patrick.net

Rubicon says

There are personal loan/hard money loans options with higher interest rates. That it?

Margin loans on stocks. How we bought our current primary home. We could have just kept the margin loan forever and paid interest only and our PITI would have been $600. Well technically ITI. And banked the other $600 as we eventually did refi and close out that account with my MIL. With appreciation and compounding dividends on other investments that are passive, we could have made $200-300k over that span of time and still had $200k in appreciation. Kind of fucked up now that I'm thinking about it. I'm actually kind of pissed. I dropped the ball. Lol. That was a $300-400k mistake.... fuck.

Misc says

The dude put down over 30% of the purchase price. I am guessing that even though he may have meager income, he has substantial assets. A lender that would see several millions of dollars of assets would have no problem loaning the guy the coin. Plus the loan is protected by the down payment.

Ok but, the scenario led with the fact the loan was difficult because he only made 38k. Plus, that's all we were told so that's all we can go by.

You guys are overthinking it. He bought it as an investment property. From a math point of view, he had a small negative cash flow. His salary was more than enough to cover it. After renting it out for a year, he could do anything he wanted to do with it.

WookieMan says

Eman says

My neighbors are immigrants from South Africa. They own 2 SFH rentals nearby. They bought them decades ago, one for each kids.

I don't like this practice. I have wealthy friends that do this. I get wanting to do what is best for your kids, but I'm paying nothing for college, not buying houses. They need to figure it out on their own.

I also don't believe that college is for everyone. Go be an airplane mechanic or something weird like that. Those jobs will always be in demand. You need annual inspections and overhauls after so many hours. Not a pretty job, but everyone needs plumbing and electric. Do 2 years of business study at a CC and start your own company. Learn accounting. IF you go to college make sure it STEM. Everything else is pretty much stupid.

I find myself often thinking about how much I should be sacrificing for my kids. At this point we're going to be leaving them each at least a paid off house. Not sure if its a mid life crisis but I feel the itch for a 911. Always been a big car guy but have been driving toyotas for 20 years. I've told the wife I don't want to be that old guy with cataracts driving a sports car 55mph down the highway.

Eman says

You guys are overthinking it. He bought it as an investment property. From a math point of view, he had a small negative cash flow. His salary was more than enough to cover it. After renting it out for a year, he could do anything he wanted to do with it.

Ok, so you were able to apply the rental income to the loan qualifications(?)?

Why does he have to wait a year before he can do whatever he wants with it?

If a person has $200 to apply to negative cash flow, can he qualify for 2 loans that each cash flow negative $100 each?

WookieMan says

Eman says

My neighbors are immigrants from South Africa. They own 2 SFH rentals nearby. They bought them decades ago, one for each kids.

I don't like this practice. I have wealthy friends that do this. I get wanting to do what is best for your kids, but I'm paying nothing for college, not buying houses. They need to figure it out on their own.

I also don't believe that college is for everyone. Go be an airplane mechanic or something weird like that. Those jobs will always be in demand. You need annual inspections and overhauls after so many hours. Not a pretty job, but everyone needs plumbing and electric. Do 2 years of business study at a CC and start your own company. Learn accounting. IF you go to college make sure it STEM. Everything else is pretty much stupid.

What you and I like, or dislike, is irrelevant. This is the thinking of immigrants, who came to this country with nothing. They work hard. They make the kids help along the way so they try to give their kids a head start where possible.

Funny enough, they used to own a 6-unit apartment building. They made the kids help out on the weekends and with the turnovers. The kids hated it. to They hated it too. After a few years of dealing with it, they sold it for a small loss. That building is worth so much now, but they were so happy to get rid of it. We had this talk and laughed about it. They were landlords. They self-managed and got burned out. I have my handyman help with fixing stuff whenever they need help with their house.

GNL says

Eman says

You guys are overthinking it. He bought it as an investment property. From a math point of view, he had a small negative cash flow. His salary was more than enough to cover it. After renting it out for a year, he could do anything he wanted to do with it.

Ok, so you were able to apply the rental income to the loan qualifications(?)?

Why does he have to wait a year before he can do whatever he wants with it?

As it’s an investment property, it has to be rented out at least 12 months before he could occupy it. Bank would use up to 45% of his gross salary to off-set the negative cash flow.

His dad passed away in his 50’s. His mom passed away a decade later. She was having trouble letting go during her last days. I promised his mom I’ll take care of him. He got an inheritance of $254k when his mom passed away. Guess who took care of that money?

One day, he came to me and asked me to help him buy a SFH, and it had to be that house. He said his wife would come over from Vietnam next year, and he wanted his own place. I eyeballed the numbers, ran it by my loan officer. He said it’s doable and he got it done.

I laid out all criteria that he had to follow as I didn’t want him to get foreclosed. When his wife came over, he took the house back, completely remodeled the house, rented out 2 rooms at $900/month each. Then his wife started working. His salary grew. Then they had kids. He started to take on another part-time job. Eventually, no need to share any room with anyone. The house is worth over $1M easy now.

RedStar says

I feel the itch for a 911

dewIT!

Eman says

You guys are overthinking it. He bought it as an investment property. From a math point of view, he had a small negative cash flow. His salary was more than enough to cover it. After renting it out for a year, he could do anything he wanted to do with it.

yeah its all "smart leverage" strategies like what Steven Pesavento discusses on Youtube

.

ad says

Eman says

You guys are overthinking it. He bought it as an investment property. From a math point of view, he had a small negative cash flow. His salary was more than enough to cover it. After renting it out for a year, he could do anything he wanted to do with it.

yeah its all "smart leverage" strategies like what Steven Pesavento discusses on Youtube

.

If you buy a duplex or a 4plex, the rental income from other units will count towards your qualification. If you get a good deal, you can potentially live rent free.

https://americafirstreport.com/the-chaos-that-underwater-properties-caused-in-2008-and-2009-is-starting-to-happen-again/

The Chaos That “Underwater” Properties Caused in 2008 and 2009 Is Starting to Happen Again
BY MICHAEL SNYDER July 10, 2023

We never seem to learn. Over a decade ago, our leaders created the biggest housing bubble of all time, and when it finally burst the entire globe experienced great financial pain. So did they learn from their mistakes and fix the system?

No, instead they just created an even bigger housing bubble. Now that housing bubble is beginning to burst, and that is going to have very serious implications for all of us.

One thing that we learned during the Great Recession is that home values really matter.

When home values get low enough, many borrowers simply decide to walk away from their mortgages, and so the fact that U.S. home values have plummeted by 108.4 billion dollars should deeply alarm all of us…

The west coast is being hit particularly hard. For example, home values in Washington state have dropped by an average of more than $74,000 over the past year…

The good news is that this is not happening everywhere.

So many people have been relocating to Florida that home prices have actually gone up substantially in that state. ...

Patrick says

the fact that U.S. home values have plummeted by 108.4 billion dollars should deeply alarm all of us

The total value of us real estate as north of 40 trillion dollars. 108 billion is not even a rounding error. I am not deeply alarmed, not even mildly alarmed. I would put my alarm meter at less than 1%. Is Michael Snyder another art history major that can't afford to move out of moms' basement?

Patrick says

When home values get low enough, many borrowers simply decide to walk away from their mortgages

"Oh no!, according to the latest zestimate my house isn't worth what I paid for it!, absent any kind of financial difficulty in paying my 3% mortgage I need to walk away from this house to ... live on the street?"

stfu says

"Oh no!, according to the latest zestimate my house isn't worth what I paid for it!, absent any kind of financial difficulty in paying my 3% mortgage I need to walk away from this house to ... live on the street?"

In the financial fraud crash of ’08, before walking away from their underwater home, people were buying the same model in the same development, at the readjusted market price, then walking away from the underwater home. As the purchase price of the home that they mortgaged to get was fixed, they found a way to make it “adjustable”. The differential between the 3% mortgage payment and the 8% mortgage payment would have to be calculated into the math behind such a decison today. Of course, renting for less than the home payment for the underwater home could make sense.

stfu says

Patrick says

the fact that U.S. home values have plummeted by 108.4 billion dollars should deeply alarm all of us

The total value of us real estate as north of 40 trillion dollars. 108 billion is not even a rounding error. I am not deeply alarmed, not even mildly alarmed. I would put my alarm meter at less than 1%. Is Michael Snyder another art history major that can't afford to move out of moms' basement?

Patrick says

When home values get low enough, many borrowers simply decide to walk away from their mortgages

"Oh no!, according to the latest zestimate my house isn't worth what I paid for it!, absent any kind of financial difficulty in paying my 3% mortgage I need to walk away from this house to ... live on the street?"

stfu says

Patrick says

the fact that U.S. home values have plummeted by 108.4 billion dollars should deeply alarm all of us

The total value of us real estate as north of 40 trillion dollars. 108 billion is not even a rounding error. I am not deeply alarmed, not even mildly alarmed. I would put my alarm meter at less than 1%. Is Michael Snyder another art history major that can't afford to move out of moms' basement?

Patrick says

When home values get low enough, many borrowers simply decide to walk away from their mortgages

"Oh no!, according to the latest zestimate my house isn't worth what I paid for it!, absent any kind of financial difficulty in paying my 3% mortgage I need to walk away from this house to ... live on the street?"

stfu says

Patrick says

the fact that U.S. home values have plummeted by 108.4 billion dollars should deeply alarm all of us

The total value of us real estate as north of 40 trillion dollars. 108 billion is not even a rounding error. I am not deeply alarmed, not even mildly alarmed. I would put my alarm meter at less than 1%. Is Michael Snyder another art history major that can't afford to move out of moms' basement?

Patrick says

When home values get low enough, many borrowers simply decide to walk away from their mortgages

"Oh no!, according to the latest zestimate my house isn't worth what I paid for it!, absent any kind of financial difficulty in paying my 3% mortgage I need to walk away from this house to ... live on the street?"

Anyone who was paying attention in 2020-2021 refid into a stupid low rate. I can’t imagine that the volume of stupid people who didn’t is even 30% of those who did.

While I agree that there will be no crash since enough locked in low rates, I know otherwise smart friends/entrepreneurs, even experienced in real estate, who went for ARMs instead of locking 3%, just because they were half a percent cheaper to start with. People with ARMs getting brutalized now unless they are wealthy enough to pay off 100% cash.

How many of these ARMS are out there and when do they adjust?

mell says

While I agree that there will be no crash since enough locked in low rates

I dunno, bro. Maybe.

The huge massive majority of homes have been owned for a very long time, with lots of equity.

What is it, something like 40% of homes are paid off?

For this massive majority, a decision to sell will not be to time it to get the Best Price, or to bail out of underwater or whatever. It will be a decision based on other prerogatives that don't have much to do with Market Timing or some other Hipster-Investorism.

Someone like that sold his sh*tbox on my culdesac to some Greater Fools last summer, to leave the SF Bay Area to be closer to adult kids in the Sierra Foothills who were Priced Out of their hometown. He told me straight to my face he would be paying cash for his new place (near Mariposa). He told me that of course working with the ®ealtor they'd try to Nickel and Dime the Greater Fool to squeeze blood from every nickel, but he and his spouse were ready to leave, they had a date in mind, and they'd Meet The Market (my phrase, not his) to make their date. A drop of $100K or whatever in "the market" would not have swayed his timing. Such a drop might be a crash to some, but not to the huge majority.

GNL says

How many of these ARMS are out there and when do they adjust?

Depends, most every month, quarter or year. Some every 3 or 5 years. Not an expert on ARMs, but my friend's one already reset to his dismay

mell says

GNL says

How many of these ARMS are out there and when do they adjust?

Depends, most every month, quarter or year. Some every 3 or 5 years. Not an expert on ARMs, but my friend's one already reset to his dismay

Any idea of the % increase in payment?

B.A.C.A.H. says

The huge massive majority of homes have been owned for a very long time, with lots of equity.

Ok, but how many arms readjusting (or %) would it take to cause problems? Even in 08ish, there were tons of homes already paid off, no?

GNL says

mell says

GNL says

How many of these ARMS are out there and when do they adjust?

Depends, most every month, quarter or year. Some every 3 or 5 years. Not an expert on ARMs, but my friend's one already reset to his dismay

Any idea of the % increase in payment?

No expert, but I assume to the full extent the 30/15 year mortgage rise, so if it went from 3 to 7 %, the arm would rise say from 2.5 to 6.5%, but usually with a 5% or higher cap, and also often with a 2-3% yearly cap.

My opinion has been that there will not be any problems because inventory is tight and I believe it will stay tight for a very long time. But if there are a significant number of arms that will readjust long before rates come back down, this could cause some problems...if that number is high enough. Are payments going to go up 50%, 25% or only 10%? That's the question I believe is important. That and how many will readjust.

I had a realtor ask me to give 3 weeks of free rent to a buyer.

stfu says

The total value of us real estate as north of 40 trillion dollars. 108 billion is not even a rounding error. I am not deeply alarmed, not even mildly alarmed.

This is a great summary of why another crash is definitely going to repeat. I don't give a shit about the fraudulent method the bankers use to create their crashes, oil/gas in late 70's, SnL late 80', dotcom bust late 90's/early 2000's, housing bubble '08. I only care about the primary cause(central banking), and the impact(most people get screwed). Instead of using ridiculous evaluations to justify ignoring the issue, how 'bout asking yourself what is the market really worth?. I'll tell you what it's certainly fucking NOT worth, 40 trillion.

GNL says

Ok, but how many arms readjusting (or %) would it take to cause problems? Even in 08ish, there were tons of homes already paid off, no?

I don't know.

My point was that it's not just recent buiyers' debt problems that can drive the inventory of homes of which sellers will accept lower-than-peak prices to get a sale.

Maybe the ®realtors are agnostic. Volume likely means more to them than Best Prices.

Also for all the housing crash neigh-sayers, riddle me this. If '08 was a "housing crash", why did the market plunge 50%..? Not certain sectors, the entire-fucking-market. If you can't understand primary trends and big picture of how our economy is designed, you'll never see the crash coming, but you will repeatedly be caught by the fallout.

I doubt the next one will be called the housing crash, but housing will crash as part of it. Wait, you say the government fixed it? Can you point me to other examples of the government fixing anything, ever..?

Asset based loan. 40% LTV with a private lender. The borrower can use the cash out money however, s/he wishes.

Eman says

Asset based loan. 40% LTV with a private lender. The borrower can use the cash out money however, s/he wishes.

So, correct me if I'm wrong but, it looks as though banks are willing to lend for anything as long as there is an asset with significant equity in it? The equity will save the bank in case of borrower default, correct? IF, and as you see I did capitalize "IF", RE is in a classic ponzi, that equity can go poof in an instant, correct? And paper wealth is simply used to create more and more and more debt which causes prices to climb and round and round we go, correct? Where it stops nobody knows, correct?

But, muh inventory. That does seem to be the one thing that keeps this thing afloat. And it is also why I have been predicting RE will forever from now on be inventory light. Constraining inventory to cause RE to climb to the highest levels ever will be the greatest way to become rich for those who control those levers. Sinister fo sho.

Btw, I am also predicting this for education, healthcare, cars/travel and food. You know, the things everyone NEEDS. This is how the few at the top with become insanely rich.

@GNL,

Lenders are in the business of lending, not foreclosing. Borrowing cost/interest rate varies based on the perceived risk. The asset is the collateral.

For the lowest rate/borrowing cost, the underwriting tends to be the most stringent. Borrowing cost goes up to adjust for the risk accordingly. In this case, the lender said 9%. My guess this was an asset based lending, not based on income or other qualifications.

If anyone wants to put 50% down and borrow 50% for residential real estate, plenty of Chinese banks are willing to lend. No doc’s required. This is how some foreigners do it as they don’t have credit/FICO score, or income to qualify for anything.

Rubicon says

zombie apocalypse

Zombies aren't real and apocalypse is a religious thing.

Cannibal anarchy is more likely.

Rubicon says

Onvacation says

Rubicon says

zombie apocalypse

Zombies aren't real

Boy, Lemme show ya

These are birth persons with bonus holes, not zombies.

Al_Sharpton_for_President says

In the financial fraud crash of ’08, before walking away from their underwater home, people were buying the same model in the same development, at the readjusted market price, then walking away from the underwater home.

Do you have a source for this? Do you know of a single instance of this actually occurring or are you just throwing shit against the wall? The reason I ask is because your claim would suggest that banks are more ignorant about the home lending process than joe sixpack who bought more house than he could afford but somehow had the financial acumen to outsmart his lender.

https://www.msn.com/en-us/money/markets/senators-say-corporate-investors-are-driving-up-home-prices/ar-AA1dJ0Zs?cvid=97ba2b81c5ba49b58eaab13d550127a0&ei=32

Senators Say Corporate Investors Are Driving Up Home Prices

(Bloomberg) -- Democratic senators including Banking Chair Sherrod Brown and Elizabeth Warren want to restrict tax breaks for large corporate investors that buy local homes and often drive up costs.

The Stop Predatory Investing Act would prohibit an investor who acquires 50 or more single-family rental homes from deducting interest or depreciation on those properties.

In too many communities, “big investors funded by Wall Street buy up homes that could have gone to first-time home buyers, then jack up rent, neglect repairs, and threaten families with eviction,” said Ohio Senator Brown in a statement.

The legislation would also encourage big investors to sell single-family rental homes back to homeowners or nonprofits in the community.

Rubicon says

Eman says

Rubicon says

Onvacation says

Rubicon says

zombie apocalypse

Zombies aren't real

Boy, Lemme show ya

These are birth persons with bonus holes, not zombies.

Ah! My bad, how confusing!

Don't forget about Nancy. Thanks for reminding me.

stfu says

Do you have a source for this?

2008 was 15 years ago, so no saved links. Banks were notorious for getting shitty loans off their books, selling them to investment banks who would bundle them into lead-to-gold MBS.

Rubicon says

Prices go down when supply goes up significantly, exceeding demand. You saw 4M active listings in 2008 and prices plummeted. We are at 1M active listings currently.

Another great example of why the market will crash. Micro-focus instead of understanding the big picture of how central banking economies run. Central banking economies are built around a myriad of lies in order to disguise the theft being perpetrated. Prussian education is a big piece of this, because unlike Austrian economics, it's creates artificial silos where the big picture, and causation are lost as people muddle in mindless details. It requires our participation to succeed for any amount of time. But, as the system is designed to boom/bust as a key method of theft, this necessitates endless crashes.

Instead of reading RE articles, try reading Rothbard...

Rubicon says

Until then, let’s follow the data.

Don't you mean "Trust the science!". I've shown you numerous examples of a market in crisis, real houses in real specific locations. you've ignored every data point. This is why people tend to confuse religion with cults and people enslaved by propaganda. They can all share fanatical beliefs irrespective of reason or logic.

stfu says

Al_Sharpton_for_President says

In the financial fraud crash of ’08, before walking away from their underwater home, people were buying the same model in the same development, at the readjusted market price, then walking away from the underwater home.

Do you have a source for this? Do you know of a single instance of this actually occurring or are you just throwing shit against the wall? The reason I ask is because your claim would suggest that banks are more ignorant about the home lending process than joe sixpack who bought more house than he could afford but somehow had the financial acumen to outsmart his lender.

Why does it fucking matter? In this situation the person would potentially be making two down payments, and still end up with two loans. One they don't pay, and reap all the penalties for failing to, and one they have to pay if they want to keep the new place. The end results is still the same, they are debt slaves with nothing real to show for the time they've invested into either house.

Rubicon says

There has only been one major RE bubble fueled by loose lending. Even if you had bought during the peak of 2006 you would be doing well today.

Because you CHOOSE to ignore history, it does not disappear. Housing busts go back to the 1800's at least in this country. That lack of perspective fuels your entire greed centered approach. Don't feel too bad about this, that's by design. Greed is another key component that makes the theft possible. Inflation makes you THINK you are better off, but you spend more time to gain the same necessities. I make six figures, and in any scenario I could have imagined with that number 20 years ago, I'd be rich. But I'm not. Part of that is the place we've chosen to live, part of that is the design of the system, and my lack of knowledge of that design until recently.

The bankers have you Neo...