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Sell the Extra Condo..  Focus on Business

Sell the Extra Condo.. Focus on Business

My friends holding second and third homes should start discounting now and push their Realtor hard to get it sold. You want to be first on this, not last. The pain happens 4-6 months ‘after’ reset.

Arm_reset_scheduleThat pain in Real Estate is just beginning. There will be some spill-over on the profitless (bag of smoke persuasion) technology side..  but free-cash-flow producers should weather the storm pretty well.

I know you’ve convinced yourself that it’s rented and you can ride it out,  but rents could start dropping and being an absentee landlord is a pain in the ass.  I’ve done it.. It’s not worth it..  Cut and run now.

This entry was posted by Frank Schilling on Friday, June 1st, 2007 at 9:16 AM and is filed under Investing (non domain investing). You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.


6 Comments

  1. nate says:

    Good advice on selling, but the rent point is mistaken. As houses sell, rents increase. Less owners, more renters. Additionally, because of the high sale prices, owners can’t afford their homes, and even if they hold on to them rents have to be higher than what they were in the past to help cover more of their higher mortgages.

    ***FS*** As more properties get foreclosed, more rental properties in the pool. I have been a landlord and it’s not as easy as it looks.

  2. VS says:

    The last thing i’m worried about is my rentals, My vacancies dont last more than few days. Rents are up about 20% in the last year or 2 and so it demand. I would however hate to be the one holding the bag in places like Vegas or Miami right now.

    ***FS*** okay… cool cool

  3. Javier Marti says:

    hahahahhaa. It is funny you mention this when I have a couple of apartments for sale in Tenerife, Spain, since the last two months! Having worked in real estae before, I could see it coming. It is not the best time for sellers, but a great one for buyers.
    I think it depends very much of the place where the property is located…prices won’t go down the same way in Tenerife than in London or New York, and the lenght of the depression will also be different.
    The availability of cheap credit is also an important factor to consider, as it is the possibility of acquiring properties on a “no down payment” basis. All these factors and more affect demand in your local area.
    I think unfortunately many people looking for real estate advice on the internet don’t realize these differences and then make things that make/may not work in the other side of the States or Europe, and then wonder why it didn’t work as planned…

    Regards
    Javier
    Trendirama.com

  4. The way I look at things.. just ignore that it could get “ugly.” Forget all the fundamentals in terms of buyers, sellers, ARMs, interest rates, and so on. Which investments are undervalued right now and will deliver killer ROIs for the next few years? Doom, gloom, or blue skies, real estate just is not in the picture. Best case scenario, no money lost, single digit appreciation. Forget it!

    I don’t think this is just an issue of real estate vs. domain names. As your blog title states, its about business. Focus on your own business (domain names, or not.) I am guessing that you can get far more leverage with much more potential upside than real estate provides today.

    ***FS*** I agree.

  5. touchring says:

    How is the business sentiment in the US? If the economy is moving, interest rates might rise again, this will jeopardize the real estate market even further.

  6. Javier Marti says:

    My apartment in Tenerife has been sold, thanks right before the wave goes down big time :)
    Franks’ was good advice, and still is

    >Good advice on selling, but the rent point is
    >mistaken. As houses sell, rents increase.
    >Less owners, more renters.

    1)This seems a bit of a dangerous oversimplification. Usually real estate crisis are accompanied by other factors affecting the economy of individuals. Many of those individuals are renters. If they start losing their jobs, or their businesses going south, and inflation continues to go up, the end result is that they can pay less rent than before, simply because they have less money available, or no jobs.

    2)usually a real estate crisis means a lot of foreclosures. The banks don’t want to take the house if possible, so they let the owner keep it even renegotiating lower payments, but he has to make damn sure he pays religiously the loan, because he is being watched and he knows it. In this case, the owner usually is desperate to rent the property, and the first thing he does is lower the rent price.
    When many are in the same situation, and they all do the same thing, overall rent prices go rapidly down.

    >because of the high sale prices, owners can’t
    >afford their homes, and even if they hold on
    >to them rents have to be higher than what >they were in the past to help cover more of >their higher mortgages.

    I think this point doesn’t make sense or I don’t understand it very well. It sounds like inverted logic. Are you saying that because the owner has to pay more (?) in monthly mortgage installments he will pass this increase on to the tenant, thus the tenant will have to pay more rent p/month?
    If so, it does not make sense. As per 1 and 2 above, in crisis times it is a tenant’s market. Rents go down, not up. It is impossible to increase the rent when people have many more options open to them, and better properties than yours to choose from, for the same price or less.

    Regards

    Javier Marti
    Trendirama.com