Expectations & Plans for 2007

[ThreeRiversREI]

I've cut back drastically on the number of articles I've been posting. Apparently there are some members who don't like having to "weed through" all the info I was posting. I guess they prefer the arguments about whether Howard is a Cutie-Pie, Sweety, or just a scum-sucking and soulless lawyer. (See my signature for my vote!)

Anyway, on to the point of this thread.

I've been seeing a lot of articles coming across my desk on various aspects of the Real Estate industry, from interest rates to housing starts to default rates to commercial consolidation and more. For those where are interested, here are some samples from the last few days.
Wall Street Journal: Sales of New and Existing Homes Will Continue Their Slide in 2007 (http://www.realestatejournal.com/buysell/markettrends/20070119-schroeder2.html?refresh=on)
Wall Street Journal: Pittsburgh's Commercial Market Exhibits Signs of Strength (http://www.realestatejournal.com/columnists_com/blueprint/20070118-blueprint.html?refresh=on)
Philadelphia Business Journal: Phila.-area firms in $300M apartment deal (http://www.bizjournals.com/philadelphia/stories/2007/01/22/daily26.html?from_rss=1)
Pittsburgh Business Times: Pittsburgh has modest home-sales increase (http://pittsburgh.bizjournals.com/pittsburgh/stories/2007/01/22/daily22.html)
Pittsburgh Business Times: Pittsburgh casino license winner tries to speed building process (http://pittsburgh.bizjournals.com/pittsburgh/stories/2007/01/01/daily21.html)
Pittsburgh Business Times: Mellon adding jobs (http://www.bizjournals.com/pittsburgh/stories/2007/01/22/daily28.html?from_rss=1)

I can't find the article any more, but about a week ago one came across my desk that pointed out that while PITG had been selected for the Pittsburgh Slots License (and others across the state) the final paperwork to formally award the license wasn't expected until the end of this month so the 30-day window for court challenges hadn't even started yet.

So housing is up, down AND sidewise! Mellon Financial is merging with the Bank of New York and moving some operations to New York, but others here. The route for the North Shore Connector has it coming close, but not quite serving the expected site of the Casino (assuming the challenges fall short).

The Steelers won Super Bowl XL, only to come back with a lousy season and head into next year with a new coaching staff. The Pirates are, well, the Pirates. And the Penguins are STILL threatening to leave.

Chaos abounds on all fronts, but amid chaos may be opportunity.

Is this the year to roll the dice and provide housing for workers at a casino that doesn't exist? Or will next year be the one to kick ourselves for not acting when we had the change.

Focus on the worst house in the best neighborhood? Or take advantage of neighborhoods in transition and ride that wave? Or even go into some of the worst parts of Wilkinsburg and Homewood and initiate some major redevelopment to try to jump start a transition for a better tomorrow.

So many options. So many directions. So many possible winning scenarios, but each with their own risk.

So, what forces are coming to play in YOUR area and how are you reacting to them?

[Debbie]

I'm not familiar with Pittsburgh so I can't really comment on them.

Regarding the market sliding during year 2007---I do agree that majority of the investors are pulling out of the market for the purpose of wholesaling and sub2.

However, I really do not think that we will lack any new homeowners (non-investors). I suspect that because of the political situation (let's NOT go there in details, please!), the next two years may be the last two years before interest rates will inch closer to two digits.

[ThreeRiversREI]

So, what's the latest regional news....

Bettis opens restaurant on North Shore (http://www.bizjournals.com/pittsburgh/stories/2007/01/22/daily43.html?from_rss=1)
Tech-focused zone set for Pittsburgh (http://www.bizjournals.com/pittsburgh/stories/2007/01/22/daily40.html?from_rss=1)
Nashville education company nets Pittsburgh contract (http://www.bizjournals.com/nashville/stories/2007/01/22/daily27.html?from_rss=1) which an earlier story (http://www.pittsburghlive.com/x/pittsburghtrib/s_487686.html) indicates will be near Squirrel Hill

So, even as census data shows people and businesses alike fleeing Pittsburgh, various guru's and experts warning against investment in the area, there are still some perceptive (foolish?) enough to push forward in spite of it all.

It certainly looks, though, like the North Side is going to have the best hope of resurgence. There's a lot of distressed property near Route 65 (near where PITG will be building the casino, assuming that doesn't get side-tracked by court challenges) and over by the California Post Office. The various Historic District complicate things by requiring that exteriors be kept intact and restoration be done with period materials (often 100-200 year old techniques!) which can make rehabs uneconomical. (And has thus lead to dozens, if not hundreds, of boarded up wrecks throughout the area!)

For the investor who cracks the nut and finds a way to make redevelopment economically feasible, a fortune awaits. For the investor who only THINKS they've found a way, the potential for economic ruin lays in wait.

Caution would seem to be the watchword of the day.

As always, do your own due diligence. The opinions expressed do not necessarily have any basis in reality and aren't always even those of the author himself. This thread is more an attempt to drive the other SW PA family members out of hiding and into a dialog.

[Aldo]

For the sake of discussion, I'd ask why you really do not think that we will lack any new homeowners. We're in a buyers' market right now due to the ongoing price correction. There are about 35% more residential properties on the market now than there were one year ago and that's because (almost) nobody's buying them. I haven't checked the numbers, but I suspect that there are currently more pending foreclosures than purchases.

Double digit interest rates? Personally, I don't see that happening. The Fed is backing off on increases right now and has even considered decreases.

Talk about double digit rates!!! For a time in the 70's mortgage interest rates were in the 14-17% range and people were actually buying at those rates. I bought a home in 1972 at 7%. Two months later rates were above 10%. Wanna talk about good timing?

[Debbie]

For the sake of discussion, I'd ask why you really do not think that we will lack any new homeowners. We're in a buyers' market right now due to the ongoing price correction. There are about 35% more residential properties on the market now than there were one year ago and that's because (almost) nobody's buying them. I haven't checked the numbers, but I suspect that there are currently more pending foreclosures than purchases.
I'm uncertain if you understood my statement. Just to clarify, I basically said that while the investors may not actively pursue in the market (focusing on foreclosures), I believe that there will be no lacking in new homeowners (non-investors).

Double digit interest rates? Personally, I don't see that happening. The Fed is backing off on increases right now and has even considered decreases.
That's why I said there won't be any double digits for the next two years due to political situation.

Talk about double digit rates!!! For a time in the 70's mortgage interest rates were in the 14-17% range and people were actually buying at those rates. I bought a home in 1972 at 7%. Two months later rates were above 10%. Wanna talk about good timing?

LOL....who told you to buy sooner than later? :thumbsup:

[ThreeRiversREI]

For the sake of discussion, I'd ask why you really do not think that we will lack any new homeowners.

Well, it was Kaos that said that, not me but let me respond anyway, at least as it relates to my backyard.

Political debates aside, we are near historic lows for interest rates. It is my belief that when (not 'if') the Democrats manage to push through a minimum wage increase and other domestic welfare-type reforms, inflationary pressures will force the Fed to resume increasing interest rates. Whether increased wages will increase buying power faster than rising rates will decrease buying power, I haven't a clue. My 'wild guess of the week' is that interest rates will "win" much to the rejoicing of landlords who are able to raise rents without a increase in their fixed financing costs. Stay tuned the next 2-5 years to find out just how off base I am.

Now, here in Pittsburgh, PA, well, Allegheny County really, I've been looking at Population "Growth" (almost exclusively loss) and Vacancy rates. Average "Growth" is an 11% LOSS and the only actual Growth I was able to find by zip code was a downtown zip where office buildings are getting converted to condos.

Also some zip codes have the disturbing distribution of 1 owner-occupant, 2 renter occupants, and 1 vacant unit out of every 4 residential units! Other areas are around 3/4 owner-occupant, but 40-50% of the remaining residential units are vacant.

Not that my partner & I aren't still looking, but we're having to tread VERY lightly to avoid ending up with homes that we can't sell or rent before they turn into alligators and eat us alive.

[thepower]

Not that my partner & I aren't still looking, but we're having to tread VERY lightly to avoid ending up with homes that we can't sell or rent before they turn into alligators and eat us alive.


Your learning, investing on Ifs ands or buts will make you turn your name into the new croc/alligator hunter.

[ThreeRiversREI]

Your learning, investing on Ifs ands or buts will make you turn your name into the new croc/alligator hunter.

Problem is, I don't think there's a "safe" deal anywhere in the region, and we're not in a position to do a lot of long-distance investing.

Thus, we're stuck weighing and doing our best to manage the risks. But there's always going to be an "if theres hidden damage/problems" or "but WILL the neighborhood continue to transition up" type questions everywhere we go. So we have to get in there, take some chances, and hopefully keep our lumps as few and far between as possible.

[AIR]

sorta off topic but I was talking to the owner of the Steelers yesterday I forget her first name, last name Rooney. Pretty nice lady:thumbsup:

[Debbie]

sorta off topic but I was talking to the owner of the Steelers yesterday I forget her first name, last name Rooney. Pretty nice lady:thumbsup:

HUH?

[Dan Auito]

Potential hard money lender prospecting ahy?

[ThreeRiversREI]

Potential hard money lender prospecting ahy?

I figure the Steelers have problems FAR beyond anything I can fix. Not to mention, the best prospect I can see is development in conjunction wtih the newly approved casino that the Steelers opposed. However, I was toying in the back of my mind with approaching PITG, the company with the license to build the slots parlor here in Pittsburgh.

Aside from the disparity in size scaring the **** out of me, I'm at a loss as to HOW to approach them. Equity share? PML? Combination? Something different? The goal being to rehab and return to habitable condition residential properties in the vicinity of the new casino that should be opening in a little over a year (tentatively scheduled for March 2008). The spin, aside from simply being good business, would be to provide affordable housing for them new employees.

The parent company, Majestic Holdings, looks to have over $500 million in assets and $625 million in liabilities as of it's last SEC filing. But I'm not able to find any details on the financial picture on PITG Gaming, LLC.

Anybody have any thoughts/opinions as to approaching them, if I even should? I figure Joe Schmuck-Little-Guy has a better chance of getting the properties at a price that works than anybody involved with PITG or Majestic will. But I'd like to have their resources to fall back on to be able to move quickly and on multiple fronts. (I estimate at least 100 homes are boarded up within 2 miles of where the casino will be.)

Somebody on here want to take me under their wing and help me push this forward? If I bumble along as best I can 1 at a time, the casino will be open and even the boarded up places will have their value sky rocketing before I can get to more than a a handful.

[ThreeRiversREI]

It's been a week and not much new regionally except for the formal decision being made on the Slots License and allowing the appeal process to begin. Here's the start of an article about it.... With final casino order issued, appeals may follow
Pittsburgh Business Times (http://www.bizjournals.com/pittsburgh/stories/2007/01/29/daily31.html?from_rss=1) - 2:42 PM EST Thursday
by Dan Reynolds

Pennsylvania's Gaming Control Board on Thursday issued its final order on its Dec. 20 decision to award PITG Gaming LLC the sole license for a slots casino in Pittsburgh.

The decision starts a 30-day period in which PITG Gaming's two competitors, Station Square Gaming LP and IOC Pittsburgh Inc., also known as Isle of Capri Casinos Inc., have a chance to appeal the gaming board's decision.

Detroit businessman Don Barden, the primary owner of PITG Gaming, has told regulators he can have a 400,000 square-foot casino built and operational on the North Shore of the Ohio River by March 2008. But any appeal could delay construction. The article goes on to discuss how IOC proved traffic issues with the Station Square plan, and vice versa, as well as community opposition to the IPC plan. It truely looks like that since PITG was seen as a long shot and largely ignored by the big two, community groups, etc. it's being approved due to lack of known negative information. Something that could EASILY be brought up in the appeal process.

My take is that if an appeal is filed, property in the area will see values drop in the short term. If March 2 comes and goes without an appeal being filed, prices will start to ratchet up.

Anybody want to be a private lender at 10-12%, around 75% LTV based on ARV, with an 18-24 month term? (Plan being to buy, rehab, rent for 1 year and then sell/refinance after the casino opens and property values skyrocket.) Contact me offline. I've got a lot of potential leads, but need to know I have the investors necessary to close before I go all out.

[SPIVALAW]

I've cut back drastically on the number of articles I've been posting. Apparently there are some members who don't like having to "weed through" all the info I was posting. I guess they prefer the arguments about whether Howard is a Cutie-Pie, Sweety, or just a scum-sucking and soulless lawyer. (See my signature for my vote!)


Hey Im not just some pretty face!:SM034:
Why cant I be cute and scum sucking?