Life was so much easier in the old days, like 2006 or 2007 and maybe even the first 3 months of 2008.\u00a0 A good deal was when your offer was accepted by the Seller of the property.\u00a0 Your heart soared, flowers bloomed and everything was going well for the world.<\/p>\n
Shift to March of 2009 and utter confusion reigns.\u00a0 Everyone seems to have their own vague idea of what a good deal is and few seem to agree.\u00a0 However, how can you have concensus when every day the economy seems to hit new lows.\u00a0 Is it even possible for a real estate\u00a0transaction to be a good deal at any cost?<\/p>\n
Although it seems certain that we still have time to go in a declining market I feel that there are certain identifyable good deals to be had if we take the time to think about them.\u00a0 Of course it depends on various criteria we set for ourselves.<\/p>\n
Following are some examples of what I believe are good deals;<\/p>\n
1.\u00a0 An owner wants or needs\u00a0to buy a property for his business or professional practice.\u00a0 It is possible now, for the first time in years, to purchase a property based upon what that company would pay for in rent.\u00a0 During this decade owners paid far more than they would have to pay in rent to purchase their own building or condo for their business.\u00a0 Now we can once again establish a relationship so that it actually makes economic sense to buy the property.\u00a0<\/p>\n
2.\u00a0 Income property such as shopping centers can now be purchased at cap rates that are equivalent to the interest rate they are borrowing at.\u00a0 The rule of thumb is that if you purchase a property at a cap rate below the interest rate your cash flow diminishes. The converse is also true.\u00a0 Therefore anytime you can get the cap rate at least the same as the interest rate on the loan you will do well.<\/p>\n
3.\u00a0 Property values are starting to decline towards building costs.\u00a0 For years we have been paying far above building replacement costs for properties. This is always on the adventurous side of investing.\u00a0 The closer to replacement costs the safer the deal is and the lower the rent you can charge to stay full.<\/p>\n
4.\u00a0 It is becoming more and more possible to increase your leverage today on apartment buildings and still have a cash flow on your invested dollars.\u00a0 That is because mortgage rates are lowering on apartments and the loan payment to income ratios are starting to fall in line once again allowing 75% loan to value loans to be made once again.\u00a0 This is good leverage but not silly risky leverage.<\/p>\n
So once again I will say that there are good deal to be had today.\u00a0 They are not overly plentiful yet but the camels nose has appeared under the tent, as the saying goes.\u00a0 In the coming months more and more deals will be coming up.\u00a0 The question is; will be ready for them?<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"
Life was so much easier in the old days, like 2006 or 2007 and maybe even the first 3 months of 2008.\u00a0 A good deal was when your offer was accepted by the Seller of the property.\u00a0 Your heart soared, flowers bloomed and everything was going well for the world. Shift to March of 2009 […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[27,38,39,65,74,79,84,99,134,158],"class_list":["post-36","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-building-costs","tag-cap-rates","tag-cash-flow","tag-economic-sense","tag-good-deals","tag-income-property","tag-interest-rate","tag-leverage","tag-property-values","tag-replacement-costs"],"_links":{"self":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/posts\/36","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/comments?post=36"}],"version-history":[{"count":0,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/posts\/36\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/media?parent=36"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/categories?post=36"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swartzcre.com\/observations\/wp-json\/wp\/v2\/tags?post=36"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}