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I know RE sales often heat up over summer, but what's deal with shore properties or second homes? Do they also tend to move in warm season or do they tend to go in off season?
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anon_0k9zlfz6lz9oy
Guest
Shore is brutal. Im trying to get a shore house and the prices arent moving at all. I was hoping and thinking some people would unload 2nd homes but nope. So now i rent in bay head another summer
I was in LBI yesterday. By the naked eye, there has been no slowdown in the amount of construction. Many of them are knockdowns so they'd obviously have been in the works for a few months. Doesn't appear to be much of a slowdown there
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anon_0k9zlfz6lz9oy
Guest
This area is insulated. Phoenix, boise and vegas are taking a bath. Nationally case shiller still up like 11% yoy but that should flip around april-ish, rates are high enough that its really hurting demand but homeowner balance sheets are so healthy that there is no flood of inventory
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anon_0k9zlfz6lz9oy
Guest
Well aware. Yoy is deceiving at this very moment. It wont be deceiving/garbage come June when we will have gone 12 month average of rates above 6%. At that time we’ll likely see a 2-3% yoy drop.
Anyone saying we were in a bubble that would retrace to 2020 prices truly was unaware of the data i presented in op. Goal posts will move for people though. Which is insane because my 0-3% yoy appreciation June22-June23 was under the assumption of rates around 5.5-5.75. The fact rates went over 7%, as close as 7.5% and the market held pretty strong is insane. But again, it shouldnt have surprised me that much due to how strong the fundamentals are
Hopefully Ky makes enough to pay the bets he loses.
Some other guys won't be as gentle as I am.
Some other guys won't be as gentle as I am.
I hope that’s all spec construction. That’s where you see some opportunities. Otherwise, it’s usually sticky money at the shore.
Shore values never ever make sense. Ever. You buy and hope on appreciation, that's it. I never could wrap my head around it.
Rather own fat cash flowing rentals and go wherever I want on vacation and rent with that money.
Rather own fat cash flowing rentals and go wherever I want on vacation and rent with that money.
Being a landlord in NJ is very risky. The laws are against you. If you have a problem with a tenant, they win and you lose. Crappy state.
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anon_0k9zlfz6lz9oy
Guest
I lean towards being a forever shore renter. This way i just use it when i need it and throw the problems off on others. Its not a bad deal. Can get a nice house mdw-ldw for like $36K
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anon_0k9zlfz6lz9oy
Guest
If it’s in NJ Id sell personally. As @T2Kplus10 said, landlord/tenant laws in NJ are no bueno. Also would depending upon your age and the equity position in that home.
Example; if youre 50 and have owned it for 20 years and its been your principal residence for 2 of prior 5 years youre exempt up to a $250K deduction if single, $500K if married. If you rent it out for 4+ years that goes out the window and if you bought for $200K and selling for $500K if you rented for 4+ years vs sell now capital gains goes from $0 (assuming youre married) to in the range of $45K-$60K.
The shore isn’t the only place holding up for now. CT and VT doing relatively well and prices are holding. Granted not big markets but supply is limiting declines. For now. Also I agree both MOM and YOY are useful numbers. If prices go down 10 but we’re up 20 the year before, no one is hurting.
Are you factoring in capex for repairs? Things will break. If that is $500 after repair costs it's ok. I own one rental that cash flows that low but it's because I put it on a 15 year note.
Bad advice based on confirmation bias. Been a landlord in NJ for almost 25 years. Next to zero problems. Unblind yourself with your crappy state narrative and you might surprise yourself. Screening tenants, carefully drafted leases and being reasonable and fair with tenants has worked well for us.
Define a fat cash flowing rental? I would have to see the math on one of our current properties, but with shore rentals getting $5K per week on weekly rentals, I'm guessing they are "fat cash flowing."
You may be looking at it wrong, and you may be surprised like you were with Pike. 😜 Not sure what problems you are referring to. The only problem we had over about 25 years was Sandy, but even with that we turned lemons into lemonade. As a bonus, we can use our beach rental or loan it to friends and family whenever we want to. Peak summer months excluded.
Good advice and considerations here. $500 per month is not that great. We often look at ours as profit as a percentage of property value. Profits have to include offset for expenses, including insurance, maintenance, repairs, etc. If we are at least 5-6% profit after expenses, we are good. But we are probably closer to 10%.
Someone will likely jump in and say we could do better in stocks and funds, but rentals are a part of our investment income total and I think we have too much in stocks and funds, and 2022 says hold my stale beer.
Good advice. Put your confirmation bias down. You may have been lucky, but many are not. I dealt with a massive # of landlord/tenant issues over the past decade, in my neighborhood and throughout town.
And most likely they were due to two unreasonable parties. The laws are not THAT different from state to state. NJ has some extra protections for tenants, but they are not completely unreasonable.
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anon_0k9zlfz6lz9oy
Guest
On the shore house bit with “problems”. Just general maintenance. HVAC, plumbing, electric, outdoor maintenance, taxes etc.
Its a personal preference. Renting for the summer for $35K or so gives me all the pleasure without any chance of pain if that makes sense. And yes I realize id be building up no equity in that shore house
NJ laws are very different than those in no pay no stay states. Very different. Actually, shockingly different.
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anon_0k9zlfz6lz9oy
Guest
NJ/NYC squatter protections are insane haha. But to your point even just general LL/tenant laws paired with rent control makes it a no go for me
As a point of comparison, here is a fairly rough calculation on our current property, which is paid off. It is a two family with a 4 BR front house that we rent weekly in the summer, and a 2 BR back small house/apartment that we rent annually. We could make more money if we made the back house a weekly or seasonal, but we prefer to have a long term, reliable, reasonable and excellent tenant on the property full-time. We could also get another $12-20K/year renting in the winter, but we don't want the hassle of winter tenants, which are often transients.
By COC (which is a great band, BTW), I take it you mean the amount initially spent to purchase the property. On that basis, we are currently at 90-100% annually, but we purchased in 1999.
Based on our estimated value of our property (which is probably in the range of $1M (+/- 10%) (we get lots of unsolicited calls/texts to sell, and when we answer we say "sure for $2M cash and no inspections").
Gross rents are about $90K, with about $30K in expenses (lawn, utilities, taxes, maintenance, cleaning for weekly tenants, etc). At a 7.4% mortgage rate for$240K down and $900K mortgaged (not sure that is where rates are at, that's what Google says) the mortgage is $5,428/month. Add in expenses, of $30K, and that is $95K/year in mortgage and expenses, which is underwater by about $5K/year.
We could probably make nearly the same money in some sort of index fund or bond, but we like being landlords and our location where we have roots, and our poor kids will probably have to make a choice when we croak.
After they kick you into the hole, they are going to sell that real estate and buy an S&P 500 index fund. Less hassle! :)
We'll see. They have roots and memories there too. It's always good to have real estate in different locales, particularly near where you grew up, as an option down the road.
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anon_0k9zlfz6lz9oy
Guest
Update: I’ve quoted him alot here as hes probably the best data driven housing analyst out there. Logan mohtashami calling for a 5.9% drop in prices yoy from 1/1/2023-1/1/2024 IF rates stay above 5.875% following a 2022 that saw 8.8% yoy 1/1/2022-1/1/2023 appreciation.
I agree with this on his national forecast. NJ will see less declines if any at all. I have NJ pegged near flat 1/1/2023-1/1/2024 with most markets seeing modest appreciation (burbs).
The calls itt that we were in a bubble that would see prices retrace to march 2020 were never based on data but rather vibes
I agree with this on his national forecast. NJ will see less declines if any at all. I have NJ pegged near flat 1/1/2023-1/1/2024 with most markets seeing modest appreciation (burbs).
The calls itt that we were in a bubble that would see prices retrace to march 2020 were never based on data but rather vibes
HousingWire Daily: Logan Mohtashami on his 2023 forecast on Apple Podcasts
Show HousingWire Daily, Ep Logan Mohtashami on his 2023 forecast - Jan 5, 2023
podcasts.apple.com
That's why it never makes sense to own DTS. I buy today and I have to pay money each month or maybe break even and hope for appreciation. Same with NYC, Hoboken etc. People do it but it never made sense to me.
We did not set out to be landlords. When we bought in 1999, we were living in North Jersey, and we wanted a place at the beach. The small back apartment was our way of affording a place and having the front house pay the rent. That is really the best of both worlds if the numbers make sense. Ours has a higher price because of the street and we are 1/2 block to the ocean.
We added a multifamily in Wall 15 or so years ago that has worked out well for us too. I like to do maintenance projects, landscaping, and handyman type of work, and I figure it will be something to keep me busy when I am done staring at computer screens 60 hours per week (not including these forums which I spend way too much time on).
Ocean City Ranks in Top 5 Places in N.J. to Live | OCNJ Daily
Ocean City has been recognized for its beaches, Boardwalk and downtown. The resort is also known as a family-friendly destination for vacationers. To add to the list of accolades is Ocean City's selection by a travel site as one of the Top 5 places to live in the state. NomadLawyer.org, a travel...
ocnjdaily.com
KYK
Might want to take off the Scarlet Covered glasses....
www.yahoo.com
"About 60,000 home purchase agreements fell through in October, according to RedFin. That’s the most on record since the real estate brokerage started tracking that data in 2013.
Deal cancellations and price cuts also hit record highs as prospective buyers moved more tentatively following the biggest mortgage-rate jump in over four decades.
While Redfin noticed a slight decrease in canceled purchase agreements in November, home sales in general dropped to their lowest rates since 2012. Buyers at every stage of the process are clearly having second thoughts about this massive commitment."
Might want to take off the Scarlet Covered glasses....
Homebuyer’s remorse: Thousands of Americans are canceling signed contracts — what you need to know before you back out of a purchase
As the housing market cools, more buyers are “taking their time and exploring their options.”
"About 60,000 home purchase agreements fell through in October, according to RedFin. That’s the most on record since the real estate brokerage started tracking that data in 2013.
Deal cancellations and price cuts also hit record highs as prospective buyers moved more tentatively following the biggest mortgage-rate jump in over four decades.
While Redfin noticed a slight decrease in canceled purchase agreements in November, home sales in general dropped to their lowest rates since 2012. Buyers at every stage of the process are clearly having second thoughts about this massive commitment."
KYK
Might want to take off the Scarlet Covered glasses....
Homebuyer’s remorse: Thousands of Americans are canceling signed contracts — what you need to know before you back out of a purchase
As the housing market cools, more buyers are “taking their time and exploring their options.”
"About 60,000 home purchase agreements fell through in October, according to RedFin. That’s the most on record since the real estate brokerage started tracking that data in 2013.
Deal cancellations and price cuts also hit record highs as prospective buyers moved more tentatively following the biggest mortgage-rate jump in over four decades.
While Redfin noticed a slight decrease in canceled purchase agreements in November, home sales in general dropped to their lowest rates since 2012. Buyers at every stage of the process are clearly having second thoughts about this massive commitment."
Mortgage rates and inflation obviously the main cause of that
Well maybe but more like I'm afraid I overpaid for this deal and in 6 months from now I can get a home/ this home for 30-50 k less
Gotta remember this time of year is a lull in supply. Once spring starts to roll around there will be an increase in supply and will be interesting if demand can keep up.
probably so but if you are taking out a mortgage you'll probably save in the long run if rates keep going up
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anon_0k9zlfz6lz9oy
Guest
Nah. People dont buy houses like they buy stocks. The sooner you realize this as a whole the better youll be able to see why the market was never in a bubble that would retrace 2 years of price growth
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anon_0k9zlfz6lz9oy
Guest
This is a great point. Whos in better shape the person who buys a house for $600K 20% down at a 2.875% rate or the person who buys a home a year later for $575K with 20% down at 6.25% rate?
Wells Fargo stepping back from the mortgage business. They have traditionally been the biggest player in the business. Any thoughts ?
www.cnbc.com
Wells Fargo, once the No. 1 player in mortgages, is stepping back from the housing market
It's the latest, and perhaps most significant, strategic shift that CEO Charlie Scharf has undertaken since joining Wells Fargo in late 2019.
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