Real Estate Timing - when to buy, sell, hold
When is the best time to buy real estate? When buying real estate for investment, smart money does not buy at, or near, the top of the market. Smart money buys real estate at, or near, the bottom of the market.
Historically, real estate often runs in cycles of approximately 7-10 years. Real estate often goes up (sometimes dramatically) for several years, tops out, goes down for several years, hits bottom and then starts going up again, beginning another 7-10 year cycle. It's a bell curve (shaped like a hill). And, when you are considering investing in real estate, you can simply figure out where you are on that 7-10 year bell curve and that can tell you in what direction real estate values are likely to go, and for how long.
note: this is the average historical method and does not take into account prolonged or dramatic upward or downward swings (bubbles or crashes).
If you are investing in real estate for a relatively short term gain (such as 3-7 years) and you buy at or near the top you could see the value of your real estate go down and you would historically have to wait approximately 7-10 years to see it regain its value and/or establish new highs. If, on the other hand, you are buying real estate to hold it for a long period of time (such as 20 years or more) you need not generally be overly concerned with these up and down 7-10 year cycles.
And when it comes to highly volatile New York or California real estate all normal timing and logic goes out the window!
For real estate investment timing:
1. try to buy at the low end of the current 7-10 year cycle
2. try to sell at the high end of the 7-10 year cycle
3. if you are in the wrong part of the current 7-10 year cycle, and can wait, a little patience can pay off handsomely
4. real estate is not a highly liquid investment; getting in and getting out takes t-i-m-e
5. in a real estate bubble or crash it's better to be safe than sorry
6. New York and California real estate often does not conform to the typical cycle (and thus may defy timing as well as logic!)
Alan Korber is a real estate investor with over 25 years of professional experience who wisely diversifies into other investments. He is also the creator and publisher of the Korber Strategy, a simple and successful stock market investment strategy which can produce annualized returns of 50%-100%. His website is http://akorber.r8.org
Mortgage Qualification Problems – Low Appraisals
The real estate market in the United States is undeniably hot, hot, hot. This toward pace has resulted in an odd mortgage qualification problem – low appraisals. Here are your options if you get a low appraisal amount.
Appraisals
An appraisal is simply an effort by a qualified person to put a value on a property. The process involves a review of the property, other properties in the area and so on. Mortgage lenders always require appraisals, so you have to deal with appraisal problems if you are going to get the home.
Let's assume you have perfect credit, make a ton of money and ready to put down a solid down payment. You are happy, the lender is happy and the only thing left to do is get the appraisal. Unfortunately, the appraisal comes in well below the price you have agreed to pay for the home. Now what?
First, you need to take a deep breath. Buying a home is an emotional process. Try to step back from the process and objectively analyze whether you are paying too much for the property. If you still want to proceed, take the appraisal to the seller and see if you can get the price lowered. A solution should be possible, but be prepared to walk away if it isn't.
Second, perhaps the fair market values of properties in the neighborhood are dropping. We are beginning to see the market cool off, perhaps more so in your particular neighborhood. If this is the case, kiss the appraiser in thanks for keeping you out of a bad deal.
Finally, the appraiser may simply be wrong. Appraisers are human and make mistakes. They may not know the neighborhood well. There are a variety of reasons you can get an appraisal that is "off." If you suspect this is the case, check to make sure the appraiser is comparing the property to comparable homes in the neighborhood. If all else fails, have your own appraisal done for comparison purposes.
Ultimately, a low appraisal should be viewed as a potential red flag. If nothing else, you should take a closer look to make sure you aren't getting a bad deal.
Dan Lewis is with http://www.gwhomeloans.com - A San Diego mortgage company providing home equity loan, refinance and mortgages to San Diego homeowners.
The Best Places to Retire in the West
I am pursuing my final career – and I am quite comfortable working a 40-hour schedule for the first time in my life. I take my time and pick my clients carefully.
I get to take a day off here and there for golf, and I travel around the western states every couple of months. Over the past two years I have been keeping an eye out for the perfect spot to retire in the Western US.
I now live in a small community near the Bay Area in Northern California. I've lived here for 20+ years, and it has been great. The Bay Area is vibrant, has a good climate, and is home to some of the most creative people on the planet. But it certainly isn't paradise.
It is an expensive place to live. The highways are congested. The boarders of the US are out of control and that has hit California hard. The government is dysfunctional, and we pay a premium for that. While we have good weather, it is great half the year and somewhat over-rated the other half. My business has changed over the past five years. I can do about 80% - 90% of it from anywhere. That's the beauty of information and communication technology.
Let me share with you what I have found as I looked for better working/ retirement locations in the western US.
- Portland, Oregon area; especially Southern Washington
- Prescott, Arizona
- Northern Baja, Mexico
- Hilo, the big island of Hawaii
- Boise, Idaho
Southern Washington: I recently visited a friend who built his dream house on a few acres in Southern Washington, about 30 minutes from Portland. His 2,500 square foot house cost about the same as a ¼ acre lot in the Bay Area. He is within easy drive of a good airport and Oregon has no sales tax. He can explore the Cascades and reach ocean or skiing in a few hours. Yep – it rains a lot, but not as much as Seattle.
Prescott, Arizona: This gem is home to 30,000 people, who enjoy mountain vistas and a temperate, sunny, four-season climate thanks to its mile-high elevation. If you aren't real fussy, you can find a nice house for $350k. If you are a little fussy or want some land, expect to pay $500k or better. Prescott is an old, established town with historic buildings and strong family culture. It's true that absentee Californians have snapped up a good bit of the real estate up. But they have been are running around most of the west buying spare homes and putting them in the "bank" for future use
Northern Baja, Mexico: Don't write this one off too fast, especially if you are in So Cal. and want a second home near the beach. It is not as crazy as it sounds You can live near the beach in Rosarito and get an absolutely great ocean view or ocean front house for a fraction of the price of a house located two hours north in San Diego county. South of the Border property even has financing available from this side of the border.
Hilo Area on the Big Island: One of the best deals in the United States has been discovered and land prices are climbing rapidly, but guess what? Land in Hilo is still inexpensive. If you are looking for a slow pace, it doesn't get any slower than Hilo. This area is absolutely beautiful yet not a prime location for vacation resorts and condos. Condos on Kauai, Maui, and the other side of the big island run $500 - $750k, yet a Hilo acre lot can be purchased for $40 to $75k, and houses for $150k. If you want some privacy, like to garden, and have dreamed of building a hideaway on an tropical island, there is still time to do it in the USA. It rains almost daily in Hilo but showers are short and the 75 to 80 degrees temperatures makes the showers and lush green growth a real delight.
Boise is rated as the second best city to do business in the US by Forbes Magazine. It has a population of about 400,000, and median house prices around $165,000. Boise is an excellent gateway to the natural beauty of the Northern Rockies. For those of you not quite ready to hang it up, but looking for an interesting, affordable small city environment, Boise deserves your serious consideration.
