patrick.net

GNL says

Eman says

This whale in my market is trying to flip this turnkey building for 4.4 cap. Who is going to pay that in the current market? It’s negative leverage right off the bat with NO upside potential. This pocket/street is weak too for the pricing.

I imagine there's an equation I could use to figure out the asking price? What is he/she/they asking for it now?

Oh yes. There are only a few variables. Gross rent, expenses, cap rate and wishing price. Knowing other variables, you can figure out the unknown one. Interest rate is not part of the calculation when determine the cap rate. Pro-forma is “what’s the maximum rent you could achieve for the units”.

zzyzzx says

So, buying Tbills is better then buying an apartment building!

Maybe it is for you. I’m not smart enough to know to be honest.

Eman says

zzyzzx says

So, buying Tbills is better then buying an apartment building!

Maybe it is for you. I’m not smart enough to know to be honest.

Is there anyone who has achieved billionaire status investing in Tbills?

GNL says

Eman says

zzyzzx says

So, buying Tbills is better then buying an apartment building!

Maybe it is for you. I’m not smart enough to know to be honest.

Is there anyone who has achieved billionaire status investing in Tbills?

There has been 2 bond kings. One was Bill Gross and one is Jeffrey Gundlach. I don’t know if they became billionaires investing in T bills. Other than that, I’ve met a few real estate billionaires in the Bay Area, and I’m sure you can google and find plenty more who became billionaires through real estate. However, I believe most people became billionaires through entrepreneurship…..real estate included.

Mr. Zell was raspy-voiced and blunt, with little patience for cockeyed ideas or sentimentality. He exulted in his reputation for using salty language even in politically correct times. It made him popular on the speaking circuit, where attendees eagerly listened for his business insights and for the entertainment he might provide. - RIP Mr. Zell.

https://chicago.suntimes.com/business/2023/5/18/23728642/sam-zell-dies-obituary-billionaire-chicago-equity-group

https://finance.yahoo.com/news/why-rental-vacancies-continue-rise-110049461.html

Why Rental Vacancies Continue To Rise

GNL says

Is there anyone who has achieved billionaire status investing in Tbills?

It be about diversification. A 5% risk-free return ain’t too shabby.

GNL says

Bitcoiner says

Sry I am not following. Why would my equity disappear? I am not selling any real estate. In fact I plan on holding my RE and hand it down to the kids. I root for lower prices so I can buy more. equity in my homes going up or down doesn’t mean much to me for the next 5 plus years. I can’t do a cash out refi with these high rates and I actually don’t plant to refinance for a while anyways.

I think you might be a Realtor...it's ALWAYS a good time to buy. Suzanne researched it.

He's just overly enthusiastic about anything he's currently invested in, be it crypto, vaxx or now SFH rentals. =)

Bitcoiner says

Nuttboxer, you would need to ask the tenants not me. I don’t even deal with them or push the increases. It’s all handled by my PM. I saw your Zillow pull. Yes you can find rents below 2k but the quality is not comparable to the newer SFH houses, location and condition I am invested in. I never said you can’t find a cheaper place, I just shared what I see and what I charge. I don’t even look at crapshacks to be honest. You might even find a place for under 500 in someone’s garage or for a place to put up a tent. That’s not my investment area. Quality places for quality renters. My buddy rents out his casita in surprise for 2400 cash per month. Usually short term. It’s tiny but fully furnished.

I didn't cull the list, but out of 60+ properties, there were plenty of nice ones in there. So your assumption of quality is disingenuous. I honestly don't give a shit about a house being new, except that if it's new enough, there are way to many chemical in the air for my interest. Place we rented just off Greenway and 67th wasn't new, but not outdated at all. Had a speaker system wired up for the patio, high ceilings, large master, and a pool. Looks like after we moved out three years ago, the price bumped up $100 to $1,650, no idea if they've raised again, but the sweet old lady who owned it didn't raise while we lived there.

I guess just like any market, there are savvy renters, and those who will pay anything...

I'm fairly private, so not going to post it, but you should have more than enough info already if you're really interested. Just ask you don't post the address.

Bitcoiner says

Why would my equity disappear? I am not selling any real estate. In fact I plan on holding my RE and hand it down to the kids.

Same as...

"Why would my bitcoin profits disappear? I am not selling any bitcoin. In fact I plan on holding my bitcoin and hand it down to the kids."?

@Nuttboxer,

We recently stayed in Glendale while we took the kids to Universal Studios. Very nice city. I was impressed.

Actually, it's Glendale AZ, not Glendale CA. A bit further from Universal, but I would still say pretty nice(depending on which part of town).

Bitcoiner says

NuttBoxer says

I'm fairly private, so not going to post it, but you should have more than enough info already if you're really interested. Just ask you don't post the address.

I knew it! Here is another question. Instead of posting the address. Just look it up by yourself, send a screenshot of the sqft, pictures and the rental history. Don’t have to disclose the address. Can you do that?

My personal laptop uses Linux, and screenshots are not something I've ever had a need to learn. If you're ok with @Patrick sharing your email, I can send it to you directly.

@NuttBoxer If you tip Bitcoiner one cent, then you can include your email address in a short private message with the tip.

For anyone who isn’t familiar with commercial loans and the prepayment penalty, here are the rates for 5/1, 7/1 and 10/1 ARMs.

For example: if you pay off the loan in the 1st year, you pay 3% penalty of the remaining loan balance. If you pay it off within the 2 years, it’s 2% of the remaining loan balance, and 1% within the first 3 years. After 3 years, no penalty. You can refinance or pay off the loan as you wish. The loan will become adjustable after 5 years if you don’t refinance. You can let it “float” based on the terms of the “Note”. I believe the terms are 2% increase maximum per year and not to exceed 6% for the life of the loan so 7.5% in year 6, 9.5% in year 7 and 11.5% after….and it’s capped at 11.5% for the remaining life of the loan.

Patrick says

NuttBoxer If you tip Bitcoiner one cent, then you can include your email address in a short private message with the tip.

Ok, didn't see it in the comment like I used to, didn't realize we still had it.

NuttBoxer says

Ok, didn't see it in the comment like I used to, didn't realize we still had it.

Good point, I should have the tip link in comments again.

https://notthebee.com/article/dont-look-now-but-it-looks-like-the-housing-bubble-is-beginning-to-pop

Our insane housing bubble is poised to pop as prices tumbled a record amount year-over-year

The median U.S. home sale price fell 4.1% ($17,603) year over year in April to $408,031. That's the biggest drop on record in dollar terms and the largest decline since January 2012 in percentage terms. April marked the third consecutive month of year-over-year declines following roughly a decade of increases.

I'm watching several 2 bed condos and mainland SFHs, all of which were $350-$500k

They've all dropped $5k-$20k in either of the past two months and two have dropped in both April and May.

One of these was the 3 bed/1.5 bath 1200 sq ft 1980s SFH competing with a literally Brand New never occupied Horton home a few streets away (same school, etc.) that was only $30k more expensive but had a bonus room and a full second bath with a few hundred more Sqft (though half the acreage) AND the developer will pay all closing costs. They cut $20k last month to a "reasonable" $320k. Reasonable is more like $250K.

Inventory continues to be an issue. What will change it?

GNL says

Inventory continues to be an issue. What will change it?

A recession.
Investors selling off houses. No reason to be a landlord when T-bills pay the same rate without having to deal with scummy renters.
Deaths (I'm thinking Florida and Arizona here)
More new home and apartments being built (getting there with apartments). New homes are plentiful in some locations.
Inflation and other increased costs (insurance and property taxes in particular) eating away at people's incomes causing them to sell off that vacation house (Florida comes to mind here).
Increases in Condo fees in theory should cause a glut of condos to sell off or turn to rentals.

On one side, there is less inventory. And people have locked in low mortgage rates. On the other side, there are too many things not going in a positive direction. The consequences of this equation hasn't appeared yet but it will/should in the first quarter of 2024 if not earlier.

Bitcoiner says

Don’t confuse investors with landlords. I am an investor and don’t deal with any tenant.

Not every comment made here is about you.

Bitcoiner says

Most importantly, you can leverage your RE assets, often possible due to significant appreciation over time.

I thought you were hoping to lose significant equity so you could buy more RE. Which is weird because don't you need significant equity so you can buy more RE?

You seem to be selectively filtering facts again to meet your narrative. We lived there for a year, owner never raised the rent. They did raise it for the new tenant, but only to $1,650. They would have had to raise it over a hundred a year ever year, and our experience says that didn't happen.

Also, you again ignore the rentals for under $2,000 I linked you to in that area.

NuttBoxer says

You seem to be selectively filtering facts again to meet your narrative. We lived there for a year, owner never raised the rent. They did raise it for the new tenant, but only to $1,650. They would have had to raise it over a hundred a year ever year, and our experience says that didn't happen.

Also, you again ignore the rentals for under $2,000 I linked you to in that area.

I'm pretty sure he's a poser.

https://www.reddit.com/r/RealEstate/comments/13y3tix/anyone_else_spending_over_60_of_net_pay_towards/

Anyone else spending over 60% of Net pay towards mortgage?

NuttBoxer says

You seem to be selectively filtering facts again to meet your narrative. We lived there for a year, owner never raised the rent. They did raise it for the new tenant, but only to $1,650. They would have had to raise it over a hundred a year ever year, and our experience says that didn't happen.

Also, you again ignore the rentals for under $2,000 I linked you to in that area.

Maybe this rent amount was a few years ago, and rent has gone up since? In general, you can get cheaper rents from landlords vs. professionally managed rentals.

I still have a handful of rentals that are $500-$700/month below market rents. These tenants have been with me for a decade or more so I leave them alone and just increase minimal each year. If any rental gets turnover now, I’ll turn them over to my PM and let them deal with new tenants. They charge me 6% flat rate for SFH and condos. 5% flat for apartments. Sweet deal.

Bitcoiner says

Pretty sure NuttBoxer does not agree with anything I send him. I own rentals in the west valley of phoenix but he knows better. If I send him a Zillow screenshot he will come up with a reason why it’s not true. Those rental rates he is referencing are PRE-Covid. House prices nearly doubled in Phoenix over the last 4 years and rents have exploded too. But don’t take my word for it. Do you own research or just believe what you want :)

It’s alright. Let it go. I consider my tenants as partners without shared equity. My cost basis is practically fixed while inflation will allow the rents to rise overtime while the tenants will buy me the assets by paying them off. It’s a great deal.

The rental market has been hot. We listed a 1/1 for $1,995, and it was gone in a day.

https://www.zillow.com/homedetails/550-S-4th-St-APT-B-San-Jose-CA-95112/2101203414_zpid/

The 2/1 was listed for $2,495 and it was gone immediately the moment we showed the unit to the first applicant. Zillow guesstimates $2,250/month rent.

https://www.zillow.com/homedetails/544-S-7th-St-8-San-Jose-CA-95112/2057550055_zpid/

This small house sold for $1.7MM in my neighborhood a few months ago. Crazy - even for Carlsbad IMO.
https://www.zillow.com/homedetails/6432-Cayenne-Ln-Carlsbad-CA-92009/16657407_zpid/

I know the original owner (old widower who has lots of lady friends) who sold for $1MM. I was surprised when flippers bought it last July and spent half a year upgrading it. I figured they were going to lose their shirt in this market but they got over asking!

Until more people list homes for sale, this isn't changing. Interest rates only slow growth. It's not intended to cause a crash. Existing loans are solid and 90% are probably under 5% or paid off.

I swear people want to just bitch out about something. There's no evidence a housing crash is coming. We knew interest rates would stall the market on purpose. Fact is between 2010-2020 people got cheaper homes at bare bones interest rates. They ain't moving. They keep them and rent them or just simply live in them. Investors just keep them as the rents rise, especially now as rates go up. More demand from renters.

This isn't rocket science. It's basic math.

Personally, I believe the "new normal" is perpetually low inventory.

Personally, I believe the "new normal" is perpetually low inventory.

According to the Oracle of California real estate, Bruce Norris, we need distressed sales for prices to crater.

The housing market always has death, divorce and investor sales. What would cause distressed sales? Massive job layoffs where people don’t have a choice but to sell their house or lose it to foreclosure. Housing prices are very sticky with equity sales.

This thread has so many echos of '06. But what's scary is the same people keep lining up to lose half their "equity", like they've been lobotomized. Every boom has a bust, every bubble pops.

You over-charge people, but you don't force them to pay it right? They make the choice. So why feel bad if some charge less, and savvy renters like myself take advantage rather than pay more than we should?

Renters who choose to live in over-priced markets dig their own graves. Our biggest advantage is our mobility, use it, or spend your life working for your house.

GNL says

I have a commercial realtor client and he says commercial real estate is doing very well. He/we are in northern Virginia.

It is also still a strong seller's market in the Williamsburg area, at least for residential real estate. I am pricing homes around cental VA's Smith Moutain Lake, hoping they will come down soon.