A Letter From The Inside
Here’s a letter from an established real estate investment firm in the city to its investors that landed in our inbox yesterday. It’s quite an interesting snapshot of where the various parts of the market stand, especially when it comes to financing. Of course, it was penned before yesterday’s failed vote. Although many of you…
Here’s a letter from an established real estate investment firm in the city to its investors that landed in our inbox yesterday. It’s quite an interesting snapshot of where the various parts of the market stand, especially when it comes to financing. Of course, it was penned before yesterday’s failed vote.
Although many of you may have experienced extreme difficulties and declines in your stock portfolios and the newspapers report daily on the dire problems with the housing market, our experience in the real estate rental business and the New York coop and condo market is not so extreme. Generally speaking our tenants continue to pay their rents and business continues in a more or less normal fashion. Although we are seeing more delinquencies than usual across our portfolio and we are carrying a greater number of residential vacancies than last year, it is fair to say so far the effects we have seen have been more consistent with a typical downturn in the economy and not more dramatic than that.
Given the current situation in the credit markets, we do anticipate having a more difficult time when seeking refinancing quotes, but we expect to be able to successfully resolve our various financing requirements. So far, our lenders have been negotiating normal mortgage extensions on appropriate market driven terms and at the moment, we do not foresee a problem in this area at least through the end of 2009…This is not to say we have not faced any problems with certain of our properties. We have found it difficult or impossible to arrange debt for new development and/or condominium conversion projects. The market is very reluctant to finance for-sale housing projects. As a result, we have put several new construction or conversion projects on hold and will continue to do so until the market returns to a more normal situation. In one case we even cancelled a deal and took a loss on our contract deposit rather than accepting inferior and expensive financing that would have strained our resources in an inappropriate manner.
i do have a decent number of what you appear to be defining as “wall street friends.” none of them fit this profile. my point isn’t that they don’t exist, but that they aren’t any more or less representative of “young affluent couples” than the overspenders i know who are 65 and living off state pensions and modest investments are representative of the “elderly middle class couples.” yes, it’s fun to think that tuscan-tile-guy-importers are getting their comeuppance, but the reality is a lot less satisfying, and a lot less karmic than that.
polemicist, stick to polemics and lay off economics, you know not what you write. Buying distressed real estate is a way to make money not a way to lose money.
This is why the bailout will not only work to calm down the securities markets and unfreeze credit but will also end up making money for the Treasury. The current problem revolves around real estate or, to use econo-speak: “currently undervalued assets”. But real estate will come back. It always does, and the governemnt has the luxury of being able to wait.
you get it?
The Paulson plan will fail because it does not provide enough money to really help the problem. The problems are not just the bad loans on the books but also the lack of capital these banks have to make loans. Combine that with fewer banks to lend and you see a tighter credit market. I NAILED THE 10400 LOW and now I tell you this market has a high of around 11400-11800 and if it doesn’t reach those highs it is going down further. I also believe this plan should not pass, I think they need to make the plan better for future homebuyers and more capital for small banks who do alot of the lending as well. TRUST ME..
“”My brother has a very high position on WS and I have been with a lot of his friends.”
So you’re that kind of sister, are you?”
Good one, P! Either that or I’m gay!
Politicians listening to constituents, that might catch on. While I was originally inclined to panic and insist that the plan be approved, I now find myself thinking to hell with the bailout. Let everything go to crap and see how it all ends up. Feels invigorating.
The Paulson Plan will assuredly fail. You cannot make unprofitable investments profitable, no matter how much money you throw at it.
Quick Poll:
Who believes the Paulson Plan, if passed, would actually work?
I myself am not yet convinced.
“A complete 180 degree turnaround in sentiment!!!!!”
Slow your roll, DIBS. I wouldn’t go quite that far:
http://www.msnbc.msn.com/id/26948627/
lechacal:
You forgot the drugs. Not cheap.
daveinbedstuy:
A 7% drop is not particularly significant – there have been several such drops since the 1987 crash which barely resulted in a public reaction. I highly doubt the veracity of your anecdote.