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Eastern, IN | In ‘09 my wife and I started buying 2-4 houses per year because we felt the housing market had bottomed. We focused on foreclosures in good neighborhoods. In ‘20 we started to sell them off and sold the last one in June of this year. 12 of the 14 houses sold to a first time buyer. In most cases the buyer walked away with a check at closing. The only thing the government is doing for the first time buyer is they are requiring taxes to be escrowed. During the previous housing boom, many buyers could NOT afford the tax escrow so the banks opted to have the new owner to pay the taxes on their own. Well, if someone can’t afford $200 taxes per month they can’t come up with $1200 2x per year.
I can tell you from our past experiences, when a tenant becomes a home owner with no skin in the game, they will walk the first issue they have. I am no expert but this housing thing will become unraveled within 4-5 years.
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n.c.iowa | The first sign that the top is near is interest only loans. In the past couple of housing bubbles this has been the sign for the average guy on the street. |
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Eastern ON | Curious, if housing bottoms out again will you repeat the process 2388? |
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Napanee, Ontario | “I can tell you from our past experiences, when a tenant becomes a home owner with no skin in the game, they will walk the first issue they have. I am no expert but this housing thing will become unraveled within 4-5 years.“
100% agree with you
Plus you guys have that landmark case where you can just hand the keys to the bank and walk away
[1969 - Jerome Daly v. The government]
EDIT TO ADD:
In Canada, we have no such prescedent. You are stuck with the mortgage no matter how under water you are on the house...
Edited by OldMcdonald 9/13/2021 06:49
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Napanee, Ontario | Yup
And ZERO down |
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Sw mn | What does it cost to build a house these days?
Price of building will put a bottom on houses in the Midwest.
Coastal areas with million dollar starter homes can fall a lot.
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Frytown, Iowa | What did you do with the houses in the meantime? Find renters? VRBO?
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Napanee, Ontario | "Here" 2x4's went from $2 to $8-10
copper, steel aint cheap either
ISN'T MONEY PRINTING & INFLATION GRAND?? |
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Eastern, IN | Yes but we will buy vacation/beach houses in Florida |
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Eastern, IN | We rented them all. It was a great business until taxes doubled and insurance went up. All the while the courts made it harder to boot people out. 14 houses and we never got on back trashed. Dirty, yes but never trashed. |
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SC WI | 2x4s are down to $5 as of yesterday, here. |
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| 2388 - 9/13/2021 09:37
Yes but we will buy vacation/beach houses in Florida
Have you ever bought vacation properties in Florida? |
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Sioux County, NWIA | OldMcdonald - 9/13/2021 08:28
"Here" 2x4's went from $2 to $8-10
copper, steel aint cheap either
ISN'T MONEY PRINTING & INFLATION GRAND??
I don’t think currency creation is the root of the cost increase of building materials. Contributor maybe. |
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| Yes, but what if this market keeps going another 5 years. I’m in the same business but not selling anything. Still building and buying. Townhomes that I bought last fall are worth 30% more today. |
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| 3.25 for 8ft 2x4 at any big box now
About .50 cents or less from pre covid prices
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Eastern, IN | We have not but we become very well versed in vacation homes. |
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Eastern, IN | That’s the risk a person takes. We just pulled our chips off of the table and bought more farmland. |
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| We just priced our new build at 150/sq ft. Same house was 225/sq ft in May. Building supply prices are dropping like a rock here. |
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Napanee, Ontario | Tell that to my local hardware store
"BUT CURT SAID PRICES ARE TOO HIGH" |
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NE Kansas | We just got finished last month, and we were at $175 sqft. |
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| Make sense if you could find farm land. There is no farm land on the market here. All land is priced with development opportunity added to what would be the farm land market.
I would be worried about not being in some real estate class.
Edited by Zach in Ala. 9/13/2021 11:42
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NW MN | ....and stated income loans. In 2005 if you were a plumber and made $40k a year and the average plumber in the US made $80k a year, you could get a "stated income" loan that would use the US average to qualify for a loan. I believe this went away after the last meltdown.
Edited by outdoorswede 9/13/2021 12:37
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| If your dumb enough to pay $8 - $10 in a $3.25 market I can't h help you nor can anybody.
Secondly I'm not curt but if you want to go down the road of you being an a$$ we can.
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SC WI | 2388 - 9/13/2021 10:45
That’s the risk a person takes. We just pulled our chips off of the table and bought more farmland.
Nice |
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Nw Iowa | Agree 2388, what’s the old saying something about hogs go to market. You should of had a helluva run. |
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SC WI | If you don’t mind sharing, did you do a 1031 exchange?
Or did you pay taxes?
Also did you rapidly depreciate houses?
ETA: I am thinking of selling our lower quality rental houses and put it towards more farmland. We intend to keep our nice units long term.
Edited by Excalibur 9/13/2021 19:22
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| Rapid depreciation of rental property? Is there a way to accelerate this quicker than 27.5 years |
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Eastern, IN | We were very lucky and everything fell into place for us.
TLC Rentals (our rental house company) sold a few houses last fall with plans of dumping the rest of them and just paying taxes. In January one of our landlords decided to sell a farm and was willing to work with us on timing.
When we started to get close on selling the first rental in ‘21 we started a 1031. We listed all the houses that we felt would close out quickly. We understood we couldn’t negotiate on selling the houses, we had to grab a reasonable contract and push hard for a quick close. Meanwhile I had the 277 acres surveyed into 3 tracts. Our land holding company is Crossley Investments LLC. Because of the 1031 TLC had to be part owner in 1 tract. We timed it to where the we sold the last house and closed on the farm the next day.
We have done many 1031s over the years so we understand the mechanics of them. The reason for three tracts on the farm: 1 tract will be sold to my son( that happens this Wednesday). This will be his first property. We wanted TLC to own no more than necessary because we plan to dissolve that company after the time restraints that the 1031 has on us. Crossley Investments owns the majority of land holding.
Depreciation: I can’t answer how many years the schedule was for these houses. I was done with rentals and was planning to sell them regardless. I was hoping to find a farm somewhere but hadn’t gotten to that point yet. That’s when we made the deal with the landlord. For the record I paid a premium for this farm. It’s one of the most expensive farms that has sold in the last two years in our area. It was a hard pill for me to swallow to pay that premium.
Edited by 2388 9/13/2021 20:13
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Shelbina, MO | "You only get one chance." |
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SC WI | I heard of separating and rapidly depreciating parts of a house such as the roof, and so on.
Remember it’s something I heard, plan to ask accountant more details. |
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SC WI | Makes sense, thank you. |
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Sw. Ill | Yeah but who is going to supply the labor? |
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Eastern, IN | That’s why we bought it. Also the farm has a perfect location for the future. |
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Shelbina, MO | Awesome! Enjoy it! |
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Housing market
