patrick.net

Here's the problem Roberto, your a guy trying to sell a plan that only works for you.

Your market is different than say Detroit, which I'm liking more all the time, but if my money were tied up in some rentals I wouldn't have choices when Bernanke decides he can move on from housing, and banking.

Will Bernanke move on? What do think?

David Losh says

Once again you are another sales person with hype.

You're wasting your time. His peers even started a thread on Zillow telling him to shut up (www.zillow.com/advice-thread/Roberto-Ribas/6491/) and was apparently telling people 2008 was the bottom.

toothfairy says

it's probably more like 2003 than 1981

People say it's more like 1991 (A False Glimmer Of Hope). But that's just good news for you, right? Less competitors to buy up all these cheap houses. If people would rather invest their money somewhere else, like the DOW which is at an all-time high, why try to sell so persistently these houses with prices that are about to skyrocket?

robertoaribas says

leave real estate analysis to those who haven't lost their tails in the business!

We owned the place in Atlanta for a lot of years, and should have sold sooner.

Like I said, you have no idea about Real Estate as a business other than your simple little rental analysis.

What bothers me is that some one may buy into your story, and start buying with the idea of being priced out forever.

Today we'll be preparing another of our properties for sale, because I'm really pretty good at timing the market.

You? not so much.

robertoaribas says

Why would anyone hire anyone as clueless as you?

People do hire me. We prepared six properties for sale last month.

People who do what I suggest sell quickly, for full price, or multiple offers, and those with a different idea languish on the market.

David Losh says

robertoaribas says

leave real estate analysis to those who haven't lost their tails in the business!

We owned the place in Atlanta for a lot of years, and should have sold sooner.

Like I said, you have no idea about Real Estate as a business other than your simple little rental analysis.

What bothers me is that some one may buy into your story, and start buying with the idea of being priced out forever.

Today we'll be preparing another of our properties for sale, because I'm really pretty good at timing the market.

You? not so much.

Why would people do that? He's been saying he's basically finished with buying for quite a while now.

robertoaribas says

You took the quote out of context, because you are too stupid to understand context... I said, I see why you left real estate agency, why would anyone hire you.... I'm sure with your fine at cleaning floors and toilets...

You do yourself no favours with such childish digs.

robertoaribas says

I am sick of this idiot following me around and commenting on every single thing I post. His track record at understanding real estate is the worst ever. His own personal record is terrible as well. He never has an actual point, except that buying anything is bad, and no analysis ever.

He accuses me of selling an investment scheme, when I at no time sell anyone on anything. Though, in actual point of fact, this may be the only intelligent thing he has ever said: that I should sell my real estate investing techniques, rather than writing about them for free, only to suffer insults from him, callmecrazy, etc on here, who are too stupid or jealous to actually think.

Fine, so take him to task about that, but don't attack him because he has a cleaning business. What makes you so superior because you are a community college professor? It's a pretty low dig to make at someone.

robertoaribas says

that I should sell my real estate investing techniques,

I'll leave your sales posts alone, because we are all here blogging for business, and you have the same rights I do to spout your nonsense.

You, however are missing the finer points of Real Estate investing.

In 2008 we had the tax credit to deplete Real Estate inventory: http://www.smartmoney.com/taxes/income/do-you-have-to-repay-your-homebuyer-credit/

That is what made me pause in buying another property.

The Fed followed this up with decreasing interest rates to make your ROI look more attractive, but prices were rising from the lows of 2008.

So when you quote sales data you are quoting increases of double digits based on lows created by a Global Real Estate market crash.

Your own example is that you bought a condo, or some condos for $50K after the crash, and now they are worth $100K. That's your double digit across the board rise in Real Estate pricing.

As I pointed out our condo in Atlanta Georgia never recovered from the crash. We paid $60K back in 1984, but it sold for $30K last year. How does that figure into your analysis? It doesn't.

You have blinders on because you do want to sell the books, and tapes.

You also never address economic viability for the long term with Real Estate. You focus on this last cycle which I view as highly manipulated.

The question is what will happen if Bernanke decides he's done fooling around, and moves on to fixing the over all economy, and unemployment.

You also aren't reading that construction, right now, is having a hard time finding workers. You don't get it do you?

The Fed has said they want to create jobs. Construction is a very cheap, and easy way to create jobs. Well, those jobs aren't attracting workers so why is the Fed continuing to dump money into Real Estate?

No jobs, no more Fed dollars. The Fed should move on to something more promising like Health Care, and services.

You just don't get it.

Bigsby says

don't attack him because he has a cleaning business.

Oh man, I have heard the same thing a hundred times over from my buddies in the Real Estate business.

I sold some properties before the crash when they were stilling pumping the market place. They told me I was nuts.

Then when I didn't jump back in and concentrated on our side business a lot of people called me stupid.

Come on, they still do, because today they are catching up from losses that they had.

My income has steadily risen.

As an example: we net $1300 per month per employee. We can add as many employees as we want, without a huge cash investment.

We don't advertise, I simply blog for business the way I do here.

Patrick.net is a great Real Estate site, and some of his ideas are very much on target. We service more individual home owners than Real Estate agents.

I think there is a shift away from Real Estate commissions, and more one on one Real Estate transactions. It was that way in the 1970s, and 1980s, more people did business direct as Principles Only, but we lost that in the rapid appreciation of the price of housing.

We'll see what happens, but there's no rush, Real Estate isn't going anywhere.

David Losh says

As I pointed out our condo in Atlanta Georgia never recovered from the crash. We paid $60K back in 1984, but it sold for $30K last year. How does that figure into your analysis? It doesn't.

And why should it?

Bigsby says

And why should it?

Exactly right!

Today we were discussing our acrage in Pinedale Wyoming. We have owned it forever, but I don't think it was wise to hold on during the crash, or then soon after.

I held because I thought fracking might boost the value of the mineral rights, but as we discussed today there are bigger players who own substantially more acrage that can play a waiting game.

I'm thinking there are other places I would put my money.

CameronCrazy says

David Losh says

Once again you are another sales person with hype.

You're wasting your time. His peers even started a thread on Zillow telling him to shut up (www.zillow.com/advice-thread/Roberto-Ribas/6491/) and was apparently telling people 2008 was the bottom.

toothfairy says

it's probably more like 2003 than 1981

People say it's more like 1991 (A False Glimmer Of Hope). But that's just good news for you, right? Less competitors to buy up all these cheap houses. If people would rather invest their money somewhere else, like the DOW which is at an all-time high, why try to sell so persistently these houses with prices that are about to skyrocket?

My point with this article is that housing prices go up and down (but mostly up). It's not like we haven't been through this before. So it's a bit naive to think oh, this time it's different and housing prices only go down.

CameronCrazy says

Just like 1981. Except we don't have Reaganomics spurring economic growth but instead have Obamacare showing the downside of the Laffer Curve. And the personal savings rate is currently around 2% rather than 10%. Oh, and mortgage rates are at an all-time low, not high. Wait, how is this anything like 1981?

people keep forgetting this...

toothfairy says

My point with this article is that housing prices go up and down (but mostly up).

no, adjusted for inflation home prices have been flat...
and every decade has been flat since 1945.

for SFBA there is plenty to go...

for SoFlorida they are back to 1975 prices...

David Losh says

Bigsby says

And why should it?

Exactly right!

Eh? So you just posted it to demonstrate you were one of the very few people in the country who managed to sell a property in 2009 for less than you paid in 1984. Half the price in fact. OK.

thomaswong.1986 says

toothfairy says

My point with this article is that housing prices go up and down (but mostly up).

no, adjusted for inflation home prices have been flat...

and every decade has been flat since 1945.

Maybe we are looking at different graphs then because the one you just posted shows prices going up.

Bigsby says

Eh? So you just posted it to demonstrate you were one of the very few people

There were no buyers, number one, and the second is that the building had reached it's obsolescence.

That's not to mention the number of bank owned properties that have been selling at these prices. We did nothing to improve the property, so it was all income.

The point is we aren't one of a very few. The building could be torn down to make way for something bigger, and better.

There are many market places where this is the same. When you want to sell, you sell for what the market will bear. There is no magic in the idea the price of property always goes up.

At the time in 1984 this part of Atlanta was considered a technology hub for software development. Today it's kind of mortibund.

So when people say they bought in the 1980s and they have an equity, that depends on if the property gets sold. I don't see Atlanta coming back, do you?

This is very simple. I don't see an upside to Atlanta Georgia, any more than I see an upside in owning property in Phoenix Arizona.

You followed the exact market timing plan that I had recommended since 2006, sell before the crash, and buy after the crash.

The problem is that the Real Estate market was never allowed to crash.

We got the tax credit, QE 1,2,3, and ended up with historically low interest rates. The banks got bailed out and are allowed to pursue more profits, cash reserves, all with very little risk. The Fed, and government seem very pleased with the housing recovery, but I don't see it as sustainable.

Now Atlanta Georgia in the 1980s was the home of Peach Tree Accounting. Back in the day that was a big deal. Today I don't see any economic viability to Atlanta so why hold on?

In the mean time, say in the past ten years, thousands of housing units were added to Atlanta, many have ended up in the hands of the bank. So I don't see prices rising there. I don't see rental potential there in Atlanta.

You're going to find many more people with the same idea. There are much easier ways to make a buck than being a land lord. I talk with Real Estate investors, who are older, who are looking to sell the properties, and put the money into something that will give greater returns, or safer returns.

Which reminds me, Real Estate is a 24/7 business. My side business was directly related to my Real Estate business, school teaching doesn't match that.

So you are either a full time Real Estate agent of not an agent at all.

You are one of thousands of people who are puffing the brilliance they had in the past seven years, but we are just getting started on this cycle.

David Losh says

So when people say they bought in the 1980s and they have an equity, that depends on if the property gets sold. I don't see Atlanta coming back, do you?

I have no knowledge of Atlanta, but if I'd bought a property back in '84 pretty much anywhere in the world, I'd be more than a bit surprised that its value had halved 25 years later. Atlanta doesn't create the images of Detroit, for example.

David Losh says

You followed the exact market timing plan that I had recommended since 2006, sell before the crash, and buy after the crash.

That's not exactly a novel recommendation in all fairness.

David Losh says

I talk with Real Estate investors, who are older, who are looking to sell the properties, and put the money into something that will give greater returns, or safer returns.

What do they have in mind? The stock market looks like a far from safe proposition at the minute.

Bigsby says

I'd be more than a bit surprised that its value had halved 25 years later

The problem there is the bank foreclosures.

In 1980 Atlanta was booming, it lost financial momentum, then over built into the 2000 mortgage backed securities scheme.

Alright, to be fair we could have changed the carpet, painted, redone the kitchen, and bath for about $10K, but still the market place is a crap shoot.

Bigsby says

That's not exactly a novel recommendation in all fairness.

Exactly right.

Bigsby says

What do they have in mind? The stock market looks like a far from safe proposition at the minute.

The video in this article talks about entrepreneurship. The article is about Blackstone, the biggest holder of residential Real Estate.

http://www.cnbc.com/id/100542594

In 1986 I had a restaurant listed for sale no one wanted, so I bought it. For three years I lived that place, it bacame one of the top ten places to be in Seattle. I sold it for many, many times more than I paid for it, and had good daily income.

People need more income, and less expenses today. I think more people are looking for good paying jobs than a high priced rental.

I see under utilized businesses every day, but that is just me.

As for my investor clients they would sell to go into safer havens, like bonds, or dividend income. I would encourage them to invest in small business, but they just want a simplier life.

No more renters calling, no more repairs, no more evictions from people who lost a job, got divorced, or went crazy.

The concensus is that when rents go down, they will sell.

robertoaribas says

The last post is so idiotic, it doesn't even warrant a response.

Then why bother yourself?

It's because what I do is contrary to the very simplistic view you have about Real Estate.

Phoenix is the third cheapest palce to buy Real Estate in a metropolitan areas in the United States. It is just ahead of Detroit, then Atlanta, then there is Phoenix Arizona.

Detroit done, Atlanta done, how far is Phoenix away from being done?

robertoaribas says

Yeah... The twit who lost money on 20 years of investing, and cleans toilets and carpets day to day, calls the math professor who made over a million dollars and climbing in real estate simplistic... My investments pull in 6k in net rental income, plus pay off 1k in mortgage debt each month. How many toilets do you scrub, to match that?

Do you have a winning smile?

robertoaribas says

The twit who lost money on 20 years of investing,

I made money, why do you think I didn't? Cutting losses on a property paid for many times over is a pretty simple concept.

robertoaribas says

calls the math professor who made over a million dollars and climbing in real estate simplistic...

I thought you were a big time Real Estate agent. You sure talk that way.

robertoaribas says

My investments pull in 6k in net rental income, plus pay off 1k in mortgage debt each month. How many toilets do you scrub, to match that?

Like I said, I make more money than you do.

Look it, I just came back here to post this chart, and found you whining, again:

http://www.bankrate.com/finance/real-estate/total-monthly-homeownership-costs-by-city.aspx?ec_id=cmctre_02_comm_RE_image_headline

You just seem so bitter about your lot in life. You made a million dollars, live it, breath it, but don't try to lord over the people here. Save that for your renters.

Bigsby says

Do you have a winning smile?

I do have a winning smile, and firm handshake, that is all it takes.

Well that, a closet full of suits, and my collection of Cole Haans.

robertoaribas says

that until just recently, it was you, your wife and your kids....

Now you're resorting to lies about me to make yourself feel better.

So you are a college professor, and part time Real Estate Investor.

I take it this is your first cycle so you really only have this experience to share.

Being a college professor with limited Real Estate experience gives you what insight?

You bring your simplistic view of price versus rent like it works for all market places, when I've shown you repeatedly it doesn't.

If you have a million dollars in equity I would cash that out so you can keep it, but where will you put your money next?

David Losh says

robertoaribas says

that until just recently, it was you, your wife and your kids....

Now you're resorting to lies about me to make yourself feel better.

So you are a college professor, and part time Real Estate Investor.

I take it this is your first cycle so you really only have this experience to share.

Being a college professor with limited Real Estate experience gives you what insight?

You bring your simplistic view of price versus rent like it works for all market places, when I've shown you repeatedly it doesn't.

If you have a million dollars in equity I would cash that out so you can keep it, but where will you put your money next?

I don't get this. One is a landlord from Pheonix and the other is a small cleaning company owner in Seattle and they are arguing who has a better business? It's like comparing apples to oranges. Power of the internet.

It's clear to me Robert could care less about cleaning business since he has a daytime job and David does not want to be a landlord since he does not want to deal with tenants. So, what's the problem here? Robert may generalize it a bit more but a sensible person should understand real estate is highly location dependent. He did not claim his business model is the best among all.

Patrick, would you stop a dog fight like this? We all like to argue on internet but this is a bit over IMO.

robertoaribas says

I have 17 years at this, and sold my properties in 2005. Unlike you, I saw the bubble coming, took my profits, waited out the crash, and bought more...

Well, if you found me online you know I did sell, but didn't buy, for all the reasons I outlined here, and everywhere.

There are reasons why you can't sell everything when you want. It depends on the market you sell into.

So your million dollars today will be worth what it sells for in a future market. What does your crystal ball say about that?

The fact still remains the Market place in Atlanta did go steadily down. I see you over giving your same tired advice about Detroit. How about that Detroit?

The Real Estate market is screwed up, manipulated, propped up.

So I don't see a comparison to the 1980s. In the 1980s there was a lot of upside potential in the economy. PCs, software, and the technology revolution were all on the horizon.

That was the point about the Atlanta property. In the 1980s it was in the hub of software development, before any teen ager on the planet could write code. What is it today? Nothing.

Real Estate markets are different all over the country, and your one size fits all approach is childish.

Mobi says

Power of the internet.

I'm sorry, but that is the point. This is all internet related.

I blog for business, and maintain a dozen, or so sites.

My business depends on internet presence which, you're right, should be my work today.

Mobi says

Patrick, would you stop a dog fight like this? We all like to argue on internet but this is a bit over IMO.

Once again, my fault no one elses. I made the mistake of visiting Robertos forums before I realized they were his. I mean I just read the comments, and the avatar didn't register.

My fault, sorry.

rob,
renters ability to pay higher rent is not fixed, is it?

robertoaribas says

Robert Shiller is DEAD WRONG when he quotes his famous "homes aren't a good investment, they only rise with inflation" quote. Really? if my home values and rents all rise with inflation over the next 10 years, I make an utter fortune.

from a classical investment POV .. RS is right since for many if RE is illiquid and extended time to sell. I can buy/sell a stock or bond on a moments notice.

Home as investment is too concentrated within its own economies... stock portfolios can be diversified across industries and locations. Your home is stuck in your location no matter how desirable or not.

Tax benefits favor securities.. can you take a loss provision on sale of residence. No!

God forbid you get a storm or earthquake wipes out your home.

You get the general picture...

robertoaribas says

My rent grows at twice the inflation rated, since half the expenses are fixed mortgage. the home value goes up at 2.5% a year, while the mortgage debt drops at $12,000 a year.

see you on midnight RE infomercial....

David Losh says

As for my investor clients they would sell to go into safer havens, like bonds, or dividend income. I would encourage them to invest in small business, but they just want a simplier life.

These investor clients of yours. I hope you are just cleaning their toilet and not giving investment advice. The housing market is just now bottoming. Selling now to go into bonds would be horrible timing.

toothfairy says

The housing market is just now bottoming.

That statement is contrary to the 20% price increases.

David Losh says

As for my investor clients they would sell to go into safer havens, like bonds, or dividend income.

You should read the comment.

Real Estate became volitile. For older investors there isn't a real reason to hold on if the price of property will fluctuate.

robertoaribas says

about advising your clients to "get out of homes, and get into bonds"

These guys are telling me what they will do. I've already made my choices.

David Losh says

Real Estate became volitile. For older investors there isn't a real reason to
hold on if the price of property will fluctuate.

It becomes relatively more volatile but it is not like it will crash next month. You do NOT have to hold on to properties. Just sell them before the next crash if you bought low enough.

@roberto,

Bap33 says

rob,
renters ability to pay higher rent is not fixed, is it?

valid or no?

The premise is entirely ridiculous. Most of LA(and SF for that matter) are unaffordable for most families.

Even if you accept the premise that the old 2.5-3.5x income calculation no longer applies due to low interest rates, you are still at something like 5-6x income. At an middle class/upper middle class income of $120-150K, you are still looking at homes in the max range of $600-900K. And looking at Redfin or similar in Los Angeles, you see a VERY small offering of complete renovated homes that contain schools with state test scores 780+.

And thats a pretty high household income. Along with that, at that price range, there MUST be fairly rapid real estate appreciation in order for it to work. Oh then theres that 20% downpayment of $120-300K which I doubt very much any people in that household income range possess.

Now I can't speak to the rest of the country other than to point out that even the most bearish here on Pat.net have conceeded that low real estate price areas such as Las Vegas, Florida, and Texas, have all bottomed out.

So you have a situation where:

1.) Housing prices must continue to rise
2.) Incomes must rise disproportionally faster(or additional government carrots must be added)
3.) Jobs must continue to be added.
4.) Inflation can't occur.

Eeesh.

Personally, and I think many people my age will be of the same mindset(GenX), what makes most sense at this point is to rent in an area I'm happy in, with a close commute to work. At this point, its far more likely that I'll inherit my 70's ish parents home with ocean view in coastal OC than mortgage a home before I retire. And as macabre as that might sound, things are what they are. The cool thing about that scenario would be the massive bank account my 457 will have produced by then. It won't even matter if prop 13 is repealed(In which case I'd likely sell, split the multi million dollar proceeds with my sibling, and retire as a King in Las Vegas)