Patience Is a Virtue, But It Isn't Exciting | John Burns Real Estate Consulting

Patience Is a Virtue, But It Isn’t Exciting

Whoever coined the phrase “patience is a virtue” could not possibly have had the current housing bust in mind. Billions of dollars have been raised by very impatient investors who want to buy real estate at a discount. However, most of them have figured out that the discount just keeps getting greater every day due to rapidly falling prices and the lack of debt.

For two years now, we have been working on deals where sellers have been dropping prices to meet buyer demand, yet the buyers have determined that the discount is just not enough.

Many of those who have lived through previous housing recessions have been sellers in this market because they knew the tremendous impact foreclosures would have, and they anticipated problems with the banking system. Their experience has paid off.

To all those with billions, your patience will be rewarded. Just sit tight. Here is our advice:

  • Align yourself with someone who really knows the business and can help you execute a business plan on day one.
  • Beware of those selling land using appraisals or market reports relying on published new home data. The real economics are worse.
  • Costs and entitlement issues can be more important than market timing. Do not ignore cost and entitlement due diligence.
  • Find a core competency. The entire world wants to buy finished lots in good locations at 50 cents on the dollar, which means that those assets will be bid up. We have a few ideas for the right people in the right markets.
  • Don’t outbid the funds with 3-year time horizons, because they are more likely to overpay or eventually disappear.

If you have any questions, please contact us at (949) 870-1200 or fill out this form.