patrick.net

https://www.calculatedriskblog.com/2023/05/update-framing-lumber-prices-down-57.html

Framing Lumber Prices Down 57% YoY, Below Pre-Pandemic Levels

https://www.homedepot.com/p/2-in-x-4-in-x-8-ft-Prime-Whitewood-Stud-058449/312528776
Shows $3.35 in my area.

It's going lower...https://www.nasdaq.com/market-activity/commodities/lbs

1337irr says

On a tangent, but former Californian homeowners who sell and move to Texas do complain about property taxes and learn to protest them. Texas puts the "taxes" in Texas. You can't spell taxes without Texas :)

No income tax. If you're a high income earner, Texas makes absolute sense. I'm not a fan myself and would never live there, but cost of living for upper middle class to wealthy beats the living shit out of CA. Prop 13 doesn't remotely make up for 13% top end income taxes unless you're locked in for 20 years to a house and don't make much.

High property taxes are trivial if you make $250k plus. Texas is still middle of the road property tax wise if I recall correctly. It's not NJ or IL. Lebron James would have been best just staying in Miami. You pay taxes where the games are played either way. He's getting raped in CA with the Lakers since half his games are there. That's 13% per game check. Any athlete that gets paid it's in the state you're playing in. Then the hassle of filing all the multiple state taxes.

As with anything everyone is getting their cut of your income. Agent, accountant, lawyers, etc. Mo money, mo problems.

1337irr says

It's going lower...https://www.nasdaq.com/market-activity/commodities/lbs

Fuck me running! Good! Great. Waiting on another quote on our build. I don't like puking after the first one. This one needs to be under $500k or we're pulling the plug I think and adding a basement bath and getting a new game plan.

NuttBoxer says

It's a lot easier to just know the values because you've been looking forever, than check the history of every rental. When I see someone asking $500 over what comparable properties in the area normally go for, I don't need to check their history to know they overpaid

Sheesh Nuttboxer. Waste your time arguing on a blog with someone who is using the blog to rationalize and convince him/her self how savvy they are?

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/13c45dl/my_hoa_is_going_to_balloon_from_345_to_over_700/

My HOA is going to balloon from $345 to over $700 within my first year in my condo. Is this legal?

zzyzzx says

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/13c45dl/my_hoa_is_going_to_balloon_from_345_to_over_700/

My HOA is going to balloon from $345 to over $700 within my first year in my condo. Is this legal?

Totally different topic. They deferred the maintenance and the guy didn't pay attention. Generally if you own a condo you'r not good with trades, so you just expect it to be done. Most HOA's are run by morons and the maintenance doesn't get done.

No one should have to tell you, but if you're too dumb to realize there are things called special assessments, you're a common idiot and deserve the increase. Also it's $345 more. You don't have to do the work. Grow up or man up and get a house and do the work yourself. People have got to stop blaming others. It's unfortunate mommy didn't give you fresh milk from her tit until you were 35.....

I read shit like this and I know we're doomed. It's not an IF it's a WHEN.

WookieMan says

They deferred the maintenance and the guy didn't pay attention.

I have seen this in Dayton and in Virginia where a condo had to increase rates because the roads had to be repaved. Since the roads are private, the developer did not have to build to state DOT standards, so the roads deteriorated in less than 10 years.

https://www.calculatedriskblog.com/2023/05/lawler-american-homes-4-rent-net-seller.html

American Homes 4 Rent Net Seller of Single-Family Homes Last Quarter

WookieMan says

You should really never have more than $10k in a personal checking account and $10k in a savings.

How does one keep not more than 10 k in checking and 10k in savings? What are the options available?

Bitcoiner says

If he paid 20% down and has a 5% interest rate (remember rates were lower in 2021). his mortgage is 2,800 (including property taxes and insurance).

So what I see is they can't keep their renter. They found someone right away both times they listed, so price must have seemed rights, but for whatever reason, renter wasn't incentivized to stay. But this current listing has gone up only 8 months after signing last contract. Turnover costs money, and places that are priced right don't turn over for years. I know a guy in Santa Barbara that has rented the same house for 20+ years, paying WAY under market. I'd guess this owner is at best treading water, but likely negative assuming money for upgrades and maintenance. And with his rent going the wrong way, he may not ever see a profit. But that's what happens when you overpay at the top...

Bitcoiner says

“ When I see someone asking $500 over what comparable properties in the area normally go for, I don't need to check their history to know they overpaid”

“Overpaid” is subjective. And you don’t know how much capital someone put down on a property and how his loan is structured.

Anyways, the notion of high rent>means someone overpaid>means housing top is near seems a bit one-dimensional to me. But whatever….. you found a house in Yuma and I am happy for you. Hope it all works out and you like it there! Send us some feedback on what you like/not like in Yuma!

Your feelings about people like me being successful without owning are subjective. A property listing for $500 over what most properties list for in same location, same amenities, same sqft is the definition of objective.

When do you think people are more likely to overpay, and attempt to over-charge, at the bottom, or at the top? I'm not sure what dimension you want to hypothesize about here, common sense makes it pretty clear. Unless you don't believe there will ever bet a bottom..?

B.A.C.A.H. says

Sheesh Nuttboxer. Waste your time arguing on a blog

Isn't that why we're all here? Seriously though, these kind of discussions are the bread-n-butter patnet was founded on in the mid 2000's. Wishful thinkers who want to profit from doing nothing will keep saying tops don't exist, versus the Federal Reserve who will keep doing their job to blow bubbles, decade after decade, after decade.

Better read yourself some boom/bust by Rothbard, or learn from past mistakes before the tidal wave of greed, inflation, and leverage drags you out to sea.

NuttBoxer says

Seriously though, these kind of discussions are the bread-n-butter patnet was founded on

Yes.

But his/her discussion is with his/her own self, trying to rationalize or convince himself (or herself) of something.

Even the Most Major California Rental Real Estate Investing Cheerleader E-man himself mentioned the present pricing is insane and out of whack. But E-man's not trying to convince himself of anything.

Key is not to overleverage...

gabbar says

How does one keep not more than 10 k in checking and 10k in savings? What are the options available?

Roths, 401k, HSA, IRA, etc. If you max those out then fine have $40k or $40M in a savings account that could be seized if you default. At that point there's no reason to default, just pay. I'm strictly talking in strategic senses. Middle class person with $100k family income loses a job and can't pay the mortgage. Leverage the default as much as you can. One by not paying. Two protect yourself/finances. Third is short sell and get all liability waived. I/we did this with probably 90 short sales.

No one can take a dime from the accounts I mention unless it was fraudulent. Even then I don't think any party can take those funds. Not one client had a dime taken from their checking or savings. The loans are sold off, but even then I would never bank with who lends me the money unless it's a commercial/business account.

I'm in by no ways promoting dumping debt. If you get yourself in a fucked up situation there is a way out is all I'm saying. Too many think it's doom and gloom and do something stupid including taking their life... over money and credit. You can always make more and repair it.

NuttBoxer says

El Cajon is way too city for me. Where I live we call going to San Diego(which starts in El Cajon), "Going into town", or "Going down the hill".

Good! I'd rather you not have to live there it's a shit hole. Smog seems to accumulate in that valley as well. Further East IS quite nice though. I'd considered moving out that way but muh commute.

Bitcoiner says

I don’t know if CA allows these kind of agreements.

I do. In California you are not allowed to collect the remaining months on the lease unless you can prove you've made a reasonable effort to re-rent the property. It's California, the owner gets screwed at every turn, anyone who lives here knows that. I don't have to make assumptions because this has been my area of expertise for 20 years. You learn a thing or two after dealing with a bad owner, and we've had one or two. Most of them have been like you though, rare rent raises, and appreciation for the value good tenants bring.

Bitcoiner says

NuttBoxer says

When do you think people are more likely to overpay, and attempt to over-charge, at the bottom, or at the top? Unless you don't believe there will ever bet a bottom..?

You understand why I don’t believe in overpaying and why it really doesn’t matter?
Years later those prices appear as cheap.

I do, you very clearly answered the above question about if you think there will ever a bottom, you don't. Given the state of the economy, that is wishful thinking indeed my friend. You didn't answer the other part, but that's ok, with logical reasoning, it's pretty rhetorical.

just_passing_through says

Good! I'd rather you not have to live there it's a shit hole. Smog seems to accumulate in that valley as well. Further East IS quite nice though. I'd considered moving out that way but muh commute.

I went to college in East El Cajon, city never impressed me. I remember the joke was you're doing well if you could find an El Cajon girl with both of her front teeth.

Out in the mountains/foothills though you get almost daily sun, if fog rolls in from the coast burns off early morning. A bit warmer and cooler, but way less humidity. I really love this area. If we had been open to buying out here in '11 and known about the USDA, would never be leaving. But that's not who we were back then, we were city folks.

If only, if only...

With any housing situation the key is to not move. Rent long term and the landlord is happy with minimal increases. Own long term and you locked in your monthly nut for 30 years generally. It's the duration of living there that's the biggest factor.

The only issue with rentals and being a tenant is if the landlord decides to sell. They do. I've lived it. You're fucked. With renting there's another party in the monthly transaction. They might be an ass hole. They might try to control what you do with the property. My mortgage company give no shits about what I do to the property as long as I'm paying. And that payment will stay the same.

I get people don't like debt, but owning is the better route for 9 out of 10 people. The 10% that can save, invest and rent are kind of unicorns. Renters generally don't save as much as owners. Owners are forced savers by paying principle. Very, very few renters set aside money for investment. It happens, but is not common.

Place we paid the least for and liked the best got sold. We did get the first chance to buy, but mortgage would have been too high. Hmm, cheaper to rent than to buy?

So just on this site you know Patrick, myself, and I believe there are a few others who have rented quite a bit. The chances of that 10% being on patnet seems pretty slim. Further, as I've mentioned, my personal experience is irresponsible people certainly buy houses, and responsible people definitely rent. If I didn't know better, I'd swear you guys learned economics from realtors ;)

Definitely all for the long-term either way. Stability is a good thing.

NuttBoxer says

Further, as I've mentioned, my personal experience is irresponsible people certainly buy houses, and responsible people definitely rent. If I didn't know better, I'd swear you guys learned economics from realtors ;)

Renters are the worst to deal with. I've been a landlord. "A fucking ant is in my house come throw chemicals at it." "My dad died I need two weeks to pay rent." Fine, you're a good tenant. That's not the norm. It's not a judgement on you personally. Renters suck. It's not easy money like some portray. It's a pain in the ass and anyone saying otherwise is lying.

Even with the best of screening tenants are shit 50% of the time. This is 100% fact having rented over 1k apartment units. My evidence is beyond anecdotal. I was a good tenant when I leased. Most aren't.

WookieMan says

I've been a landlord.

Same here, but for only the 10 SFH houses that I personally owed. Even on that scale owning rentals is more of a part time job than a passive investment.

Bitcoiner says

Did you manage them all yourself or did you have a property manager? Did you end up selling them all?

I managed them all myself except one, and I sold the last one off a couple years ago. The one exception was because I left town. I did not own all 10 at once, I only had 4 that I owned simultaneously.

WookieMan says

NuttBoxer says

Further, as I've mentioned, my personal experience is irresponsible people certainly buy houses, and responsible people definitely rent. If I didn't know better, I'd swear you guys learned economics from realtors ;)

Renters are the worst to deal with. I've been a landlord. "A fucking ant is in my house come throw chemicals at it." "My dad died I need two weeks to pay rent." Fine, you're a good tenant. That's not the norm. It's not a judgement on you personally. Renters suck. It's not easy money like some portray. It's a pain in the ass and anyone saying otherwise is lying.

Even with the best of screening tenants are shit 50% of the time. This is 100% fact having rented over 1k apartment units. My evidence is beyond anecdotal. I was a good tenant when I leased. Most aren't.

Interesting data. I guess the quality of tenants is better here in the Bay Area? My biz partner and I have over 100 units. 96 units are managed by a property management (PM) company. The other could handful units, we still manage them as they’ve been our long-term tenant. Whenever these tenants leave, I’ll either sell or turn them over to the PM company.

Out of the 96 units, we had 3 evictions. They were all legacy tenants, which we evicted shortly after the purchase. I guess previous owners got burned out from self-managing. We have not had one eviction with our PM company. Pretty amazing screening process would you say?

I learned from our PM that it’s a business. Treat it as such and don’t let it bother us. It’s been serving me well. We have a full-time handyman who handles all the repairs and rehab. Without a handyman, the repair cost would be higher so it cuts into the cash flow, but it can be quite passive. The more passive, the more it’ll cost. It’s that simple.

I self-managed 18 units before I met my partner and scaled up to apartment buildings. At that time, I found it could be a little annoying at times as things tend to break on a Friday before the long holiday weekend. However, it’s still much much better than working a W2. What I’ve learned is that if I’m willing to pay a premium, someone will make fix it and make the problem go away. All in all, I’d rather scaled up to 200 units and be an investor than to hold down a W2. It’s a great trade for me.

Eman says

Interesting data. I guess the quality of tenants is better here in the Bay Area? My biz partner and I have over 100 units. 96 units are managed by a property management (PM) company. The other could handful units, we still manage them as they’ve been our long-term tenant. Whenever these tenants leave, I’ll either sell or turn them over to the PM company.

Out of the 96 units, we had 3 evictions. They were all legacy tenants, which we evicted shortly after the purchase (some text omitted to shorten quote...) 18 units before I met my partner and scaled up to apartment buildings. At that time, I found it could be a little annoying at times as things tend to break on a Friday before the long holiday weekend. However, it’s still much much better than working a W2. What I’ve learned is that if I’m willing to pay a premium, someone will make fix it and make the problem go away. All in all, I’d rather scaled up to 200 units and be an investor than to hold down a W2. It’s a great trade for me.

I agree! Just don’t lose money!

WookieMan says

Roths, 401k, HSA, IRA, etc. If you max those out then fine have $40k or $40M in a savings account that could be seized if you default. At that point there's no reason to default, just pay. I'm strictly talking in strategic senses. Middle class person with $100k family income loses a job and can't pay the mortgage. Leverage the default as much as you can. One by not paying. Two protect yourself/finances. Third is short sell and get all liability waived. I/we did this with pro (some text omitted to shorten quote...) se funds. Not one client had a dime taken from their checking or savings. The loans are sold off, but even then I would never bank with who lends me the money unless it's a commercial/business account.

I'm in by no ways promoting dumping debt. If you get yourself in a fucked up situation there is a way out is all I'm saying. Too many think it's doom and gloom and do something stupid including taking their life... over money and credit. You can always make more and repair it.

Thank you. I understand. I agree. I will admit that I am risk averse. I went through a bad phase in my life and that experience changed me and made me conservative. No complaints though. Again, thank you very much for this ground reality, Wookieman.

WookieMan says

Renters are the worst to deal with. I've been a landlord. "A fucking ant is in my house come throw chemicals at it." "My dad died I need two weeks to pay rent." Fine, you're a good tenant. That's not the norm. It's not a judgement on you personally. Renters suck. It's not easy money like some portray. It's a pain in the ass and anyone saying otherwise is lying.

Even with the best of screening tenants are shit 50% of the time. This is 100% fact having rented over 1k apartment units. My evidence is beyond anecdotal. I was a good tenant when I leased. Most aren't.

My boss used to be a landlord. He said he sold all his properties because it was not worth it for him. He was an accountant by education.

Eman says

96 units are managed by a property management (PM) company.

We were the property management company and brokerage so we could get the sale in the future. So the owners didn't deal with shit. It wasn't 1k units at one time either, just over 15 years filling vacancies 5 times a month or so.

Chicago proper is a vastly different rental market. Professional, well off people don't rent there. They live in the suburbs or they own their condo or home. These were city rentals in any neighborhood in the city. As fact known nationally, Chicago is not the nicest or well run city and it's 100% a tenant friendly city as well. Copious amounts of regulation.

I may get back into it personally. Facebook I know, but our townie page with 2k people has people asking for rentals DAILY. There's nothing as people are leaving urban areas and building basically stopped where I'm at. So if I can find a steal of a deal I might pull the trigger. I don't think I'd want more than 5 unless someone else is on board. I really don't want to have to answer to others. Give me a task and I'll do it, but leave me alone and don't fuck with me.

I mention the ant thing because it is that time of year here. We'd get calls and just bring over a bunch of pods they crawl in and die basically. Walk in the kitchen and be like, you know why you have fucking ants bro? You haven't cleaned the floor, the sink is full of dirty dishes, etc. People in cities live in filth and blame the landlord for their own actions.

I no longer hold a RE license, so it's okay to say this in my world. And this isn't a blanket statement. Black people are AWFUL tenants unless they're profession level with a good job. Which means 90% are bad. Mexican have the dirtiest kitchens in my experience. They love their cooking but apparently not cleaning it up. The stove hoods I've seen in Chicago you'd need a paint scraper to get the grease and grime off of it in the Mexican neighborhoods. White were a problem but that was mainly drug use and alcohol. Same for the blacks. Chicago is a weird city once you get in the underbelly and away from tourist spots.

If you're shielded from the shit with a PM you could have 1k units at once and it would seem easy. The key I would tell anyone is be patient, location (not regulations above) and don't overpay ever.

WookieMan says

The key I would tell anyone is be patient, location (not regulations above) and don't overpay ever.

What's PM?
Charlie Munger would agree with this.

gabbar says

WookieMan says

The key I would tell anyone is be patient, location (not regulations above) and don't overpay ever.

What's PM?
Charlie Munger would agree with this.

Property manager. You lose 10% or so but you don't have to deal with the day to day generally. Self managed rentals are a nightmare if you have no clue. Appliances break, roofs leak, things break, etc. You have to know how to manage that. So you pay someone 10% or so of rents so buying right and being patient is critical. Bird-dogging and finding owners that might sell off market it critical. You're generally not going to find a deal through a Realtor or MLS. Anytime a broker is involved you're looking at a 2-3% loss out the gate and potentially 6%.

Think little things too. Keep going back to ants. Think about a mouse and you have a female renter. They're going to freak out and call the PM or you if you're doing it yourself. Depends on your screening, but if a tenant calls and is gonna be 5 days late, do you play hardball or be nice.? Next time it's 10 days and it compounds as they try to take advantage of you.

There are other layers depending on location. Section 8 tenants. They're not all bad, but some are super righteous. Most are confused that you can discriminate and not accept section 8 tenants and will threaten you with lawsuit. The local housing agency inspects your property. There's no law that says you have to agree with that in any municipality that I've seen.

Fact is you have to have some thick skin or be willing to eat about 10% of profits on a PM. Which is fine. Pareto principle (80/20 rule). 80% of your tenants will tend to be a pain in the butt. If you screen right and get the 20% of responsible humans, you're on easy street. You're printing money. It takes work if you're doing it yourself. Or it takes work to find the right PM.

Other thing is you need to know basics about homes. Furnace, dishwasher, plumbing, electric, etc. If you don't know any of that I wouldn't touch real estate. You will get screwed by repair people and contractors. Kind of goes for home ownership as well. Have a water heater blow and not know how to replace it. $2k later for a $500 fix. The list goes on. Not trying to stop people from getting into rentals properties, but it's not a cakewalk. It's like restaurants. Most fail at it thinking it would be easy. You need a plan and structure.

Bitcoiner says

I’ll stick with long term SFH’s in good locations. Might add a vacation rental down the road.

Single family homes are the way to go in my opinion. As usual and you mention it location is key. Usually requires a higher price out of the gate is the biggest issue.

Before high building costs (coming down) and high interest rates, building townhomes and apartments was pretty lucrative. Little to no maintenance. Single family though is just easier if you have the tenant manage landscaping and lawn care and they feel like it's their home. No neighbors banging on the floors and walls. Easier resale because few people are going to buy 4-50 units at once, so appreciation should be solid if you're holding long term.

Vacation rentals are intriguing. I sincerely don't know the management aspect of it. How hands on it is. I know Just_passing_through has a Hawaii rental. I just don't know if something as simple as a cleaning person missing a pubic hair on the toilet becomes a problem. I'm easy to please. I repaired a pool heater in Anna Maria Island, FL at a vacation rental. I imagine most people would just bitch and whine. I'd love to buy a 2/2 on St. John USVI and have renters pay for the thing for when we officially retire and I'm free and clear on my IL mortgage and down there. Bounce back during hurricane season.

Bitcoiner says

When you compared the rent to the mortgage. How did this look like? On your PITI, the P is your forced savings account. Did you deduct that to compare? Would you have put at least 20% down?

The rent was $1,450 for a 3/1 house. For most of the four years we lived there it was $1,375. West side of Chula Vista, older blue collar neighborhood. There were asking in the $300k range. At 20%, which we didn't have back then(I never took work seriously until I was almost 30), with maintenance, would still have been more.

Here's the other thing owners don't think about. There's no fucking way I'll ever live in a city again in California after scamdemic. The only reason we lasted was because in our small town, no one gave a shit about that stuff. Also, the school my daughter was enrolled at in Chula Vista never taught math. I'm not kidding. She was two-three years behind when we transferred her to Phoenix. Took tutoring and some really good teachers, and a lot of work by her and us to catch her up.

All that to say there's no way we would have stayed. And thanks to renting, we had the freedom to make those choices.

On the bad renters, again this is a bullshit false paradigm. Some people are more responsible than other, more honest, harder working. Doesn't matter if they're the landlord or the tenant, those are personality traits. I've known plenty of tenants who get taken advantage of because they don't know the law. And the reason landlords get bad tenants, they don't know how to screen. A credit score is not a good way to screen people. Job history and personal references are more important, as well as past rental history.
Especially when the landlord takes the first person to get their app in. If someone can move in on a moment's notice, that should tell you something...

WookieMan says

Bird-dogging and finding owners that might sell off market it critical.

How does one find owners that might sell off market?

WookieMan says

It's like restaurants. Most fail at it thinking it would be easy. You need a plan and structure.

Nassim Taleb discourages people to go into restaurant business because of the competition. Do you think restaurants pay taxes on cash received as payments from dining customers? I recall reading somewhere that restaurants (hotels too?) have 2 books; I for IRS (doesn't have cash payments etc.) and one that's factual (for internal confidential use)

NuttBoxer says

On the bad renters, again this is a bullshit false paradigm. Some people are more responsible than other, more honest, harder working. Doesn't matter if they're the landlord or the tenant, those are personality traits. I've known plenty of tenants who get taken advantage of because they don't know the law. And the reason landlords get bad tenants, they don't know how to screen. A credit score is not a good way to screen people. Job history and personal references are more important, as well as past rental history.
Especially when the landlord takes the first person to get their app in. If someone can move in on a moment's notice, that should tell you something...

I lived with a roommate who didn't know how to piss in the toilet bowl with accuracy. Needless to say, landlord was happy when he vacated.

WookieMan says

Black people are AWFUL tenants

And awful neighbors.

The only neighbors I ever had problem with were gay whites and Mexicans. The black ones at my complex hang out in their garage and drink beer during the summer. I still owe them a beer.

Bitcoiner says

WookieMan says

I'd love to buy a 2/2 on St. John USVI and have renters pay for the thing

Like that idea! Never been to St John. Have you been to other islands like Turks and Caicos?

If I have to guess, they’re all beautiful. Been thinking of buying a vacation rental/property where it can “almost” pay for itself when not in use. Haven’t figured out the location and asset….yet