Any C's fans know about the US property market? ie: investing in Florida/ Vegas?

[chambers]

So I'm in a pickle.
After recently travelling to the USA from Australia for 6 weeks.(I'd lived in the USA for college at Indiana University for quite some time), I learned about how dirt cheap property prices have become over there in some states and cities in recent years.
I mean I'd heard things are bad, but had no idea just how bad the market had gotten in places like Vegas and Florida.

Questions for finance/ real estate savvy C's fans...

1) do you think that the property market in these places has hit rock bottom or is the struggling US dollar (and probable continual struggle) going to mean it gets even cheaper to buy homes there?

2) what are rental markets like in places like this?
I've searched for rental properties and it seems that the average asking rental prices easily cover mortgage repayments- the question being: Is anyone actually renting these houses?

3) What are the best places in the USA to invest in real estate for rental returns and capital growth?

I've stumbled across a significant amount of cash and I'm thinking about gambling on some places over there, but I've only just started the research.
There seem to be a lot intelligent posters here and surely there would be a few people with a real estate knack that could offer advice... anything would be appreciated.

[Cman]

My opinion is that the real estate market as a whole in the US still has a bit of correcting to do.  Not sure about the specifics of Vegas and FL, though.  

One thing to think about: if you are really bullish on the direction of real estate in the US, consider investing in a REIT (Vanguard has a good REIT index fund).  Your portfolio would be more diversified than buying a few properties here and there, and you wouldn't have to deal with the headache of actually owning a piece of property.

Update: VNQ is the ticker symbol for the Vanguard REIT.

[angryguy77]

I don't think we've hit bottom yet. Things are going to get a bit worse imo. But I hear the DC market is booming surprise surprise.

[Cman]

I don't think we've hit bottom yet. Things are going to get a bit worse imo. But I hear the DC market is booming surprise surprise.

No surprise there (lobbyists).
Who is it who said "the more things change, the more they stay the same"?

[edit: the Internet tells me it was French novelist Alphonse Karr (1808-90). ]

[Fafnir]

The Housing market is still unwinding, a lot of foreclosures to come still. Even worse the commercial real estate market's debt servicing load is going to peak in a few years (2013? not sure exact timing)

I wouldn't invest anywhere that I didn't live near personally, too easy to make huge mistakes if you're viewing things from a distance.

[Donoghus]

I wouldn't touch real estate with a 6 foot stick right now.

[Rondo2287]

I just read the new Michael Lewis book, "The Big Short" over vacation.  At one point he described a vegas dancer that had 4 properties and all of them foreclosed.  The Anecdote isnt that relevant, but it mentioned Vegas as one of the hardest hit areas of the real estate crisis

[Fafnir]

I wouldn't touch real estate with a 6 foot stick right now.

Yeah, its not a bad time to by a house to live in right now if your job isn't likely to call for you to relocate.

But an income property or any other sort of investment would be scary.

[JSD]

1) do you think that the property market in these places has hit rock bottom or is the struggling US dollar (and probable continual struggle) going to mean it gets even cheaper to buy homes there?

If not yet, close in terms of USD. As the dollar loses more and more purchasing power, the prices of homes will eventually stabilize and appreciate (In terms of fiat currency). The recent raising of the debt ceiling will pave the way for more money printing further weakening the dollar.

2) what are rental markets like in places like this?
I've searched for rental properties and it seems that the average asking rental prices easily cover mortgage repayments- the question being: Is anyone actually renting these houses?

Many people foreclosed on look for a place to rent. This made it very easy for me to rent out my place. I'm sure the same applies to the places you've mentioned

3) What are the best places in the USA to invest in real estate for rental returns and capital growth?

Hmm... Try MetroBoston. it's an excuse to go to a Celtics game, right?  Plus, the college bubble is still going strong, so you'll have a large market of college kids to rent to.

I've stumbled across a significant amount of cash and I'm thinking about gambling on some places over there, but I've only just started the research.
There seem to be a lot intelligent posters here and surely there would be a few people with a real estate knack that could offer advice... anything would be appreciated.

I hope your non risky investments involve gold and silver.

[Timdawgg]

I live in Vegas. It is bad here. Prices are at rock bottom so you can get some unbelievable buys (for even less than the cost of construction). That being said, we (in Vegas) could be 5-10 years before any significant growth in market value. The rental market was great for a year or so after everything crashed but more and more people here are starting to lose money on their rentals. The rental market is tough here because there are so many vacancies that people are willing to take a hit and lose money on their rentals for awhile just to stay afloat. I would say wait a few years unless you have cash on hand. It will someday be a great investment but it may take 5-10 years to realize it.

I had to reduce my rent by over $1,000 in one years time just to get someone in a beautiful home with a pool in a prime neighborhood. At the end of the day I had to foreclose since I was about $800 a month upside down on that mortgage and you can only withstand that for so long.

[greenpride32]

Real estate investment purchases are currently outnumbering primary residence purchases.  To me that is a sign of the rich buying low while the poor can't afford to do so.  Essenetially the same condition that happened in 2008 when Main St America was selling all their stocks while the rich were buying at dirt cheap prices and realzing 2-4x gains since then.  You always have to go against the grain to make money.

Having said all of that; I would not touch the 2 areas you mentioned unless you plan to reside there yourself.   The one exception might be housing located near a large university, preferably near a post undergrad environment where you are almost guaranteed stable rentals.  Of course the same scenario is only so many times better in an area that is less depressed.

[TBreezy]

I agree.  There is no slam dunk in investing, and requires some risk.  Finding the balance between risk and stupidity is a tricky thing and is different for each person.  Essentially folks here are giving you their opinions on the balance. But ask yourself -  Are you risking money you can afford to lose?  Are you applying expertise that nobody else has and therefore subject to less risk than the public?

If you are trying to make a quick buck without understanding the environment and not able to satnd losing your investment then perhaps you shold abstain until you have a better understanding.

Taht being said - better lucky than smart. 

Real estate investment purchases are currently outnumbering primary residence purchases.  To me that is a sign of the rich buying low while the poor can't afford to do so.  Essenetially the same condition that happened in 2008 when Main St America was selling all their stocks while the rich were buying at dirt cheap prices and realzing 2-4x gains since then.  You always have to go against the grain to make money.

Having said all of that; I would not touch the 2 areas you mentioned unless you plan to reside there yourself.   The one exception might be housing located near a large university, preferably near a post undergrad environment where you are almost guaranteed stable rentals.  Of course the same scenario is only so many times better in an area that is less depressed.

[blake]

One thing to think about: if you are really bullish on the direction of real estate in the US, consider investing in a REIT (Vanguard has a good REIT index fund).  Your portfolio would be more diversified than buying a few properties here and there, and you wouldn't have to deal with the headache of actually owning a piece of property.

I dont think this is quite what you are looking for.  It sounds like you are interested more in individual residential properties.  This fund will primarily be made up of companies that buy commercial properties.

Nobody is going to be able to say if Vegas has hit bottom, but I would say that it probably hasn't.  Like a previous poster mentioned, there is still another wave of foreclosures that will rip through in the coming year.  You might wait until after that.

[bdm860]

So I'm in a pickle.
After recently travelling to the USA from Australia for 6 weeks.(I'd lived in the USA for college at Indiana University for quite some time), I learned about how dirt cheap property prices have become over there in some states and cities in recent years.
I mean I'd heard things are bad, but had no idea just how bad the market had gotten in places like Vegas and Florida.

Questions for finance/ real estate savvy C's fans...

1) do you think that the property market in these places has hit rock bottom or is the struggling US dollar (and probable continual struggle) going to mean it gets even cheaper to buy homes there?

2) what are rental markets like in places like this?
I've searched for rental properties and it seems that the average asking rental prices easily cover mortgage repayments- the question being: Is anyone actually renting these houses?

3) What are the best places in the USA to invest in real estate for rental returns and capital growth?

I've stumbled across a significant amount of cash and I'm thinking about gambling on some places over there, but I've only just started the research.
There seem to be a lot intelligent posters here and surely there would be a few people with a real estate knack that could offer advice... anything would be appreciated.

Are you planning on still living in Australia or are you planning on moving to the US?   If staying in Australia, how often would you plan on coming to the US?  Were you planning on only buying one house, or multiple houses, or maybe multi-family houses or a small apartment building(s)?

When I read your post, the first thing I thought was you’d still live in Australia, which would lead me to wonder how you’d manage any property you bought, so that’s why I asked those questions (which will lead to more questions like: what’s your plan to manage the property, will you hire someone, do you have a local friend/business partner?).  I would think if you live in Australia you’d have to have someone in the US to manage the property, hiring someone makes sense for multiple properties or apartment buildings, probably wouldn’t make financial sense for one house.

So I know your still thinking out the whole idea, but I was wondering if you had any kind of plan yet (even if it’s vague).  Ideally what would you like to do?  Like buy one single family residence for X, (looking to fix up, and would you pay someone or do it yourself, or not fix it up at all?), get a mortgage for Y, put a “for rent” ad on Craigslist, charge Z for rent, etc.