patrick.net

You don't make sense.

How the hell do you pay under $2000 a month for a 1million home? Mortgage alone is going to be much much higher than that.

And taxes, property taxes aren't cheap. Your property taxes alone would be higher than most peoples mortgages around the country.

And I know you wrote some hypothetical scenario about %2.75 Interest Only Arm... but that is stupid. That is what got everyone in this country in trouble in the first place, not to mention I doubt any bank would take that kind of risk today.

The Professor says

Question to all of the investors: If all your leveraged properties dropped in
value, your renters left, and you could not afford maintenance, taxes, ansd
insurance, what would you do?

I know my scenario above is highly unlikely but the stated answer by many
investors is walk. Bankruptcy or whatever it takes, many investors will not be
responsible

All?, not very likely. But, a similar situation or close to what you described has already happened. We survived, and everybody else did too. The economic downturn took out some flippers, but that was likely to happen anyway due to their philosophy about housing in general which is by doing the least amount of work and expending the least amount of resources, while trying to extract the most profit. People get wise fairly quick to the polished turd routine, with new paint of course.

FortWayne says

You don't make sense.

How the hell do you pay under $2000 a month for a 1million home? Mortgage alone is going to be much much higher than that.

And taxes, property taxes aren't cheap. Your property taxes alone would be higher than most peoples mortgages around the country.

And I know you wrote some hypothetical scenario about %2.75 Interest Only Arm... but that is stupid. That is what got everyone in this country in trouble in the first place, not to mention I doubt any bank would take that kind of risk today.

Its not hypothetical, this is the loan I got!
If anyone wants this loan go to unionbank.com today and get it.

robertoaribas says

yeah, someone that bought a home 2 years ago, has been paying a mortgage far less than rent

True in a lot of places like Phoenix. But in the SFBA, 2 years of the savings of renting vs owning is pretty equal to the manipulated price advance that we are witnessing. I'd take the increase in my savings any day over the hope that the games will continue.

FortWayne says

You don't make sense.

How the hell do you pay under $2000 a month for a 1million home? Mortgage alone is going to be much much higher than that.

And taxes, property taxes aren't cheap. Your property taxes alone would be higher than most peoples mortgages around the country.

And I know you wrote some hypothetical scenario about %2.75 Interest Only Arm... but that is stupid. That is what got everyone in this country in trouble in the first place, not to mention I doubt any bank would take that kind of risk today.

Interest only ARM loans...

Risky when you have the skin in the game. If you sell before the next downturn, you win big tho.

Mobi says

Interest only ARM loans...

Risky when you have the skin in the game. If you sell before the next
downturn, we win big tho.

Yes, but I think Popy put a down payment of 100-200k? Now if it is a zero down payment ARM only-I guess that is worth it?

David Losh says

Two years doesn't make a market place for Real Estate. None of these people
could sell today, and be made whole.

Does not make sense. I know at least one case personally (at lot more than that if I do the research) who was made whole by buying and selling within the last couple years.

For this loan unionbank requires a 20%+ down payment.
I would have loved to do a zero down loan - the closest loan left is FHA and the rates and fees are high.

I totally am going to sell this home in the next zero to two years. A 30 year fixed loan would have been dumb IMO.

lostand confused says

Mobi says

Interest only ARM loans...

Risky when you have the skin in the game. If you sell before the next
downturn, we win big tho.

Yes, but I think Popy put a down payment of 100-200k? Now if it is a zero down payment ARM only-I guess that is worth it?

Correct. That is whay I meant to have skin in the game. Pretty much you want to unload it before the next down turn.

lostand confused says

PockyClipsNow says

At the same time, almost no one who rents and has a stock portfolio over 1m.

Unrelated, but this reminded me of the poor Enron lady. She was an employee of Enron and was ready to retire I think and had 1 million dollars of Enron in her 401K I think. When the sh*t hit the fan, she couldn't sell , the executives sold and then her 1 million became worthless! Poor lady.

I think the old proverb goes something like this:

Better to have been rich and lost, than to never have been rich at all

; )

Bigsby says

WTF are you blathering about?

robertoaribas says

what a complete idiot... it is really unbelievable!!!!

yeah, someone that bought a home 2 years ago, has been paying a mortgage far less than rent, and has seen the home value go up 10 to 30% depending on where has done fine. Only the absolute dumbest person in the whole world can't understand that, cue david lush.

That is the most ridiculous assertion in the sales person hype bag.

First it's the less than rent blather, now it's that double digit price hikes have made people whole.

So, it's 10% to sell, we have the one year of price hikes, and Hmmm.... I'm the idiot?

10% to 30%, Hmmm.... do you mean from Case Shiller, Zillow, Trulia, and what other source? Is that a universal set of truths of more anecdotal information.

Mobi says

Does not make sense. I know at least one case personally (at lot more than that if I do the research) who was made whole by buying and selling within the last couple years.

What doesn't make sense is that some one bought to sell two years later who wasn't an investor flipper kind of person.

rent STILL cost twice the mortgage

Then rents are too high.

KarlRoveIsScum says

If you can afford to rent a home worth $1M there is something wrong with you if you don't buy!

This is a very helpful, succinct statement illustrating why a majority make owning a house their biggest financial goal.

Why do rental payments have to equal mortgage payments?

There are many places in the world where rents are cheap, but home buying is incredibly expensive - and vice versa.

It's the Austrian/Neoclassical fantasy about equilibriums.

I actually got a 5 year IO ARM on my house. I only used the 3 year in the example because its common to move every 2 years, then you got an extra year which seems safe.

We know the pattern that established from last bubble:
buy and then every 2 years sell for tax free gain to trade into better house
repeat
repeat
..
bankruptcy and/or foreclosure/loan mod/short sell etc.

The IO arm loan is perfect for such a lifestyle. The bubble jumping job hoppers like me will appreciate it.

David Losh says

That is the most ridiculous assertion in the sales person hype bag.

First it's the less than rent blather, now it's that double digit price hikes have made people whole.

So, it's 10% to sell, we have the one year of price hikes, and Hmmm.... I'm the idiot?

Maybe you should stop saying things like 'none of these people (who bought within the last 2 years) could sell today, and be made whole.' Actually, why don't you just explain what the hell that is supposed to mean?

thunderlips11 says

It's the Austrian/Neoclassical fantasy about equilibriums.

Austrians are quite explicitly against equilibrium theories. The Keynesians OTOH are quite fond of equilibria.

Bigsby says

Actually, why don't you just explain what the hell that is supposed to mean?

I don't know anyone in today's retail market who could sell in 2 years, and come out with a profit.

Flippers might, if they were scrambling for a deal, but I don't know any homies, who are in multiple offers, no inspection, and now no appraisal, escalator clause offers who are doing well.

Bigsby says

Actually, why don't you just explain what the hell that is supposed to mean?

Actually why don't you explain it to me, because so far you have said nothing other than demand proof from me, about my statements, which I have readily supplied you.

If you already know this Real Estate market place is heavily manipulated then why play?

It seems exceedingly risky to me.

David Losh says

Bigsby says

Actually, why don't you just explain what the hell that is supposed to mean?

I don't know anyone in today's retail market who could sell in 2 years, and come out with a profit.

Flippers might, if they were scrambling for a deal, but I don't know any homies, who are in multiple offers, no inspection, and now no appraisal, escalator clause offers who are doing well.

Most people who buy to live in the property themselves aren't going to sell in 2 years, but the point was you claimed they are all in over their heads. That is just blathering nonsense on your part and is completely unsupported by the actual facts. I bought 18 months ago and am more than happy with both the purchase and the price. I'm not in over my head, so you are wrong.

David Losh says

Bigsby says

Actually, why don't you just explain what the hell that is supposed to mean?

Actually why don't you explain it to me, because so far you have said nothing other than demand proof from me, about my statements, which I have readily supplied you.

If you already know this Real Estate market place is heavily manipulated then why play?

It seems exceedingly risky to me.

How am I supposed to explain something to you when I'm asking you to explain what you mean by your comments. Again, what on earth does 'make whole' mean?

KarlRoveIsScum says

If you can afford to rent a home worth $1M there is something wrong with you if you don't buy!

Haha, this is so wrong. I can afford, actually can afford to pay cash. This is only because I didn't buy into the SFBA. Silly rabbit, ageing wood and nails is for kids tree houses. A proper family home should be made of durable materials.

KarlRoveIsScum says

David Losh says

I see plenty of people who are in over their heads in properties.

Trillions have been wiped out.

And so will trillions more. Sit back and watch the continued fireworks. The show is just starting, not ending. I've funnelled most of my wealth out of this country (legally btw) and sleep well at night now. Good luck to everyone.

What insurance if Free in Lala land?

robertoaribas says

I'm going to sell it...

Then do that, good for you, but you are an investor right? In a Phoenix market place, right? Arizona is the highest set of price hikes behind the Bay Area, right?

So how are you making a universal statement for every one who bought?

Especially for the home owners who have been mercilessly hosed.

robertoaribas says

So, there will be the best proof of david's idiocy ever!

Now, if you ever wanted to bring anything other than anecdotal information about your investments to the table, with some reasoned response with data, other than your own personal anecdotal sales data, I would maybe listen to you.

However, your reliance on insults takes anything you might have to say, and makes it laughable.

I'm always amused by you, but you bring nothing to the discussion here.

David Losh says

So how are you making a universal statement for every one who bought?

He's not. You are though.

robertoaribas says

nd has seen the home value go up 10 to 30% depending on where has done fine.

You keep saying that and you are completely wrong. The value of the home has gone nowhere until the person sells! So that 10 to %30 up in value is totally in your head until you sell. Why can't you get this?

robertoaribas says

RentingForHalfTheCost says

And so will trillions more. Sit back and watch the continued fireworks.

let's see: you said the same thing last year and were butt ass wrong.

you said the same thing 2 years ago and were butt ass wrong...

you state no facts, no explanations for how your prior predictions sucked so bad, and yet keep predicting the same thing....

does thinking hurt you or something?

85 Billion/month to prop up a dead market is enough facts you need. Ahh, lets just forget about that, it is nothing at all. Nothing you say. Just wait... Your facts are all forgetting about what is causing them. You are one level above the root, if you dig down you will scare even yourself.

robertoaribas says

A home has a value. PERIOD. it isn't worth zero just because you don't sell it on that particular day.

Its value could actually go negative. Upkeep on a home you can't sell is negative. You need income to keep supporting the dead animal.

Any landlord ever wake up and get a note from their tenant that they will pay you more in rent? I don't think so. You have to be the enforcer and risk that they leave you without your rental income just to squeeze more juice form the orange. I'd rather the former. Just saying...

http://finance.yahoo.com/news/cisco-increases-quarterly-cash-dividend-231500984.html

Reality says

Austrians are quite explicitly against equilibrium theories. The Keynesians OTOH are quite fond of equilibria.

Some Austrians, like Mises, are critical to the point where you can say they reject general equilibrium. Others aren't. von Weiser spent a lifetime, and Hayek half his lifetime, working on their versions of Equilibrium. Hayek's version came to become Market Equilibrium, but it is heavily influenced by the classic concept of equilibrium.

robertoaribas says

as usual, you lack of intellectual ability interferes with the discussion.

YOU mad a universal statement: that everybody who bought was over their heads.

Bigsby says

He's not. You are though.

You made the statement about the past two years. I refuted it, and you came back with another anecdote about your property.

Let's see what happens when you sell.

Best of Luck.

What is interesting is that you are all in for Real Estate.

Let me see, I sold in 2005, 2006, and 2007, and again that prize of a property in Atlanta that I suppose you think we should have held onto.

The fact is that we had a global Real Estate market crash in 2007, I had my cash out, but I would have been an absolute moron to jump into a market I had already gotten out of.

I spent more time on my business which has done much better than you have with your portfolio.

and Bigby, if you have something to contribute, anything to say, then make some statements.

The discussion was about properties bought in the past two years. One of declines, the other of that great double digit price hikes we hear so much about.

If it's true, then we should all sell, and get into something much more profitable.

David Losh says

You made the statement about the past two years. I refuted it, and you came back with another anecdote about your property.

Let's see what happens when you sell.

Best of Luck.

Try re-reading the thread. You might be able to get your facts straight then.

David Losh says

The fact is that we had a global Real Estate market crash in 2007, I had my cash out, but I would have been an absolute moron to jump into a market I had already gotten out of.

What you do with your cash is your decision. Would you have been an absolute moron to do what Roberto did if you had been living in Phoenix? Come on, give an honest answer rather than trying to maintain your present narrative.

David Losh says

I spent more time on my business which has done much better than you have with your portfolio.

Another rather pointless and unproven statement. You seem to like doing that.

David Losh says

and Bigby, if you have something to contribute, anything to say, then make some statements.

And what are you doing except posting extraordinarily confused comments that seem to have a habit of contradicting themselves? Am I now not allowed to point out the problems with what you are saying?

David Losh says

The discussion was about properties bought in the past two years. One of declines, the other of that great double digit price hikes we hear so much about.

If it's true, then we should all sell, and get into something much more profitable.

Why? I'm not a landlord. I like my house. Why would I sell even if my house had seen substantial rises (which Monterey has not)? And that's not even beginning to touch on all the other factors that determine whether or not to sell.

Bigsby says

Would you have been an absolute moron to do what Roberto did if you had been living in Phoenix?

Yes, I would have been a moron to jump back into an investment that had just crashed, and is now poised to crash, again.

I don't believe in a crash, but I do think we will find an equilibrium that finds prices in Phoenix excessive.

I think $50K, or $26K for a condo in Phoenix is a fair price, as we saw in Atlanta.

The other thing is about rents. We had ten years of building that ignored apartment construction. We had a glut of construction Nationally, but now we have apartment development.

I never saw why people paid high rents. You can always move twenty minutes away, and pay less.

You don't like these broad statements because they contradict the other broad statements like Real Estate always goes up, it doesn't, rents don't always go up either.

We are in a whole new economy.

Now about this thread and the 50% low in Bay Area housing. That may be, but the premise is that some one is paying $4K per month in rent, and the house payment is $1952.

Now why is that? How is that happening? Seven hundred fifty thousand dollars in debt, plus the bank gets $250K of my hard earned money, and I save $24K per year on rent. Does that mean it takes me ten years to recoup my down payment?

So you think that some how, by magic, in those ten years we will have Real Estate appreciation of 2%, or will we be at those great double digit price hikes forever?

At 2% it's $20K so we get our down payment back in five years, or there abouts.

The actual return on investment is low, unless you have that rental income.

I personally don't think you have thought any of this through.

So I own my family home, and as soon as I can, I'll sell it, and move onto other things, but I'd be an absolute moron to buy into the Real Estate market place.

thunderlips11 says

Reality says

Austrians are quite explicitly against equilibrium theories. The Keynesians OTOH are quite fond of equilibria.

Some Austrians, like Mises, are critical to the point where you can say they reject general equilibrium. Others aren't. von Weiser spent a lifetime, and Hayek half his lifetime, working on their versions of Equilibrium. Hayek's version came to become Market Equilibrium, but it is heavily influenced by the classic concept of equilibrium.

So why did you single out Austrians for affinity for fanciful equilibrium when they are about the farthest removed from advocating equilibrium compared to almost all other schools of economic thoughts.

David Losh says

Yes, I would have been a moron to jump back into an investment that had just crashed, and is now poised to crash, again.

I don't believe in a crash, but I do think we will find an equilibrium that finds prices in Phoenix excessive.

You just can't make it up. What did I just say about you constantly contradicting yourself?

David Losh says

I think $50K, or $26K for a condo in Phoenix is a fair price, as we saw in Atlanta.

You think it's fair? Based on what? Seriously, how on earth can you make a comment like that?

David Losh says

You don't like these broad statements because they contradict the other broad statements like Real Estate always goes up, it doesn't, rents don't always go up either.

Complete nonsense. Who on here says RE always goes up? I don't like your broad statements because they aren't based on any kind of rational analysis of the situation. They are just you painting your imaginary picture.

David Losh says

Now why is that? How is that happening? Seven hundred fifty thousand dollars in debt, plus the bank gets $250K of my hard earned money, and I save $24K per year on rent. Does that mean it takes me ten years to recoup my down payment?

I wouldn't do what the original poster did, but that's me. I, however, can see what he's arguing and I can also see the pitfalls. If prices shoot up and he cashes out (as I think he said he was going to do), then he'll come out ahead and his 250k down and 24k savings a year would represent a pretty good use of money. And no, it doesn't mean it'll take 10 years to recoup his down payment. What are you talking about?
Investments are risky. Would you want to drop 250k in the stock market as it is now? Would you put it in RE? Buy gold..? Leave it in the bank? Each to their own.

David Losh says

So you think that some how, by magic, in those ten years we will have Real Estate appreciation of 2%, or will we be at those great double digit price hikes forever?

At 2% it's $20K so we get our down payment back in five years, or there abouts.

The actual return on investment is low, unless you have that rental income.

I personally don't think you have thought any of this through.

He's trying to take advantage of the current market. Of course the current double digit increases in certain house prices won't last forever. Who the hell is saying they will? But some areas are having them now and that's what certain people are trying to benefit from.
And what is low about Roberto's return on investment, for example? Any idiot can make up a figure and say 'look at this low return.' If the original poster's purchase goes up 2% a year and interest rates stay about the same, then in 10 years, he'll have saved the rental difference, pocketed 200k or so, and basically have done alright for himself. If circumstances change... And what about the actual returns of Roberto's investments, the ones you constantly attack? If he sold right now, which he clearly could easily do, he would make a fantastic return on his investment in just 2 years, or are you really arguing otherwise?

Bigsby says

And what about the actual returns of Roberto's investments, the ones you constantly attack?

Let me stop you there, because Roberto attacks every one who disagrees with him. He folows many of the threads to interfer with discussions that are contrary to his Real Estate investment strategy.

You should follow all of the threads that Roberto has commented on.

Roberto insults any one who brings real data to the table with his own anecdotes about his personal residential housing investments.

I personaly applaud Robertos accomplishments, and he is starting to come around to the idea of cashing out, because I think, according to what I read, that 2014 will be about the end of the government propping up the housing market.

As an example the article yesterday about Fannie Mae turning a profit: http://www.cnbc.com/id/100610000

Roberto doesn't like the fact that my wife, and I own a cleaning company, and that is where I chose to put my money.

Most of my buddies, and family made fun of me for my choice, because we did pretty well buying, and selling properties. I recovered my lost income within a year, and have built larger profits every year since. Last year we had 30% growth, and project the same this year.

Yesterday I hired back one of my regular laborers because the demand for preparing properties for sale is growing. We have two trucks that we haven't used in three years, because our income from cleaning has been high.

You see, Roberto doesn't like that because it's contrary to his investment strategy, or lack of strategy. Roberto says he didn't see the rapid price increases coming.

As far as your analysis of the above presented buy in to save on rent, you don't pocket $200K, you recover your down payment. It was your money to begin with.

David Losh says

Let me stop you there, because Roberto attacks every one who disagrees with him. He folows many of the threads to interfer with discussions that are contrary to his Real Estate investment strategy.

I know he does, but that wasn't what I was discussing.

David Losh says

I personaly applaud Robertos accomplishments, and he is starting to come around to the idea of cashing out, because I think, according to what I read, that 2014 will be about the end of the government propping up the housing market.

This is another example of how you contradict yourself. I've seen you post this kind of comment before, and then in the same breath state how the bottom will drop out of the market and he'll be screwed. Make up your mind.

David Losh says

Roberto doesn't like the fact that my wife, and I own a cleaning company, and that is where I chose to put my money.

Most of my buddies, and family made fun of me for my choice, because we did pretty well buying, and selling properties. I recovered my lost income within a year, and have built larger profits every year since. Last year we had 30% growth, and project the same this year.

You don't have to prove yourself to me. Your job is your job. All jobs are important to someone otherwise they wouldn't exist. Roberto's belittling of what you do simply reflects badly on him, so why concern yourself about it?

David Losh says

Yesterday I hired back one of my regular laborers because the demand for preparing properties for sale is growing. We have two trucks that we haven't used in three years, because our income from cleaning has been high.

You see, Roberto doesn't like that because it's contrary to his investment strategy, or lack of strategy. Roberto says he didn't see the rapid price increases coming.

Your market place isn't of much relevance to someone not living there. If more houses are going on the market where you live, how exactly is that contrary to his investment strategy? He's already said he's finished buying. And last I heard, he wasn't buying where you lived anyway.
And who did see such rapid price increases coming? He believed there would be increases of some kind, invested accordingly and has done very well. You seem to accept that in some of your posts and then say the exact opposite in others.

David Losh says

As far as your analysis of the above presented buy in to save on rent, you don't pocket $200K, you recover your down payment. It was your money to begin with.

What are you talking about? If prices rise 10% a year for two years, he'll walk away with that increase minus expenses AND his down payment.

Bigsby says

What are you talking about? If prices rise 10% a year for two years, he'll walk away with that increase minus expenses AND his down payment.

Expenses can be a pig! Maintanence, Insurance, Property tax, easements (if you are a condo), interest on the over-inflated price, necessary renovation that don't increase the house value at all, lawyer fees when your financial distress leads to a divorce, huge university costs because your kids see their parents indebted for life and they want something better, etc. etc.

Rent= problems are just a phone call to the landlord saying "Fix it"! ;)