Willing to go bottom fishing in real estate?

There are plenty of places to put your money. Given what’s happened in residential real estate, does bottom fishing still make sense?

Or is it smarter to think of a house as a home — and look for investments in other arenas?

The housing downturn has left Atlanta full of homes now priced near 1997 levels, AJC reporters Rachel Tobin and Tammy Joyner write.

But that has left a market of opportunities for those gutsy enough to go after them, the reporters write.

Making such a deal can take months and guarantees lots of near misses, Tobin and Joyner write. Many of these “deals of the century” often come with issues, such as poorly wired electrical systems, holes where $5,000 Viking ovens used to be, torn up floors and even missing sod, the reporters write.

So, is this the place to try to score big?

Given all that has happened over the past few years — and the backlog of foreclosed and soon-to-be foreclosed homes — I would not take the chance. But I’m a chicken with my money.

How about you?

- Henry Unger, The Biz Beat

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32 comments Add your comment

Destin Dawg

June 6th, 2011
7:20 am

Not Yet in Atlanta anyway..

Mr ClayCo

June 6th, 2011
7:51 am

I would because real estate unlike stocks bonds or commidities will always appreciate over time. these prices and this cycle we are in is only temporary i am 28 so i have plenty of time to invest now to enjoi the fruits of my labor later. a 3 bedroom 2 bathroom 2 car garage house for less than $20k is a steal.

Dudogger

June 6th, 2011
8:11 am

Great time to buy – but never, ever in Atlanta!

Sink or Swim

June 6th, 2011
8:17 am

Please folks, buy what you can ultimately afford once the RE market rebounds. The upkeep and taxes will go up as well. There are folks out there still buying housed they can’t ultimately afford, price wise now is a steal but they are not thinking about everything thing else that goes along with it. I know of 2 folks that bought foreclosures that are now in foreclosure, Make sure you have 3 years of income in saving in case you loose your job before you ever buy a home!

Most people aren’t knowledgable or savvy enough to bottom fish!

Sink or Swim

June 6th, 2011
8:19 am

“Great time to buy – but never, ever in Atlanta!”

Believe it or not, ATL RE never boomed like many places in the country – but our bust was worse. This will set Atlanta or a path to rebuild just fine.

Dave28

June 6th, 2011
8:35 am

Sink or Swim – I agree with you in that you should only buy what you could ultimately afford once the real estate market rebounds. However, home values are arbitrary amounts at this point so it’s hard to know what the “real” value will be 5 years from now. My take is that you should buy something less than what you thought you could afford in 2007. Odds are that you’ll still have an affordable mortgage (assuming you put 20% down) and that house is likely bigger (or better) than what you would’ve bought then. And who has 3 years worth of income saved anyways? You’re hard pressed to find someone with 6 months worth of savings :)

James k

June 6th, 2011
8:35 am

Catching a falling knife is a sure way to get cut, some will bleed a little, some will bleed a lot, some will die from the injuries. Greed is powerful and advertising always ensures that you will always feel insecure and inadequate, sure you can fix all your problems just buy whatever they’re selling.

Buy a house to live in, not to reflect some dream lifestyle you saw on tv or in a magazine. Don’t let your home be an anchor around your neck dragging you to the bottom. Until wages catch up with home prices or vice versa, the surplus of homes and the foreclosures creating even more supply will continue.

Catch a falling knife at your own risk and realize you have to be both really skillful and really lucky to pull it off without permanent damage that you will remember for the rest of your life.

Feel lucky punk?

blazerdawg

June 6th, 2011
9:00 am

Atlanta is a GREAT investment, but not necessarily in RE – here or most places.

Destin Dawg

June 6th, 2011
10:03 am

Huge homes are out… buy only what you can easily afford… IF you will be in it 5 years.. .. IF your cars, credit cards, student loans are paid off……ONLY IF at least 20 % down… nothing wrong with getting a 2nd job.. save… SAVE 1st…

Heywood Jublome

June 6th, 2011
11:03 am

Just like the people who thought they got steals 10 years ago, today’s “steals” are tomorrow’s “they over-paids”.

RE is a suckers game for mom-n-pop investors. Renting costs less, gives you more mobility and let’s you invest your extra money in real investments, like gold – not a loser investment like “building up equity”. That’s crap brought to you by Realtors and home builders.

The Gecko

June 6th, 2011
11:13 am

Home Ownership in the US averaged around 64% for 30 years> It then climbed to almost 70% during the bubble and is now back to around 66%. Which means another 1.5 to 2 million homes will be vacated until we are in balance once again. So shopping now is still risky but legitmate deals are there. Need to find an experienced pro to help your search and be patient.

"Mom-n-Pop" Investor

June 6th, 2011
11:30 am

@Heywood

“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

-Warren Buffett

james

June 6th, 2011
12:18 pm

yea, gold that is a good investment….moron

BRIN

June 6th, 2011
1:07 pm

I agree with Buffet…In an absolute economic crisis…even rich folks have to eat and drink, brush their teeth and take medicine.

The truly valuable items will be Food stores, water source, seeds, ground to farm, medicine and little things that become big things like toilet paper, toothpaste etc. and don’t forget guns and Ammo go protect you and your family and possessions.

If it ever gets that bad…just think what it would be like and what you would need…it sure would not be Gold or Silver and those with gold or silver would be glad to trade it to you to you for food and water etc….but why would you want it ?

Norcross

June 6th, 2011
2:03 pm

Illegal aliens were allowed to buy homes, and ATL was one of the prime areas which they were allowed to do this. This area never saw the high real estate prices that most areas saw, but we certainly are seeing the worst of it. When people that should have never been able to buy homes were allowed to by the federal government, there is the bulk of your problems.

Heywood Jublome

June 6th, 2011
2:52 pm

james and Mom-n-Pop,

And gold is killing Buffet’s portfolio over the past ten years! It’s been one of the best performing investments of the past ten years.

But maybe you’d like to invest in bubbly sugar water with Buffet. Bubbly sugar water makes a lot more sense than gold. Yeah right. Suckers!

Mary-etta

June 6th, 2011
3:30 pm

The average investor is not savvy enough to invest in gold. Why do you think they have gold investment ads all over the tv and radio, so that folks like Buffett will listen and buy?

No one can really predict when the RE will really reach bottom. My bet is Gwinnett will rebound quicker due to consistent good marks with their public school system.

bottom out

June 6th, 2011
4:25 pm

don’t bite–the bottom hasn’t come yet–prices will still go down much further! The economy is getting worse by the day.

Nina

June 6th, 2011
4:38 pm

I am in the market for a home right now. I can’t speak for anyone else, but it’s a good time for me. Stable income, good credit score, and realistic expectations. I don’t expect to make a profit on this home, I just want a yard for my grandkids. And I’m looking below what I’m told I can afford. You really have to look honestly at your own situation if you are considering buying at this time. If you have credit issues, job issues, or don’t even plan to stay put for a few years, this may not be the time for you to buy.

"Mom-n-Pop" Investor

June 6th, 2011
4:45 pm

@Heywood

Yes, clearly Warren Buffett (or “Buffet,” as you call him) isn’t a sophisticated enough investor to understand the value of gold.

@Mary-etta

As a rule of thumb, never buy something from a person telling you what a lucrative investment it is.

Paul Hewitt

June 6th, 2011
5:41 pm

The best investment is to get GT to hire you with a buyout.

rojer

June 7th, 2011
10:56 am

Everyone says dont buy… not yet… still further to go… so thats how you know its the right time to buy. No brainer to me. Current home is up for rent rignt now so I can buy by the fall. Might not be able to cash out for a few years but there are lots of future profits to be made right now.

I'm a Poor Person

June 7th, 2011
11:37 am

Paul Hewitt,

Can you help me get a deal like you had? F##k real estate.

TG

June 7th, 2011
12:50 pm

You don’t make money based on macro-economic conditions, you make money on “the deal”. You also have to know your own strengths and weaknesses as an active investor in real estate. Real estate is not liquid and requires more management than stocks. With that said I think if you have the time, liquidity and ability-real estate in Atlanta is a wonderful opportunity. Focus on “the deal” and not the market.

downsouth

June 7th, 2011
4:44 pm

don’t buy at the height i.e. gold right now…

William

June 7th, 2011
8:52 pm

Hopefully the not-so-brights will re-elect the Obamination in 2012.
I have picked up 5 foreclosures in the past 4 months and am praying that the idiot in chief will cause even more damage, making me that much more money.

yu be da foo

June 8th, 2011
3:04 am

Lets see, gold is at a record high, and real estate is at record lows. So lets follow the ages old investment axiom of buying low, and selling high. That means lets load up on gold, and sell the real estate? I am not a Buffet fan myself, but even fools get lucky once in awhile. Buying gold at these prices is for the suckers!

Robbie

June 8th, 2011
6:51 am

If you intend to buy a home as a place to live for five plus years and are able to do so, missing this low cycle is a foolish choice. If you have funds to invest, rental property can produce 15% – 20% returns without considering appreciation (I happen to believe in the cycles of RE and that values over the long haul will increase). If it meets your needs, provides a roof for your family, we’re close enough to the bottom that it’s a smart decision to buy. For investors, if it cash flows now and the return is acceptable to you, the value is irrelevant. Buying distressed properties is about knowing what is worth fixing and what it will cost to do so. For investors, add-in what it will rent for. If you don’t have the skills to repair it yourself, there are plenty of homes that need paint and carpet makeovers for you owner occupants or available contractors. Most investment properties will need more than a paint and carpet makeover. If you can’t repairs these yourself companies like ours can offer you passive investment properties producing the above returns from the day you close. If you can repair them, there are plenty of property managers if you don’t want to do so yourself. Missing appliances, floor coverings, sod, etc are easy fixes whereas improperly graded lots creating water intrusion issues are harder to fix and don’t add value. Now is the time to buy and hold for both owner occupants and investors. robbie.hewitt@keypropertyhomes.com

dagnabit

June 8th, 2011
7:16 am

Mr ClayCo; real estate always appreciates. Where do these people come from?

dmb

June 8th, 2011
8:12 am

heck no.. not here.. not now.. and don’t buy the B.S. that these lying Real Estate agents are selling. It’s not at bottom just yet. There is a massive amount of properties still in the shadows.. just waiting to go on the market.. it’s still going down, folks. Hold on for a year or so.. then buy.

Varinia

June 8th, 2011
9:01 am

Awesome time to buy right now. I have bought 10 properties in the past 2 years. All around 10K each. Very little rehab needed. They’re now rented out and I’m semi-retired. They’re all in Atlanta

Debbie

June 8th, 2011
2:54 pm

People need to stop thinking of houses as investments, and start thinking of them as a tax-reduced way of living. Buy low (i.e., now), put some equity into (you can afford to since you bought low), and if you need to sell within the next few years, be prepared to sell it for what you paid for it. Your gain is a home to live in, a tax break, and privacy from multi-family living. Why people are renting right now is beyond me. It is cheaper to buy a house than to rent an apartment in the Atlanta market.