Denver Real Estate Discussion / Opinion Thread (NO Data Charts) (price, suite)

[davebarnes]

Originally Posted by new_to_town

since the late 90's

90s
Brought to you by The Committee to Save the Apostrophe from Abuse.

[SkyDog77]

Note to self:

[new_to_town]

Originally Posted by SkyDog77

Note to self:

At least that is one thing we agree on, lol...

[brown_dog_us]

You two have different strategies and goals.

SkyDog's method produces a low return on investment, but it also has a very low risk. Overtime he will pay down his note and rents will rise. His risk is close to zero as long as he doesn't sell. My father is retired with 5 paid for rental homes. Sure, he could have taken the profits by selling high and buying low over the years, but instead he just held them. Now he gets a check for $7000 a month. Not bad.

new to town is focused on maximizing his profits. He wants to use numbers to locate houses he can buy at a discount. This method can lead to larger profits and especially large if the person sinks their profits back in to more investments. There is a lot more risk to this method. There are the obvious risks of miss timing the market or not understanding the market, but the largest risk is hubris. Often people with this method forget that a rising tide raises all ships. Eventually they make some bad investments because they are over confident in their methods.

The best real estate advice I ever received was "Pigs get fat and hogs get slaughtered". There is nothing wrong with just being a pig.

fwiw, I think the guy who figures out (guesses?) what a doubling of interest rates will do to home prices and rents is the guy who will make big returns the next 5-10 years.

[SkyDog77]

Originally Posted by brown_dog_us

You two have different strategies and goals.

SkyDog's method produces a low return on investment, but it also has a very low risk. Overtime he will pay down his note and rents will rise. His risk is close to zero as long as he doesn't sell. My father is retired with 5 paid for rental homes. Sure, he could have taken the profits by selling high and buying low over the years, but instead he just held them. Now he gets a check for $7000 a month. Not bad.

new to town is focused on maximizing his profits. He wants to use numbers to locate houses he can buy at a discount. This method can lead to larger profits and especially large if the person sinks their profits back in to more investments. There is a lot more risk to this method. There are the obvious risks of miss timing the market or not understanding the market, but the largest risk is hubris. Often people with this method forget that a rising tide raises all ships. Eventually they make some bad investments because they are over confident in their methods.

The best real estate advice I ever received was "Pigs get fat and hogs get slaughtered". There is nothing wrong with just being a pig.

fwiw, I think the guy who figures out (guesses?) what a doubling of interest rates will do to home prices and rents is the guy who will make big returns the next 5-10 years.

The only risk to my approach would be if I operated at a high leverage point and rental rates dropped significantly leaving me in a position where my income was less than my mortgage and I couldn't cover the spread. Fortunately, I don't do this. In order to drop the leverage, I bring in other people looking for a very safe place to put cash with a guaranteed return. But I guess if I go to one of new to town's investing forums, apparently they would say I'm an idiot.

As for your last "question", I think this is a great point. My guess: Prices drop in the overbuilt, suburban areas and rental rates climb because more people will be forced in to the rental market unable to afford to buy at the new, higher rates. It is just a guess, but I am trying to position myself by owning as much well located real estate with as little leverage as possible. In my mind this covers me in any eventuality.

[new_to_town]

Originally Posted by brown_dog_us

You two have different strategies and goals.

SkyDog's method produces a low return on investment, but it also has a very low risk. Overtime he will pay down his note and rents will rise. His risk is close to zero as long as he doesn't sell. My father is retired with 5 paid for rental homes. Sure, he could have taken the profits by selling high and buying low over the years, but instead he just held them. Now he gets a check for $7000 a month. Not bad.

new to town is focused on maximizing his profits. He wants to use numbers to locate houses he can buy at a discount. This method can lead to larger profits and especially large if the person sinks their profits back in to more investments. There is a lot more risk to this method. There are the obvious risks of miss timing the market or not understanding the market, but the largest risk is hubris. Often people with this method forget that a rising tide raises all ships. Eventually they make some bad investments because they are over confident in their methods.

The best real estate advice I ever received was "Pigs get fat and hogs get slaughtered". There is nothing wrong with just being a pig.

fwiw, I think the guy who figures out (guesses?) what a doubling of interest rates will do to home prices and rents is the guy who will make big returns the next 5-10 years.

Yes, you're right I do focus on maximizing my profits, and I am not risk-averse, BUT I believe diversification holds the best portfolio. Three of my properties are fully paid off, in three different markets, and I'm nowhere close to retiring. I believe in flexing with the market depending on conditions. Some markets are better for flips, wholesaling, etc (which if you're reallllly good at the latter, Denver wouldn't be bad for right now). I also consider cap rates obviously but in an inflated seller's market, good luck getting a cap rate to overcome your operating expenses, and on top of that the house is going to take a lot longer for renters to pay off. I believe you make money in real estate when you buy. Thinking you will never sell or not having an exit strategy is dangerous, if anything is. Like most investors, I do watch equity and in many cases I'll sell when a rise in equity causes ROI to drop and I'm better off elsewhere. Different strokes for different folks, but, I've done well.

If I were to enter the Denver market right now, there'd be no way I'd jump into the fray of the SF resale market. I'd put my $$ into new construction and/or multifamily, probably even commercial. Would I do the same in 5-10 years? Dunno. Depends on the market at that time...

And buy the way, new_to_town is a She. Yeah yeah most RE investors are male... but not all

[brown_dog_us]

Originally Posted by new_to_town

And buy the way, new_to_town is a She. Yeah yeah most RE investors are male... but not all

Ha! My apologies.

[lurtsman]

New to Town, please be careful. I went through and looked at the arguments and use of logic and statistics. It appears skydog had the better end of the understanding. I'm working on an MBA also (4.0) and have been investing in business for several years. I understand the market. Several of your arguments showed a clear logical disconnect, in particular it appears that your reasoning on Denver city vs the MSA may have been faulty. What you expected MIGHT have been true, but your logic that "if A then B" was inaccurate, the real case was "if A then maybe B".

It's your money, and you have a right to invest as you see fit. I don't offer my services in financial counseling for free unless I'm personally invested in the success of the other person, so I'll keep it short. If you reexamine each step for logical coherency, you may discover a few weaknesses that increase your exposure to risk and result in a lower return/risk ratio than you were expecting.

Best of luck in your investment decisions. I anticipate a rising tide, so results for real estate investors may be better than normal.

[new_to_town]

Originally Posted by lurtsman

Several of your arguments showed a clear logical disconnect, in particular it appears that your reasoning on Denver city vs the MSA may have been faulty. What you expected MIGHT have been true, but your logic that "if A then B" was inaccurate, the real case was "if A then maybe B".

It's your money, and you have a right to invest as you see fit. I don't offer my services in financial counseling for free unless I'm personally invested in the success of the other person, so I'll keep it short. If you reexamine each step for logical coherency, you may discover a few weaknesses that increase your exposure to risk and result in a lower return/risk ratio than you were expecting.

Best of luck in your investment decisions. I anticipate a rising tide, so results for real estate investors may be better than normal.

O... M... G are you kidding me? This is like the B horror film in which the monster never dies, it just keeps getting up... This thread of conversation over a data point has gotten so old and stale the flies don't even want it anymore. Or do they? THANKS, btw, to those who have started posting relevant and interesting information again.

Can this end? For one, I already said I have decided to not invest in Denver, so this argument is of no consequence to me. I'm glad you do not offer your financial counseling on whose thinking you deem illogical for free - as a student - especially to those who do not ask for it. It seems so many people are so concerned about what parts of the MSA/not in the MSA may have sellers underwater or not, "if A then B", "if A then maybe B" (but it doesn't really say "If A then NOT B," does it?)... as I said, if anyone is so concerned, they may go research what zip codes, homeowners, etc are or are not underwater themselves, instead of just posting about how wrong they think I am, which is not really useful. Obviously if I had made the decision to invest in the Denver market, I would look at what the exact investment was, neighborhood/street/property, situation. So should any other investor.

One of the writers of the original stories was Aldo Svaldi, at the Denver Post, with his contact information on the site. The remaining authors can be referenced and questioned directly as well.

The originator of the data point that people seem to enjoy arguing about, or ?? was Corelogic (note: not me!). The report is here: http://www.corelogic.com/research/ne...ity-report.pdf, with media contacts listed on the document. I'm sure they can direct you to the zip codes or whatever further data you desire to satisfy you and hopefully kill this chain.

I am hoping this closes this issue once and for all. At this point, I would find a B horror movie more entertaining (or at least an episode of MST3K).

I am glad the market has improved for those in Denver if they are in a position that can profit from it. Good luck!

[SkyDog77]

If you want it go away, simply stop replying. It's your need to have the last word that is keeping this going....l