patrick.net

robertoaribas says

living on a beach

The crabs and fleas will bite you at night. Stick with the buying a Honda Odyssey plan. You can remove the back seats, put shag carpet down. Sleep in a sleeping bag. It'll be the bomb.

swebb says

The interest rate clearly matters. The amount you end up paying back is more with a higher interest rate. If your investment has some given return, it may not cover a 5% interest rate, but it may cover a 3% interest rate....that could be the difference between making money and losing money.

Yeah, the operative words there are if there is a return.

Now banks get a return on the debt by selling the loan, investing that money on short term contracts, that will be at higher interest, or lending the same money again.

For the banks those loans go onto a balance sheet even if they portfolio the loans. The banks are churning that debt to make more money, the borrower would need to do the same in order to get a return. Your house, at this time isn't an investment.

Roberto gets rental income so he gets some return. The only thing, at this time, the home owner is getting is the difference between rent they would pay, and a mortgage.

So borrowing money to get a return is much different than just borrowing money for a place to live. In that regard the interest rate is irrelevant.

If the interest rates were 25% the price of the property would be much less than it is today.

ELC says

It's pump then dump

That's the term I've been trying to remember for months now.

Yes, it's a bump, and dump, but I think you'll see when the dumping begins.

David Losh says

but from what I've read you are buying a job of property owner.

Light bulb changing skills, slopping out biohazard refrigerators and unclogging pubic hair encrusted drains will certainly come in handy in the future. There's always a place in America for someone with that sort of expertise. Someone who can find a proof to Fermt's Last Theorem. Not so much....

David Losh says

So yeah, I think you paid top dollar for your short sale, and the bank is laughing.

You should see all the fools at the auctions here in Florida. It's like a leper colony. There are a few who know what they're doing and they can barely hold back their laughs.

Roberto, can I mail you a check? Send 5 of those places up my way.

Even with a 10% mgmt fee I'd still be doing better there than I can do here at the moment. Even in a crappy neighborhood here your 4BR house would be $140k and rent for about the same amount.

robertoaribas says

Go ahead, its 1600 square feet 4 bedroom 2 bath, single level, new roof in 85027... will rent for $1100, needs literally just clean up inside, and i'm buying it for $86,500. Show me how that is a terrible deal!

My friend just bought one like that at a tax deed sale here in Fort Lauderdale. Paid 70k. Put 20k into it plus lots of sweat. It's on a nice lake. Furnished it "should" rent for $1700 or sell for 150k if he's lucky. I entered it a week ago. We'll see.

$1100 rent is pretty reasonable for a 4/2. I guess it's a different market there. 86K would be a good deal in South Florida but the taxes are higher here I suspect.

David Losh says

but I think you'll see when the dumping begins.

They've been pretty good at hiding what they're holding. At least good at hiding it from those who don't want to see.

robertoaribas says

my taxes on this house are $800 a year

Taxes on my friend's house is $2214. Quite a difference!

ELC says

They've been pretty good at hiding what they're holding.

I had this discussion on another Real Estate blog where a person pointed out that we pretty much know everything at this point. We know the foreclosure, short sales, defaults, Notices of Default, and every other frigging thing.

If you can quantify it, it's no longer a shadow inventory.

We also know the time line, the cut off is when the Fed said they would stop holding interest rates as low as they could which is 2014, I think, but they have also said they will easy monetary policy when unemployment is at 6.5%, if I recall correctly.

We are well on our way to having a relaxed Fed policy and I do think that is why we are seeing price rise.

The last time prices rose like this was in 2006. There was plenty of inventory, 2007 not so much inventory, and prices rose faster. That's when the dumping began.

Banks will be the ones to pull the plug, at the end of this year or beginning of next year. All of a sudden everything will be approved. Auctions will release properties, short sales will be approved, loans of questionable substance will be made, and boom, there it goes.

The economy as a whole is no longer dependent on housing, or construction, so no one will care, economically, except those who made hefty investments. That's when the big players will dump. By 2016, 2017 we will have a clean house. Prices will be lower, interest rates will be up, and housing will once again be another cost of goods, and services rather than an investment.

robertoaribas says

i'm buying it for $86,500. Show me how that is a terrible deal!

You've published that purchase all over this blog, so I'm pretty comfortable saying you paid top dollar, because that is what the bank wanted for the property.

You're the one making assertions here about your great deals.

I don't need to analize your individual purchase to know that the bank is making money, when you claim they were stupid.

Wait a minute, does it have a pool? I'm asking because for that price it must. 4/2 pool $86K sounds about right.

Your short sale is your market place. It makes no difference what the retail market is because of the number of short sales, and the price the banks are asking, and getting for short sales is going up. There is a point when people won't pay the higher prices and the banks will start taking what they can get, once again, but this time they won't stop until they deplete any, and all inventory they can get.

They'll take all the foreclosures people are squatting in, all the excess that big investors didn't buy, and dump them all, quickly, but surely they will.

E-man says

No we don't.

Yeah we do, we do know the data. I was wrong about that to until this guy, who I don't really like very much, posted a bunch of links, talked a bunch of nonsense, but over the course of like a week, he was pretty much right, if you want to know, it's all out there.

There is nothing in the data that's particularly compelling one way or the other. We had a soft landing, with this bounce, but if you remember the 1970s, and most of the 1980s, except for that period of hyper inflation which the Fed has promised to control, and they certainly have, you'll know we are headed for an even keel.

There will be no tops, or bottoms to the market, just housing.

robertoaribas says

you could compare the home using zillow or trulia,

yeah let me get right on that.

You should have taken the $110K like most of the smart guys are doing.

robertoaribas says

ok, says the alleged businesman!

What's your problem?

You made a million dollars, so what are you kicking about every day on these threads.

Who cares about your strategy, money is money.

You have a million dollars so what do you care?

My point is that banks are making money. Banks are everything about money, and they have entire departments that run numbers all day, every day.

The bank is in control of your market place.

Making satements like the banks are stupid shows very little consideration for your position.

So, do what you do, write your book, do your job, but once you start insulting people it shows a high level of insecurity.

I don't believe we've seen the lowest in real estate prices. The can is near the end of the road. When faith in a major currency fails - and it need not be the US dollar - then all fiat will be mortally struck. Post election disasters coming right up.

David Losh says

You should have taken the $110K like most of the smart guys are doing.

You keep asserting that he has overpaid for his properties and that he should sell them and get out now if he can. What's the reason? Do you not believe his rental income numbers? Do you think the rental income doesn't justify the price? Do you think rental rate are going to crash? I don't get it. If he's covering his payment and profiting the same amount each month, why is that a bad deal? You either have to believe the rents will decrease significantly, or that there are better opportunities right now...If prices are going to drop in the near term, maybe he would have been better waiting, but it doesn't make his investment bad in an absolute sense, just relative (and if he used debt to finance it, all the better).

Why specifically do you think it's a bad investment? It sounds good to me, and it sounds like he's doing pretty well.

swebb says

It sounds good to me, and it sounds like he's doing pretty well.

Glad I wasn't the only one thinking that. Even if housing goes into the dumper, he's still making a sound ROI any which way you slice it.

swebb says

Why specifically do you think it's a bad investment?

Because it's NOT an investment if he can't make money on long term appreciation. It's a just self made J O B. A job that he's enjoying the best case scenario for now. His JOB scenario is very unlikely to get better. If it stays the same he might just make it to that tropical beach he dreams of... as long as his partners don't inevitably decide they deserve to make more than he does. I personally would liquidate, take that million and run like a thief in the night.

David Losh says

There will be no tops, or bottoms to the market, just housing.

Are you saying that the housing market will stay flat line? If the real housing price stays flat, I'm happy. Inflation is an investor's best friend while it's a saver's nightmare. Place your bet accordingly and be careful what you wish for.

robertoaribas says

1. pay short term capital gains by selling immediately.

2. If I rent it for one year, it becomes long term capital gains instead... RIGHT THERE that saves me 20% of the profit.

So now we're looking at 800k rather than a million. Collecting 90% of rent since 10% goes to a partner. Anything else that may eat into your profits?

I still think you should keep the 800k and tell the banks to take their job and shove it.

Roberto Crackpipe Home value example:

http://www.zillow.com/homedetails/1037-E-Manhatton-Dr-Tempe-AZ-85282/7596383_zpid/

Check out the owner estimate LOL!

David Losh says

That's when the big players will dump. By 2016, 2017 we will have a clean house.

From watching Frontline: The Untouchables, I believe they are also waiting for the criminal statute of limitations to pass before they cause any major pain. It was really creepy listening to these people in the DOJ and FBI talk about how hard it is to prosecute and how they were worried what prosecuting a bank executive might do to the economy. You could tell they were protecting these criminals.

A soft landing was essential to stave off mass demand by the people for prosecutions. If a true crash was allowed even the sheeple would want to see some heads roll.

yup1 says

http://www.zillow.com/homedetails/1037-E-Manhatton-Dr-Tempe-AZ-85282/7596383_zpid/

Check out the owner estimate LOL!

I sure wish they had a way to sort by disparity of owner estimate with actual recent sold price. It would sure make my evening giggles a lot easier as I hover over the keyboard with a glass of wine.

Philistine says

yup1 says

http://www.zillow.com/homedetails/1037-E-Manhatton-Dr-Tempe-AZ-85282/7596383_zpid/

Check out the owner estimate LOL!

I sure wish they had a way to sort by disparity of owner estimate with actual recent sold price. It would sure make my evening giggles a lot easier as I hover over the keyboard with a glass of wine.

The best part is that I think Roberto owns this one :D

E-man says

We're just investing

Uh, no Junior -- it's just onesy-twosy speculating/gambling.

robertoaribas says

Go ahead, find other homes with pools in 85282 to compare to it, then factor in the separate workshop and extra 2 car garage, for a total of 4 garage spaces....

Come back and giggle some more!

Whoever is renting for $1500 treat them like a god. I don't have true MLS access in Phoenix anymore but see http://totalviewrealestate.com/index.php?address=1037+E+Manhatton+Dr&city=tempe&state=AZ&zip=

BTW, This house would get you 200k or $1500 rent in Florida no problem. I went up and down the streets with Google Maps. Boy, I thought Florida was flat and depressing. It's so barren! I think if I lived there I'd have a gun in my mouth within a few months. Life's too short. Why do people live in such a place? You left Spain for this?

ELC says

Mobi says

I agree with you but it does not take a genius to see they are trying to pump the price back and higher. If they are going to win, why not ride the tide?

Because it is not just "pump." It's pump then dump and it WILL take a genius or inside information to figure when they're ready to dump. And when it comes to real estate it's not a simple click of the mouse to get out. IMO you're playing with fire. That's why most of the world is parking it's money and happy to get zero return. A zero return IS a profit in this market, but they'll always be a percentage of people who just can't see the sense in that. Those will soon be your servants.

We all know it is pump and dump but if you put your money in a S&P 500 index back in 2009 or 2010. You are now with a profit better than ZERO. Of course, a stock collapse can erase that profit in 1 week so that is the reason to use housing market. If you are smart enough, there is definitely enough lead time to sell before a loss (like Roberto and D Losh in the last run.)

swebb says

You keep asserting that he has overpaid

What I'm saying is that he is paying Fair Market Value. The banks are in control of his market place, so they dictate that market.

Roberto has an excellent strategy. If you follow it you will make money. His rental income is what saves him, and makes what he does an investment. Mom, dad, and the kids aren't so lucky.

There are other ways to make money in today's market place. There are guys, and groups that only buy, and sell, so they can stack up huge cash reserves.

There are people who dumped LLCs in 2007, and are only buying with all cash today because they could do multiple quick turns of properties. They buy here, and Nevada, but Arizona seems like a good fit for that.

What I'm saying is that it's all a win win situation. Roberto makes money, the banks make money, and investment groups are making money. There is a ton of cash in the Real Estate market place.

My concern is that something will hit the market that is the next bubble, and the cash will be redirected to whatever that next investment opportunity is, and housing will be left to flounder.

Roberto will always be alright, and make good money, because of his strategy.

ELC says

they are also waiting for the criminal statute of limitations to pass

I've also thought that debt has a six year staue of limitations, that puts us at 2014 from 2008.

At that time the people who deleveraged, dumped debt, foreclosure, and short sale would be able to buy again.

David Losh says

What I'm saying is that he is paying Fair Market Value. The banks are in
control of his market place, so they dictate that market.

David Losh says

There are people who dumped LLCs in 2007, and are only buying with all cash
today because they could do multiple quick turns of properties. They buy here,
and Nevada, but Arizona seems like a good fit for that.

What I'm saying is that it's all a win win situation. Roberto makes money,
the banks make money, and investment groups are making money. There is a ton of
cash in the Real Estate market place.

My concern is that something will hit the market that is the next bubble, and
the cash will be redirected to whatever that next investment opportunity is, and
housing will be left to flounder.

I think you are generally right. Roberto is probably paying a Fair Market Value compared to other local investors, still lower than the owner-occupancy prices though.

If I were smarter and better, I probaly flip houses. If you do it right, you can easily get capital gain equal to or more than a year's income if it were a rental. You need more cash though.

If there is indeed the next bubble, it is great (from an invester's perspective). You just sell them before it pops. The only thing I worry about is the Europe wild card.

robertoaribas says

Giggle away, idiot

This isn't all about you. You missed the whole point. There is an overload of people on zillow with their ridiculous "make me moan" and "owner guesstimates". If you dig through, nearly all of these owner-stated numbers are far off from comps. These are the same people that lease a 7 series and think they are living the life.

JodyChunder says

E-man
says

We're just investing

Uh, no Junior -- it's just onesy-twosy speculating/gambling.

Depending on how you define investment. But Fed definetely tranforms people's mind set from long-term investiment toward shor-term trading.

Mobi says

You need more cash though.

Here in the Seattle area there is a guy who used to call himself the foreclosure king. He set up a group that lends the money to people who want to buy all cash at the auctions. The bidder puts 20% down, pays a 3% sales commission, and gets a 14% interest loan compounded yearly with a six month balloon payment.

They have been doing this now for six years. There was a time in 2010 when the rumor was they were running out of money to lend, and other investors stepped in to pick up the slack.

So, now this guy is borrowing, and lending with a turn of six months, plus the fees. He has a lot of cash.

Now more specifically is another guy who dumped six LLCs in 2007, sent them back to the bank. He bought his first place for $20K cash and sold it for $36K. His next place was about the same deal, until he traded up to a $50K purchase, which netted him $30K, and he piled the whole thing together to buy a place for $85K which he rented to his sister. After a year he asked for a bank loan.

He was able to borrow 30% of that $85K back within three years of dumping his LLCs. He now has his own investment group of six guys who all buy, sell, and stack cash.

The problem is the foreclosure market.

When this last guy started buying you could buy for a good price at auction. You had to wait, because banks were also buying thier own paper, but there were deals.

Then the prices paid started creeping up, because the first group I mentioned had all of these new investors bidding against each other.

Now you have home owners who are tired of the multiple offers on listed property thinking foreclosure auctions may be a way to go. Prices are creeping up again.

I think a lot of people are saying the same thing, that they will stop buying this year, but if there are two more years of this there will be a very healthy amount of cash in Real Estate.

Philistine says

If you dig through, nearly all of these owner-stated numbers are far off from comps.

His is far off the comps because the house isn't getting the credit for another two car garage. My guess is because it's not attached nor permitted. However I don't think that structure is worth 50k to most people either.

David Losh says

The banks are in control of his market place, so they dictate that market.

He is basically babysitting these places for the banks. When the banks no longer need a babysitter his babysitting money will dry up.

David Losh says

I've also thought that debt has a six year staue of limitations, that puts us at 2014 from 2008.

Derogatories must be removed from a credit report after seven years. But you can qualify for an FHA mortgage in as little as a year post-bankruptsy. The trick is to get the credit score up high enough. A joint account with someone with good credit can do wonders.

With these standards we'll be having trouble for a long time to come. http://www.nytimes.com/2012/09/16/realestate/mortgages-life-after-bankruptcy.html?_r=0

robertoaribas says

hey yup1 again! dumbass back for more!

that home appraised for 185K last month... and, one just sold for over 200
that is: smaller, no pool, only 2 car garage instead of 4 car garage!

I've had that one rented for $1500 a month since I bought it...my mortgage is
$650...

go ahead, do your "snicker, snicker, I think rob owns that one, snicker
snicker..." again.

Yep, I do... very glad I own it too. Piss off loser!

Based on the Zillow comps, you are wrong. I realize the Zillow comps may be wrong, but I trust them more than I would every trust you. The reality is you posted your idiotic valuation for your property on 07/09/2012 proving that you are a Jackass. If that is the kind of comps that you are using for your Million dollar buy at the bottom jackpot, I question the validity of your feeble analysis. Suck it Beotch!

ELC says

Boy, I thought Florida was flat and depressing. It's so barren! I think if I lived there I'd have a gun in my mouth within a few months. Life's too short. Why do people live in such a place?

This coming from a swamp zombie! ; P

The desert is beautiful. The desert is clean. The desert serves as a sieve for weeding out the weak little nosepickers. Only the Alphas make their homes in the desert.

robertoaribas says

Oh I see... The zestimate is ONLY 16,000 more than the price I paid seven months ago... I should go cry... Only 16,000 increase in seven months... I did so badly! Not to mention that 1100 rent zesty when I'm renting it for 1500...

So you buy a place and 2 months later post it is worth 60K more than you paid for it, 190k. You post that it just appraised for 180-185. You call game, set, match? You called that game for me right? Fucktard!

robertoaribas says

I'll stand by 190k as a lowball of its value

You posted the value at 190 on 07/09/2012 did you not?

Your property has appreciated 0 from July 2012 until now based on your own posts.

Your own posting on 07/09/2012 was completely incorrect was it not?

The facts are the facts. You high balled your owner appraisal that you posted in July. Now you are high balling your appraisal in 2013, which happens to be the same amount as 7 months ago. Zillow estimates your property is worth 145k. I am guessing your property is worth much closer to 145k than your ego inflated 190K.

Commence with more name calling Roberto it is pretty much the only thing you are good at.