal regulators charged with observing market risk met on Thursday and warned that a sudden surge in interest rates could have a destabilizing effect on financial markets, the WSJ said.
The Fed’s chairman, Ben Bernanke, sits on the Financial Stability Oversight Council. Using detailed data that the central bank started collecting after the financial crisis, Fed officials are regularly running big banks’ portfolio holdings through models to gauge their exposure to various changes in interest rates, according to Fed officials.
Author’s note: Early in the year, I traveled to Missoula, Montana, for a winter vacation, but a contact put me in touch with a few people in the real estate industry and much to my surprise I came away with a couple of interesting stories. This column is the first of two.
For a while it seemed that anyone with a lot of money, from Hollywood stars to business moguls, wanted a piece — make that a very large piece of — America, and they came west looking to buy their own ranches. Many, following the lead of flamboyant media entrepreneur, Ted Turner, looked to acquire in Montana.
During the bubble years, investors couldn’t acquire Montana ranches fast enough.
William McDavid, who opened the Missoula office of Hall and Hall in 1996, remembers those years fondly.
“Before the recession, people were standing in line to buy,” McDavid says. “There were bidding wars for multimillion-dollar properties.”
Hall and Hall does a lot of different things as a real estate company, but to this day it is known as the premier brokerage for ranch lands with offices mostly throughout the west.
