NYT Article: NY Real Estate Still Moving in the Millions Range

second paragraph notes at reduced prices...

And volume overall is 75% down...

"Deals are still being done, the records show, but often far below the asking price, and bankers and hedge-fund types, who once drove prices ever higher, are a fleeting presence."

oldbuyers.... the only difference btwn you and I... you are a bull... I am a bear. You should have that talk about your finances with your wife... oh, I forget she gets to know nothing....

Yep. Still got it :)

Conveniently missed the other Times article, saying that luxury market is "hurt"..

http://www.streeteasy.com/nyc/talk/discussion/7363-luxury-market-hurt-but-not-dead

It must suck for all you sideliners to be counting on 50% reduction in prices only to realize maybe 20% reduction. It appears your predictions are completely off base, and the 5 of you guys out there that agree with each other are the same 5 losers that sat at the wastoids table at lunch.

w67thstreet, you are the biggest tool I will never (thankfully) meet. You have the 'sense of humor' of a 70 year old man. Are you?

oldbuyers, it adds nothing to the conversation to call people "losers" and "wastoids."

People merely quoted exactly what the article says.

I'd bet you that real estate was sold in New York during the Depression, too.

stevejhx, I have seen your 'stand up' routine and it is appropriate to call you a loser.

keep pontificating about 50% reductions that will never happen. Nice try, comic boy.

> keep pontificating about 50% reductions that will never happen

And you KNOW this putz said the same about the 20% reductions.

He unfortunately has to change his line by 5% each month.

"It must suck for all you sideliners to be counting on 50% reduction in prices only to realize maybe 20% reduction."

BTW, are you really trying to infer that if the market "only" declines 20%, that isn't a huge win? Hell, 20% was all I thought we'd get initially.

We waited while someone like you took a 20% haircut (and probably more leveraged) and we get to buy at the lower prices. And its still going down...

How on earth are you trying to play that one as a victory for the losers?

Thanks, oldbuyers. I don't know what one has to do with the other, but it's nice that you can't help being nasty.

I'm getting the feeling, however, that you, too, are LICComment, given the writing style and syntax.

Let's compare how these people write and come to a conclusion:

LICComment - "I used to think that steve had an average level of intelligence and just had trouble applying concepts, but now I see that he is just slow. Even basic concepts are beyond his grasp."

oldbuyers - "I have seen your 'stand up' routine and it is appropriate to call you a loser. keep pontificating about 50% reductions that will never happen. Nice try, comic boy."

Hmmm.

There's a way to tell that these two snide tidbits were written by the same person, but I won't say how.

Except the clue's in what I'm writing.

I sat at the "waistoids" table at lunch. I don't recall seeing you there, Steve.

I ate watching CNBC. Probably that's why.

Steve and NYC10022 akaq EddieWilson have never once in over 2 years been able to post just 1 example of any opportunity to make money in real estate. They are complete nay sayers who are paralyzed by fear.

They have no credibility. If you can only post negatives and see no opportunities then you actually add no value. They have no knowledge on how to make money in real estate. they can only try to convince everyone else to be like them - paralyzed by fear, sending 50% of their monethly take home to a landlord and losing everything in the stock market. Is that who you want to take any real estate advice from?

First, petrfitz, I haven't been posting for 2 years.

Second - I said very specifically when there are opportunities for making money in real estate: when it's cheaper to buy it than to rent it.

I don't spend anywhere near 50% of my monthly take-home pay on rent. However, I would if I bought an identical apartment across the street for twice the money.

> never once in over 2 years been able to post just 1 example of any opportunity to make money in real
> estate.

I certainly did... I said short it. Whether you picked the Case Shiller or the REITs, you did VERY hansomely.

If you didn't do that, NOT BUYING was a way to signficantly increase your relative wealth...

> They have no credibility

Yes, lets all learn about "credibility" from the guy who said that RE would be up 15% in 2008.

Nice job!

> If you can only post negatives and see no opportunities then you actually add no value

I already gave you opportunities. I also said buy SSO at 7600. Those all made money. Everything you suggested lost money.

> Is that who you want to take any real estate advice from?

You definitely don't want to take it from the guy who called BUY at the top of the biggest real estate bubble in history...

Tell us again about "opportunity" and "credibility", Pete...

oldbuyers/petrfitz...I just convinced a friend who bought a $400K condo in the east side in early 2004, to list his 1bdrm for $1MM and rent for the next 2 years the same unit a few floors down. He's been reading SE and decided a box is a box and if I can get $400k in profit and sit out 2 yrs and buy a 2bdrm.. then so be it. Does this sound rational to you... one move, change of address form and $30K in hassles to live in a 2bdrm for the rest of your life instead of oldbuyer/petrfitz studio? If you make money like Brtiney... then who cares... otherwise we all care.

One other item... in my greedy self-serving need to raise the price of my stock position I told uwsmom to buy HRP 2 weeks ago at $2.00, it's trading at $3.5 as we speak and throws cash of 24.9% at current price... get it while you can (that's 75% return in 2 weeks).

w67th you speak of market timing.

nyc10022 - BS you have never been able to come up with 1 opportunity to make money in real estate. Neither have you steve. and Steve since the per word translation rate has plummeted over 40% (i employ about 5 translators for my games) you are now spending about 85% of your seriously decreased take home in rent paying someone elses mortgage.

I challenge both Steve and NYC10022 to look at the 11000 available units and just give us 1 example of a money making opportunity. Just 1 example. This is an easy test of your self described knowledge of the real estate market.

Why was I left out? Does renting and buying an apartment in 2 years and not paying $1000psf, but closer to $500psf. count as making money?

Let's clarify something. I am a RE owner in NYC... I am gonna take it in the chin for the next several years (if I needed to sell or Citibank goes under as I have an LC from them for a large tenant of mine). My passion for this "correction" is much more about the "righting" of our social /economic system that I am of an individual losing their wealth. When a RE broker (on average) makes more than a first year medical fellow, or a union worker who bought a Lincoln Tower 1bdrm (on a RE asset basis) makes more than a young lawyer at Stroock, and competes for goods and services... the whole system breaks down. How can I tell my daughter to be a doctor or lawyer when there is this great transfer of wealth with no rhyme or reason. Do you understand the difference? I may cross the line, but someone took cabana #3 at the 4Seasons maui from me and the mrs.... I'm sure it was a RE broker :) Lets' see what the occupancy is in March 09 w/o the asset bubble.

hmm w67th - i agree with you on a RE broker making that kind of money. What about the Wall Street banker who basically puts together a transaction and makes hundreds of thousands per year? more than the actual enterpeneur who created the company or opportunity?

a RE broker is paid much more in line with reality than the no value offering parasites on wall street who are essentially human credit card processors.

> nyc10022 - BS you have never been able to come up with 1 opportunity to make money in real estate

OK, you can't read... i made it very clear above. Shorting what I suggested be shorted months ago would have made you a ton of money.

Sorry that instead, you bet wrong and lost it.

I'm sorry you keep losing money, but we told you so...

nyc10022 - please explain how you caqn short NYC real estate? not stocks

again you cannot come up with 1 example of an opportunity to make money in real estate.

"I challenge both Steve and NYC10022 to look at the 11000 available units and just give us 1 example of a money making opportunity."

I looked at all of them and can't find one.

Though why you would challenge me to prove you right when I think you're wrong, and expect me to take you seriously, I don't know.

Steve and NYC10022 cannot find 1 opportunity in the real estate market. They have admitted that they have only the ability to see no opportunity.

Their credibility is vanished even though they never had any.

They will continue to believe that they are intelligent by pointing out that the macro market is bad. I have proven that they do not look at individual opportunities they jsut read the head lines and try to make everyone believe there is no money to be made.

I feel sorry for them.

"They have admitted that they have only the ability to see no opportunity."

It takes an idiot to require that all "opportunity" can only be found in an asset class that is being demolished.

Part of seeing opportunity is finding undervalued asset classes, and avoiding those about to CRASH.

Unfortunately for pete, he can talk "opportunity" all he wants, but it doesn't make him any less a lousy investor. Seeing "opportunities" that only lose one money isn't good investing, it is stupidity.

"I have proven that they do not look at individual opportunities they jsut read the head lines and try to make everyone believe there is no money to be made."

You didn't prove shit, you lied.

You presented "opportunities" which if anyone was stupid enough to listen to, they lost money. Probably a lot of money.

I've already made several calls on this board that would have made anyone money. Some in RE, some not.

Anybody listening to perfitz is broke. How he calls that credibility.... funny.

nyc10022 spends his entire day posting on a REAL ESTATE board that he sees no oppportunity in real estate even when there is more available inventory than ever before.

Why dont you leave these boards NYC10022 and go to a website that discusses REITS or stocks?

You add no value here jsut negativity. Negativity doesnt make anyone money. You had your chance to prove your knowledge of real estate and you could not come up with 1 single opportunity.

Leave now - even though you were previously kicked off these baords when you posted as EddieWilson.

Now leave for good. Leave these boards to those who can find opportunity in real estate.

"They have admitted that they have only the ability to see no opportunity."

No. We disagree on some things, but we agree that this is an asset class to stay far away from. If you can find that "1 opportunity" then let us know. Not vagaries such as "somewhere where they're rezoning."

Sneaky, you lost all credibility the day you said you owned a place in Nevada next to Celine Dion, and her helicopter woke you up every night.

She didn't own a place in Nevada. She lived in a hotel.

Steve - why do you lie?

http://www.more.ca/attitude/profiles/celine-dion-takes-control/a/1901/2

you just make your credibility even less... you need to lie about me and my real estate, you lie about rates going up in translation, and you cannot even find 1 opportunity in todays real estate market.

Oh yeah - by the way, I am in Nevada now actually looking at her house....

Steve - why do you lie?

http://www.lasvegassun.com/blogs/robin-leachs-las-vegas-celebrity-watch/2008/oct/13/jennifer-lopez-celine-dion-make-weekend-vegas-visi/

When she was working she stayed in the hotel.

Steve can you tell us why you have to lie?

why do you lie Steve?

http://www.cbsnews.com/stories/2003/03/25/entertainment/main546046.shtml

Frank Sinatra and Elvis Presley played here regularly but never called Las Vegas home. Dion, Angelil and their 2-year-old son moved to a $1.2 million house in Lake Las Vegas for an easy 17-mile commute.

Steve I am no translator but doesnt commute mean that you live in a place then travel to your work?

Ok, petrfitz' improprieties notwithstanding, I think it's foolish for stevejhx to say he's looked at every last property and doesn't see ANYTHING! I'm sure there are better examples, but here's a quick search result, with admittedly somewhat aggressive (but not ridiculous) assumptions.

http://www.streeteasy.com/nyc/sale/365213-coop-204-west-92nd-street-upper-west-side-new-york

Say you pick it up for $700k, 20% down, 30-year fixed at 5%, runs you under $3800/mo (including maintenance). It's not at all unreasonable to rent it at that price (or more). If you're aggressive and find the right place, I don't think it's impossible to find a few rental properties that wouldn't put you in the red. That bathroom needs to go however!

> You add no value here jsut negativity.

So what exactly do you add here, pete?

horrible market calls? 3rd grade insults? your pretty face?

seriously, what have you added?

All i see are insults and recommendations that would have pulled others into your bankruptcy.

bjw, that's getting close, though the layout is very odd & duplexes go for less psf than everything on one floor.

But it's getting close.

Thanks steve. I'm sure with a little effort, we could find something really interesting at this point (you're absolutely right about the duplexes, but that was a pretty quick search). As I've always said, you have to be aggressive to get a good deal, in any market. I have no idea when the market will hit its "bottom," but if anyone's ever serious about buying but isn't even going out there to inform themselves now, I think they'll be woefully unprepared by the time things start to look good again.

More posts nyc10022 attacks can't name 1 real estate opportunity and Steve nay says and can't name 1 opportunity

wow, avoiding the question (and I already answered yours 3x).

Seriously, Pete.... YOU brought up the topic. So what is it?

"> You add no value here jsut negativity.

So what exactly do you add here, pete?

horrible market calls? 3rd grade insults? your pretty face?

seriously, what have you added?

All i see are insults and recommendations that would have pulled others into your bankruptcy."

another nyc10022 ana eddiewilson post and he again cannot point out just one single
Opportunity. He can only attack and naysay.

ok, pete, you are rufus, i get it.

and, not surprisingly, you still haven't answered the question.... and YOU brought up the subject.

But, not surprised, you've been a hypocrite all along. A poor one (in many senses of the word).

Please eddiewilson just show us 1 opportunity just 1 should be easy for a real estate genius like you

I did... 3 of 'em.

Still avoiding the question, I see, I see.

I gave you 3 answers... you, none. And it was a question you first posed.

You hypocrite....

You lose money (yours and others) and then talk crap. Start insults, and then can't even answer a simple question.

Really, pete, answer the question. Come on, what's wrong with you?

You CHICKEN!?!??

nyc100222 - where did you give an answer that dealt with buying real estate? please point me to your post that spoke of a property that you thought was an opportunity to make money.

also what question did you ask me?

nyc10022 and actually the only money that I have lost in the last year is in the the stock market. my net worth in stock holdings decreased about $ 1 million. I have not lost any money in real estate in the last year. I have actually made money in real estate - sold a property in the beginning of the year and earned rents on the others.

> also what question did you ask me?

Now you are playing stupid again?
Maybe its not playing.
I posted it, asked again, they copied and pasted it.

For the fourth time..

"> You add no value here jsut negativity.

So what exactly do you add here, pete?

horrible market calls? 3rd grade insults? your pretty face?

seriously, what have you added?

All i see are insults and recommendations that would have pulled others into your bankruptcy."

still a chicken. I don't know how to make the chicken noise in e-mail. BWAACK, maybe?

Still haven't answered the question... the same one you tried to ask of others.

Come on, pete, what is it? What do you think you add here?

Answer the question...

btw, your stocks went down... so you sold them? You locked in your losses at the bottom?
Smart move...

nope i did not sell - can you not read that i said my "net worth?"

also i didnt see your attacks and ramblings as a question. I add value by pointing to mulitple opportunities in todays real estate market. opportunities that I have posted about - multi unit buildings in the LES, proeprties that have had their buildable FAR doubled by the LES/EV rezoning, and Brooklyn Brownestones. I also have my eye on a few UWS townhouses with RC/RS units that could be turned to market, a few JErsey shore properties, and recently I like the Hamptons as thier are a few firesales out there that will return very nice upside in 3-5 years.

you on the other hand have never posted about 1 single opportunity. you just and follow the macro indicators. you see no opportunity so your mission is to make sure that no one else sees an opportunity as this makes you feel better about yourself.

hey NYC10022 i am going to use your and Steve philosphy. I didnt lose any money in the oil melt down so that makes me an oil barron like you are a real estate genius. I also didnt lose any money in commodities because i didnt invest in any in 2008 therefore i am genius commodity trader.

nyc10022 also i didnt lose a job on wall street there by your logic i am a top notch iBanker!

> nope i did not sell - can you not read that i said my "net worth?"

Cool, just checking your logic.

That means, you lost money on all your Manhattan properties. 20% say the stats.. .and its more because you are leveraged.

Explain to us how the stock market was your "only" loss again?

> I didnt lose any money in the oil melt down so that makes me an oil barron like you are a real
> estate genius.

Not losing money in oil doesn't make you an oil barron. But anyone who just LOST THEIR SHIRT in oil who claims they are an oil barron would be a complete idiot... or you, to be more specific.

actually, for an easier analogy...

When the guy who said "buy oil, you are stupid if you don't, it will be up 15% this year" when its was $150 came to the oil board today (with oil at $40) and proclaimed himself oil king, he'd be...

well, you...

if i bought my current propertites in 2001 have several million in equity and only $300K leveraged with about $150K per year rental income how did i lose money?

please answer nyc10022

and tell me how you made more money than me in the last year by renting?

perfitz,

i don't understand why being 'negative' is a bad thing. if the market is heading down then being negative is just being smart. is being stupidly optimistic in the face of overwhelming evidence some kind of moral virtue?

> if i bought my current propertites in 2001 have several million in equity and only $300K leveraged

Your properties declined on average about 20% since peak. Thats how...

> with about $150K per year rental income how did i lose money?

You are a very lousy investor if you can't tell the difference between cash flow and profits. You can be cash flow positive and losing your shirt.

Which seems to be the case.

> please answer nyc10022

uh, ok.

> and tell me how you made more money than me in the last year by renting?

I didn't make more, I lost less. A LOT less. Call it whatever you want, but you just took a major leveraged loss. I didn't.

Keep it up, oil barron! What other areas can you show us you are a lousy investor in?

"i don't understand why being 'negative' is a bad thing. if the market is heading down then being negative is just being smart. is being stupidly optimistic in the face of overwhelming evidence some kind of moral virtue?"

Most of us would call it prayer.

His "net worth" is taking serious hits each day, so he's angry at anyone who points this out.

So according to NYC10022's genius since i didnt sell at the very top of the market i have lost money even though my properties actually generate cash income on a regular basis. His brilliance also assumes that my properties will never again reach their 2008 levels, he also doesnt calculate in the benefits of ownership - tax incentives, write offs etc, and the benefits of historically low financing. His brilliance also cites that the actual money he paid out in rent say $50 to $100K is less of a loss than an unrealized loss by my not selling my properties at the top of the market. He therefore infers that actual cash out of the pocket is less of a loss than an unrealized gain or loss.

what a moron.

this philosphy can be used to say that NYC10022 didnt buy the best performing stocks in the stock market and didnt sell them at their highest, therefore he lost money on any funds he had in the market.

also nyc10022 please explain how properties that pay for themselves and generate $150K per year in cash to me means that I am losing my shirt? how does renting for $50K work out better than earning $150K a year as a landlord?

petrfitz... let's just leave it at the fact nyc, stevie and I am arguing to avoid this asset class, b/c like in 2004 I don't see any fundamental reason that RE relative to other asset class and especially against a "rental" comparison, current (deflated) prices cannot be maintained. It's like pancreatic cancer... it's got one of the highest mortality rates five years out, but if you survive till year 6, does it make you a saint?

Someone may indeed purchase a unit today and 3 years out think they did the best thing since learning to read. My guts is that an liquidity/fraud/mania/let's bid on 10 condos in Miami this weekend while we are at a bachelor party bubble cannot be corrected in 2 years.. much less 3 and more likely 5 to 8 years (IMHO). But I will buy b/f the bottom, b/c my wife nags and I'm making a killing on HRP.

Oh... yep.. my on-line persona was an I-banker and a burger flipper at one point.. and yes they too were over-compensated... however, the competition to be an I-Banker (a good one) is intense. Lots of super saturdays... i think I did 35 interviews for one position. To be a mortgage broker you needed $500, me thinks, to be a RE broker... well it's just one exam. Seriously, chill with some I-Bankers... they are as a whole interesting if you get past the suits... I've met a green beret, olympic medalists .. look at Hank Paulson... you'd think he could take some time off from Falconary to whiten his teeth (he does falconary... weird but true).

:)

agains nyc10022 points to no investment that he has that makes money and cannot point to 1 opportunity in real estate. all he can do is attack. he is a straw man a bitter jealous one at that.

he is a moron who thinks that paying money to a landlord is a better investment than being a landlord who collects money for doing nothing.

nyc10022 is a pissed off laid off wall streeter who realizes that he will never have the earning potential he used to have. maybe he can become an accountant some day.

"keep pontificating about 50% reductions that will never happen. Nice try, comic boy."

LOL. Realt-whore much? THey said the same thing about Miami, Las Vegas, Phoenix and other cities, and they are nearly at 50% down already. And those cities, unlike Manhattan, did not have their main industry neutered.

You'll see 40-70% declines in NYC easy.

w67thstreet then you, steve, and nyc10022 should leave these boards and allow people who are actually in the game making investments in real estate have a proper discussion. we know the obvious that the market and economy are in the shitter, there is no value in parrots saying the same bad news over and over again.

all three come back and start posting here again when you think that the RE market is about to go up again. until then we will take your none posting as the three of you still not seeing any upside in RE.

also i dont see iBanking as something that takes talent. try starting your own company or creating content or technology that people are willing to pay for. otherwise an ibanker is just something that any talentless moron, calculator, or telemarketer from bangalore could do. ibankers are parasites who sell their soul steal other peoples money and convince themselves that they are smart and worth the money.

Realt-whore.

LMAO!

"you have to be aggressive to get a good deal, in any market."

Not in a buyers' market. You just wait.

Is nyc10022 the same as petrfitz, arguing w/ himself? B/c they only appear in tandem.

"allow people who are actually in the game making investments in real estate have a proper discussion."

Show us where. THE LINK!

"allow people who are actually in the game making investments in real estate have a proper discussion."

Translation: "I am a starving realtor and I need to eat!!!!!!!!!!!!! If we can persuade the gullible to overpay for the unremarkable, I can live well again! GOD, I MISS 2006!!!!!!!!!!!!!!!!!"

“The worst is yet to come; there is a blood bath coming,” said Matthew Haines, a founder of the real estate site Propertyshark.com who prepared the Corcoran report."

From today's Jan 6 NYT article titled, "Striking Declines Seen in Manhattan Real Estate Market"
http://www.nytimes.com/2009/01/06/nyregion/06estate.html

petrfitz,

who are those people making investments in nyc real estate right now? clearly there aren't that many since volume is down between 55% and 80%. and when you say "we know the obvious that the market and economy are in the shitter," clearly that isn't the case since every single day there are numerous people on this very board arguing that nyc real estate is going up, has already bottomed, is the best investment in the world right now, etc. etc. you seem to be under the mistaken impression that streeteasy is a real estate investment club or booster society. it isn't. it is an open forum for discussing real estate.

west67th, i'd love to hear your bull case for HRPT Property.

"clearly that isn't the case since every single day there are numerous people on this very board arguing that nyc real estate is going up, has already bottomed, is the best investment in the world right now, etc. etc"

happyrenter, I'm not really seeing this. Of course there is always a handful of extremists (in either direction), but it's tough to take them too seriously.

"Not in a buyers' market. You just wait."

I strongly disagree, stevejhx. Even in a buyers' market, you can be aggressive and get a great deal. Your advice is like telling a basketball team leading by 20 at the half to just coast the rest of the way. Sure, you're ahead, but you're not doing yourself any favors.

Even in a buyers' market, you can be aggressive and get a great deal.

Perhaps. But I would wait until prices start to rise again before I bought, and that won't be for a very long time.

"Perhaps. But I would wait until prices start to rise again before I bought, and that won't be for a very long time."

EXACTLY. This is the mistake investors nearly always make. They suffer from reference point bias - because they remembered their favorite tech company's shares at $120 in 1999, they lapped them up at $90 in 2001 -- "What a bargain!". Those shares traded at $12 in 2003! Some bargain...

It's almost always a bad idea to try to catch a falling knife. If you wait until prices start to RISE, you may not have bought at the bottom, but you will have avoided the very large risk of holding the bag on the last 20%, 30% or more of declines. Plus, if you wait until things start to go up, you're immediately in a gain position and have many more years of gains ahead of you.

meant to say, "this is the mistake NOVICE investors nearly always make"...

"It's almost always a bad idea to try to catch a falling knife. If you wait until prices start to RISE, you may not have bought at the bottom, but you will have avoided the very large risk of holding the bag on the last 20%, 30% or more of declines. Plus, if you wait until things start to go up, you're immediately in a gain position and have many more years of gains ahead of you."

Well said Admiral. Well said. Trying to time the bottom? Might as well go to the casino and count cards at the blackjack table, dear lemmings.

This is yet one more thing that LICC = tech_guy got wrong: today's price has nothing to do with yesterday's price or tomorrow's price. Markets change, and what we're seeing now is a huge shift in the demand curve with no shift in the supply curve, so virtually nothing is getting sold. When sellers realize that they have to drop their asking prices because Wall Street is dead and never coming back, and credit is tight, then things will start to move again.

But there's in my estimation another 40% drop to go. Wait till summer, when inventories rise from the present 2 year supply to a 4 year supply, and market rentals return to 2004 levels: nice 1-bedrooms in the $2,000 - $2,500 range. They're almost there in Chelsea - that's what an alcove studio is going for in luxury buildings.

BTW that would put the price of a 1-bedroom at about $300,000, less than half what they're going for now.

Admiral, you're assuming a few things here:

a) that once prices start to rise, they will continue to do so.
b) that you can accurately gauge when prices are rising. Because comps are really the best tool we have, and these are lagging indicators (at least several months to over a year or more in some cases), it is very tricky to pick your spots with much confidence.

You're also looking over the fact that different neighborhoods, buildings, and product types don't necessarily move in conjunction with each other, which can make gauging the market even tougher when you're looking to buy. This is why I think I maintain that staying informed (well beyond reading Streeteasy - I mean going to open houses, seeing what's on the market, what can be negotiated) and being aggressive in your bidding should be constants.

"Might as well go to the casino and count cards at the blackjack table, dear lemmings."

You need to pick the price that you think it's worth, and buy it at that price.

Happy New Yr Everyone

Steve: If we had been in school together, I'd probably always be asking you to copy your notes (& maybe your answers), so, please give me the formula:

You're saying if rents are around $2k-$2.5k, then the sales price should be about $300K. How'd ya do that?

thanks

Easy enough: if you were to buy an apartment with a 4.75% 30-year fixed mortgage and rent it out to an unrelated third party, assuming common charges / maintenance of $500, the most the apartment could cost for you to break even on the transaction would be about $300,000 to $350,000.

That is the most reliable measure for what property should cost. If you rent it out, you should break even on a cash-flow basis right away. Else you wouldn't buy it because you'd lose money.

"If you rent it out, you should break even on a cash-flow basis right away."

Not necessarily true. If you reasonably forecast the rent to increase and surpass yor carrying costs within a few years, it can be a worthwhile investment. It doesn't have to be "right away." It would be better obviously, but not always the case.

"If you reasonably forecast the rent to increase and surpass yor carrying costs within a few years"

If you can reasonably forecast what the price of anything will be "in a few years," g-d bless. But it's not possible, and a bank wouldn't likely even finance the deal. A bank will only allow you to count 11 months' rent as income, since apartments are often empty between tenants.

That ratio of rents being equal to owners' carrying costs held steady in the long-term, until about 2000 when property prices skyrocketed. It's now correcting itself.

Notice, as well, that if you use that arm's length transaction rule, it makes the property worth 12x annual rent: $2,500 * 12 * 12 = $360,000.

Another reason why that ratio holds true.

You will also see that $2,500 * 40 = $100,000, which is the 40x monthly rent = income requirement to rent an apartment. And 30% PITI will also give you $2,500: $100,000 * .3 / 12 = $2,500.

These ratios work because they are different ways of saying the same thing. They're not accurate to the penny, but they're pretty darned close.

Thanks Steve & I hear you bjw.

I would love to buy, but not now. Think I'll buy when the market starts turning up, when ever that will be.

"If you can reasonably forecast what the price of anything will be "in a few years," g-d bless. But it's not possible, and a bank wouldn't likely even finance the deal. A bank will only allow you to count 11 months' rent as income, since apartments are often empty between tenants."

Couple things here, stevejhx:

1) Obviously you can't predict with absolute certainty what will happen to rents. You can't predict ANY investment with absolute certainty, otherwise the profit margin would dwindle to 0. If you feel pretty confident about it though, then you do it. And there is certainly evidence of sustained periods of rent increases. Doesn't mean there can't be declines, obviously, but that alone doesn't defeat the argument.

2) Getting a mortgage has little to do with this. If you have cash and other reserves that clearly support your ability to pay the bank, even though rental income will be less than carrying costs, than why would a bank not lend you the money. You don't make this kind of investment if it leaves you perilously close to bankruptcy, and you don't do it if the rental income is way way less than carrying costs (2x or more, as we've seen in some potential cases) - I don't think any smart investor would ever advocate that. I assumed you understood that. It should be a given.

"And there is certainly evidence of sustained periods of rent increases."

Actually, there is no evidence of that. There is no such thing as a "rent bubble," because rents can't go up faster than incomes. To make it fast by quoting from wiki:

"Rents, just like corporate and personal incomes, are generally tied very closely to supply and demand fundamentals; one rarely sees an unsustainable "rent bubble" (or "income bubble" for that matter). Therefore a rapid increase of home prices combined with a flat renting market can signal the onset of a bubble. The U.S. price-rent ratio was 18% higher than its long-run average as of October 2004 (Federal Reserve Bank of San Francisco report)."

http://en.wikipedia.org/wiki/Housing_bubble

We did have an "income bubble" in NY thanks to Wall Street bonuses. It has burst. We had a price bubble not only because of that income bubble, but because of a leverage bubble. Both are gone - they did not last long. And note that rents remained relatively stable before 2004 - I was still able to get a free month's rent from Related when I rented there.

Rents didn't start to climb until property became virtually unaffordable for all but the Masters of the Universe. Unfortunately, the universe just got smaller.

Regarding your point 2, if you have enough money you can do anything. My point was that if you seek financing those are the guidelines.

"Actually, there is no evidence of that. There is no such thing as a "rent bubble,""

I mostly agree with that last bit. I do think median rents have trended mostly upward though, and that's what I'm referring to. Not sure where to get good data on this for Manhattan, however. But yes, rents can't increase faster than incomes, which of course does not preclude them from rising. The point is, your carrying costs are locked in, with the bet that the rent curve will intersect at some point. Does it always happen? No, of course not. But all I've been saying is, it can happen (and has), which means your above statement (about only buying if you can break even right away) is a little off. By the same token, if you're breaking even right away, but rents take a hit in the future, that too is a poor investment.

> So according to NYC10022's genius since i didnt sell at the very top of the market
> i have lost money even though my properties actually generate cash income on a regular basis.

"bbbbbbut I'll make it back, i swear"

Yes, absolutely. You need to finish math class.

Cash flow is not the same thing as profit. You can absolutely lose money on an investment that is currently cash flow positive.

Sorry you are too dumb to get that.

> His brilliance also assumes that my properties will never again reach their 2008 levels

No, even that could happen and you still would lose money.

Sorry, sucker.

> he also doesnt calculate in the benefits of ownership - tax incentives, write offs etc, and the
> benefits of historically low financing.

Yes, that you can write off a loss doesn't mean its not a loss.

Idiot.

> His brilliance also cites that the actual money he paid out in rent say $50 to $100K is less of a
> loss than an unrealized loss by my not selling my properties at the top of the market.

Some of the stocks you sold paid dividends.

They not losses all of a sudden?

Idiot.

> He therefore infers that actual cash out of the pocket is less of a loss than an unrealized gain or
> loss.

You can have be cash flow positive, cash flow negative, it doesn't matter... it can be a gain in either case, or a loss (as in yours).

> what a moron.

Yes, thank you for proving you are an idiot.

> this philosphy can be used to say that NYC10022 didnt buy the best performing stocks in the stock
> market and didnt sell them at their highest, therefore he lost money on any funds he had in the
> market.

No, you moron.

If I bought them and they went down, I lost. If they went up, I gained.
Your properties have all lost value. Pretty plain to see.

Wow, even the 3rd graders understand that one.... not surprised you can't.

> also nyc10022 please explain how properties that pay for themselves and generate $150K per year in
> cash to me means that I am losing my shirt?

Hey, moron, take a finance class. Seriously.

You think you can't lose money on stocks that pay dividends?

Seriously, take a math class. You need it.

> how does renting for $50K work out better than earning $150K a year as a landlord?

Well, if a place is generating cash from a tenant, you can't live there. So thats a moronic comparison.

But if all you earn is $150k, and you needed tons of capital to do that, you are doing pretty damn poorly.

If you were a little smarter, I could hire you and double your salary.

"w67thstreet then you, steve, and nyc10022 should leave these boards and allow people who are actually in the game making investments in real estate have a proper discussion."

Yes, lets leave the real estate advising to come from the folks who have lots tons in it. Always the best experts. I can probably find some dot com investors to teach us about stocks, too, if you want. We can get all the idiots in a room to teach a course!

> we know the obvious that the market and economy are in the shitter, there is no value in parrots
> saying the same bad news over and over again.

For you, yes... you are right... you didn't listen anyway and made major mistakes. Being you were so dumb that you missed the crash, its too late for you. Its bad enough you couldn't figure it out yourself, you didn't listen to people who knew better.

Others, maybe they did listen and didn't make the same mistakes.

But, I really feel for anybody who took your moronic advice.

So applying the 20% decline to perfitz's imaginary holidings (he claimed $4 million, right)?

Good thing, you only lost a million last year.

Glad it was imaginary money...

You know, remember that manacurist who bought 5 houses on the video that got posted here a few weeks back. And now she's broke.

I think thats Pete!

gee more rambling attacks that are not backed up by any logic from NYC10022 and he can still not point to 1 single opportunity to make money in real estate.

he holds to his argument that putting out $50K per year in CASH to a landlord is a better investment in his opinion than being a landlord who nets $150K in cash from his tenants.

this is the level of logic and reason from this moron. No wonder why he got laid off from his junior level wall street job and is a bitter moron who hangs out on RE boards all day.

Now I am off to golf 18 holes then hit the Spa at the Ritz.

"this is the level of logic and reason from this moron. No wonder why he got laid off from his junior level wall street job and is a bitter moron who hangs out on RE boards all day."

this coming from the idiot who argued with me that buying real estate in Manhattan a couple of months ago is the BEST TIME EVER in its ENTIRE history of existence since the beginning of time. seriously, just STFU already.

"Now I am off to golf 18 holes then hit the Spa at the Ritz."

good, now GTF outta here and go back to your "real housewives of new york city" life.

happyrenter:
HRP (up another 8.7% today) yippeee!
1) Buffet owns;
2)50% of leases to govt' (they'll just print money) and medical offices (they don't like to move around too much);
3) very nice staggered leases over the next several years (i couldn't have done better);
4) 50% leverage;
5) Very well managed;
6) pretty sure all debt is unsecured.

Here is my play over the next 2 years... is the dividend gonna take a hit.. .absolutely.. . expect 50% cut in the next several qaurters... (those are prime build up position situations)... but let's say 50% cut equates to the 50% of tenants that are not gov't or medical.. so you got a 50% vacant REIT that can still yield 15% (not bad).

Now let me put on banking/work-out hat... If I was a banker and saw this, I'd approach HRP with a re-cap including getting a senior secured debt structure extending debt maturities to 20 years... this will give HRP tremendous leverage/Cash flow cushion and make some coin for my bank...

If all hell breaks loose... slash dividends to 1% yield and start paying off debt and re-work debt convenants etc... they have alot cash flow and a tremendous amount of good-will with their bankers at the moment. ...

But here is where I really expect to be able to stop reading SE and spend like Britney spears... if a sponsor gets his "s!!t" together and takes this private.... oh yeah! Pay bank 15% yield on a senior secured debt with a balloon in 15 yrs and have a debt waterfall/funding clause to make bankers happy and manage the buildings like you own them :) Good I wish I had $100MM.. cause that's all it would take to own assets worth $6B in 15 yrs.... uggggg!!!! Can I get some change.. .some change please... just a little change....

If you get that last stmt, we can be friends. :)

"is a little off."

Okay, it could be a little off, but I stand by it. Nothing's ever 100%. But perhaps inadvertently you agreed with me: "The point is, your carrying costs are locked in, with the bet that the rent curve will intersect at some point."

The problem is, if it doesn't, you're screwed.

If you buy it as owner-occupied residential real estate you may not be screwed as much if you don't have to sell, but since owner-occupied residential real estate is a hedge against rising rents, it would make no sense to buy under that scenario, either.

MMAfia, when did petrfitz build a miniature golf course on the Lower East Side?

W67: I got an LC for a commercial T also. What happens to the LC if the bank goes bust? Wouldn't FDIC cover it up to $250K?

"The problem is, if it doesn't, you're screwed."

Steve, I never really disagreed with your overall assessment. The only thing I pointed out was that breaking even on carrying costs immediately is not a must. If you're confident rents will eventually surpass your costs, and you can afford losing a couple hundred each month on a cash flow basis, it's not necessarily a bad investment. On the flipside, if your rental income is above carrying costs, but you foresee rents decreasing, I'm not sure that's a great investment either. That's a long way of saying that the cash-flow sitch at the time of purchase is only your starting point - it's not the only factor in the investment decision.

As for petrfitz, I don't know why we still bother with him!

alrighty... petrfitz... here is my financial armageddon financial situation (not wishing for it, but taking an educated guess with my on-line persona background):

One day petrfitz you will see a shadow of a homeless man in the window and do a double take and realize it's you in the mirror and you'll just be another financial version of the walking dead in those horror flicks. And here is how we get there.

DJIA and S&P goes on a false rally for the next several months with fiscal stimulus, Obama, and no bad news out, in Q3/4 09' banks start disclosing commercial/credit card bad debt.. capital ratios fall to a level where a second wave of banks are teetering on bankruptcies, Obama emergently passes TARP 2.0... GM goes under, followed soon by F and Chrysler... unemployment hits 11%, some municipalities declare bankrutcy roiling the public debt markets. Bernanke... goes back to his research paper and does everything he can to stench this with a negative interest rate policy... The chinese and middle east finally get that for their leaded toys and oil we gave them a piece of paper worth nothing. They dump dollars denominated bonds/RE and all other US assets... wrecking havoc on our currency. The RE downturn in US continues unabated and rent goes down b/c how many homes do we need? and people do the opposite of bubble... they consolidate housing (living with parents, rooming together, going back to school (dorms)), which further decreases value of RE (that's how you get "f!!!ed petrfitz." ). The US consumers feel the devaluation as a spike in gas prices and flat screen TVs, leading for an interesting time when TVs (due to contractual obligations) built in China are turned around and re-shipped to China in a "new" black market, as well as oil and other commodities (thank goodness we produce a lot of food in this country, if it was Japan.. .there would be riots and cannibalism.. they don't produce enough food to support themselves.. .hence their need to go on war rampages every 100yrs). Remember the J-Curve takes awhile and our export won't happen for several years and maybe never cause we demolished all the factories to make "HOUSING" . LMAO

Oh where was I? Yes, (Geopolitcally) all of the above wrecks havoc on Russia's economy, especially oil.. they are pissed and need someone to blame.. .Putin puts himself back in power with the "we hate America" even more now mandate (they already want us dead).. and in order to take the minds off its populace from huge unemployment and as a fiscal policy increases its military (Cold War version 2.0). They take sides with the middle east against US and Israel and secretly start shipping arms to Hamas via North Korea (as the US cannot effectively deal with a nuclear armed crazy country).

Now Americans are scared... TARP 2.0 hasn't worked, 600K new gov't jobs only represent 5% of those unemployed, bridges to nowhere only help 1/100 of the laid off housing construction workers... inner city youths get disenchanted as they do the right thing and go to college, but work at Starbucks and those working at Starbucks with GEDs are laid off. Gang violence increases and they come out with cheaper "crack" and this puts tremendous strain on our social services which are woefully lacking in funding.

Now we have "Stagflation". Bernanke doesn't have any credibility and as a student of economics.. .I believe the first order of business is to tame inflation (the German Bundesbank has it right). If Volker is still alive, he does Volker 2.0 and raises interest rate to 15% ( yep I gotz me a car loan from the 80's with a 19% interest rate right here youngins.. .it's happened bf). This is the medicine which will finally right the ship.. .but at the expense of further drop in RE...but this is like a 5 flusher people. This is when Petrftiz declares bk and walks around asking for change...

Oh BTW how's the sticks swinging today? I'm hitting my 3 iron to the "moon Alice," but then it messes up my Nike 5900 driver... WTF? Damn too cold to hit balls today... oh well... let me go find AR and play some mind games.... :)

This is just my worst case scenario given what I see... maybe petrfitz opens a Subway franchise (he's started a company... yeah!) and can look down on us I-Bankers.

dwell... sorry but the $250K is for depositors. In backruptcy.. .you become just another unsecured creditor and will most likely get crammed down to a junior position. Remember, two things must happen... tenants needs to bankrupt (or however you structured the LC) and your bank needs to go bkrpt... given TARP 1.0, I highly doubt another major bank goes bankrupt.. .they'll do TARP 2.0 b.f. that... but TARP 3.0... shit.. .that means I'm opening cans of beans in Central Park and setting benches on fire for warmth.. .I just read The Road... just I'm just feeling "blue."

Oh geez W67, the perfect black swan friggin storm, but I know you're right. Reads like a screen play, but you're missing the love interest subplot: petrfitz opens a Subway franchise, falls in love with the cold cut girl, but since times are bad, they can't afford baloney, so they slice up the homeless & serve 'em on a bun?

Hey, what about my LC question?

didn't forget the LC q. Chk again...

yep.. missed the love interest story... :)