Real Estate Market Timing
Mike and I met in mid 2003, I was the “wholesaler” and Mike was the “buy and hold investor”. I was good at finding great deals and Mike has always been good at the financing and numbers.
I remember I contracted a house that was a pre-foreclosure in fair condition, fair meaning the walls were not kicked in and the utilities worked. I being the wholesaler was trying to sell the property to Mike and make some quick money. We would haggle back and forth on price. He would say the roof was sagging, I would mention the neighborhood was up and coming, it was brutal. We would finally come to a price that both of us agreed on.
After doing many of these deals we decided to join forces and see what we could accomplish in the real estate world. We manage to build a residential real estate portfolio of about 120+ homes going into the boom of 2005, we new as every body did that the 7% monthly price increases was not going to last long. We decided to sell everything we had. The inventory levels here in Phoenix in 2005 reached an all time low of about 5000 available homes. Investors were kicking and screaming to buy our properties. I’m sure you have read Warren Buffet’s famous quote that says “When the market get’s greedy I get nervous and when the market get’s nervous I get greedy.” Well the market was amazingly greedy and we sold all of our properties in to the strength of the buyers market. They say timing is everything; well we made millions and millions of dollars in a mater of months.
We decided to start buying again in early 2008, it seemed like the homes were becoming more affordable and the prices were stabilizing. Right now we own exactly 50 cash flow rental properties and are buying as many as we can. We are buying these properties first to deliver to our clients at Fortress Investor and 2nd for our own portfolio. Here are several reasons why I believe that the Metro Phoenix real estate market timing is ripe right now:
1. Inventories levels are slowing retracting, the upward trend in increasing inventory levels has stopped.
2. Arizona State University ’s Repeat Sales Index reported that the median home price is now $175,000.
3. New home permits have dropped to a record low of 697 last month down from over 5000 in 2005 according to RL Brown, Arizona economist.
4. Resale’s are up more that 35% over last years numbers according to realty studies at Arizona State University .
5. According to the NAHB Phoenix is the most affordable city for housing compared to 9 of the most populated cities in the west cost.
The numbers are just getting better and better, along with good new today yesterday reported by The Mortgage Bankers Association that Mortgage Applications Surge with Large Drop in Rates. I believe we have another 12-18 months of a good buyers market and then the tied will turn.
So how can you capitalize on this once in a life time buyers market? We’ll the first this is to buy as many cash flow properties as you can. When the market does turn like we know it will you be very happy you are in control of a lot of real estate. The great thing about buying cash flow properties is that you can wait for the right time to pull the trigger. We will keep you informed with this blog on exactly when we start selling out properties. I also believe this is one of the greatest opportunities we will have in this life time to set our families up financially. Another great quote I love is “opportunities are never lost; they just go to somebody else. Make sure you are the somebody else.
God Bless and Happy Investing