patrick.net

Darrell In Phoenix says

We know you're lost... lost in a sea of misrepresentations and lies.

Says Mr. Multiple Trolling Personalities.

Let’s see if I can do this without making a complete hash of things..apologies in advance if I do.

===========

Price: 875k
$ Financed: 700k

============

Meaning your paid $175,000 down, or 20% of the sale price, presumably to avoid mortgage insurance. I think I got that part. And I’m also presuming you incurred zero other expenses upon the purchase. Is that a fair statement? In other words, you either used the bank’s attorney or represented yourself, were able to stick the seller with everything from the cost of your credit report to every filing fee to every fedex delivery to I guess even the home inspection fee, presuming you had one done. Sound about right? Since this is a “real-life” example, I’m assuming all relevant facts were presented. Whereas in a typical house purchase the buyer’s side of the closing costs can run from 1% to (so I’ve been told) 3%. But not for you. I’d like to hear the “real-life” way you scooted around all that, personally.

===============
Loan: 5/1 Interest Only ARM at 2.875 with .25 points (union bank)
Payment: 1677
===============

So here’s my problem with your math: Something in the above is wrong, presuming all you did was put down a 20% down payment and do nothing else. To get to a $1,677 payment you have to ignore the .25 points. Both as part of the downpayment AND as part of the monthly payment.

Monthly: ( 0.02875/12 = 0.002396) * 700,000 = 1,677 (rounded). No .25% points there.

Downpayment: $875,000 * .20 = $175,000, what you said you paid, and what you would have needed to pay to avoid mortgage insurance. No .25% points there, either, else your downpayment would’ve been too small.

So, somewhere along the way 700,000 *.0025 or $1,750 fell of the table. Where’d it go? It is not in what you’re claiming as a monthly payment, and it is not stated as being included in any closing costs, which apparently were zero on your end, other than the 20% downpayment.

=============
Prop tax: 912
total: 2588
(im in 28% effective tax bracket so 2588 * .72 = 1863 'after tax write off payment')
Add fire ins of 129 per month and total pmt after tax write off = $1992
========

And here’s my second problem, not a math one necessarily, more revolving around logic: Are you saying you have no homeowner’s insurance? And that your mortgage was written in such a way to permit this? Or, is what you’re calling “fire insurance” of $129/month actually a homeowner’s policy? In that case, you’re getting the deal of a lifetime, since a property worth $875,000 is only costing you $1,548/yr to insure. I’d guesstimate a number double that, quite frankly, maybe more if you’re required to insure 125% of replacement value. So, neither scenario seems credible in my eyes, but perhaps you can offer an explanation.

And I’m a bit surprised that you included nothing at all for routine repairs and maintenance. No lawn to mow, no air conditioning to break down, etc? Any reason in particular you feel your lawn isn’t going to grow and nothing is going to break down over the next five years? In that case, I’d like to know the brand of grass seed you’re using AND the Uber-builder who has apparently constructed an invulnerable house.

Oh, yeah. Apropos of nothing, is your mortgage considered Jumbo or Conforming? In a sane society it would be Jumbo, of course. But I guess in certain parts of the country you would come in as conforming. And I’m guessing you’re conforming, FWIW, given the interest rate you’ve gotten. But I’d be curious to see if I’ve guessed right.

Thanks in advance.

EPD

Darrell In Phoenix says

We know you're lost... lost in a sea of misrepresentations and lies.

If you own property, sell it, if you want to buy, buy for what you would pay in cash.

Buy what you can afford to pay off within seven years, but don't tell the bank your intention.

The truth is out there, but I don't think you are listening.

The bank is always the enemy, be done with them as quick as you can.

Darrell In Phoenix says

We know you're lost... lost in a sea of misrepresentations and lies.

Will you used house pimps ever be honest with the public?

What happened to your banning? And where's War? Is he going to make an appearance today?

Darrell In Phoenix says

Darrell In Phoenix says

Will you used house pimps ever be honest with the public?

LIEWog/Bigsby..... you need to sign out of your Bigsby username and into David Losh first. You're getting your names all mixed up.

Why do you realtors post here with multiple usernames?

No need to project what you do onto others.

Darrell In Phoenix says

Why do you realtors post here with multiple usernames?

says the guy that spends every minute on the forum trolling with multiple names...haha, funny.

Shoot, I gotta run...my house just lost a few bucks in value...crap..

Just because you repeat some nonsense does not make it a fact...

You know a lot of stuff - like I am underwater, I am a realtor, I have multiple usernames...

I recommend everyone to listen to Darrell...he knows everything and he is not lying. How do I know that? Well, he says so.

Now, I really gotta run as my losses on my house today are increasing...also I gotta hit the real estate office for some listings and in between sign on with 10 different usernames to troll...

HAHA - awesome!

You should write a book. Genre: Fiction - really, you have great fantasy. I give you that.

...

THE DARRELL CODE!!

Now at your bookstore...

Darrell In Phoenix says

The LIAR CODE!!

Established with MLS

there you go! I knew you'd come up with something.

Darrell In Phoenix says

David Losh first.

I'm actually a real guy who has also been banned here in the past, but Patrick let me back in. I only use my real name.

For those of you who think owning is a bad idea, you are signing up to always pay the market rate for monthly housing cost. Your owner/neighbor may own and have fixed their monthly cost for 15 years at 2.75% interest. After 15 years, they won't have a payment other than taxes and insurance. You will still be paying the going rate for rent. While their payment stayed the same, your "payment" was variable and changed with the market.

Yes, you have maintenence with owning, but you also have potential equity growth and certainly have principle paying down. If someone is deciding to be a lifelong renter at 3% interest rates, they are making a rather large error in my humble opinion.

The monthly payment is on sale right now when you decide to own. Saying it's a once in a lifetime event would be accurate. The last time mortgage rates were fixed at 3.25% for 30 years? Never since 1900 anyway. I know that for a fact.

Best of luck!

brucenorris says

The last time mortgage rates were fixed at 3.25% for 30 years?

So then with your logic 2.25% would be even better? How about 1.25%, then 0.25%, then 0%. The low interest rate speaks of a deeper problem. You don't need to look that far to see it. Jobs!

Darrell In Phoenix says

brucenorris says

Saying it's a once in a lifetime event would be accurate.

Hey used house pimp,

When are you liars ever going to stop lying to the public?

When are you going to stop being a dumb ass?

SubOink says

In the meantime, you have spend 4 years of rent and pumped it down the drain.

So in essence, if you add up those 4 years of rent then you know how much you have lost on that deal.

4 years of over 2k/mth in savings. Not a bad deal at all. Add to it that this savings has grown at a rate of 8-10% annually. YMMV

RentingForHalfTheCost says

The low interest rate speaks of a deeper problem. You don't need to look that far to see it. Jobs!

The last word should be Japan!

Japan has had 0% for a decade.

robertoaribas says

how long till I have all of my invested money back?

You have debt. You have to pay the debt, or default. If you end up with less equity than you risked then you lost.

Investing in Real Estate is a job. It can be a good paying job, but it is a job. You are tied to the set of asset you acquire.

robertoaribas says

so lets see: if I can finance homes at LESS THAN HALF OF CURRENT RENT

As rates go down so do rents. I'm renting cheaper now that I ever have been in my life. Incredible, and each month I couldn't be happier. I wish time went faster...

You don't need a math degree to figure this stuff out. Good luck to you.

RentingForHalfTheCost says

As rates go down so do rents

Please explain how apartment complexes in bay area have increased rents 25-30% in the last 2 years with the rates going down.

Your chart starts at 2008. If you use the Tableau chart with Case Schiller you will see the real dynamics of the top, and bottom, as you call them.

Let's see if this works: http://public.tableausoftware.com/views/Case-Shiller-YOY/YOYChange?:embed=y&:loadOrderID=0

You can adjust the chart back to 1987, I think

OK, that worked.

So you can see that the chart is over shooting the bottom rising up to the top, but that is totally inconsistent with the market place in Arizona.

I have always been able to buy a place in Mesa for about $100K, three bedrooms, 1.5 to 1.75 baths, and a pool.

Then it all went sideways.

So I don't see a bottom or a top, what I see is volitility.

Yup says

SubOink says

my hownowners insurance = $1000.-/y

when we rented our renters insurance for the house was $950.- /y

BS that is complete crap, you are full of shit.

Why is it BS? Those are the amounts I pay/paid...

SubOink says

Why is it BS? Those are the amounts I pay/paid...

He seemingly knows more about your bills than you do. An impressive ability.

Bigsby says

SubOink says

Why is it BS? Those are the amounts I pay/paid...

He seemingly knows more about your bills than you do. An impressive ability.

I thought Darrel from Phoenix is the only guy that possesses such abilities...

Yup says

You are correct I apparently do know more about bills than he does.

You don't know more about HIS bills though, do you?

dublin hillz says

RentingForHalfTheCost says

As rates go down so do rents

Please explain how apartment complexes in bay area have increased rents 25-30% in the last 2 years with the rates going down.

Because they haven't overall. Sure, you can find places that fit your description, just like you can find places that are cheaper than 4 years ago. Overall, rents are stressed. There are better opportunities out there now that I have ever seen in the BA. I can rent a McMansion for 4k/mth. That was never true before.

Elwood P Dowd says

And here’s my second problem, not a math one necessarily, more revolving around logic: Are you saying you have no homeowner’s insurance? And that your mortgage was written in such a way to permit this? Or, is what you’re calling “fire insurance” of $129/month actually a homeowner’s policy? In that case, you’re getting the deal of a lifetime, since a property worth $875,000 is only costing you $1,548/yr to insure

Elwood,
I've seen lenders refer to homeowner insurance as "fire insurance", so, it's probably the same thing.

For the cost. In LA or Silicon Valley it's common for the lot to account for more than half of the purchase price. Someone may purchase a rundown house for $1m with the intent to scrape and rebuild. So the lot is $1m. A typical SV Fortress house that sells for $1.5m would be roughly $1m for lot, $500k for structure. The insurance covers the structure, not the lot. The insurance price then is lower than you might think, based on the purchase price. Insurance on a 2k ft $1.5m house could be $1200. It also depends a lot on the deductible and liability limits.

This is a flaw in many rent vs own calculators; they will show the homeowner insurance as a percent of purchase price, but if the lot is expensive, that's misleading.

Same with maintenance. You'll have a lot more maintenance on a $1.5m house in the midwest than in Fortress, just because the $1.5m house in the midwest will be much bigger. 25,000 sq ft if Darrell builds it for $60/sq ft. There will be much more maintenance on a 25k ft house than a 2k ft house in SV, even if they both cost $1.5m.

However, it is true that maintenance is not zero, and the calculation needs to account for that.

RentingForHalfTheCost says

Overall, rents are stressed. There are better opportunities out there now that I have ever seen in the BA. I can rent a McMansion for 4k/mth. That was never true before.

I seriously do not buy that. We rented the same 4 Bedroom house for 8 years for $1,500 a month. We were lucky in that the LL never raised the rent. Back then Landlords couldn't give these away. When we looked at rentals, the immediate area we looked in had pages of houses for rent and the one we settled on was one of the more expensive. Some were for as little as $900.

About a year ago I started looking out of curiosity at what stuff was renting for around us. The same houses were renting for $3,000 a month. What's more, there were few if any to rent. A lot of people who probably would have bought before can't do so now hence the demand for rentals, especially houses. I just looked now. There are a total of five 3+ BR houses to rent total in our east bay city. Five.

Basically what I pay for the mortgage is just slightly more than what we had been paying in rent and about 40% less than what the type of house we bought would rent for in the current market.

If we were talking say- 2002-2003, sure- the rental market was dirt cheap and highly flooded. At least in the immediate BA I can't really say that's the case. Besides- $4,000 a month in rent? You can buy a house for 50% less then that these days.

The cost of sleeping in the car is inflation proof!

edvard2 says

Besides- $4,000 a month in rent? You can buy a house for 50% less then that these days.

It depends on the area, and the property.

If you are renting a million dollar place then $4000 seems reasonable for rent.

Actually a lot of tech people in Seattle pay high rents to be in good areas close to work. The kicker is that they are in some really nice areas. People with really nice houses can afford to rent to the people who will take care of them.

edvard2 says

Besides- $4,000 a month in rent? You can buy a house for 50% less then that these days

The houses that are equivalent to my rental would cost me 7-8K/mth in owning expenses. Sure, you can buy cheaper, but I just got too much crap to house now. ;)

robertoaribas says

I'd take 10 homes in Phoenix for my million

OK, but that is discounting the millions of people who are underwater on homes they "own."

I could tick off a dozen homes in my area that are renting because the owner can't sell them. Most can't rent for near what the payment is and those people supplemant the payment.

I noticed right off that Patrick has Menlo Park listed as his home. My aunt Grace lived in Menlo Park, back in the day, down the street from Shirley Temple Black. I don't think he could own a home in the area, no offense, but for sure you can rent for less than the price of a mortgage.

RentingForHalfTheCost says

The houses that are equivalent to my rental would cost me 7-8K/mth in owning expenses. Sure, you can buy cheaper, but I just got too much crap to house now. ;)

Well... granted our house isn't a Mcmansion, but its 4 bedrooms and the mortgage is less than half of $4,000. So not sure I would necessarily equate $4,000 a month in rent as a steal per say...

Well renting for 4k a month when you can own for half that is only a good deal when prices are trending down. When they are going up like now you lose your shirt every year in missed equity gains and get no tax write offs unless you own a business.

Im going to pour at least 25k in remodeling costs into my house but that is only one year of the money i save by owning vs renting same house.

robertoaribas says

million dollar homes have never made any kind of freaking sense as investments... Even at $6K rent, it still pretty much sucks.

You got my agreement there. A million dollar home is the bay area is nothing to be proud of either. The workmanship on the 150K home in Phoenix is far superior IMHO. Because of the continuously mild climate, no one sees the shady construction.

RentingForHalfTheCost says

You got my agreement there. A million dollar home is the bay area is nothing to be proud of either. The workmanship on the 150K home in Phoenix is far superior IMHO. Because of the continuously mild climate, no one sees the shady construction.

Most people who have never lived outside of CA are fools drunk on the California kool-aid, repeating what they've heard for years.

~~ I could NEVER live anywhere other than California ~~
~~ They're not making any more land here, so housing is a sure thing! ~~
~~ I CAN'T leave the ocean! (even though I only go every 6 years or so) ~~
~~ (Even though when I eat out it’s mainly at Taco Bell or off McDonald’s Value Menu because I don’t have any money) California has the restaurants and culture that I need ~~
~~ It's too hot/cold there, I could NEVER move there! ~~
~~ Where else can you drive 1.5 hours to the ocean and 1.5 hours to skiing?!? (even though I rarely do either of those) ~~

When I returned to CA from Colorado and was driving through my parent's million$$+ neighborhood in the Bay Area I realized that I never would have agreed to live in such a lower-middle class neighborhood in Colorado. I would have rejected it outright and moved on to a more well-kept area, but people in CA are so used to buildings that are old with owners who don't have enough money for regular maintenance - let alone repairs - that they don't see this anymore.

Whether you rent or own, far too much of your income goes to your housing (my parents spend over $1,000 per month in taxes on their “paid off” house). When everyone else skimps on maintenance/repairs and relies on patches and quick fixes in order to keep the illusion that their 50 year old house is not falling apart, you start to think this is normal, even for the rest of the country. They just keep telling themselves that they are “special” because they live in California.

Meanwhile, they live multiple people to a room in a tiny 1200 square foot house with a poor layout, no coat closet/dishwasher/pantry because their house was built before these things were priorities. It’s even worse when John Nguyen decides to improve his house (and obliterate any tiny bit of “character” left in the house) before selling by doing his own crown molding and throwing some Home Depot landscaping down over his Bermuda grass yard. NOW the house will look reeeeeeeal nice with that For Sale sign out in the front yard… if you can ignore the cars jammed up to all the curbs, in all the driveways, and parked on the lawns (oops, what USED to be the lawn!) because the garage doors have been plywood-ed over as the garages are used for a living space for the masses of people crammed into each house!

PockyClipsNow says

When they are going up like now

Speculation is a crazy way to make money, but it works out some times.

Any Real Estate agent who knows anything will tell you we are in a period of massive speculation on the out come of this election. Both Congress, and Presidential canidates are promising prosperity is just around the corner.

These historically low interest rates along with the low inventory should be warning signs to most people, but to some it's a sign of opportunity.

You never really know what will happen. We all make our own bets.

My bet is that prices will fall further, and if any one has any sense the price of housing will fall like a rock, for all the reasons I've expressed before.

David Losh says

PockyClipsNow says

When they are going up like now

Speculation is a crazy way to make money, but it works out some times.

Any Real Estate agent who knows anything will tell you we are in a period of massive speculation on the out come of this election. Both Congress, and Presidential canidates are promising prosperity is just around the corner.

These historically low interest rates along with the low inventory should be warning signs to most people, but to some it's a sign of opportunity.

You never really know what will happen. We all make our own bets.

My bet is that prices will fall further, and if any one has any sense the price of housing will fall like a rock, for all the reasons I've expressed before.

David,

Based on what you said above, how long have you been advising your buyers to wait and not to buy? How's that working out for you so far? What's the percentage of buyers appreciating your advice? What's the percentage of buyers ignored you & bought anyway? How many buyers did you lose for giving your honest opinion? What indicators are you using to come up with your "house prices will fall further" reasoning? How much further do you think house prices will fall?

TIA.

Yup says

SubOink says

Why is it BS? Those are the amounts I pay/paid...

If you paid $950/year for renters insurance you are an idiot.

It does not cover the structure but it covers your belongings and in my case a very expensive array of equipment and other stuff.

You are a moron - look up what it costs to do renters insurance for 150k worth of stuff. And then look up insurance that only has a $500 deductible and see what the premium is.

Your little brain obviously knows nothing about that. My homeowners now not only covers my structure, dwelling blablabla but also that, I have an amazing deal with that. Only difference is that my deductible is $2k on the home owners.

The world is more complex than you think.

E-man says

How many buyers did you lose for giving your honest opinion

Real Estate is a two edged sword. When you don't have buyers you can list properties for sale.

Well, I'm not very popular in either area of Real Estate with buyers, sellers, or other agents.

I started telling sellers to get rid property in 2006. There were still deals to be had then, but no buyer wanted to hear about keeping a lid on what they bought, and to keep it simple.
Sellers didn't want to hear "get rid of it."

Unlike many of my contemporaries we have a business that provides Real Estate services. We prepare properties for sale. We did one yesterday on a little town house from the 1960s.

I did my last deal in 2008, and referred out buyer's and sellers to other agents I know. A lot of people made fun of me, but not so much today.

When we work on properties for other agents we keep our standards, and work directly for the home owner. We stopped working at Real Estate agent direction because some of the agents were getting a little desperate.

OK, now, in 2007 my wife, kids, and I took a trip to Barcelona. In 2008 we went to Peru to visit my wife's family, she's from there.

Once you see the global Real Estate market you get a real sense of how whacky it is.

The mortgage market is a complete sham. The idea that mortgages are traded as securities is ridiculous. We might talk about moral obligaions here in the United States, but in Europe, or emerging markets, it's a complete joke.

In Spain the unemployment rate is 24%. How do you think those mortgages are doing?

In Peru I had to explain why, after two years of paying on a credit card, the balance is still the same.

We "saved" our banks who are now to big to fail, but in Europe, China, and South America I just don't see how banking as we knew it will survive. I don't see how the stock market will continue to go up.

I also watch oil kind of carefully, and don't see oil being the go to commoditiy is was ten years ago, but it keeps going up in price.

I don't think it will be a crash. The United States has anchored itself, and the world body is going along. We will have a correction that will last a decade or more.