Doctor Jack's Stock Medicine

[IIC]

Totally agree with you Doug. Shortly the people with disposable cash will be able to take advantage of other peoples misfortune. Those who are leveraged and financed will be looking to take whatever they can get to pay off their debt. Then the sharks come in and the bloodletting begins. My wife an I just had dinner with my brother-in-law and his family and we were talking about the same thing. Grabbing as much land and existing homes as we could afford with our cash on hand. It's just part of the cycle. Like stocks, buy cheap under depressed conditions and sell high. This is actually going to turn out to be a great opportunity in the real estate business.

Yes it will...But where will the bottom be?...Not for years IMO...Key is to find those who are desperate...Not necessarily a nice way to earn a buck...But what am I supposed to do???

[skiracer]

Yes it will...But where will the bottom be?...Not for years IMO...Key is to find those who are desperate...Not necessarily a nice way to earn a buck...But what am I supposed to do???

Take advantage of their desperation without lying, cheating, or stealing to them. And never ever feel guilty for making money because you have money or because of their being desparate.

[IIC]

Take advantage of their desperation without lying, cheating, or stealing to them. And never ever feel guilty for making money because you have money or because of their being desparate.

What the heck am I supposed to do?...I'm not a charity...Look...I warned people in Sept '87...I warned people in Mid '99...I warned people starting in November '05...I can't be everything to everyone...My exact timing is not always correct...But my advice is free...take it or leave it...I don't know what to say Ski????

[b_cadvantag]

Yes it will...But where will the bottom be?...Not for years IMO...Key is to find those who are desperate...Not necessarily a nice way to earn a buck...But what am I supposed to do???

Curious: Ski & IIC

What type of RE are you looking to target?

Single family, townhomes-condo, apartment complexes, land, commerical buildings


What would be your main goal?

price appreciation-holding property, landlording-cash flow, land for developers



I have been slowly dipping my toe into the RE market, targeting townhome-condo and renting them out. Builders are giving deals and they will give more. Rents are finally going up. I am targeting specific areas of growth.

[IIC]

Curious: Ski & IIC

What type of RE are you looking to target?

Single family, townhomes-condo, apartment complexes, land, commerical buildings


What would be your main goal?

price appreciation-holding property, landlording-cash flow, land for developers



I have been slowly dipping my toe into the RE market, targeting townhome-condo and renting them out. Builders are giving deals and they will give more. Rents are finally going up. I am targeting specific areas of growth.

Tag...I'd say rents should continue up for quite a while...as homeowners w/ negative or little equity lose their houses.

But I'm looking at single family homes in the current $700,000 range if I can get them for a $200,000 to $300,000 discount...Might be tough...But there will be some for the nimble...Doug(IIC)


PS:...they will be able to be flipped...may take longer than last year...But desperation can cause people to take anything...short sales...or just give it back to the bank and walk away...Then you just wait

[Jack Haddad]

Well...I beg to differ w/ you Jack...Maybe home prices are holding their own in No. Cal???...But they are dropping FAST in So. Cal...New Homes selling...because of incentives...But it's OVER...Done with...Need to wait another 9 years IMO...Real Estate is a Sucker Play now IMO...Who cares what past earnings were???...Let's look forward...IIC

Doug, Real Estate may be over, but the homebuilder stocks always have a way of re-inventing themselves, especially with the close manner they associate themselves with JVs.

[Jack Haddad]

I have a real estate business and my wife and I are both licensed here in NJ. The best indicator I know of to illustrate and give me a feel of how business is going is the multiple listing book. This is the book that contains all the listings for sale. Last year and the year before that the book was about 3/8" thick. The thinness means that as the new listings came on they would sell off in no time and the inventory was almost nothing. Brokers were fighting like mad for listings. Over the past 12 months the multiple listing book has increased in thickness to about 1 1/2 inches which translates to increased inventory which means that there is a much greater increase in inventory and that resales are selling at a much slower pace. The thickness of the multiple listing book is the surest indicator of how the market is working. We are in for a big softening in the resales and sales of new homes market. The housing and building sectors are the sectors that along with the banking, refinances, sectors are the ones that have been driving the markets the past 2/3 years. It is coming to an end an it is on the downward side of the slope. Without the strength of those sectors to drive the markets it could get alot worse over the long run. Just an observation of what is happening on the east coast from someone who is very involved in the housing and real estate market in general.

I just don't see here in the bay area. People are still bidding 10 to 15k over the ask price on homes. In faact, home prices have risen 5% since December of 2005. The demand here is incredible.

[Jack Haddad]

According to Justin Walters of Birinyi Associates, when the stock market (as measured by the S&P 500) rises more than 1.5% in response to a Fed announcement, it fell 10 out of 14 times the following day!

[Jack Haddad]

This is a U.S. mining company with big operations in Peru and Mexico which plunged about 30% from a high in mid-May. Not only has it faced an inflation-triggered decline in global copper prices from $4 to $3 a pound, but the company has also been hit by labor strikes at two Mexican mines. At $75 a share, the stock trades at seven times earnings and boasts a dividend yield of 11%... For a company that is expected to boost earnings by 55 to 60 percent , that ain't an expensive stock at all.

On June 26 2006, CPU broke out from a small consolidation pattern sitting on its 200-day moving average – a widely followed intermediate-term trend proxy. This adds to the body of evidence that the bull market in mining stocks of all kinds is very much alive.

[billyjoe]

Ski,
I've got a small cottage for sale and buyers are trying to find out if I'm desperate. Either that or the realtor is. Have agreed to 5 sales , four in the last few months, each time they either try to lower the offer or tack on a new condition such as "replace all plumbing" or "house must be completely furnished". Realtors have been seen on the property posing as contractors and phoning me without ever seeing me in person. I also believe they are creating buyers that don't exist. Have signed papers several times while counter offers are made by phone by realtor representing buyer. These guys are crooks.
billyjoe

[skiracer]

Ski,
I've got a small cottage for sale and buyers are trying to find out if I'm desperate. Either that or the realtor is. Have agreed to 5 sales , four in the last few months, each time they either try to lower the offer or tack on a new condition such as "replace all plumbing" or "house must be completely furnished". Realtors have been seen on the property posing as contractors and phoning me without ever seeing me in person. I also believe they are creating buyers that don't exist. Have signed papers several times while counter offers are made by phone by realtor representing buyer. These guys are crooks.
billyjoe

Billyjoe,
There is a state and national Code of Ethics that all realtors, sales agents and brokers, must follow. If one of them is messing around with you all you have to do is to gather up all the info about what they are doing and file a complaint with the local Board of Realtors in your area. That will put a stop to it. If they are trying to coerce you or screw you over in some underhanded way they will be in trouble. All you have to do is confront them with the fact that you are going to file a complaint and that should put an end to it.

[mrmarket]

Even if the market has topped, homebuilders are still cheap. Interest rates are still low, on an absolute basis.

Homebuilder earnings would have to be grossly negative for their stock prices to get crushed from here. I just don't see it, as they have been much better at recalibrating their production and expenses in response to the market.

Even if their earnings are only 25% of what they had been, the stocks are still cheap...relative to other equities.

If the builders were smart, they'd go private, buy back stock or pay out some dividends to appease investors. However, it's likely they'll buy more land if the market craters and build on it when it gets good again.

[IIC]

Even if the market has topped, homebuilders are still cheap. Interest rates are still low, on an absolute basis.

Homebuilder earnings would have to be grossly negative for their stock prices to get crushed from here. I just don't see it, as they have been much better at recalibrating their production and expenses in response to the market.

Even if their earnings are only 25% of what they had been, the stocks are still cheap...relative to other equities.

If the builders were smart, they'd go private, buy back stock or pay out some dividends to appease investors. However, it's likely they'll buy more land if the market craters and build on it when it gets good again.

True...The PE's are very low which can be attractive to value investors...True, all the Homebuilders in my database show eps projections for 2007 which look pretty good if that's all one is looking at...But, the projections are all -14% to -30% in 2007 vs the 2006 projections and most, but not all are projected lower for 2006 than the actuals in 2005.

I just don't see any growth investors interested here. Also, and I can't back this up with any facts, but from my past experience builders continue building for quite some time after demand decreases. One reason for this is that big projects take years to complete from the planning stages. My gut tells me that there will be some fire sales on new homes in a year or so...But I guess only time will tell...I'll just sit back and wait.

Best, Doug(IIC)

[Jack Haddad]

Drl

Folks, DRL's agreement with with Westernbank Puerto Rico will significantly decrease its financial exposure to rising interest rates, deleverage its balance sheets, and improve its capital ratios. The deal will DRL to restructure all outstanding mortgage loan sale transactions. As of May 31, the unpaid principal balance of all mortgage loans previously sold by Doral Financial to Westernbank was $954 million. Under the new agreement, Doral will transfer to Westernbank its retained interest on the mortgage loans-- which means it will no longer pay Westernbank a floating pass-through rate. They will continue to service the loans in exchange for an annual fee of 25 basis points of the unpaid principal balance of the mortgage loans. In addition, as of May 31, Doral agreed to repurchase from Westernbank at par any mortgage loans that are 90 or more days delinquent, and Westernbank agreed to terminate in full Doral's obligations under the original mortgage sale agreements.


This is a stock that I have been eyeing for approximately 1 1/2 years, since its collapse from 48. I have done quite well trading it from time to time. However, at 6.50/share, I'd like to establish a long core of 5 blocks or more. Fundamentals and management have improved significantly.

[IIC]

Folks, DRL's agreement with with Westernbank Puerto Rico will significantly decrease its financial exposure to rising interest rates, deleverage its balance sheets, and improve its capital ratios. The deal will DRL to restructure all outstanding mortgage loan sale transactions. As of May 31, the unpaid principal balance of all mortgage loans previously sold by Doral Financial to Westernbank was $954 million. Under the new agreement, Doral will transfer to Westernbank its retained interest on the mortgage loans-- which means it will no longer pay Westernbank a floating pass-through rate. They will continue to service the loans in exchange for an annual fee of 25 basis points of the unpaid principal balance of the mortgage loans. In addition, as of May 31, Doral agreed to repurchase from Westernbank at par any mortgage loans that are 90 or more days delinquent, and Westernbank agreed to terminate in full Doral's obligations under the original mortgage sale agreements.


This is a stock that I have been eyeing for approximately 1 1/2 years, since its collapse from 48. I have done quite well trading it from time to time. However, at 6.50/share, I'd like to establish a long core of 5 blocks or more. Fundamentals and management have improved significantly.

I remember when Doral was a high flyer...I'd pretty much forgotten about it...thx for the info...I'm going to check it out.

Anyway, I got to thinkin' about what Ernie was saying about continued profits for homebuilders. And although the eps %'s are projected to decline significantly they(The actual $ amount eps) are still pretty solid along with those low PE's.

That got me to thinkin'...I'm in the RE business...But on the Facilities Management side...I could ask...and I will...some people I know about this....But maybe Jack, Ernie or anyone else here has an idea about this:

Generally speaking because I realize all projects are different...But how much profit is there in New constuction and sales?

For example...Let's say ABC Development builds a community with 500 homes priced at an average of $800,000...How much does it cost to build and market the average unit?...$600,000???...So demand declines and they end up selling them for $700,000 instead of $800,000...They still make a decent profit.

I know the example is very simplistic...But is that what you are getting at Ernie?

Thanks...Doug(IIC)