patrick.net

MAGA says

Scumbag Realtor!

Just read the article. You may disagree with her, but I wouldn’t call her a scumbag. She’s more than likely smarter than you, has seen more than you, and probably has more experience than you when it comes to real estate.

I disagree with her encouragement on buying real estate at this point. I could totally be right and she would be proven wrong, but I still wouldn’t call her a scumbag.

Eman says

I disagree with her encouragement on buying real estate at this point. I could totally be right and she would be proven wrong, but I still wouldn’t call her a scumbag.

She'd be a scumbag if she knows a crash is looming and she's trying to get the last sucker in.

@Eman is right that not sure about most of the realtors but one thing is sure. We all know that Inflation is real and would continue. Unless it’s too expensive, RE can protect you from inflation at least primary residence. Rest can go to stocks, bonds.

BayArea says

City?

Nah. Small town of about 2,500 in the middle of cornfields. Small subdivision where the contractor who did the sewer, water, grading and streets executed his lien rights and took the land when the original developer crashed and burned during the housing crisis. Hoping to get two lots just under an acre for $40-50k. Full water and sewer hook up, so no well or septic and can still walk to stuff in the downtown area. Our neighbor would own the adjacent lot as well and not build on it. It's really a perfect situation.

Location makes sense because the wife sells (to public works is as detailed as I'll get) and has IL and WI as a territory. So she's within 3-4 hours drive for most work, golf and conferences. I'm trying to convince the owner to go in on a place up in WI for events, golf and conferences up there. Rent it out when we don't use it or she's not working up there. Around Castle Rock Lake or Petenwell which is pretty much central WI. I also need a project and flying will be less frequent and going north on the weekends during the summer would be fun. I don't expect most to know that area, but for flat landers it's fun for ATV's, UTV's, boating, hunting, fishing, snowmobiling, skiing, etc.

EBGuy says

WookieMan says

Tell me if I'm making a bad move. I'm trying to tell myself that it is.

Will you have to go with construction financing first and then refi into a conventional loan? I'm getting cold sweats just thinking about the rate raises the Fed want s to do this year.

Yes. Rates don't bother me. Payment does as I'm a 30 year fixed guy and pay it off early if we want. We'll be under 20% debt to income on the loan even at $500k. Hoping to come in with $100k cash down as well.

Eman says

This house is in a decent working class neighborhood, nothing fancy. Offer is due today, and it’s already contingent. 🙄

Yeah, land out here is basically worthless and mostly a tax burden unless farming it. This has the advantage of sewer and water hookups, storm sewer/drainage, so it has some value. Because it was a foreclosure and lien take over by the general contractor he's still looking to get his money back. So we're on the hook for sidewalks and parkway trees, so that kind of sucks. Probably only $10k for that out here, so not awful and I've got a good buddy that owns a nursery. So I can get cheap trees.

As I get older and look back on regrets. Not networking more. Fortunately between the wife and I we have a ton of contacts in a ton of industries at our current age. Wish I had them earlier though.

I don’t understand why you’d go through the trouble of building a dream home in the WRONG state! Illinois is horrible for taxes and Indiana is right next door. I’ll bet you could drive ten to twenty miles and be in tax nirvana.

Eman says

Just read the article. You may disagree with her, but I wouldn’t call her a scumbag. She’s more than likely smarter than you, has seen more than you, and probably has more experience than you when it comes to real estate.

As I mentioned, I didn't click the link. Fact is everyone is trying to extract money from you. Realtors do it through minimal work I think is the biggest beef based on an arbitrary commission % that has little correlation to the work performed. Selling a $2M versus a $500k home is generally the same amount of work.

When I managed my former employers office we had $20k home sales in the ghetto and $2M sales in the nice neighborhoods. And when I say managed, I did everything beside selling and dealing with clients. I did marketing, photos, scheduling showings, accounting, dealing with attorneys and all the other tools involved in the transaction (fuck condo sales and HOA's).

I'd tap the brakes on saying she's smarter than anyone though. If you can do pretty basic math, being a real estate agent is easy as fuck if you have a network. My wife's cousin just started a Keller Williams team with a buddy 3 months ago. The guy is a moron, but he knows a lot of people. So he gets listings. He the Guido tool type like Jersey shore. You get the listings you get the buyers. Do dual agency and double the money.

Chicago the seller's expect the listing agent to be there. So I've met well over 1k agents. 97% are morons. Anecdotal, but I have a legit and honest sample size. 80/20 rule doesn't apply in RE for agents. It's the 97/3 rule. But, I'll say this. Most sales people aren't "intelligent" anyway. They just say what you want to hear in an attempt to get business. Or take you out to lunch, dinner, golf, etc. The smart ones own the business and just have to manage people they basically control. Not always easy, but better than dealing with the public.

WookieMan says

I'd tap the brakes on saying she's smarter than anyone though.

She is smarter than most and especially the OP, who called her a scumbag. She started a company with $1k at the age of 23 and later sold it for $66M. Let the result speak for itself.

Eman says

WookieMan says

I'd tap the brakes on saying she's smarter than anyone though.

She is smarter than most and especially the OP, who called her a scumbag. She started a company with $1k at the age of 23 and later sold it for $66M. Let the result speak for itself.

Money is not a sign of intelligence though I guess was my point. I wouldn't call her a scumbag either. Dumb luck exists though.

I've experienced it with my own Uncle. Lucky situation. Got a contract with Caterpillar to plow their parking lots here in IL during the winter. Didn't graduate high school. Can barley read. And I'm not joking when I say that. Not book smart or your standard level of intelligence measurement, IQ. If you didn't know he had 8 figures of wealth, maybe 9 now you'd think he was an idiot. He liked construction toys (for him) and built a massive contracting company here in IL and now AZ and I think other areas. He's a little boy at heart that wanted to play with bulldozers. Only area he as smart in was hiring, but that's a personal decision from any business owner I know. I like you, you know how to do X, let's get it done.

He had blind luck his entire life. And once you get enough money it just works for itself so to speak. I've seen Barbara on Shark Tank. I'm underwhelmed. I was one, but the vast majority of Realtors have ZERO interest in your goals. The amount of shady shit I experienced is staggering. I could put a lot of people in jail to be honest. Big names too, at least in the Chicago metro area.

I let the license lapse last year so I can talk freely in public and online and not jeopardize my license at the time. So I speak more freely now here. For the lots I went around the Realtor and I'm not dealing with her. I won't. I know the game and the best investors in RE I know don't deal with Realtors to be honest. Maybe if my best friend was one I would use them, but I need to be close, super close to someone to trust them. End of the day it's price. No need for a 3rd party to skim off the deal.

Started a company with $1k and later sold it for $66MM requires brain more than luck IMO. We’ll have to agree to disagree.

I joined Patnet in 2009. I was like part of the 99%ers then. After a series of “luck” in the last decade, I’ve joined the 1%ers. Next goal is to join the 0.1%ers. Just like your uncle, we may not be “smart” but we know value when we see it. Smart people may not be as smart as they think. Don’t believe me, come to the Bay Area.

Eman, are you hanging on to any apartment buildings or have you sold them off/divested?

I had a friend who was a financial planner. If you don't think a lot of rich people have dumb luck, you need to talk with one of those guys. Some of it is just the wheel of fortune, and some manage to hang on to the dough even with lives full of boners and bad decisions, luck of the draw. He had some interesting stories about his clients and how hard it was to steer some away from the rocks, because they thought he should just be Bernie Madoff for them, giving them guaranteed 15 percent a year returns out of sight and out of mind. He worked as CFO for some family businesses who had no idea what they owned, they just took as much money from the company as they wanted for whatever Caligulan lifestyle they led. He struggled to audit to at least let them know to avoid the IRS and know the basis for their companies.

Unfortunately, some of these real life observations of the lucky fools can lead you to resent the unfairness in the scheme of things.

Every drug dealer I ever knew, even the ones who went to prison, always had big bucks that they somehow squirreled away from the authorities (likely through their lawyers and offshore banks). The money from dealing drugs, if you survive, is outlandish which is why the Globalists and intel agencies have come to dominate it. Of course, survival is the key because longevity isn't the strong suit of drug dealers. Retirement plans tend to be more along the lines of concrete boots in the bay because when you quit, you are then just another free range state's witness who needs to be snuffed out.

I had some extremely wealthy clients. Some of them were just around in California for generations and had enormous tracts of real estate that their families owned. You couldn't likely notice them in a crowd, they wore ordinary jeans and grungies and drove unremarkable cars. In Santa Cruz, you would be hard pressed to tell a lot of the trust fundies from the hippies scrounging to live in somebody's garage. The Nordstrom dressed up with Porsches tend to be corporate nouveau riche.

EBGuy says

Eman, are you hanging on to any apartment buildings or have you sold them off/divested?

I still have all the apartment buildings. I sold my duplexes, condos and townhomes between 2015-2017 to scale up buying apartments.

I recently did my PFS (Personal Financial Statement) for my lenders and noticed my net worth went up $2M since pre-pandemic. Funny all the gains mainly came from SFHs. We’re talking about 35-40% increase in value. Condos and townhomes went up around 10-15%. Apartments didn’t gain any value. In fact, a few buildings went down in value due to lower rents, thus lower NOI (net operating income). Fortunately, no debt beat in our buildings. Vacancy was 1.2% in 2020 and 2% in 2021. 😅

Rents should come back to pre-pandemic soon I believe, if not already, for our San Jose market.

Talking about divesting, I have about $600k in 3 flips, $600k in the stock market, and wife has about $400-$500k in her 401k/IRA. Thinking of ways to grow the stock portfolio to $7M by 2025. 😅

I'm worth $2M and don't even own a home. Sad I know.

Let's see what happens when the 30-year is 7%. 90% of homebuyers buy the payment. And the big investors buy the payment vs. rent, too, they aren't paying 100% cash.

AmericanKulak says

Let's see what happens when the 30-year is 7%.

How likely do you think that 7% will actually arrive?

porkchopexpress says

I'm worth $2M and don't even own a home. Sad I know.

There’s nothing wrong with this. Know your end goal and work towards it. Not everyone wants a home. I have a good friend who is a nomad. He has someone help him run the AirBnB biz while he travels the world. He doesn’t own a home, but worth over a million at the age of 37.

Eman says

porkchopexpress says

I'm worth $2M and don't even own a home. Sad I know.

There’s nothing wrong with this. Know your end goal and work towards it. Not everyone wants a home. I have a good friend who is a nomad. He has someone help him run the AirBnB biz while he travels the world. He doesn’t own a home, but worth over a million at the age of 37.

Thanks. It just never worked out because of my job and we lived in crazy expensive places. Then throw in the Great Recession and that spooked the hell out of me. It was during that time I went down the rabbit hole of the Fed, Peter Schiff, sound money, etc. I also joined this site back in like 2005. I was just afraid of losing my shirt on a house because I saw friends and family go through it. I feel a little like old people who lived through the Great Depression...they become super frugal.

Financial planning is not complicated but unfortunately requires patience, diligence, and discipline (avoidance of errors in judgement).

For $500/month you can have a million bucks but it takes 30 years more or less depending on when you start.

Guys who make a shitload of money may actually spend it and not have $500 left at the end of the month.
Or, guys buy dumb investments, or roll the dice on a stock instead of a mutual fund.

My grandmother and Porkchopexpress would get along; she rented but lived in great places and left all of her grandchildren $5000 apiece, more to her two daughters.

There’s a paradox in housing sometimes; people love owning them, and sometimes they have a need for cash flow so they rent them out at a fair price.

porkchopexpress says

Then throw in the Great Recession and that spooked the hell out of me. It was during that time I went down the rabbit hole of the Fed, Peter Schiff, sound money, etc. I also joined this site back in like 2005. I was just afraid of losing my shirt on a house because I saw friends and family go through it.

I felt the same way. This was why I didn’t buy/add anything to the portfolio in 2020 to now. In hindsight, buying a couple SFH’s would have net $1M in a couple years. The housing market is madness at this point. I wouldn’t touch it.

I joined this site in 2009. My thinking aligned with Iwog, SFace and pkennedy as the old timers know. I decided to quit my W2 in 2009 and pursue real estate full time. It turned out to be a great decision.

I bought 6 properties with pkennedy from 2011-2013. Sold 3 and still have 3. We’re up over $2M on these condos and townhomes with our $300k investment. About 700% ROI not including cash flow all these years. Outperformed the S&P 500. 😅

As Wayne Gretzky said, we miss 100% of all shots we don’t take. Not taking risk is also a decision. The best time to leverage and go all in is during a recession. That’s when the risk is actually the lowest unlike what our mind and society tell us.

HeadSet says

How likely do you think that 7% will actually arrive?

Well, the typical 30 year with 20% down is over 4% now with just a quarter increase in the highly stimulating funds rate of only 0.5%. Highly stimulating was anything under 2%, and 3% was considered stimulating. I checked both California (Walnut) and Florida (Orlando).


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There's been a strange normalization (Entitlement?) to the lowest Mortgage rates since WW2. 5% is low historically.



About 7.5% is the average mortgage rate since 1971 when the Fed began collecting data:
https://www.valuepenguin.com/mortgages/historical-mortgage-rates#hist

The rates in the 90s averaged higher than 7% and averaged around 6% in the 2000s.

Pkennedy retired with his young Brazilian wife in Brazil. After a decade of not doing much, he recently bought 3 acres and is developing 120 units. If this project is successful, he’s set for life.

He met @Patrick, @mell, iwog, justme and a few other Patnet members years ago. He told me mell is tall and slender. That’s all I could recall.

Pkennedy never owned a house here in California by the way. He hasn’t bought a house in Brazil all these years, but I believe he would soon. At some point, it makes sense. Hope your time will come soon @porkchopexpress.

We're due for the real crisis, everything is overvalued AF. Real Estate, Stocks, etc.

The PE Ratio of the S&P500 is still over 25. I'd figure a ~30% correction is still necessary.

Eman says

At some point, it makes sense. Hope your time will come soon @porkchopexpress.

Thanks brotha. Me too.

AmericanKulak says

We're due for the real crisis, everything is overvalued AF. Real Estate, Stocks, etc.

Nominal prices can stay the same or even slightly rise. The game afoot is to reset real value. It's similar to Lucy and the football. The sheeples only grok nominal.

guys keep in mind last time rates went up, prices didn’t go down. and inflation is just adding to construction costs.

im not saying buy now or be out forever. its always up and down. but nothing is getting cheaper.

Fortwaynemobile says

guys keep in mind last time rates went up, prices didn’t go down.

I do remember someone talking about the late 70's/early 80's when they had to buy a home for their newly formed blended family (remarriage where both the husband and wife already had children). They bought the most they could at the time, which meant a very modest home, while work colleagues lived in the nicer part of town with larger homes. Sure, they could refinance in the late eighties, but were stuck living in that asset, where as their new mortgage would have afforded them a nicer place. Buy now and be priced IN forever...

If anyone has to buy now, I recommend getting a 10/1 ARM, IO (interest only), or not. Your mortgage will be fixed for the next 10 years. If history is any indication, you should have a chance to refinance and lock in a 30-year mortgage in the 2%ish within the 10-year time frame.

Good luck

Eman says

MAGA says

Scumbag Realtor!

Just read the article. You may disagree with her, but I wouldn’t call her a scumbag. She’s more than likely smarter than you, has seen more than you, and probably has more experience than you when it comes to real estate.

I disagree with her encouragement on buying real estate at this point. I could totally be right and she would be proven wrong, but I still wouldn’t call her a scumbag.

I had read that she was focusing on investing in Pittsburgh as it was not in an apparent bubble

MMR says

I had read that she was focusing on investing in Pittsburgh as it was not in an apparent bubble

IIRC correctly, Pittsburgh is relatively unique in that it has a land value tax (LVT) which is taxed at a higher rate than the structures erected upon the land. I.E., the tax is geared to recapture the unearned increased value of property due to community improvements (roads, schools, etc.). Land value taxes are about 5X that on the assessed value of structures.

This tax structure goes a long way towards containing bubble pricing.

More info:

https://www.strongtowns.org/journal/2019/3/6/non-glamorous-gains-the-pennsylvania-land-tax-experiment?source=patrick.net

MMR says

I had read that she was focusing on investing in Pittsburgh as it was not in an apparent bubble

Just like anything in life, know your business, or your trade well, and you should do well. She apparently knew her market and her niche. That was probably how she made it. More power to her.

I’m a small time real estate investor who got lucky. I started out real small in 2009. My goal was to get $2.5M in equity in 10 years and $10k/mo of cash flow. While immersing myself in the business, I learned much more and was able to scale up and made more than I thought was possible within this time frame. 🙏

People are so good at name calling and criticizing others. I suggest they look at themselves in the mirror first before criticizing others.

stereotomy says

IIRC correctly, Pittsburgh is relatively unique in that it has a land value tax (LVT) which is taxed at a higher rate than the structures erected upon the land. I.E., the tax is geared to recapture the unearned increased value of property due to community improvements (roads, schools, etc.). Land value taxes are about 5X that on the assessed value of structures.

This tax structure goes a long way towards containing bubble pricing.

More info:

Wow! Apparently Pittsburgh was stable in the last crash also. This might be a significant reason why.

Thank you! Fascinating!

Eman says

’m a small time real estate investor who got lucky. I started out real small in 2009. My goal was to get $2.5M in equity in 10 years and $10k/mo of cash flow. While immersing myself in the business, I learned much more and was able to scale up and made more than I thought was possible within this time frame. 🙏

Congratulations! I do recall you over the last 10-12 years.

That is something I hope to do in part because of the tax benefits and a FIRE mindset along with my wife

Nice!

MMR says

Congratulations! I do recall you over the last 10-12 years.

That is something I hope to do in part because of the tax benefits and a FIRE mindset along with my wife

Thanks. I stopped posting on this site for awhile. I did a ton on posting on BiggerPockets. I got real popular there. Then the pandemic hit, I decided to close out my BP account and focus on my business.

The annual distribution has been decent. On a slow year, I would get $250-$300k. On a good year, $500-$600k. Tax liability most of the time on this is $0 due to off-setting the distribution with depreciation and capital expenditures. Also, we have a fantastic CPA.

We always have to pay taxes as flip profits are short-term gains so they’re being taxed as ordinary income. On average, wife and I pay $40-$50k/year in taxes. Not great, but not too bad.

stereotomy says

IIRC correctly, Pittsburgh is relatively unique in that it has a land value tax (LVT) which is taxed at a higher rate than the structures erected upon the land. I.E., the tax is geared to recapture the unearned increased value of property due to community improvements (roads, schools, etc.)

Pretty good definition of Georgism there.

https://infogalactic.com/info/Georgism?source=patrick.net

Eman says

MMR says

Congratulations! I do recall you over the last 10-12 years.

That is something I hope to do in part because of the tax benefits and a FIRE mindset along with my wife

Thanks. I stopped posting on this site for awhile. I did a ton on posting on BiggerPockets. I got real popular there. Then the pandemic hit, I decided to close out my BP account and focus on my business.

The annual distribution has been decent. On a slow year, I would get $250-$300k. On a good year, $500-$600k. Tax liability most of the time on this is $0 due to off-setting the distribution with depreciation and capital expenditures. Also, we have a fantastic CPA.

We always have to pay taxes as flip profits are short-term gains so they’re being taxed as ordinary income. On average, wife and I pay $40-$50k/year in taxes. Not great, but not too bad.

@eman
Looks like you have very smart ideas. Do You also do commercial property?
It is not easy to get loans.
W2 income is great, But paying quarter million+ every year in taxes for bay area typical dual high earners eat into take home pay.

Eman says

Just like anything in life, know your business, or your trade well, and you should do well. She apparently knew her market and her niche. That was probably how she made it. More power to her.

I’m a small time real estate investor who got lucky. I started out real small in 2009. My goal was to get $2.5M in equity in 10 years and $10k/mo of cash flow. While immersing myself in the business, I learned much more and was able to scale up and made more than I thought was possible within this time frame. 🙏

People are so good at name calling and criticizing others. I suggest they look at themselves in the mirror first before criticizing others.

I think hate towards realtors is not right. Only a handful make money , rest are just putting food on table.
Real culprits are bankers who generate money out of thin air and much of it disappear it into their cronies.

Eman says

If anyone has to buy now, I recommend getting a 10/1 ARM, IO (interest only), or not. Your mortgage will be fixed for the next 10 years. If history is any indication, you should have a chance to refinance and lock in a 30-year mortgage in the 2%ish within the 10-year time frame.

Good luck

Any suggestion on best HELOC rates?