If you could buy new homes @ 65% of market value, would you buy now?

In a word...Maybe.

However, your question cannot be answered without more details. I often buy houses at 50-100% or more of "market value" and make my living doing it.

But what is "market value"? You have to know YOUR market to answer that. There are some HOT markets right now. And, as we have seen in the news, there are some bad ones too. I live in the midwest and my market has seen increases in both median prices and the number of sales over last year. But my market is consistent. We see an average of 5-7% annual appreciation each and every year.

You also have to consider your exit strategy. What will you do with the home? Live in it? If so how long? Or, will you rent it, wholesale it, retail it? If your are looking at real estate as an investment you have to know when and how you anticipate seeing your return and structure the deal accordingly.

Another thing no one has adressed is terms. If I can buy a home (new or used) get a fair price and great terms I'll buy them all day long. I recently bought a duplex and paid full market or retail value (exactlly what the seller was asking). I got a new first mortgage for 85% of the price, the seller held a second mortgage for the remaining 15%. I have a monthly cash flow of almost $400.00 and I got $4,900.00 back at closing. If you could buy a home with no money out of your pocket, get more money than the monthly expenses and put almost 5 grand in your pocket when you buy it...would you have bought that house?

The one word in your question that did get my attention though, was the word "new". I'm always leary of new homes. Often the "market value" of new homes is established by the builders and not the market. Right now I am buying new homes, that sold for $179-199K when brand new, out of foreclosure for as little as $120K and re-selling for $140K and these are homes that are only 1-3 years old.

They are in single builder developments that were marketed heavily by the builders. The builders also provided the financing to anyone with a job and a pulse and then sold the junk paper on the secondary market. Even though the existing homes in our local market are going up in value these homes are depreciating.

If you would like to discuss your situation in detail email me for some free advice.

Market value is what someone is willing to pay for it now, and now prices are dropping in most areas. So actually you are referring to 65% of what the market value was, but is not anymore.

It would depend on a couple of things.

First, how many excess home are on the market and at what discounts are they selling.

Since I already have a home it would have to be for speculative purpose so I would have to compare the possible return of the home and other options.

Obviously, selling and buying in the same market only the agents and mortgage companies come out ahead.

Pengy is totally right.

65% of market value is what? that makes no sense. Market value is what you pay for a property.

If a home is worth 100K and they are saying take it at 65% of that, its only worth 65K. If it was worth 100K they would sell it for 100K. Whatever marketing scheme they are selling you doenst make sense.

You are not buying a home at 65% of market value, you are buying it at *Market Value*. Regardless of what they say. What you purchase the property *IS* market value.

I buy houses to lease out to renters.

I don't care what anyone says the house is worth. I am buying it for the cash flow so I decide what I am going to pay based on what I can get in monthly rent.

That's generally what I am doing now, although i prefer 50% or 60%. And yes, it is quite possible and profitable.

of course, why not. The market rises and falls. This slump is nothing new. They happen about every 10 years or so. Buy Low. Sell High.

That is how millionaires become billionaires.

only a fool would try now, the market is still inflated

No, MV always changes and really does not mean anything

Pengy is right. Market Value is what the houses would sell for now.
And personally, i would not buy now. The foreclosures from the gimick, unconventional loans have just started. We won't see the real fallout, until the majority of the introductory interest rates reset, which is within the next 3-12 months. The economy is starting to slow down, coupled with a credit crunch. Simply, I don't see anything short-term which is going to cause housing prices to stop falling. Don't be surprised if prices don't stabilize until a glutting period of 12-18 months.

Only if I could rent them out for a positive cash flow.

Does not really matter what the % discount is if you cannot cover your mortgage payment.

Hope this helps.

Terry S.

http://www.Welcome2Arizona.com

P.S. NOT paying attention to your cash flow is a quick trip to the poor house.

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