In article <MtOdnXMCsZjM7frUnZ2dnUVZ_jCdnZ2d[at]giganews.com> ,
ichudov[at]algebra.com says...

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My first thought about a $1,000 house is that, it may be
"distressed" physically.

Is it one of those places where the previous buyer (on a subprime
ARM time-bomb) expressed their anger on the way out? By trashing
it?

If a $1,000 house needs $30,000 worth of work before it is legal
to rent out, then isn't such a great deal. Especially in a
"distressed" geographic area like Detroit, with low rents and a
high risk of bad (or just laid-off) tenants.


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honda.lioness[at]gmail.com wrote:

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fall apart is risk-taking decision making driven by greed, and also
seeing everyone else succeed quite well (in boom times).
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owning stock in a company. Not only are you better off (over the
long-run), but you are making things happen that develop products,
provide jobs, and in general help the growth of standard of living.
It's not too much of a stretch to say the same of options, derivatives,
CDS's, and insurance products in general.

Where I think I can draw the line is firms that are incredibly leveraged
and using these financial tools -- and calling themselves a valuable
franchise...

T

During the property boom I have heard many people say things like
"property always goes up" and "property doubles every 7 years."

Investing in property is almost the same as investing in shares. If
you have a property that you rent, you own a business. Your business
is simply to rent that property out to others.

The general share market is often exposed to high technology that can
produce greater profits from lower inputs. That is, due to continuing
innovation from companies like e.g. Google, profits rise. This is why
expected returns from shares, as measured by economic indices like the
S&P500, is higher than the expected return from property. With
property, at the end of the day you are only selling land. There is
little innovation or technological improvement in that.

However, this is not a downside as it provides stability and steady
growth.

honda.lioness[at]gmail.com wrote:

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More houses than buyers? Real estate markets are very inefficient. In a
downturn, much money can be made by people with deep pockets and patience.

That said, I grew up in Detroit and visited over Christmas. The city of Detroit
is dying and has been since the 60's. Some of those $1,000 houses will be in
neighborhoods you wouldn't want to enter without a company of Marines.

-- Doug

Igor Chudov
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I don't know. Like John suggested, there is a reason these houses are
going for so little. So I am not prepared to make a blanket judgment
like yours, other than, sure, if one can bear a loss of $1000 and all
the other work implied in getting such a house up to snuff, go for it.

On 2009-01-09, beliavsky[at]aol.com <beliavsky[at]aol.com> wrote:
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At $1,000 per house, the risk is very minimal as long as you maintain
proper insurance.

Gambling is taking risk where you know the other guy has an
advantage. It is a folly.

Buying a distressed $1,000 house from a seller who does not want to
get top dollar for their stuff, does not involve such a "guy".

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beliav...[at]aol.com wrote:
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My posts over the years demonstrate well that this is false. My posts
over the years also demonstrate an interest in rebutting so-called
academic claims of how to get rich quick.

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I will hold onto this belief, because it has so stunningly been shown
to be valid. The shysters at high levels who sold leveraged crap
packaged as allegedly sophisticated risk reduced this-and-that brought
this economy down because they did not understand the incongruence of
mathematical theory vs. practice in economics.

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IMO the line is between those who bet on a set of numbers going up
simply because they have in the past vs. those who contemplate what it
means to own a stock and to have an economy and a civilization.
Publicly owned and traded shares of companies represent fortresses
against ever again having to sit in a grimy hammock all day, swatting
mosquitoes and dying of malaria.

When a person "gets" this, then they have met the first criterion for
being qualified to buy into the stock market.

If they do not get this, they are gamblers, plain and simple.

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This strikes me as a rationalization for not giving a damn about what
it means to have an economy that uses stocks.

snip for brevity
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My objection is to seeking get-rich-quick schemes. I agree providing
reasonably priced housing to others is a necessary part of an economy.
In fact I would support someone who said, "I have 5% of my portfolio
that I do not mind losing completely. I am going to put it into some
of these hovels in Detroit and see what happens." If you want to offer
this up, fine. But if you do not qualify such discussions thusly, then
expect to hear back from those of us tired of the promotion of get-
rich-quick schemes to an unsuspecting public where over 70% have not
even a college degree and the rest generally cannot be said to be all
that educated in finances.

On Jan 9, 6:50*am, honda.lion...[at]gmail.com wrote:
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You need to get away from the idea that every investment approach
other than your own
constitutes "gambling" and that every application of mathematics to
investments other than your own consitutes "numerology". Any
investment involves risk. Where is the bright red line that separates
investment and gambling? I think of sound investment as being
"gambling" with positive expectancy.

If cheap houses can generate rental income after property taxes and
upkeep that is high relative to the original investment, they can be
regarded as "value" investments. I'm not a real estate investor, so I
don't know if they can. That's why I started the thread.

How is buying property and renting it out "preying on people's
frailties"?. A landlord who provides a place for people to live and
who maintains his property is performing a valuable service.

On Fri, 9 Jan 2009 05:50:41 -0600, honda.lioness[at]gmail.com wrote:


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Along these lines, I think the best thing we can do these days for our
financial security is to focus on making ourselves invaluable to our
respective employers (and clients). For example, taking extra
job-related education courses, volunteering for extra assignments,
exhibiting a cheerful demeanor at work, avoiding gossip, being
pro-employer and loyal to firm and supervisor, etc.

Beyond that, make choices and decisions that allow us to avoid debt
and save regularly.

Here's a saying that I saw recently that gets to the point:

"Life is not about waiting for the storm to pass... it's about
learning to dance in the rain." - unknown


-HW "Skip" Weldon
Columbia, SC

On Jan 8, 12:17 pm, beliav...[at]aol.com wrote:
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I would have strong concerns that renters who can reliably pay in the
Detroit area, for one, will be so easy to find, given the trouble the
Big 3 automakers are having. With the economy foundering in general, I
expect there may very well be a nationwide, Depression-era-like loss
of jobs in the rest of the country. Bad gamble. Let the banks eat it.
Banks have a better shot of being bailed out than Joe Yupper Middle
Class.

I think people need to get away from thinking the only way to make
money is through gambling that this-or-that will rise in price in the
next five years. Being involved in making a useful product (not one
that skims off money by preying on people's frailties) is better for
the psyche and the economy as a whole.

"PeterL" <po.ning[at]gmail.com> wrote
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A good place to start:
http://www.reit.com/AllAboutREITs/tabid/54/Default.aspx

On Jan 8, 4:31*pm, PeterL <po.n...[at]gmail.com> wrote:
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I think residential REITs typically own large apartment complexes, not
single-family homes or duplexes.

If that was happening in my area, I would probably buy a dozen of such
$1,000 houses, assuming that my real estate taxes will reflect the
price I paid.

Outside the area, I am afraid that overhead and agency costs would
make such an adventure not worthwhile.

Fortunately, we live in an area that did not experience either a big
boom, or a big collapse. This is not a random occurrence, as I did not
want to buy a house in the other area (north of Chicago) that was
undergoing a boom. So such housing adventures would remain only a
thought.

i

On Jan 8, 11:17*am, beliav...[at]aol.com wrote:
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Check out some real estate investment trusts. You'll have to do
research to find which ones have lots of cash right now to buy into
distress markets.

In article
<0b8e3901-6354-468c-8a3b-be4f6290b6ce[at]t39g2000prh.googlegroups.com> ,
beliavsky[at]aol.com wrote:

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But what are the chances of ever selling a home in Flint? These
houses are priced at under $3000 because that is what the seller
thinks that they are worth. A home is not a bargain no matter
how cheap it is if there isn't any buyers. All you have to do
is watch the movie (Roger and Me) to find out the story of Flint.

-john-

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I wonder if there are real estate parternships one can invest it that
would buy homes such as those mentioned in this article and rent them
out (while waiting for house prices to rebound). It seems like an
opportunity for investors who can afford to have money locked up for
some time.

http://money.cnn.com/2009/01/08/real...ion=2009010806
Radical cheap: $1,000 homes
In places like Detroit and Cleveland, banks are unloading rundown
homes for next to nothing. And they're tremendous bargains, even after
factoring in renovation costs.

NEW YORK (CNNMoney.com) -- The real estate market is so awful that
buyers are now scooping up homes for as little as $1,000.

There are 18 listings in Flint, Mich., for under $3,000, according to
Realtor.com. There are 22 in Indianapolis, 46 in Cleveland and a
whopping 709 in Detroit. All of these communities have been hit hard
by foreclosures, and most of these homes are being sold by the lenders
that repossessed them.

"Foreclosures have turned banks into property management companies,"
said Heather Fernandez, a spokeswoman for Trulia.com, the real estate
Web site. "And it's often cheaper for them to give these homes away
rather than try to get market value for them."

In Detroit for instance, Century 21 Villa owner Randy Eissa has a
three-bedroom, one-bath bungalow of about 1,000 square feet listed at
just $500. It's a nice place with lots of light, but it needs a total
rehabilitation inside, which Eissa estimates will cost between $15,000
and $20,000. But that's not bad, considering that the home last sold
for $72,000 in late 2007, according to Zillow.com.

With prices this low, lenders aren't looking to make any money on
these deals. They just want to get these houses off their books, so
they don't have to bear the cost of maintaining them and paying
property taxes.

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