patrick.net

I clearly need to travel more....

Mobi says

For a person like David who likes long term stability, it is probably safer to keep it in cash.

I'm thinking of buying another cleaning company.

That must have been fun. I had the horrible misfortune of living at home w/parents in college. Theres a college under every rock in CA so this is common.

Roberto nailed it.

Get rich slowly and work smart and hard.

I saw the same opportunity Roberto saw. But here is the difference. I didn't want to deal with rentals and people.

So I lost out of my own free will. I chose not to do what Roberto did.

But I don't begrudge him for his success like some of you do. And I especially don't go online without evidence and smear others. It is getting old.

skeptic says

Now I'm not saying that RE is not a good investment. However, when you state "worth 100K today" you lose all credibility.

But my Zillow Zestimate says so. LOL.

skeptic says

Now I'm not saying that RE is not a good investment. However, when you state "worth 100K today" you lose all credibility.

Why does someone lose credibility if the numbers they are quoting are accurate? If they would have to pay 30% more today to get the same property, with the same monthly rental income, isn't that data point meaningful?

If I bought for $100k last year, and was pulling in $1,000 per month, but could buy the same thing for $50k today, wouldn't people (rightly) point out that I would have been better to wait and buy a year later?

Sure, you have to actually sell the property to realize your gains...but the point is that he could sell the property for more, and that's a meaningful indicator that his decision to buy wasn't bad. His decision to not sell today might end up being terrible, and I'm sure people will point it out if that happens.

I don't know, it seems entirely reasonable to me to use current market values compared to purchase price to gauge a buying decision.

Phoenix Area February Home Sales

http://www.dqnews.com/Articles/2013/News/Phoenix/RRMAAZ130325.aspx

A key price gauge analysts watch, the median price paid per square foot for existing single-family detached houses, rose to $99 in February, up from $96 in January and up 37.5 percent from a year earlier. The February figure was the highest since it was also $99 in September 2008.

Lenders foreclosed on 1,232 Phoenix-area houses and condo units last month, up 103.6 percent from the month before and down 52.1 percent from a year earlier. The number of homes lost to foreclosure during the first two months of this year totaled 5,522, down 66.7 percent from the same period last year.

n February, 333 Phoenix-area buyers purchased two or more homes on the open market (excludes foreclosure auctions). That was up about 31 percent from the same month last year, based on an analysis of buyer names in the public record. (Note: In some cases individuals and partnerships buy under different names). This February these multi-home buyers purchased 1,003 homes, which amounts to about 13 percent of all homes sold and represents a 38.3 percent increase from the number of properties that multi-home buyers purchased in February last year.

The largest buyer identified in February, appearing in public records as "THR Phoenix LP" and "THR Phoenix LLC," purchased 159 homes, or about 16 percent of all homes purchased by multi-home buyers in February. There were 18 buyers in February that each purchased five or more homes, but only seven of them bought 10 or more. Combined, the buyers who purchased 10 or more homes in February acquired 260 homes, or about 26 percent of all homes bought by multi-home buyers.

http://www.azcentral.com/realestate/investors/top-three-investors-map.html

Top investors

Buying sprees by billion-dollar hedge funds and real-estate investment firms have investors owning nearly 20 percent, or one out of every five, of the region’s single-family houses and condominiums, according to an Arizona Republic analysis of recent sales data. That's double the number of rentals considered normal in metro Phoenix in 2000, according to housing-market analysts. The map below shows which of the top three investors owns the most properties, by ZIP code. Each ZIP code is colored based on which of the three investors owns the majority of properties.

David Losh says

Mobi says

For a person like David who likes long term stability, it is probably safer to keep it in cash.

I'm thinking of buying another cleaning company.

Cleaning company is not cash but it is probably more liquid than real estates in that sense (closer to cash.)

robertoaribas says

zillow, trulia, and plenty of others seem to think homes have values even on days they aren't sold, and work on algorithms to estimate such...

Now you have hit the nail on the head. I know exactly what you paid, what the trend line is, and can get a fair market analysis for the property that I want to buy, online, for free.

Here in Seattle we are in the home of redfin, where my very good buddy Glenn Kelman, an absolute novice to Real Estate, began hawking the discount Brokerage business model.

I refer to all of these web sites as Real Estate sales sites. They have a very vested interest in pushing Real Estate as a business model.

Actually they are pushing mortgages.

In the early days of Zillow, which is also another Seattle concoction, there was a law suit that was quashed brought by an individual who got a mortgage far in excess of her property value. She had applied for the mortgage through an online advertizer on Zillow. She had based her property value on a Zestimate.

In my opinion the game is rigged in favor of Brokerages who can spot hot markets, and target buyers.

So, no I don't have a lot of faith in this idea buyers will simply pay you, or any one else, more than you paid, unless they are a fool. Why would a buyer pay you twice what you paid for a property you have had for about five years?

All the information is there, so why would any one be that foolish?

David Losh says

So, no I don't have a lot of faith in this idea buyers will simply pay you,
or any one else, more than you paid, unless they are a fool. Why would a buyer
pay you twice what you paid for a property you have had for about five years?

All the information is there, so why would any one be that foolish?

Greed, hoping it would double again and they can offload it with superb profits. What else drives these bubbles?

Mobi says

Cleaning company is not cash but it is probably more liquid than real estates

I have three competitors in my market place, outside of National Franchises. The value of the company, combined with my web presence, is very high. Our domain names alone are valued over $25K.

My area of expertise is in restaurants. They are much more work, and the ultimate return is very low. You have to own the building to get the numbers to work.

lostand confused says

hoping it would double again

That's the other problem. There is a ton of information in the data, and the data can change rapidly.

According to the Roberto model of Real Estate market timing, the bottom, or top of the Real Estate market can turn on a dime.

I think more accurately it depends on the spin of the new discount Brokerage models. A buyers, or sellers market is equally good to them.

So today's strong buy sign, can turn to an equally strong sell sign, just like the stock market? I don't think any buyer is that foolish, but I've been wrong before.

David Losh says

So, no I don't have a lot of faith in this idea buyers will simply pay you,
or any one else, more than you paid, unless they are a fool. Why would a buyer
pay you twice what you paid for a property you have had for about five years?

A good reason is that some of those were distressed properties where conventional buyers could not get home mortgage loan with. Therefore, buyers had to either pay cash or get hard money loan. That's a discount by itself.

When those properties are sold agian in a few years, assuming foreclosure rate goes down quite a bit and interest rates are still low, conventional buyers will pay higher price for sure (with mortgage loan.) It won't be twice but it will be good profit. Didn't you profit by fixing up distressed propertied before? Where did that profit come from?

robertoaribas says

David, you claimed multiple times, I overpaid. NOW either show some evidence I overpaid, or shut up forever and quit posting on anything I write you lying dumb ass.

You provided your own evidence.

I'm sorry you are so insecure. You entered a fools market place which I've shown you time, and time again.

You don't want to see it, you want to play the game of the greater fool. Look at the Real Estate market place, there is nothing there, but hype.

Mobi says

A good reason is that some of those were distressed properties where conventional buyers could not get home mortgage loan with.

Real Estate is all numbers. Distressed properties are selling for full retail today because the buyer pool is so large. New investors, and even home buyers are buying at auction through other investment groups.

After the sale you take the cost of improvement, plus or minus what those improvements are worth to you, and that may be the price, but it sure isn't a profit.

Buyers should be very aware that they are in an artificially inflated market place. To say otherwise is just a lie.

Ok just for fun I'm pointing out the horrible grammar and spelling on David's website:

"March Madness!

We have six openings this year from people who have sold homes already. We have another three clients who will be marketing homes in the next month or so. That leaves us we nine every other week spots to fill on our regular schedule."

Roberto is a math teacher maybe we have an english teacher here to help?

PockyClipsNow says

we

Funny, yeah, let me fix that. Thanks for playing.

robertoaribas says

I own 2 such homes, one bought for $76K, the other for $46K...

The properties are worth what you paid for them. Now why would some one pay more than that? based on what data?

PockyClipsNow says

Ok just for fun I'm pointing out the horrible grammar and spelling on David's website:

Be sure to watch for our new mobile device user website coming at the end of next week.

David Losh says

Real Estate is all numbers. Distressed properties are selling for full retail
today because the buyer pool is so large. New investors, and even home buyers
are buying at auction through other investment groups.

The key is the numbers of the distressed properties. Is it growing or shrinking? If it shrinks down like in Phoenix, your profit natually grows in time. If it grows or flattens, profit margin is small and you want to be very selective. I suspect the delinquency rate was still relatively high in Atlanta and that's why your house lost value and Roberto's gain value.

robertoaribas says

because, you completely stupid

You have no data other than some fool paid more than the properties are worth.

People need to be very aware of your hype, and nonsense. Like I said, you paid what $50K?, but now the same property is worth $180K? Is that by magic?

Come on, how long do your really think the buying public will go along with this?

You have been provided tons of data, by myself, and a lot of people who post here. You don't want to see it, you never come back with anything other than the same tired Real Estate website sales data hype, and never explain the way the data is set up.

That sales data is based on the higher prices of other properties, like the new construction you linked to.

As far as I can tell Arizona is ripe for new construction, kind of the same Las Vegas is. So why are you comparing 13 year old houses to new?

mike2 says

Not sure wherew they get there data from but I can tell you for a fact that prices incresed a lot more than 10% in the SF Bay area.

You're making a very common mistake which is to compare statistical data with anecdotal data. Learn the difference and it will change your life!

robertoaribas says

However, he seems to have missed a very solid bottom now, and been unduly pessimistic about the recovery.

You keep making the mistake of stating Shiller's intent in making statements about markets as similar to yours. Your statements, such as "currently worth" reflect a short-term outlook, whereas Shiller's reflect a long-term outlook. The time value of money is represented by an exponential mathematical relationship with time in the exponent. For that mathematical reason, it has been found to be more helpful to one's wealth to maximize the value of the exponent as opposed to the value of the base.

robertoaribas says

I ride a bicycle to work, and walk my dog for fun. I'm almost purely vegan, and cook my own beans and vegetables at home... I drive a honda.

I, for one, am celebrating your forward thinking here. Apparently others here are much more traditional/conservative.

Starrstruck says

Roberto nailed it.

Get rich slowly and work smart and hard.

Getting rich in two years is not getting rich slowly. I'm taking "two years" from statements written by Roberto which suggest that's the time frame he's using to define his success in timing housing prices.

Starrstruck says

I, for one, appreciate Roberto presenting the facts and his experience in the Phoenix market.

As long as everyone understands they are two different things to be considered very differently.

The last graph on this article

http://www.calculatedriskblog.com/2013/03/real-house-prices-price-to-rent-ratio.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

shows that phonenix has risen from the ashes much faster than Vegas.

Both of them are sometimes called 'suburbs of los angeles' due to the millions of CA refugees fleeing the state of CA. Not sure why NV hasnt recovered as much, probably still too much supply I suppose. I'm going to start paying more attention to this shit, its crucial.

PockyClipsNow says

The last graph on this article

http://www.calculatedriskblog.com/2013/03/real-house-prices-price-to-rent-ratio.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

shows that phonenix has risen from the ashes much faster than Vegas.

Both of them are sometimes called 'suburbs of los angeles' due to the millions of CA refugees fleeing the state of CA. Not sure why NV hasnt recovered as much, probably still too much supply I suppose. I'm going to start paying more attention to this shit, its crucial.

Any plan to invest in Vegas? Any trick to do well as an absent landlord?

robertoaribas says

David Losh says

You have been provided tons of data, by myself, and a lot of people who post here

total lie...You seem to have two modes: lying, or being stupid.

Like I said you ignore data. Just because some one pays more is like some one who sells a rusty nail. People may pay $450K for a rusty nail, but it doesn't give it value.

I was smart enough not to buy into a highly manipulated Real Estate market place.

You seem so bitter. You're continually angry at anyone who sees your scheme, and calls you on it.

I'm really happy with my choices. I have much more income potential at a time you seem done.

So, I have a lot more questions for you, like why any one would gift you these extremely high rents. How do you see the future of your "investments" coming in at more money for you?

You don't get it, you paid full retail for your properties, are gouging rents, and calling yourself smart.

You just seem insecure.

FunTime says

I, for one, am celebrating your forward thinking here. Apparently others here are much more traditional/conservative.

Roberto is giving you the old timey conservative advice about how Real Estate only goes up.

We all know that isn't true, don't we?

robertoaribas says

David Losh's wife cleaning someone's house... Here is how the bigmouth makes his living: sending his wife and her kids out to clean, ($80 for a 3 person crew for an hour) while he blogs all day like a bigshot. picture downloaded from his blog.

Does that make you feel more of a man Roberto ? You feeling like a King yet ?

I flipped burgers scrubbed my share of toilets and still do ...

a long way to the top.. but even I got to be a success in SV tech industry.

robertoaribas says

I spent 15 years studying the Phoenix market, and market bubbles and crashes. If you are reading this, do you know about the south sea trading bubble? the nifty fifty bubble?, the arabian horse bubble? the florida real estate bubble in the 1920s? the japanese bubbles both stock and housing? the dutch housing bubble, which in money terms dwarfed the famous tulip bubble? I have studied each and every one of them in detail, as well as currency collapses around the world.

So, yes, I think I have a story to tell.

Then you should know that never been serial bubbles. They tend to skip a generation and for good reason. And if you really studied then you will also know that some (not all) had a mini echo bubble a few years after their crash just to resume their trip downward. The reason I think this is a fake housing recovery is that there is no wages growth to keep up with any appreciation. All the inventory is being taken up by investors to rent (like you?). Eventually (and this is already starting to happen) rents will soften (to many like you?) and there will be pressure to sell those investments (like music chairs?). Just saying

skeptic says

Then you should know that never been serial bubbles. They tend to skip a generation and for good reason. And if you really studied then you will also know that some (not all) had a mini echo bubble a few years after their crash just to resume their trip downward. The reason I think this is a fake housing recovery is that there is no wages growth to keep up with any appreciation. All the inventory is being taken up by investors to rent (like you?). Eventually (and this is already starting to happen) rents will soften (to many like you?) and there will be pressure to sell those investments (like music chairs?). Just saying

You are talking like Phoenix is the BA. He bought his properties for peanuts compared to the prices most posters on here face. Some of his houses were bought for prices that would be easily manageable for people with low incomes let alone those with median household incomes. Even after the recent run up, many of the prices he is quoting are perfectly manageable for anyone with an income around 30k. That is a lot of people. At some point, the run up will cease in Phoenix, but why would that bother him?

robertoaribas says

If prices doubled again in Phoenix, we'd be in a bubble... 170K median price for a single family home is hardly a bubble... Oh, and by the way, rents went up 1.3% city wide last year... hardly seems like rental declines to me..

"The median purchase price for a single-family home in Phoenix jumped 35 percent to $163,000 in January from a year earlier, according to a March 8 report by Center for Real Estate Theory at Arizona State University’s W.P. Carey School of Business. Median rents on a per-square-foot basis, meanwhile, dropped 3 percent in February from a year earlier after climbing 1.5 percent in the 12 months through February 2012 and 3 percent a year earlier, according to Fletcher Wilcox, a real estate analyst at Grand Canyon Title Agency in Phoenix. "

"Monthly leases in Phoenix’s west side, where investors bought the most rentals, fell by about $100 a month, or 10 percent, in 2012, said James Breitenstein, CEO of Landsmith, a San Francisco-based single-family rental firm that sold most of its 250 Phoenix rental houses last year. Rents also softened in Las Vegas and in Atlanta, where Landsmith acquired about 300 homes in the past six months, he said. "

Like I said the buy-to-rent is softening and "investors" will start to offload their inventory into the market. Moreover, for a buy-to-rent investor like Blackstone the "buy-to-rent" business model goes way

BTW I define a bubble in RE as any pricing that deviates from 3 to 4x yearly wages. So even at this levels housing is overprice to most people that are not cash investors.

http://www.bloomberg.com/news/2013-03-18/rent-gains-trail-as-blackstone-crowds-u-s-with-homes.html

robertoaribas says

on your own blog, you told about your Atlanta purchase for $90K that you sold for $30K... Yeah, you were smart all right. it shows!

That's not on my blog it was in a comment here to show that not all market places were doing gang busters.

You really can't keep anything straight.

I realize this is another one of your sales forums, it was my mistake to engage you, again.

David Losh says

People may pay $450K for a rusty nail, but it doesn't give it value.

OK, then. How do you "value" a house?

IMO, the "value" varies significantly from one person to another. A 4th BR may be useless to a childless family, but may be extrememly valuable to a family with 2 or 3 kids. So, I'm really curious how you can determine a value independent of what someone actually pays for it.

skeptic says

BTW I define a bubble in RE as any pricing that deviates from 3 to 4x yearly wages.

Well, this is like how people bitch and moan about how CPI is calculated. I mean, a TV in 1950 is not what a TV today is. Oil in the '90s had way different supply/demand dynamics than it does today. In the same way, trying to link a home purchase to wages is dubious because both home prices and wages have become unhinged from their past standards.

It may be that we are now working for slightly less, and simply paying a lot more of our income for housing than in the past. If it seems "un"fundamental, consider that the market is currently functioning with or without you liking that. Infact, we are for all intents and purposes reaching 2006 prices in most markets, so the last 12 years of runaway housing costs are so far actually sustained.

Do I want to buy a house in CA that is 5x my household income? No. And I won't. But plenty others are and they are making it work enough to support price increases.

tatupu70 says

OK, then. How do you "value" a house?

The value of the property is determined by your own financial plan.

You value the property by what it is worth to you, and your financial goals.

It is a financial decision that you can ignore in favor of a quality of life, like a neighborhood, or school.

It needs to fit what you can afford in the long term, and the equity you can build with it.

David Losh says

People may pay $450K for a rusty nail, but it doesn't give it value.

I'm going to be a billionaire by the end of the week!

David Losh says

The value of the property is determined by your own financial plan.

You value the property by what it is worth to you, and your financial goals.

It is a financial decision that you can ignore in favor of a quality of life, like a neighborhood, or school.

It needs to fit what you can afford in the long term, and the equity you can build with it.

I think the key point you're missing is that when your "value" is less than the market value, the market value wins. Your value is pretty much irrelevent.

Would be nice if the jealous haters would only look at the price paid 1 year ago and the price sold for or being listed for this year. Then use a calculator to add the numbers and make your conclusion. Is that person a fool for making a nice chunk on his investment or did he make a wise decision? Delusional psychopaths and jealous people will say he's a fool while normal people will admit he made a killing. The numbers speak for themselves.

postbubblesucess says

Delusional psychopaths and jealous people will say he's a fool while normal people will admit he made a killing. The numbers speak for themselves.

ying and yang... while it may seem like a killing to you.. such inflation in prices 20-30% annually isnt a good thing for our local economy.