From: billmiami2@netscape.net
Newsgroups: misc.invest.real-estate
Subject: Re: Economics of buying rental properties in current market
Date: 4 Jun 2005 11:26:41 -0700
   posting-account=YllvOQwAAAAtUxXFpDsbHdLRvsRZDzJG

For how much longer can prices rise?  Even if interest rates don't go
up, I would think there would be a limit to how high they can go.
Currently people are resorting to the interest-only loans to make
properties "affordable", but eventually even that won't suffice as
prices continue to rise.  Are there any more financing tricks left in
the bag?  Will we see large groups of "investors" pooling their money
to buy a 2 bedroom house?

We talked to a real estate agent who told us that we're not going to
find any rental properties that break even, much less earn an income.
In spite of that, he himself is buying rental properties at a monthly
loss because he thinks that the appreciation will make up for it.  I
guess its the "greater fool" theory that Tyrone mentioned.  But
eventually as the property changes hands at higher and higher prices, I
would think that the monthly losses will get to a point that even the
most hardy of buyers will start to hesitate.

We've since pulled out of the real estate market.  We're not interested
in competing for bad investments with people who are willing to put
themselves at great financial risk.  It just doesn't make sense.  I've
also sold my investments in REIT funds because I'm afraid of what is
looming on the horizon.  I just hope that it doesn't take the whole
economy with it.

Bill