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drbubb

The Cleveland thread - US Urban decline and revival

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I do appreciate your invitation to GEI and will be happy to contribute as much as I can. Sorry for not a prompt response but here in Cleveland we have only 24 Hrs a day available :rolleyes: and it's not always enough to do everything you want.

Hi, Svetlana.

Welcome to GEI. How kind of you to visit and post here

 

Michael, I like your analysis, your idea of living without the dependence on car and personally I would love to move some time in the future from our nice village of Moreland Hills to Downtown or to University Circle area of Cleveland, especially now when my sons graduated from Orange High School and we don't need at least this feature anymore. 10 years before, though, we moved from crazy urban environment of Moscow to Moreland Hills, OH. I immediately fell in love with its almost paradise feeling of unrealistically peaceful co-existence of human civilization and fearless nature. I still love it. And I still sell more houses in Eastern suburbs of Cleveland than in Cleveland itself. So far I personally feed my urbanistic nostalgie by travelling back to Moscow. I've just come back from there two weeks ago. What a co-incedence - I was in Moscow on my International Real Estate investment consulting business and one of my business goals is to sell Cleveland to long term foreign investors.

 

You are right. Many people will choose a suburban life for their families.

Certainly there are some who visit GEI and post here who will prefer a traditional suburban lifestyle,

but I do worry that observers like James Howard Kunstler will prove correct in his view that "the suburban

living arrangement has no future." For myself, I think the risk of a $200-250 oil price within the next 2-3 years

is a real possibility, and I want to make living and investment choices that will stand up to that type of price

move. So the traditional suburbs, relying heavily upon transport by car, is not right for me.

 

Others who do not agree that we will see this, may make different choices.

 

Back from my personal "off" to the topic. Yes, I will be happy to help GEI people to explore opportunities in Cleveland area. I actively work with a group of investors right now who buy, remodel and rent out the single family homes in Buckeye area - close to Shaker Square, just across the street from St.Luke's with its newer development project. Initial purchase price for foreclosed houses which they buy is within $5K. That's only one sample of easy investment opportunities in Cleveland.

 

That sounds like the sort of area that would appeal.

I think many here would be keen to make an investment like that, or many times that size.

We will need to explore many issues, for example:

+ How will the properties be managed?

+ How will they be selected?

+ How can such small properties be worthwhile for an agent to help? (you need to live too)

 

Big advantage of investing in Cleveland is low property tax rate. Let's see what's going on at the University Circle area. Part of it belongs to the city of Cleveland, part - to Cleveland Heights. Cleveland Heights neighborhoods including Coventry or Cedar-Lee which you mentioned before are very attractive but they have very high property taxes. As an example you may refer to one of my listings in Cleveland Heights Visit My Website. City of Cleveland not only has a lower tax rate but also offers very attractive tax abatement to some of new projects. Higher crime rate and poor school system are the biggest disadvantages of Cleveland. The new Euclid Corridor project http://www.euclidtransit.org/home.asp is making a big difference in Downtown. It looks much better now. That's a good sign.

 

Mayfield Heights has reasonable property tax rate, more or less reasonable pricing (not in all neighborhoods!), stable demand for purchase and rent, nice people friendly environment and relatively short commuting time to UC or Downtown. There is a bus line along Mayfield Rd. (Rt.322) http://www.gcrta.org/pdf/9X.pdf. So, people do not totally depend on their cars to get to the job but because of relatively short driving distances, most of the people still use their cars.

 

The tax rate issues are important.

And many may not be aware how large the variations can be, and the impact this may have on school

systems, and the quality of education in different areas.

 

We will have the First Cleveland International Investment Forum on May 21-23, 2008 which will be dedicated to new opportunities for foreign investors. Sorry, I have only Russian version of the Forum's program and guest registration at www.Local-n-Global.com/Forum. English version will be published in a week. I will keep you posted.

 

Yes, please do keep us posted.

And I want to encourage Pluto, one of our valued new posters, to contact you during his forthcoming visit

to Cleveland.

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... As an example you may refer to one of my listings in Cleveland Heights Visit My Website. ...

Look at this house! £55,000 -- at current exchange rates. Makes me wanna move to Cleveland instantly. :)

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Not sure whether everyone knows the web page I linked below. I check it every now and then to keep up with the development in the Indy area. Most of the 'houses' here can not compete with the kind of properties Svetlana is offering on here web page/blog. It's rather the very bottom of the barrel (all repossessed) that is listed on this page:

 

http://www.onlinehomebid.com/index.html

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Look at this house! £55,000 -- at current exchange rates. Makes me wanna move to Cleveland instantly. :)

 

1925-built, but it looks like recently renovated.

I wonder what the neighborhood is like?

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1925-built, but it looks like recently renovated.

I wonder what the neighborhood is like?

I had a look at all the pictures, and the little I could see of the neighbourhood looked quite decent.

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Not sure whether everyone knows the web page I linked below. I check it every now and then to keep up with the development in the Indy area. Most of the 'houses' here can not compete with the kind of properties Svetlana is offering on here web page/blog. It's rather the very bottom of the barrel (all repossessed) that is listed on this page:

 

http://www.onlinehomebid.com/index.html

 

Hi,

 

You are right. The page you referred to works as an on-line bidding place for bank-owned properties. It's a relatively new and pretty expensive service (if you win the bid, you should pay additional $800 at closing just for using this service). The properties which are offered are all in a bad shape, part of them totally vandalized, etc. Happily, not all the banks use this web site to sell their REOs :) .

 

I think many here would be keen to make an investment like that, or many times that size.

We will need to explore many issues, for example:

+ How will the properties be managed?

+ How will they be selected?

+ How can such small properties be worthwhile for an agent to help? (you need to live too)

 

First of all, the main point of this kind of investment is purchasing, remodelling (if needed) and renting out the multiple houses in the same neighborhood. It makes it easier to manage, easier to attract decent tenants, probably, some of them will be able to sign rent-to-own agreement. It helps to get a better appreciation. My company offers assistance in selection, purchase and propety management. Help in selection and purchase will cost to the buyers about $500 per property. People usually pay the commission equal to one monthly rent for finding a tenant and 15 % for property management. Again, as we do a multiple houses' management it makes sense. I will be glad to offfer my assistance in this matter to any group of investors.

 

The house in Cleveland Heights http://www.3265Berkeley.com has been totally redone. It's a decent neighborhood, very established - I met the neighbors who live there for 20-25 years. Some houses got foreclosed there though. The only big disadvantage there from investor's point of view is high property taxes. Homeowners try to contest this rate with Cuyahoga County. Some of them succeed, some not.

 

 

 

 

 

 

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... The properties which are offered are all in a bad shape, part of them totally vandalized, etc. Happily, not all the banks use this web site to sell their REOs :) .

That was my impression too. Few (if none) of these houses really look close to anything I would like to spend a night in.

 

...

The house in Cleveland Heights http://www.3265Berkeley.com has been totally redone. It's a decent neighborhood, very established - I met the neighbors who live there for 20-25 years. Some houses got foreclosed there though. The only big disadvantage there from investor's point of view is high property taxes. Homeowners try to contest this rate with Cuyahoga County. Some of them succeed, some not.

Svetlana, how much do property taxes vary between the areas you have mentioned? Could you give an example for an average family home? Many thanks.

 

GF

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Svetlana, how much do property taxes vary between the areas you have mentioned? Could you give an example for an average family home? Many thanks.

 

GF, surely you're not considering living in the US? I'm just guessing here but when DrBubb started this thread he was talking about buying property as an investment rather than living there. He was hinting that when the US turns into an export economy (full swing) Cleveland will become a very attractive place to live due to all the new job oppurtunities that will arise there combined with all the people will who lose their job as a result of the depression and be seeking work. He also realises that because of the rise in oil prices people won't be able to afford to live in the suburbs and drive long distances to work or perhaps drive at all. So any big nice houses you see are more likely to be in the suburbs and you have to take that into account.

 

I don't think he was suggesting it would be as nice a place to live as somewhere like Hong Kong for example. I don't think anywhere in the US is going to be safe from the fallout but this place is more likely to recover and improve much further down the line (10+ years) so would make a good very long term investment.

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GF, surely you're not considering living in the US? I'm just guessing here but when DrBubb started this thread he was talking about buying property as an investment rather than living there. He was hinting that when the US turns into an export economy (full swing) Cleveland will become a very attractive place to live due to all the new job oppurtunities that will arise there combined with all the people will who lose their job as a result of the depression and be seeking work. He also realises that because of the rise in oil prices people won't be able to afford to live in the suburbs and drive long distances to work or perhaps drive at all. So any big nice houses you see are more likely to be in the suburbs and you have to take that into account.

 

I don't think he was suggesting it would be as nice a place to live as somewhere like Hong Kong for example. I don't think anywhere in the US is going to be safe from the fallout but this place is more likely to recover and improve much further down the line (10+ years) so would make a good very long term investment.

 

Saberu,

You basically have it right- in terms of guessing my own views.

 

But for someone who doesnt "need a job", and has their own sources of income, living in the US may be a reasonable alternative to the UK. For sometime to come- maybe for decades- it will be much cheaper to buy or to rent in a midwestern US city like the Cleveland. And most other day-to-day living expenses will be lower too. (However, you need to take a close look at what income and property taxes you will have to pay if you live and work in the US.)

 

Is NOW the time to buy? Perhaps is you find something you really love, it could be. However, for the market as a whole, my guess is that prices will continue to decline at least until winter 2008/9, and maybe for years. How much cheaper will Cleveland get? I am not on the spot, but I reckon that foreclosures will continue at a high rate for amny months. And the depths of the recession/depression havent been hit yet. If job losses accelerate, there could be more than a yaer of continuing slide. So do be careful.

 

Having said that, I think it is a great time to be doing detailed research. And that may be what GF is doing.

 

If he winds up buying, it may be worthwhile to consider whether he might set up some kind of small private REIT. to buy properties and manage them on behalf of others.

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Svetlana makes some great points...

 

You are right. The page you referred to works as an on-line bidding place for bank-owned properties. It's a relatively new and pretty expensive service (if you win the bid, you should pay additional $800 at closing just for using this service). The properties which are offered are all in a bad shape, part of them totally vandalized, etc. Happily, not all the banks use this web site to sell their REOs :) .

 

If you buy a foreclosed property from a bank, you need to plan on:

+ Finding the property in poor condition, needing alot of work,

+ Spending plenty of time, effort, and money fixing it up

+ The neighborhood it is in may be going downhill, with other foreclosed or abandoned properties nearby

 

First of all, the main point of this kind of investment is purchasing, remodelling (if needed) and renting out the multiple houses in the same neighborhood. It makes it easier to manage, easier to attract decent tenants, probably, some of them will be able to sign rent-to-own agreement. It helps to get a better appreciation. My company offers assistance in selection, purchase and propety management. Help in selection and purchase will cost to the buyers about $500 per property. People usually pay the commission equal to one monthly rent for finding a tenant and 15 % for property management. Again, as we do a multiple houses' management it makes sense. I will be glad to offfer my assistance in this matter to any group of investors.

 

I think that getting a reliable agent to help find a property in an area you do not know well will be money well spent, since you can easily spend $500 worth of time and effort chasing "dead ends" if you operate on your own, and a "mistake" will wind up costing far more than that. Of course, you and the agent will need to have a good understanding of what you are looking for. And maybe some information on this board, plus some research on teh internet, and on the ground, before you buy and/or engage the agent will be very necessary preparation.

 

As to buying multiple houses, this can be a very good idea. If you buy enough houses in the same area, you may be able to help "turnaround" or maintain that area.

 

The house in Cleveland Heights http://www.3265Berkeley.com has been totally redone. It's a decent neighborhood, very established - I met the neighbors who live there for 20-25 years. Some houses got foreclosed there though. The only big disadvantage there from investor's point of view is high property taxes. Homeowners try to contest this rate with Cuyahoga County. Some of them succeed, some not.

 

This house looks attractive, and is ceratinly cheap by UK standards. It may represent a good way to get started, and the only sensible way to invest for someone who hasnt the time to fix up a property themselves.

 

However, it is obvious that the seller bought it even more cheaply, and has already spent time and effort on the renovations. They will be wanting to make a good return on that investment. So you can buy from the renovator, or buy from the bank, and spend the time, effort, and capital yourself, and look to capture the "renovator's edge."

 

Contesting the property tax raises an interesting point. As prices decline, and owners get lower assessments, the area's tax base will erode, and the local government will be stuck in a tough bind: do they cut back on services, or do they raise the rates of tax, to higher percentages of assessed value, so they can win back the taxes that the falling market is taking away.

 

Svetlana,

Would you be willing to provide a detailed budget (items, estmated amounts), of all the costs that someone may face in buying properties in Cleveland?

 

Here's a crude example, which is "off then top of my head":

 

+ Property Purchase cost........ : $50,000

+ Property search fee, agent... : .. $ 500

+ Closing fee, lawyer.............. : $ xxxx

+ Title guarantee.................... : $ xxxx

(if financed):

+ Loan processing fee............. : $ xxxx

+ Mortgage closing, lawyer...... : $ xxxx

= TOTAL purchase cost........... : $xx,xxx // what have I left out?

 

FIX-UP COSTS (depends on condition of property)

 

RUNNING COSTS, per annum:

+ Mortgage interest & principal : $ xx,xxx (what % loan is obtainable now? how many years)

+ Utilities, elec., gas, water..... : $ xxxx

+ Property tax....................... : $ xxxx

= TOTAL running cost............. : $xx,xxx // what have I left out?

 

An example of this type, may be useful in making comparsions with the UK.

If you do not live close to public transport, you will also have to fact in the cost of owning,

maintaining, insuring, and fueling an automobile. It it is a "rough neighbor", the insurance

cost on the automobile can be rather high.

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According to the journalists, spinmasters, uniformed and property gurus, Cleveland is the poorest city in the United States and the sub-prime capital of the world. Well after my "boots on ground" trip all I can say is hell yeah bring it on! I spent quite some time on both the east side and west side, and there is a lot of urbanisation going on BOTH sides, although the east side has more activity. I went to the campus of CSU, and toured most of the area.

 

If even half the construction I saw was going on in any city in the UK, the media and the property VIs would be ramping the crap out of it with the "executive apartments" the size of size 10 shoe box and the price of many hundreds of thousand pounds. Oh, and by the way, by construction I'm not talking about city flats, I'm talking about infrastructure, hospitals, UNis, clinics, research buildings. All job creators.

 

To sum it all up: If you have a regular income you will live like a KING in Cleveland. My favorite areas are the couple of blocks between Coventry right up to the Euclid corridor project, although Cedar road all the back to I271 is also a great location, with its transport links and shopping outlets. I did not realize it, but Progressive insurance is also based on the east side employing many thousands.

 

I have a couple of properties that I am sniffing into right now. One is a character brick built apartment block with (7) three bedders for the price of a crappy 3 bed semi in roughest parts of London! The rental yield makes this a no brainer, without even considering capital appreciation once these properties bottom out - and they will bottom out.

 

I have to go now, but I'll keep you peeps up to date how this all transpires.

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According to the journalists, spinmasters, uniformed and property gurus, Cleveland is the poorest city in the United States and the sub-prime capital of the world. Well after my "boots on ground" trip all I can say is hell yeah bring it on! I spent quite some time on both the east side and west side, and there is a lot of urbanisation going on BOTH sides, although the east side has more activity. I went to the campus of CSU, and toured most of the area....

 

Great post, Pluto. Very useful.

Keep us posted, with any more comments.

 

My favorite areas are the couple of blocks between Coventry right up to the Euclid corridor project, although Cedar road all the back to I271 is also a great location, with its transport links and shopping outlets. I did not realize it, but Progressive insurance is also based on the east side employing many thousands.

 

Svetlana,

Do you know the area??

(I will look for a map later)

 

 

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Investing in Foreclosures :: website

 

Some of the results for ... PRE-FORECLOSURES // Cleveland Heights - Cuyahoga County, Ohio

 

Eqty Mkt Val Ln Date Ln Amt Property Address City Zip Type Sq Ft Bd/Bth Pub Date

$115,000 Click for FREE Access Cleveland Heights 44112 3/27/08

$100,000 Click for FREE Access Cleveland Heights 44112 3/27/08

$141,000 Click for FREE Access Cleveland Heights 44118 3/27/08

$95,000 Click for FREE Access Cleveland Heights 44121 3/27/08

$67,000 Click for FREE Access Cleveland Heights 44112 2260 4 / 2 3/27/08

$93,000 Click for FREE Access Cleveland Heights 44112 3/27/08

$108,000 Click for FREE Access Cleveland Heights 44121 1321 2 / 1 3/27/08

$137,000 Click for FREE Access Cleveland Heights 44112 2218 2 / 2 3/27/08

 

#####

 

BIG DATABASE there:

 

Cuyahoga County, OH: 12,433 Preforeclosures, 11,253 Auctions, 24,012 REOs

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...

To sum it all up: If you have a regular income you will live like a KING in Cleveland.

...

Many thanks for your post, Pluto. Although I'll be in the US for several weeks in summer, I won't have the chance to visit Cleveland, so, thanks for the insight.

 

The one line I quoted above sums it up, and in a way it is a response to Saberu's earlier post: given you have a good and stable income, you might have a very comfortable & good life in cities like Cleveland, that have left some people's radar screen many years ago.

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As to buying multiple houses, this can be a very good idea. If you buy enough houses in the same area, you may be able to help "turnaround" or maintain that area.

 

... it is obvious that the seller bought it even more cheaply, and has already spent time and effort on the renovations. They will be wanting to make a good return on that investment. So you can buy from the renovator, or buy from the bank, and spend the time, effort, and capital yourself, and look to capture the "renovator's edge."

...

Svetlana,

Would you be willing to provide a detailed budget (items, estmated amounts), of all the costs that someone may face in buying properties in Cleveland...

 

Hi everyone,

 

That's a great idea to learn about the real cost of investment.

First of all, purchase price is important. As Michael mentioned above, you may choose either the "fixer-upper" or you may buy ready-to -rent or even already rented out property. Price will differ a lot. That's why I would rather skip

+ Property Purchase cost........ : $50,000
as it's variable. The rest of the closing fees are more or less the same regardless the purchase price. The only variable is the cost of Title insurance which is calculated as a percentage (.4%) of purchase price. Usually it's required if financed. If it's a cash deal, it's the buyer's choice either to buy it or not.

 

+ Property search fee, agent... : .. $ 500

 

+ Closing fees, lawyer.............. : about $1,200 (escrow fee, recording fee, deed preparation, settlement fee, survey, misc.)

 

+ Title guarantee.................... : $ xxxx - .4% of purchase price, usually split between seller and buyer

 

(if financed, fees may vary depending on bank or mortgage company or the program):

 

+ Appraisal fee.......................: $300-$350

+ Loan origination fee..............: up to 1 % of loan amount (may be skipped)

+ Loan processing fee............. : $ 375-$800

+ Mortgage closing, lawyer...... : $ $600-$900

= TOTAL purchase cost........... : $xx,xxx // what have I left out?

 

We usually recommend to have the property inspected by private inspector of buyer's choice. It costs about $ 300.

 

If you get your purchased financed you will be asked to purchase annual homeowner's insurance premium prior to closing. You may also be asked by bank to establish an escrow account with the reserves for property taxes and insurance.

 

Please do not forget that we have such a thing as tax propration at closing. Part of the property taxes (6-12 months dues) goes to the buyer as a so called "tax credit" as we pay property taxes a year in arrear. Because of this "credit" you usually need to bring less cash to closing.

 

Typically, for the house purchased for $100K with bank's financing, closing costs will total at no more than $3,500 plus reserves - usually 3-4 months of property taxes and insurance - if required by bank.

 

If you buy the house in Cleveland Heights, Shaker Heights, Mayfield Heights and few more cities where is a Point of Sale municipal inspection, you may be required to put specific amount of money in escrow for correcting the code violations. Some cities are very tough. That's why you should be very cautious about purchasing foreclosed and especially pre-foreclosed properties in these cities. BTW, pricewise it's usually better buy already foreclosed properties which banks list with Real Estate brokers. Prices are lower, and you may negotiate almost everything. I would recommend to compare the listings at web sites like Holland Park mentioned

 

HollandPark: Some of the results for ... PRE-FORECLOSURES // Cleveland Heights - Cuyahoga County, Ohio

with listings at www.Realtor.com.

 

Pluto, I am so glad you mentioned all our East Side and Downtown projects. Good luck with your investment ! If I may be of any help, please let me know.

 

 

 

 

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Thanks, Svetlana. That's terrific information. Most appreciated.

 

BTW, pricewise it's usually better buy already foreclosed properties which banks list with Real Estate brokers. Prices are lower, and you may negotiate almost everything. I would recommend to compare the listings at web sites like Holland Park mentioned

 

That is interesting- that the banks sell that way.

Does your firm carry listings of foreclosed properties? Who pays the fee?

 

Pluto, I am so glad you mentioned all our East Side and Downtown projects.

Good luck with your investment ! If I may be of any help, please let me know.

 

Svetlana, all your help here is much appreciated.

Something good can come from it. But please do be a bit patient. We have a good-sized membership on GEI.

But most live in the UK, or Asia. So vene if they are keen on Cleveland, it may take them a while to get over there.

 

Who knows, the useful information compiled here may get GEI some new members in the USA,

and they may have an interest in adding to the information about Cleveland, and other Great Lakes area cities

 

 

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That is interesting- that the banks sell that way.

Does your firm carry listings of foreclosed properties? Who pays the fee?

 

There is no common sense behind the bank's decisions. No matter how complex may be the combined reason for banks' action, it's good to know what is the most suitable way of purchase for private investor today. Indeed, the banks have a very interesting way of selling their properties today. Apparently it looks weird. Banks buy foreclosed properties at Sheriff sales. They do not have to, but they do. Started from approximately mid-2006, here in Cleveland private parties practically have no access to Sheriff sales. Formally you may take part in it and make a bid, but in reality the banks win all the time on any of more or less interesting properties.

 

Just one example. Prime neighborhood, great schools system, very popular place - Thornburry of Solon (East side of Cleveland). House built in 2005, sold by builder for $600K with 100 % financing. Foreclosed in 2007. Purchased at Sheriff sale by the bank for $390K (no closing costs or bank's foreclosure expenses disclosed). Put on market initially for $575K in July of 2007. Price eventually reduced to $462K. Sold in March 2008 for $410K. Bank paid 6 % commission, closing costs, water and utility bills, and proprated taxes (annual tax is $10,945 for this property). Obvious losses.

 

Based on information from our local MLS (NORMLS), there are 52 4 bedrooms homes built in 2000 or later in Solon which are currently for sale.

Average asking price is $ $626,636. Average size - 4,057 sq. ft.

 

From 01/01/2008 till today there were 13 comparable houses sold.

Average sold price was $574,162. Average size - 4,050 sq. ft.

 

There are 4 houses currently on the contract.

Average asking price - $592,250. Average size - 3,813. (That is suburbia with all these McMansions, still very popular :angry: )

 

What I am trying to say is that bank did not have a market defined base for such a low price. Such aggressive pricing is a part of the game which we do not totally understand so far. It's good for investor though to catch such a deal. I think that we have few more months of real aggressive pricing by the banks. When the banks finally be allowed to enetering Real Estate they may be turning their pricing policies in the opposite direction. Looks like last months of 2008-first half of 2009 might be a good time to buy.

 

It looks like in some areas prices have already hit the bottom: in some cases our investors really compete against each other.

 

I personally do not represent the banks and do not carry the foreclosed properties. I do represent the buyers in this kind of transactions. Commissions to both sides - buyers' and sellers' representatives - are paid by the sellers. My company charge the buyers $250 administrative fee and sometimes additional $250-$500 if commission offered by the bank is too low (like for the houses which sell for $2,500 :rolleyes: ).

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What I am trying to say is that bank did not have a market defined base for such a low price. Such aggressive pricing is a part of the game which we do not totally understand so far. It's good for investor though to catch such a deal. I think that we have few more months of real aggressive pricing by the banks. When the banks finally be allowed to enetering Real Estate they may be turning their pricing policies in the opposite direction. Looks like last months of 2008-first half of 2009 might be a good time to buy.

 

It looks like in some areas prices have already hit the bottom: in some cases our investors really compete against each other.

 

Very interesting posting, Svetlana.

 

Still, that seems like alot of money. But it's alot of house too, at that size.

 

$574,162. Average size - 4,050 sq. ft :: that's $xxx psf.

 

I have bought 8 out of my 9 properties in Hong Kong, at under hk$3,000 psf average (= US$ x)

Number nine cost about hk$7,000 psf (= US$ x) at a "better" location.

 

It is interesting to me to make some comparisons like that.

 

BTW, my onw cyclical work suggests a possible low about Q1.2009 or later.

So your comment about timing looks possible.

 

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What I am trying to say is that bank did not have a market defined base for such a low price. Such aggressive pricing is a part of the game which we do not totally understand so far. It's good for investor though to catch such a deal. I think that we have few more months of real aggressive pricing by the banks. When the banks finally be allowed to enetering Real Estate they may be turning their pricing policies in the opposite direction. Looks like last months of 2008-first half of 2009 might be a good time to buy.

 

It looks like in some areas prices have already hit the bottom: in some cases our investors really compete against each other.

 

Very interesting posting, Svetlana.

 

Still, that seems like alot of money. But it's alot of house too, at that size.

 

$574,162. Average size - 4,050 sq. ft :: that's $141.77 psf. (eqv. to hk$1,106 psf)

 

I have bought 8 out of my 9 properties in Hong Kong, at under hk$3,000 psf average (= US$385 psf)

Number nine cost about hk$7,000 psf (= US$ 900psf) at a "better" location.

 

It is interesting to me to make some comparisons like that.

And it makes me wonder how long before the US will be able to compete with China in manufacturing.

Labor costs are rising fast across the border in China now.

 

BTW, my own cyclical work suggests a possible low in the USA as of about Q1.2009 or later.

So your comment about timing looks possible.

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Hi Bubb

 

This is a great thread and provides a lot of food for thought. Like you I think the US will provide great value in a year or so.

 

The only concern I have and this would apply similarly to the UK is that given the scale of the credit bubble, surely there will be severe social problems as a result. Especially if we get hyperinflation or severe deflation (less likely I expect). But the point is would you really want to invest physically in the USA (or the UK eventually) when things get so bad? What happens when people or the politicians look around for someone to blame for example after the Weimar hyperinflation in Germany. Do you think the risk of severe social unrest, perhaps war would make the US a bad place to invest in?

 

I really hope it doesn't come to that myself. I like the US and I would also like to buy a house eventually in the UK, but on a poltical level politicians in both countries seem intent on increasing taxes and looking for people to blame, as well as increasing surveillance and chipping away at our freedoms. If it really turns bad would you not be better off remaining invested in somewhere like Hong Kong where things are improving rather than deteriorating even if it is more expensive?

 

I don't know the answer, perhaps we will just have to be flexible and see how things turn out.

 

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...the point is would you really want to invest physically in the USA (or the UK eventually) when things get so bad?

What happens when people or the politicians look around for someone to blame for example after the Weimar hyperinflation in Germany.

Do you think the risk of severe social unrest, perhaps war would make the US a bad place to invest in?

 

I really hope it doesn't come to that myself. I like the US and I would also like to buy a house eventually in the UK, but on a poltical level politicians in both countries seem intent on increasing taxes and looking for people to blame, as well as increasing surveillance and chipping away at our freedoms. If it really turns bad would you not be better off remaining invested in somewhere like Hong Kong where things are improving rather than deteriorating even if it is more expensive?

 

Your points are valid, and one sensible way to mitigate some of this risk is to diversify,

and own property in more than one country.

 

Taxes are another big issue, as this posting from the Michigan thread demonstrates:

 

Where could I find out about how the US property tax system works or does it depend from state to state, town to town? I suspect this is potentially the biggest problem for someone looking to buy something in that you would need an immediate plan on how to generate income from some land or property in order to keep paying the property taxes. What are the chances that property taxes will be reduced as things get worse and towns and cities try to incentivise investment into areas?

 

I hope some of the locals can comment on that. It is an important issue.

 

But if you are going to live in the US, you need to be aware that many states charge a state income tax, on top of the US national income tax.

And some cities - like Chicago and New York- have a city income tax too.

 

"State income tax is an income tax in the United States that is levied by each individual state. Some states choose to impose no income tax. These states are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Additionally, New Hampshire and Tennessee limit their state income taxes to dividends and interest income only. As of 2007, the highest rate of state income tax is that of California, with a maximum rate of 10.3%."

 

State=== ( Low - High )

Illinois.... : ( 3.00% Flat )

Michigan : ( 4.35% Flat )

Ohio...... : (0.618-6.24%)

 

More: on State Income Tax

 

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From 01/01/2008 till today there were 13 comparable houses sold.

Average sold price was $574,162. Average size - 4,050 sq. ft.

 

What's all the fuss about? $141/sf?

We can build brand new really nice homes for less than that. In fact, we designed a simple but brand new elementary school that bid for less than that about a year ago.

 

If this is "Clevelandization" at work, I wish someone would Clevelandize my own property which was purchased at $62/sf with 5 acres too.

 

 

 

 

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What's all the fuss about? $141/sf?

We can build brand new really nice homes for less than that. In fact, we designed a simple but brand new elementary school that bid for less than that about a year ago.

 

If this is "Clevelandization" at work, I wish someone would Clevelandize my own property which was purchased at $62/sf with 5 acres too.

 

A good point.

But that's a city price, not a country price.

 

Still, if there are good jobs or business opportunities to be had in Kentucky,

maybe we should start a Kentucky or "Bluegrass Thread" to keep an eye on opportunities there.

 

How would Kentucky be a part of a resurgence in US exports? (a genuine question)

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A good point.

But that's a city price, not a country price.

 

A house can be built in the city for the same price, if not less. The land just costs more.

 

Still, if there are good jobs or business opportunities to be had in Kentucky,

maybe we should start a Kentucky or "Bluegrass Thread" to keep an eye on opportunities there.

 

How would Kentucky be a part of a resurgence in US exports? (a genuine question)

 

I wasn't implying that KY would be a good investment opportunity. I was implying that Cleveland property could still fall more since one can still build new for less $$ than buying an existing home. This was the case for our area for several years, which fueled a big home-building movement in the area. Now, I think, it has evened out.

 

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