patrick.net

"In 1950 the median American home price was 7,354 and median household income was 2,970 which is 40%. Today the median household income is 70,000 and median home price is 440,000. That's 16%. What makes this even more alarming is most households that are $70,000 are with two earners. 34% of US households are single earning. In 1950 only 12% where two income."
(edited for typos)

-redditor

And on that credit scam people always fall for. I've never taken out a car or home loan. Have co-signed a car, and done some zero interest appliance loans. I owned a credit card for a few years, but that's the extent of my credit history. My score is well over 700, possibly 800. My sister is the same. Her only debt has been small loans from banks.

You don't need debt for a good credit score, you need debt for slavery.

Started with 10k excess money roughly 17 years ago, which has now grown to over 1MM excess money, with the caveat that not all of it were gains, whenever there was a prolonged rout in the market and I maxed out margins I would add a few k here and there from my checkings and savings, so after adjusting for those infusions the yearly ROI roughly falls between 20%-30%. It is not that hard to make a multi-bagger if you hit a really good biotech (my main sector) pick where you have enough shares to sell off some gains and keep the rest of the shares as freeloaders and let em run. I probably need another 1MM in excess to fully retire (esp. with wife and 3 kids), house is roughly 35% paid off, but I'm aiming for semi-retirement, aka freedom from the man, at least within the next 1-3 years, and keep continuing tech by contract only while focusing on investing. As some mentioned, with a leverage of 1:2 max. and starting with a humble amount you don't become financially independent that quickly. We also have some family properties and I am not interested in doing any landlording or taking over any mortgages ;)

mell says

Started with 10k excess money roughly 17 years ago, which has now grown to over 1MM excess money, with the caveat that not all of it were gains, whenever there was a prolonged rout in the market and I maxed out margins I would add a few k here and there from my checkings and savings, so after adjusting for those infusions the yearly ROI roughly falls between 20%-30%. It is not that hard to make a multi-bagger if you hit a really good biotech (my main sector) pick where you have (some text omitted to shorten quote...) etire (esp. with wife and 3 kids), house is roughly 35% paid off, but I'm aiming for semi-retirement, aka freedom from the man, at least within the next 1-3 years, and keep continuing tech by contract only while focusing on investing. As some mentioned, with a leverage of 1:2 max. and starting with a humble amount you don't become financially independent that quickly. We also have some family properties and I am not interested in doing any landlording or taking over any mortgages ;)

property manager…cough…cough

1337irr says

property manager…cough…cough

Definitely the way to go, would need on the combined patnet expertise to pick a good one though, being overseas complicates the matter

Bitcoiner says

mell says

1337irr says

property manager…cough…cough

Definitely the way to go, would need on the combined patnet expertise to pick a good one though, being overseas complicates the matter

Mell, are you back in DE?

currently in CA (back in Europe soon, incl. DE, for the summer), no need to manage them yet. Will probably find some local mgmt company when the time comes unless siblings want to step up ;)

NuttBoxer says

You don't need debt for a good credit score, you need debt for slavery.

Or a landlord. The 2nd syllable isn't just for fun. It's reality. I own the property, I control you. Can sell anytime and can boot almost anytime I want for the dumbest reasons. I can put cameras on the exterior of MY property and track any tenant movements or guest. I have your SS# as a landlord. I'll have your drivers license. I can ask for references. Talk to previous landlords. You don't give that, you ain't renting from me. So you end up with shit landlords that probably have shit properties.

Debt is how you use it and have the ability to get out of it. Credit scores don't matter. I can get $1M cash in 48 hours and not through a bank after not paying for cars and house for 2 years (not my situation). You're hating the players and not the game. You don't understand the game. The United States is never paying back any debt. No one will collect. We won't collapse.

I've been around here long enough and MANY users have been so off their rocker it's not funny and been absolutely soooo wrong. The US "is" the world economy. We fail so does everyone else, but the others failures will be substantially worse with minimal chance of recovery for decades.

Fact is most renters are pissed they missed out in 2010(ish). They were scared of debt. Which debt literally doesn't matter at all. Until you realize that you'll just be paying other people's debt and making them money.

There are advantages of owning vs. renting. There are advantages for renting too.
The biggest advantage of owning is you don't get evicted and control your destiny somewhat.
The disadvantage is someone new moves in nearby and fucks up your neighborhood.

This has happened to my neighbor in Santa Cruz; a complete lunatic bought the funky run down house next to her and lives in a crummier house just behind it; he's running a miniature slum next to her. He put in a hot tub just a few feet from her bedroom on his side of the fence and they have drunken pot infused hot tub parties at all hours.
He got a funky Winnebago and parks it in front of the house a few feet from her front yard, and illegally rents it out.
He moves it around when they put a ticket on it; but he ran an extension cord out to it and people live in it.
Her house is a gorgeous little place with a plaque on it as registered Historic.
Her life is diminished by the presence of the kook neighbor and his kook friends/tenants and their behavior.

So, owning a place with a lot of land around it to keep out the assholes is probably the best scenario; unfortunately they're not building many of those and many people cannot afford them.

WookieMan says

Which debt literally doesn't matter at all.

How does debt doesn't matter at all?

gabbar says

WookieMan says

Which debt literally doesn't matter at all.

How does debt doesn't matter at all?

The idea is that a default hurts the lenders more than the borrowers, so the lenders accept devalued currency or a debt swap / mutual debt forgiveness. Most nations run large deficits, and not being able to redeem the loans they are owed would make their situations far worse. I don't think this will hold true forever, but until now it mostly has.

mell says

gabbar says

WookieMan says

Which debt literally doesn't matter at all.

How does debt doesn't matter at all?

The idea is that a default hurts the lenders more than the borrowers, so the lenders accept devalued currency or a debt swap / mutual debt forgiveness. Most nations run large deficits, and not being able to redeem the loans they are owed would make their situations far worse. I don't think this will hold true forever, but until now it mostly has.

Would this apply to individual american citizens? No, right?

gabbar says

mell says

gabbar says

WookieMan says

Which debt literally doesn't matter at all.

How does debt doesn't matter at all?

The idea is that a default hurts the lenders more than the borrowers, so the lenders accept devalued currency or a debt swap / mutual debt forgiveness. Most nations run large deficits, and not being able to redeem the loans they are owed would make their situations far worse. I don't think this will hold true forever, but until now it mostly has.

Would this apply to individual american citizens? No, right?

Correct

clambo says

So, owning a place with a lot of land around it to keep out the assholes is probably the best scenario

This!!!

NuttBoxer says

"In 1950 the median American home price was 7,354 and median household income was 2,970 which is 40%. Today the median household income is 70,000 and median home price is 440,000. That's 16%. What makes this even more alarming is most households that are $70,000 are with two earners. 34% of US households are single earning. In 1950 only 12% where two income."
(edited for typos)

-redditor

What was the average square footage of a house in 1950? How many bathrooms did it have? What was the r-value of the insulation?

Let me answer those for you. 1000, 1, 0

You could build a 1950 level home today for 100K. Problem is your wife will look at it and tell you to keep renting the condo. So nobody builds houses like that anymore.

gabbar says

WookieMan says

Which debt literally doesn't matter at all.

How does debt doesn't matter at all?

It's a business transaction. I will be building (eventually......). If I can't pay my construction loan the builder gets whatever is built so far. Can finish it and sell for a profit potentially. My credit takes a ding. I still have a house currently that he can't lien and I default on the construction loan. This is hypothetical.

I've known people that have committed suicide over debt. FOR NO FUCKING REASON! Debt is a contract. You can break the contract. Either party. If my builder doesn't do what I want I'm not paying them and they have little recourse besides going to court and paying attorneys because they fucked up.

People need to take the emotion out of debt. Pay your obligations, I'm NOT promoting defaulting on debt. What I'm say is it's not a big deal. Don't stress over it. Unless you have a million dollars in unprotected assets there's nothing they can do. You don't even need to file BK.

People can say we could invest differently, but we have over $1M in 401k's and Roths. Guess what? No one can touch a dime. We could stop paying everything tomorrow and say fuck off to the creditors. Would still pay for the house of course.... which they also can't touch. We have been brainwash into believing that we HAVE to pay back debt or our lives are over. The biggest companies you know or knew that are now gone all used leverage/debt. That old school mall. Sears. It's okay for big companies to fail financially but you can't as a person? You are a business and it's the same thing.

There’s two problems with debt.

1. You get overextended. Sure it’s all great on paper when you’re using 5% down loans to build your real estate empire. But then the market takes a dip and the bank calls your loan and then you’re forced to sell into a down market. It would be tough to take the emotion out of losing your entire life’s work and having to go back and manage a Burger King to feed your family and your wife divorcing you to marry a doctor.

But sure, normal construction loans or mortgages you shouldn’t get to worked up over.

2. Student debt. Lots of kids out there live off their student loans in college. There’s lots of people out there with worthless degrees and 100+K of debt that cannot ever be discharged. I guess if I was a 30 year old waiting tables for 35K / year with 100K of student loan debt and no way to save for my future because all my money is going to servicing the debt, that might be hard to take the emotion out of as well.

pudil says

2. Student debt. Lots of kids out there live off their student loans in college. There’s lots of people out there with worthless degrees and 100+K of debt that cannot ever be discharged.

Agreed. Hard to dispute that. Even STEM fields where you just end up working for a sales person that get you business and you never get to be the big dog.
pudil says

But then the market takes a dip and the bank calls your loan and then you’re forced to sell into a down market

Yeah, that's commercial/investment loans. They ain't calling residential loans. And if they call the loan, you knew it was coming. And you don't pay if you can't. It's business credit under a separate FEIN number. Generally it doesn't hit personal credit, it just becomes impossible to borrow as a business under that EIN.

I can promise 80% of people don't know what EIN even means. They hire an accountant and attorney. If you don't know how to run a business, you're not gonna pay your loans. Restaurants generally fail because people think it's all fun and games. Hang out with customers at the bar and drink on the job. You have to know what you're doing.

Most real estate brokers take their income as 1099 personal income. Guess what happens when someone comes to sue you. They can come after what they want. You to set up some corporate structure. S-Corp, LLC, etc. You tell a seller to lie about flooding issues and you get sued, your own home can get taken.

Asset protection is key. Businesses and banks have got it so IRA, 401k, Roths and HSA are shielded if you fuck something up because they want your money. BK nobody can touch it. HSA is the one area I've fucked up in. It's complicated but as long as you track everything you can draw from an HSA anytime and have it invested with pre-tax money. Health care costs WILL be higher than what you put it. Employer has to set it up or you do self employed. You won't be a millionaire from it, but it's the best way to invest emergency funds. Keep the invoices though for urgent care or major medical costs.

WookieMan says

Sears. It's okay for big companies to fail financially but you can't as a person? You are a business and it's the same thing.

I used to shop at Sears before they went bankrupt. Used to read articles about how Eddie Lampert engineered the bankruptcy so that he could profit from it.

WookieMan says

Would still pay for the house of course.... which they also can't touch.

Why can't they touch your house? Is it because its under a business name?

pudil says

NuttBoxer says

"In 1950 the median American home price was 7,354 and median household income was 2,970 which is 40%. Today the median household income is 70,000 and median home price is 440,000. That's 16%. What makes this even more alarming is most households that are $70,000 are with two earners. 34% of US households are single earning. In 1950 only 12% where two income."
(edited for typos)

-redditor

What was the average square footage of a house in 1950? How many bathrooms did it have? What was the r-value of the insulation?

Let me answer those for you. 1000, 1, 0

You could build a 1950 level home today for 100K. Problem is your wife will look at it and tell you to keep renting the condo. So nobody builds houses like that anymore.

I have a friend. They are empty nester. Lives in a 4000 sft house excluding the basement which is another 2,000 sft. This much square footage for a couple makes no sense to me. Their 2 kids have their own homes. There are other couples who live in homes that are 5 to 6k square feet in size. This doesn't happen in other countries, I reckon.

gabbar says

What was the average square footage of a house in 1950? How many bathrooms did it have? What was the r-value of the insulation?

Let me answer those for you. 1000, 1, 0

You could build a 1950 level home today for 100K. Problem is your wife will look at it and tell you to keep renting the condo. So nobody builds houses like that anymore.

Trailer parks. Plus, lots of those 1950s houses are still around with same single bathroom but often updated insulation, plumbing, and electric.

pudil says

NuttBoxer says

"In 1950 the median American home price was 7,354 and median household income was 2,970 which is 40%. Today the median household income is 70,000 and median home price is 440,000. That's 16%. What makes this even more alarming is most households that are $70,000 are with two earners. 34% of US households are single earning. In 1950 only 12% where two income."
(edited for typos)

-redditor

What was the average square footage of a house in 1950? How many bathrooms did it have? What was the r-value of the insulation?

Let me answer those for you. 1000, 1, 0

You could build a 1950 level home today for 100K. Problem is your wife will look at it and tell you to keep renting the condo. So nobody builds houses like that anymore.

Nope. Entire neighborhood of home that are actually older in San Diego, and price are higher than even the average from this anonymous poster. We lived in a 3/1 about 1,000 sqft for over four years, loved living there, and yes, am including the wife. Only complaint was the single bathroom, but we didn't move until they sold it.

This is the response when people are confronted with the reality of inflation. They attempt to dismiss it because it's pretty fucking depressing to admit that your wealth is being stolen from in front of your eyes, and the system you've been told leads to prosperity, actually leads to slavery.

NuttBoxer says

Only complaint was the single bathroom

One bathroom for a small to medium sized family is a minor inconvenience. Nothing more.

NuttBoxer says

it's pretty fucking depressing to admit that your wealth is being stolen from in front of your eyes, and the system you've been told leads to prosperity, actually leads to slavery.

The US government doesn't have to pay off its $31 trillion debt. The government debt can't be compared to something like a household's finances. When governments for one reason or another run up large debts, it is, as far as I can tell, unusual to pay those debts off. - Paul Krugman, May 23, 2023

Few investors rode the pandemic-era housing boom as high as Jay Gajavelli. Fewer still have fallen as far.
Before Gajavelli found his real-estate career, the 61-year-old immigrant from India was just another information-technology worker, putting in 60-hour weeks for a middling job in Dallas. Last year, Gajavelli’s company owned more than $500 million worth of Sunbelt apartment buildings with more than 7,000 units, and was one of Houston’s biggest landlords.
Over the past four years, Gajavelli built his real-estate empire using funds from dozens of small investors who wanted a chance to earn a landlord’s riches without any of the work. He pitched double-your-money returns in ebullient, can-do talks at investor conferences and on YouTube videos. 
He described buying buildings with plans to upgrade units, raise rents and sell for a profit after as little as three years. The idea that everybody needs a place to live was the bedrock of Gajavelli’s pitch. “I never worry about [the] economy now,” Gajavelli told investors in a webinar presentation last year for his company, Applesway Investment Group. “Even if [the] economy goes down, still I make money.”
Gajavelli’s investors were, in fact, highly vulnerable to interest-rate increases over the past year that crushed the business model that they and thousands of others in similar deals across the U.S. had hoped would make them wealthy. For them and a host of small investors —who were expecting a share of rents and a piece of the profit in an eventual sale—it is looking like a looming investment-property disaster.
In April, Gajavelli’s company lost more than 3,000 apartments at four rental complexes taken in foreclosure, one of the biggest commercial real estate blowups since the financial crisis. Investors lost millions. Gajavelli didn’t respond to requests for comment.
His company had taken out commercial real-estate loans that carried floating interest rates and were adjusted each month. Those types of loans in 2021 offered initial rates as low as 3.5%. Everything changed when the Federal Reserve began raising rates last year, driving up monthly loan payments. Inflation contributed to higher expenses, and Applesway couldn’t raise rents fast enough to keep pace. After bills went unpaid, company properties went into foreclosure.

https://apple.news/AxiPeg69nRZqA85XuvSnPJA

Al_Sharpton_for_President says

Noooooooooooo!

RWSGFY says

Al_Sharpton_for_President says

Noooooooooooo!

That looks like bullshit. Weren't prices still going up in 2022?

pudil says

@pudil,

There’s two problems with debt.

1. You get overextended. Sure it’s all great on paper when you’re using 5% down loans to build your real estate empire. But then the market takes a dip and the bank calls your loan and then you’re forced to sell into a down market.

I have never seen or known anyone who got their loan called due. In theory, it’s possible, but I haven’t seen it in real life.

Banks are in the business of lending, not foreclosing, or calling the loans due and taking losses. As long as people keep making payments, banks will let them be and not calling anything due.

GNL says

That looks like bullshit. Weren't prices still going up in 2022?

https://www.redfin.com/news/housing-market-tracker-april-2023/

I think everyone should be prepared for rates going higher from here. You should be prepared for 6 or 7 percent. - Jamie Dimon, May 22, 2023

gabbar says

The US government doesn't have to pay off its $31 trillion debt. The government debt can't be compared to something like a household's finances. When governments for one reason or another run up large debts, it is, as far as I can tell, unusual to pay those debts off. - Paul Krugman, May 23, 2023

Tell that to Venezuela, Zimbabwe, Nigeria, Weimer Germany. Free market says nothing goes up forever, confidence in a scam always evaporates, and what's left is just reality. If it wasn't taken from the ground, it wasn't earned.

RWSGFY says

Inflation contributed to higher expenses, and Applesway couldn’t raise rents fast enough to keep pace.

Naw man, you didn't listen to all the opinions in this thread. Rents and salaries always keep pace with inflation. Just sit back and relax, someday we'll all be millionaires!!!

WookieMan says

I've known people that have committed suicide over debt.

How many?

Without sharing others' personal informations, what were the circumstances?

Eman says

I have never seen or known anyone who got their loan called due.

You need to get out of the Cool And Hip Bay Area, bro.

RWSGFY says

“I never worry about [the] economy now,” Gajavelli told investors in a webinar presentation last year for his company, Applesway Investment Group. “Even if [the] economy goes down, still I make money.”

No you don't.

Eman says

Banks are in the business of lending, not foreclosing, or calling the loans due and taking losses. As long as people keep making payments, banks will let them be and not calling anything due.

What do regulators say about that? Banks don't ever have to mark their assets to market?

(I have no idea).

NuttBoxer says

If it wasn't taken from the ground, it wasn't earned.

I've long said that real wealth can only come from labor and land. Everything else is a skim.

Eric Holder says

Eman says

Banks are in the business of lending, not foreclosing, or calling the loans due and taking losses. As long as people keep making payments, banks will let them be and not calling anything due.

What do regulators say about that? Banks don't ever have to mark their assets to market?

(I have no idea).

Let’s look at it from this perspective.

House 1 is worth $1M. Bank lent $800k. House drops to $600k. Borrower still makes monthly payments like clockwork. What’s the mark to market value?

House 2 is worth $1M. Bank lent $500k. House drops to $600k. What’s the mark to market value when the borrower defaults on payments?

In general, banks only mark it to market once the assets have been foreclosed and on the book. This is when the assets are called “bank owned”.

Another scenario, house is worth $1M. Bank lent $800k at 3%. However, banks now have to pay depositors 4.5% for their money. What’s the mark to market value on this $800k note?

GNL says

NuttBoxer says

If it wasn't taken from the ground, it wasn't earned.

I've long said that real wealth can only come from labor and land. Everything else is a skim.

@GNL,

Is Warren Buffett a skimmer or a labor? Some people work with their brain while others with their hands. However, they don’t get compensate equally. One thing most people don’t realize is that we get to determine how much our time is worth.

When I was working a W2, I knew I was worth a lot more. I knew I was there for the experience and reputation (of the company) before opening my own firm. Then I realized I would still be trading time for money even if I owned my own firm. My family wouldn’t be taken care of if I kicked the can.

Then the GFC happened. I hung up my W2 and went ball deep into what I knew could build generational wealth and take care of my family in the event I kicked the can. Within a few short years, it proved to be a prudent decision. Wife’s siblings said quitting my W2 was the best decision for the family. Some of them are a few millions richer, on paper, because of my decision. Simply amazing how one decision can change the course of someone’s life forever.