Another Auction --Heron's Watch 7 Condos

Advertisement in Friday's WSJ for Absolute Auction of 7 Condos at Heron's Watch on May 19. (Selling Furnished.)

Got Link?

Auctions are helping the market establish the bottom. People who want to buy land are still sitting on there hands, they don't want to over pay. A absolute Auction seems to set some price and establish new comps for similar properties. The more there are the faster the bottom will be established. Some properties are already below what they should be due to the fear of buying, some properties still have a way to go down. It takes some Faith in a good Auction company to have one in this market right now, some great deals will be had due to this. This is just what I see and I seldom right ( just ask my Wife ).

00seer00

Our land goes nex Saterday, PM me for a personal tour.
http://www.roebuckauctions.com/auction_detail.php?ID=137031

I disagree, 00seer00, about auctions setting the bottoms right now. Most of these auctions are not absolute, and sometimes when a seller has multiple units listed absolute, they are pulling the other six if they don't get bids they want on the first one. With all of this going on, they are not drawing many bidders to the auction steps. If sellers would realistically set their asking prices, buyers would show up, and I'm not talking about one or maybe two, like the recent auctions draw.

I think if these auctions want to get buyers in a down market, they need to do reverse auctions, starting at the listing price of comps and decreasing the price until the first guy raises his hand. That would cause a frienzy.

Got Link?

Here you go: http://national-auction.com/default.aspx?id=1240

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I disagree, 00seer00, about auctions setting the bottoms right now. Most of these auctions are not absolute, and sometimes when a seller has multiple units listed absolute, they are pulling the other six if they don't get bids they want on the first one. With all of this going on, they are not drawing many bidders to the auction steps. If sellers would realistically set their asking prices, buyers would show up, and I'm not talking about one or maybe two, like the recent auctions draw.

I think if these auctions want to get buyers in a down market, they need to do reverse auctions, starting at the listing price of comps and decreasing the price until the first guy raises his hand. That would cause a frienzy.

So you are siding with my wife? Oh well, I did refer to Absolute Actions only. If someone pulls the property then it is not Absolute. The Absolute Auctions I have been to where 1 property per Auction, in each case the bidding did not start until they reached maybe 30% of what the property ended up selling for. We will have 3 lots going Absolute, there will be no pulling off of any lots if the first one does not go well. A 20 acre , 40 acre, and a 60 acre plat, will sell Absolute, regardless of price. Someone might get a extremely good deal if bidding does not go well. Word of these great deals will bring more and more buyers to other Absolute auctions. With more and more buyers, more and more Absolute Auctions for buyers to go to. This will all help form a bottom. I am often wrong, but this is how I see this one.

This will be interesting...i am very curious to see what these go for as i am very familiar with this development.

lowest one in MLS at around $185K...they rent for around $1K/month.

Lets do quick cash flow evaluation here...

$12,000 annual rental income

($2,640) HOA dues -- I'm pretty sure its around $220/month incl Insurance

($1,000) Transitional Vacancy and Repairs/Improvements

($1,500) RE Tax

$6,860 in annual operating income

Just breaking even, this will support a mortgage of $86K (7%, 30 yr)

So I guess around $90k would be a good price??!!

People think thats crazy, but seriously the residential rental vs for sale market is sooo out of whack...this may be an extreme example, but it goes to show you that good investments cash flow. I totally understand buying beach real estate because of the intagables (emotional aspect), but don't kid yourself that its an investment.

egrp,
Your numbers look fairly accurate, but remember to include the 10% buyer's auction premium.

Just breaking even, this will support a mortgage of $86K (7%, 30 yr)

So I guess around $90k would be a good price??!!

People think thats crazy, but seriously the residential rental vs for sale market is sooo out of whack...this may be an extreme example, but it goes to show you that good investments cash flow. I totally understand buying beach real estate because of the intagables (emotional aspect), but don't kid yourself that its an investment.

eg,

No, I think < $86K would be a good price.

Good number crunch...but wasted on investulators who wouldn't know cash flow from shinola.

BTW, is the "new airport" baked into that number too?

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From looking at it from no other view than a cash flow, I would want to mark in a 10% annual return, so you could further reduce that purchase price, in order to have some positive cash flow better than CDs and MMs, not break even.

I don't know anything about this particular property but there are some people out there who buy something just because they want to use it weeks or months at a time and then throw it into a rental pool or do it themselves just to bring in a little income.

Every buyer is not an investulator though some might like you to believe that.

Every buyer is not an investulator though some might like you to believe that.

Suffice to say, investulators are a dying breed.


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This will be interesting...i am very curious to see what these go for as i am very familiar with this development.

lowest one in MLS at around $185K...they rent for around $1K/month.

Lets do quick cash flow evaluation here...

$12,000 annual rental income

($2,640) HOA dues -- I'm pretty sure its around $220/month incl Insurance

($1,000) Transitional Vacancy and Repairs/Improvements

($1,500) RE Tax

$6,860 in annual operating income

Just breaking even, this will support a mortgage of $86K (7%, 30 yr)

So I guess around $90k would be a good price??!!

People think thats crazy, but seriously the residential rental vs for sale market is sooo out of whack...this may be an extreme example, but it goes to show you that good investments cash flow. I totally understand buying beach real estate because of the intagables (emotional aspect), but don't kid yourself that its an investment.

EG, just remember that if you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00. With Enron, you would have had $16.50 left of the original $1000.00. With WorldCom, you would have had less than $5.00 left. If you had purchased $1000 of Delta Air Lines stock you would have about $49.00 left.

But, if you had purchased $1,000.00 worth of beer one year ago, drank all the beer, then turned in the cans for the aluminum recycling REFUND, you would have had approximately $214.00.

There, is a time to buy, and there is a time to sell.....now is the time to be buying RE at the beach cause it's not going to get any cheaper! :roll:

Hey Fly For Funn.. the quote you just used, which was famously pasted to every inbox in the world, was from 2002-03 period when the stock market bottomed, not today. your quote mentions how $1000 would have evaporated with investments in the newsworthy blowup stocks of 2002 such as Nortel, Enron...

Not sure if you're now aware, but things have changed. If you had invested $1000 in a good number of stocks in February 2005 you would have $1500 or more in your account. Conversely if you had invested $1000 in SoWal Real Estate in February 2005, you would have about $500 in value (if it was truly marked to market) today- not including the cumulative impact of any negative cash flow which would exacerbate the above 50% drop. Individual experience may vary (i.e. some real estate may only be down 35% from the top, on a good day) -- , if you're lucky to find the small handful of buyers who think that there is no airport in the area currently)

it takes a lot of balloons to attract those buyers to your property, because even the gullible know what the onset of "Auctions" after years of no supply to sell, effectively means to the market here.

latr

EG, just remember that if you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00. With Enron, you would have had $16.50 left of the original $1000.00. With WorldCom, you would have had less than $5.00 left. If you had purchased $1000 of Delta Air Lines stock you would have about $49.00 left.

There, is a time to buy, and there is a time to sell.....now is the time to be buying RE at the beach cause it's not going to get any cheaper! :roll:

Actually, FFF, you've got some pretty old stock market references you're using to make your point.

$1000 worth of NT purchased last year would be worth $900+change today...Enron and Worldcom were already history, so one couldn't buy their stocks a year ago....and finally, come April 30, $1,000 in Delta stock will be worth absolutely NOTHING since Delta will be flushing their old shareholders down the crapper when they emerge from BK.

I also think you're wrong about buying RE now too.

<P.S. And I'm not just saying this trying to get you to like me >


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"I also think you're wrong about buying RE now too."

Sorry FFF, I think Shelly might be right about this one. Had you bought a home last year at this time in Walton County, you could have purchased it for (on average) $500,000.00. This year, same time ......... $700,000.00. Oh well - there's always next year.

Did I just miss something ???

EG, just remember that if you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00. With Enron, you would have had $16.50 left of the original $1000.00. With WorldCom, you would have had less than $5.00 left. If you had purchased $1000 of Delta Air Lines stock you would have about $49.00 left.

But, if you had purchased $1,000.00 worth of beer one year ago, drank all the beer, then turned in the cans for the aluminum recycling REFUND, you would have had approximately $214.00.

There, is a time to buy, and there is a time to sell.....now is the time to be buying RE at the beach cause it's not going to get any cheaper! :roll:

This quote is just silly, IMO, in addition to being WAY out of date. You can always look back and handpick statistics to support anything you want. We all know about those colossal failures but there were stocks in that period that did okay. As others have pointed out, stocks overall are doing well right now but there are also those that are in the crapper.

There are also many people that are not being hurt in the slighest by this RE pricing pullback, though by saying that I am not dismissing the pain being felt by many who weren't part of the speculator crowd. The time to buy differs for an individual just as much as the time to change jobs or get married or any other decision to be made.

This quote is just silly, IMO, in addition to being WAY out of date. You can always look back and handpick statistics to support anything you want. We all know about those colossal failures but there were stocks in that period that did okay. As others have pointed out, stocks overall are doing well right now but there are also those that are in the crapper.

There are also many people that are not being hurt in the slighest by this RE pricing pullback, though by saying that I am not dismissing the pain being felt by many who weren't part of the speculator crowd. The time to buy differs for an individual just as much as the time to change jobs or get married or any other decision to be made.

Two, three or four years ago...is not the point. My point is simply all market's change...that is RE or stocks. Stocks are much more unpredictable than RE because there is just to many variables. You can end up with worthless paper when you invest in stocks, and in RE, you at least have something you can sleep in, watch the sun set and have a cool one while the waves roll in. Unless you choose good mutual funds managed by experienced folks, small time investors get killed in stocks. Right now is a buyers market for RE in Sowal and if you don't take advantage of it, you will miss Florida's next RE market....and that is the bottom line.

Two, three or four years ago...is not the point. My point is simply all market's change...that is RE or stocks. Stocks are much more unpredictable than RE because there is just to many variables. You can end up with worthless paper when you invest in stocks, and in RE, you at least have something you can sleep in, watch the sun set and have a cool one while the waves roll in. Unless you choose good mutual funds managed by experienced folks, small time investors get killed in stocks. Right now is a buyers market for RE in Sowal and if you don't take advantage of it, you will miss Florida's next RE market....and that is the bottom line.

Couple of points here: If someone is already invested in Florida real estate from before the bubble, they might not want additional exposure. If someone is a speculator, they never planned to sleep in it, etc. or even in the case where they have multiple properties for investment. Now if one is looking to buy a home to live in or a 2nd home to use, you may be correct.

Your statements regarding small time investors getting killed in stocks paint with too broad a brush. Some do, some don't. There are plenty of 'small time investors' who got destroyed in RE as well. Also, for anyone with multiple properties who is overexposed and cannot sell them (and there are many), being in RE instead of a worthless stock is not much solace for them. If they can't sell or cover the payments and carrying costs, they could lose their entire investment just like a stock. There are negative and positives to both. RE is very illiquid, unlike stocks. You can't set a stop loss or get out with a mouse click.

There, is a time to buy, and there is a time to sell.....now is the time to be buying RE at the beach cause it's not going to get any cheaper!

How many said that during the runup???? I'm not necessarily negative at all on RE, being an owner in Sowal, but your statements are way too general, IMO. If you can call the bottom with 100% accuracy, more power to you and pull the trigger.

Tell us - are you using leverage and buying everything you can? What are you buying and where? What kind of loan programs are you using? How much are you putting down? I for one would like as much information as I can get from those who know (seriously).

There, is a time to buy, and there is a time to sell.....now is the time to be buying RE at the beach cause it's not going to get any cheaper! :roll:

See posts on the real estate plunge thread--prices are getting cheaper by the month and have been for a couple of years now.

Tell us - are you using leverage and buying everything you can? What are you buying and where? What kind of loan programs are you using? How much are you putting down? I for one would like as much information as I can get from those who know (seriously).

Just like stocks it takes cash....working for banks and mortgage companies is not part of my process. I sit back and let you guys/gals slam the market down and then I pay cash. People who over leverage themselves in RE market, just like stocks, go broke every day! However, the stock market is full of people who are experts in moving money from your pocket into theirs. Cheating, dishonesty and cooking the books is all ok until you get caught, and too few every get caught. Good attorney and a paid off jury will get the stock crooks back to the beach of bahama's or Mexico while one enjoys their large nest egg. If you have not experienced the pain of playing the stock market either you have been lucky or have time to play it full time. I prefer RE, and will take my chances at the black jack table in Vegas over the stock market any day!

If you have not experienced the pain of playing the stock market either you have been lucky or have time to play it full time.

The operative word in your statement is "play," which rhymes with "excessive risk" and "speculation."

I prefer RE, and will take my chances at the black jack table in Vegas over the stock market any day!

No risk and fraud to see in the RE sector folks...just keep moving long:

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A local home appraiser is alleging widespread mortgage fraud in Bakersfield?s housing market, accusing local real estate professionals of artificially inflating prices to generate illegal profits.

Appraiser Gary Crabtree said Friday he has alerted federal, state and local authorities to ?suspicious? home sales in the Bakersfield area. But he said he believes what he has found is just the beginning.

?I think I?ve just scratched the surface,? Crabtree said. ?I know there are other people in the real estate industry in Bakersfield that have knowledge of this. They are just not talking.?

After documenting 22 suspect cases in the last year, Crabtree said he has referred six of the strongest instances to the FBI, California Department of Real Estate and California Office of Real Estate Appraisers, and three to the Bakersfield Association of Realtors. He also has attempted to notify the lenders involved in each of the 22 cases.

Neither the FBI, Department of Real Estate or Office of Real Estate Appraisers would confirm Friday whether they have ongoing mortgage fraud investigations in Bakersfield. Crabtree stressed that he doesn?t have any firsthand knowledge of any investigations by the agencies.

The California Department of Real Estate receives between 8,000 and 10,000 complaints a year, spokesman Tom Pool said.

?We investigate any complaint that comes our way,? Pool said. ?It is very likely some of those came from the Bakersfield area. But I can?t tell you how many of them are mortgage fraud.?

Crabtree and Bakersfield Association of Realtors President Ray Karpe said they believe questionable transactions make up a minority of local home sales.

?There are hundreds of really good, really qualified serious lenders and Realtors in town,? said Brynn Powers, vice president and general manager of Alliance Title?s Bakersfield office. ?There are just a few that have found a way to get around the rules.?

Crabtree said some of the properties in question may have been ?flipped? ? purchased and sold for profit ? by investors, real estate professionals or so-called straw man buyers whose identities and credit histories were used to secure loans. The cases include what Crabtree said appear to be fraudulently inflated sales prices and buyers purchasing properties with 100 percent financing.

Some buyers received money back at the close of escrow, Crabtree said, sometimes under the guise that the money would be used for installing amenities that were not installed, such as backyard landscaping.

Crabtree said he believes some real estate agents and brokers as well as lenders and appraisers may have taken part, while others were taken advantage of in the scheme.

Some of the properties have gone into foreclosure or received notices of default, Crabtree said, leaving lenders holding the bag.

?It has falsely inflated values,? Crabtree said. ?Foreclosures will follow.?

Powers said a relative who earns about $10 an hour was approved for a $200,000 loan and asked to falsify documents to say he made more money.

?If anybody asks you to tell a lie or an untruth to get qualified for a loan, you shouldn?t do it,? Powers said. ?If you have to tell a lie, don?t do it, even if you want the house real bad.?

Karpe confirmed that his organization received information from Crabtree, but said the potential wrongdoing falls outside the association?s policing authority. He said the Realtors association would wait to see if any punishment was handed down from higher authorities.

?Once some of the investigations go through and people get their just punishment, it will clean things up,? Karpe said. ?But you are always going to have people pushing things. Most of the people in our business do good business, but a couple grab the headlines and it taints the whole industry. I don?t like it.?

The FBI estimates that mortgage fraud losses total between $1 billion and $4 billion a year.

?It is an epidemic,? said Ann Fulmer, vice president of industry relations for Interthinx, a company that provides mortgage fraud prevention and detection technology and risk management tools to banks and lenders. ?We don?t have a ... handle on how big a problem it is because it is not reported by everyone. Lenders don?t always recognize it.

?I don?t think we have seen the worst of it yet.?

Fulmer, who has worked with federal and state regulatory and law enforcement agencies fighting mortgage fraud, said more mortgage fraud cases are coming to light.

?When the market was so hot and properties were appreciating quickly, it was more difficult to spot,? she said. ?Because the market is slowing down, the fraud that happened in loans that originated in the last two years is like dead bodies rising to the surface.?

Crabtree said he began tracking the questionable transactions so he wouldn?t use them as comparable properties when doing appraisals.

Crabtree said word is out in local real estate circles that he has provided information to agencies about potential improprieties.

He said he has lost business as a result and others in the industry have stopped talking to him for fear of being implicated.

But he said he believes it is the right thing to do.

?I could have just let this gone on and not said anything to anyone,? Crabtree said. ?But it is my responsibility as an ethical appraiser to report these cases of suspicious activity.?

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But that's Califorinia...it's not Florida??

The Federal Bureau of Investigation's recent Financial Crimes Report states that mortgage fraud is a "pervasive and growing" problem in the current market climate, especially in the Sunshine State. In fact, the report singles out Florida as one of the nation's top 10 hot spots for mortgage fraud, along with Georgia, South Carolina, Illinois, Missouri, Michigan, California, Nevada, Colorado and Utah.

The advantage and risk of investing in real estate is leverage as opposed to stocks...even buying stocks on margin, much greater leveraged can be obtained in RE.

The little guy investing in stocks typically is only investing cash and can only lose the equity amt...RE on the other hand can be purchased with zero equity; however, the entire value of the asset is at risk.

Also...I'm sorry but you're not a RE investor if you buy in cash...it devistates returns.

The advantage and risk of investing in real estate is leverage as opposed to stocks...

Not only can you leverage the purchase of RE but if you buy the right property, you can - through rent - use other people's money to pay down your obligation.

Not only can you leverage the purchase of RE but if you buy the right property, you can - through rent - use other people's money to pay down your obligation.

Not many properties purchased during the frenzy (and even the majority for sale on the market now) will produce positive cash flow from rental income.


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