Weekend Open Thread (2013-03-15)

NOTE: If you are subscribed to Seattle Bubble’s RSS feed and are seeing these open threads in the feed, please switch to our official feed at http://feeds.feedburner.com/SeattleBubble Thanks!

Here is your open thread for the weekend beginning Friday March 15th, 2013. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!

NOTICE: If you have comments to make about politics or economics that do not somehow directly relate to Seattle-area real estate, they may be posted in the current Politics & Economics Open Thread. If you post such comments here, they will be moved there.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

15 comments:

  1. 1
    Blurtman says:

    Senator Sherrod Brown Drops a Bombshell in Mary Jo White’s Hearing

    “Brown: And in 2008, the Fed’s General Counsel called the SEC to urge the Commission not to pursue fault penalties against bailed out firms that had committed fraud. As a result, institutional investors, pension funds that provide retirement security for working Americans for example, ended up with less compensation in the settlement. The New York Times affirmed the costs were shifted from Wall Street banks to working Americans.”

    “White: So that, for example, a corporate fine that in effect would have grievous impact on innocent shareholders is taken into account in terms of remedies that they seek.”

    “Exactly who are these shareholders the U.S. Department of Justice is so concerned with protecting over the overarching public interest of enforcing criminal laws? According to the Economic Policy Institute, as of 2010, the top 5 percent of the wealthiest Americans constitute the majority of shareholders in the U.S., owning 67.1 percent of all stocks while the bottom 80 percent of the population own 8.3 percent.”

    http://wallstreetonparade.com/2013/03/senator-sherrod-brown-drops-a-bombshell-in-mary-jo-whites-hearing/

    Rate this comment: Thumb up 0

  2. 2
    Blurtman says:

    Live, Senator Levin (God bless him) grilling the JPM criminals: http://www.c-span.org/Live-Video/C-SPAN3/

    Rate this comment: Thumb up 0

  3. 3
    toad37 says:

    Does anyone know of a good local course offered on real estate investing?
    I was primarily looking at small apartments and small commercial buildings.

    Thanks,
    Toad

    Rate this comment: Thumb up 0

  4. 4
    pfft says:

    By Blurtman @ 2:

    Live, Senator Levin (God bless him) grilling the JPM criminals: http://www.c-span.org/Live-Video/C-SPAN3/

    stephanie ruhle on bloomberg was saying how good Levin was doing. Maria Bartiromo was asking as guest if he wanted the people asking questions to run or regulate derivative trades…

    She made it sound like if you want cars to have seatbelts you are against cars…

    Besides a few people CNBC is a journalistic tragedy.

    Rate this comment: Thumb up 0

  5. 5
    David Losh says:

    RE: toad37 @ 3

    No, there isn’t. All anyone is going to do is talk with you about the CAP Rate on a building: http://realestate.about.com/od/knowthemath/ht/cap_rate_calc.htm

    There is a ton of data, lots of calculations, and a lot of speculation in buying a small apartment building. The very best calculations can be done, by you, on a property you choose. The good news is you will find more opportinuities in apartments.

    Some buildings are a lot of work. Some you can find will pay for themselves.

    It’s a different market place. Some buildings have been owned by the same people forever, they pay off the building, collect the rents, then sell to buy something larger. The over all return my be a mystery to you, but they have a formula, and you don’t need to look a gift horse in the mouth. Other buildings have fallen on hard times through divorce, drugs, or death of the owner.

    You work your numbers, figure your cost per unit, figure the cost of repair per unit, and what your rents will look like while it all gets completed. You do a business plan of five, ten, and fifteen years, because most commercial Notes will ask you for the amount of the principal balance to be paid in full with a fifteen year balloon payment.

    So you have to be very smart with your numbers. You need equity. Every one understands that, and will be looking at your ability to manage the property. Your business plan needs to be strong. Your numbers have to make sense, and be very heavily in your favor. Any seller will hope you are a fool, but will resepct you more, give you a better deal, in some cases, if you are bright, informed, and knowledgable.

    Rate this comment: Thumb up 0

  6. 6
    pfft says:

    excellent commentary.

    Is the dollar collapsing?
    http://www.cbsnews.com/8301-505123_162-57573822/is-the-dollar-collapsing/

    Notice the typical idiocy.

    “Anybody who buys gas and food – two former inflation indicators that have been removed from the equation”

    No you moron, it is in the CPI. You’re thinking about core CPI. morons.

    Rate this comment: Thumb up 0

  7. 7
    toad37 says:

    RE: David Losh @ 5

    Thanks David! The work to get up to speed on this will take a while. I will be in research and study mode big time over the next 6-12 months. The big issue I am struggling with is as follows- Which choice sounds best to you?

    -Sell my primary residence and have x dollars-
    -Put some or all of that money back into a primary home in a market that seems to not be
    buyer friendly right now-
    -Put some or all into investment property (small apartment or commercial), but then would have to rent for potentially a long time.
    -Put some cash with some mortgage and buy a duplex to live in and rent the other half, and put some cash and some mortgage into an investment property.

    Obviously there are many more scenarios, but those are what I currently considering.

    I probably will take a course, even though I appreciate you saying that I’ll basically just be getting instruction on how to figure cap rate. I just need to get some form of formal education on this to get the ball rolling.

    Thanks so much for feedback, it it truly appreciated.

    And you guys were right, screw Phoenix. The future is brighter in the PNW.

    Rate this comment: Thumb up 0

  8. 8

    RE: toad37 @ 3
    North Seattle Community College has some great real estate classes. There’s a guy there who teaches commercial RE named Mahoney, who was one of the developers of the Transamerica tower in San Francisco. He’s ancient, funny, and has made and lost millions in real estate.

    Rate this comment: Thumb up 0

  9. 9
    toad37 says:

    RE: Ira Sacharoff @ 8

    Thanks Ira, that is definitely one I’m looking into. Thanks!

    Rate this comment: Thumb up 0

  10. 10
    Blurtman says:

    RE: toad37 @ 7 – I always thought buying a rental property in a university town could be good, keep a room for yourself when you wanted to visit the area. Or, perhaps in an affordable beach town like Ft. Lauderdale or something like that. But you probably would have to really screen renters, and then deal with occassional problems. Is sounds like you would be a landlord. What about hiring a property management firm. Doing it yourself is described to be not for the faint at heart.

    Rate this comment: Thumb up 0

  11. 11
    David Losh says:

    RE: toad37 @ 7

    The best small commercial investment property story I have is about a young couple I met who were Property Managers. They worked a building of about 20 units that was family owned. While we sat there at the kitchen table with a kid in a high chair, and another toddler they presented me with all the numbers that they had.

    They wanted to buy a six unit marblecrete building a few blocks down from where they were. They wanted me to carry the offer, but they had so much data it was like a dream. She had charts, and graphs of future income, and he had some Excel sheets showing costs of needed repairs, and a time line to get them done.

    They bought the building, and kept the Property Management job for a couple of years. One unit got repaired at a time. No renters moved, they kept the rents low, and increased rents as people vacated.

    The cash flow was plowed back into the principal balance, repairs, and some improvements.

    They simply came up with the plan, and followed it.

    In your case it will depend on your situation. They had a chunk of money they used as the down payment that was about 30%. The Property Management job paid the rent, and some expenses. He had a job so his wife was the one who was home during the day.

    In terms of the primary residence, I would prefer to have a commercial property than a single family as a rental. In a single unit any renter can have a break down, get into shouting matches with themselves, or others, and you may never know. In a four, or more unit commercial building the renters can, they don’t always, self regulate.

    I’m going to stress that my thinking is Real Estate is learned by doing. You can take all the classes in the world, but it doesn’t prepare you for that special property you may have your eye on.

    Rate this comment: Thumb up 0

  12. 12
    toad37 says:

    RE: Blurtman @ 10

    Thanks Blurtman, when I lived in Seattle in the Maple Leaf neighborhood from 2000-2008 I had a home with a MIL basement. Through those years I rented to a few UW students. So I like your idea. I’ll stay in the PNW but thanks for the idea of maybe looking for a small complex near one of our colleges.

    Rate this comment: Thumb up 0

  13. 13
    toad37 says:

    RE: David Losh @ 11

    Thanks David… that is a great story and shows the power of what a good plan can do.

    I like the idea of this very much, but I need to be careful that I don’t rush into anything.
    One of the main reasons I like the idea of taking a couple classes is that it will force me to
    slow down.There is plenty of time, I just need to learn a few things so I don’t go out and make a
    newbie mistake.

    And I agree, I am not interested in a SFR as a rental. I just meant to say that I may plow all my money into investment real estate, and rent (as opposed to buy) for where I actually live.

    One idea a friend suggested is maybe do a SFR for a flip initially and take some classes on multi-family/commercial. I do like the idea of that because I could live in the place as I fix it up. Then ease into the multi-family thing after I have some education under my belt. Just a thought.. I have two friends that are contractors, so I’ll pick there brain about the flip idea.
    I’m pretty sure the only way a flip would work if I went the trustee foreclosure route,, but I’ll
    start researching that this coming week.

    Thanks again!

    Rate this comment: Thumb up 0

  14. 14
    David Losh says:

    RE: toad37 @ 13

    You’re the guy with the condo.

    Did you go to the Vestus meeting? Come on fess up. Did you go?

    Rate this comment: Thumb up 0

  15. 15
    toad37 says:

    RE: David Losh @ 14

    Vestus meeting? No, lol… are they a flipping company? Oddly enough, a contractor buddy
    in Bonney Lake mentioned them today.

    Rate this comment: Thumb up 0

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Please read the rules before posting a comment.