patrick.net

https://www.reddit.com/r/RealEstate/comments/14oxauw/we_have_a_really_good_mortgage_rate_but_cant/

We have a really good mortgage rate but can’t afford our bills.

But inflation is supposed to fix everything for loanbuyers!!

Bitcoiner says

When you spell it all out it becomes clear why inflation is considered your friend if you are a homeowner.

Or a sociopath that likes war and hates people.

Bitcoiner says

With inflation, income and rents go up. And when you own assets and debt, inflation is a tailwind for you. Your debt “loses” in value because it’s fixed but your income goes up. And as a bonus your asset value increases over time. When you spell it all out it becomes clear why inflation is considered your friend if you are a homeowner.

This is not quite accurate. During inflationary periods nominal wages may rise, but real wages may not. And there are numerous examples of home prices going down during inflationary periods.

Bitcoiner says

I wouldn’t say it fixes everything for you but it certainly helps.
With inflation, income and rents go up. And when you own assets and debt, inflation is a tailwind for you. Your debt “loses” in value because it’s fixed but your income goes up. And as a bonus your asset value increases over time. When you spell it all out it becomes clear why inflation is considered your friend if you are a homeowner.

I'm talking about loan owners, that's the context people use the most often when justifying inflation. But like you they ignore the practicality of everything going up, and how that will screw them out of anything they don't really own. Stay in the real world with me and understand that in the tech space, one that has done well far longer than blue collar, wages are NOT keeping up with inflation. And many companies are laying employees due to inflation cutting into their profits. No RE articles with bullshit stats, just real world experience by myself and people I know, companies I've worked for.

Utilities go up(actually read the linked article). Food, gas, maintenance, everything. Went to the movies the other day, for three adult tickets, a small popcorn, candy, and nachos price was $80. Going out to eat and ordering three meals, with tip, $100. A couple packs of good beer and some sunscreen, $75. Real prices, from my real life.

Al_Sharpton_for_President says

Bitcoiner says

With inflation, income and rents go up. And when you own assets and debt, inflation is a tailwind for you. Your debt “loses” in value because it’s fixed but your income goes up. And as a bonus your asset value increases over time. When you spell it all out it becomes clear why inflation is considered your friend if you are a homeowner.

This is not quite accurate. During inflationary periods nominal wages may rise, but real wages may not. And there are numerous examples of home prices going down during inflationary periods.

For my 3 SFRs inflation sucks. First, I had to raise rents more than normal and I hate that. But also my insurance, property taxes and maintenance costs are way up as well. I don't think I covered it with the rent increase. Giant pain in the ass is what it is.

Bitcoiner says

Cry me a river. Your rents went up and you don’t think you covered the increased expenses….forgot to mention your house values went to the moon over the past decade? Bottom line, you are way wealthier today compared to 5 years ago.

So far I think it's a wash at best. Glad I have them or I would have fallen behind but I don't think this round of inflation is helping much of anyone. Value doesn't matter much if I don't plan to sell for 30 years. I'd rather it stay flat then suddenly spike at year 29!

Bitcoiner says

In 15 years from now people will say how cheap houses were in 2023. That’s the brutal reality.

Unfortunately, this is true. They will also say "In 2023, most families did not have to double up to afford rent/mortgage."

HeadSet says

Bitcoiner says

In 15 years from now people will say how cheap houses were in 2023. That’s the brutal reality.

Unfortunately, this is true. They will also say "In 2023, most families did not have to double up to afford rent/mortgage."

The same thing was said in the early 1970’s. Most people could buy a house and lived on single household income.

In the early 2001, I was working with a couple older gentlemen, who said if they knew what they had known then, they would have bought 5 houses in Cupertino. They would have been much better off, and this was 20+ years ago. For this reason, I went all in and bought as much as I could afford, borrowed and financed between 2009-2013.

just_passing_through says

Bitcoiner says

Cry me a river. Your rents went up and you don’t think you covered the increased expenses….forgot to mention your house values went to the moon over the past decade? Bottom line, you are way wealthier today compared to 5 years ago.

So far I think it's a wash at best. Glad I have them or I would have fallen behind but I don't think this round of inflation is helping much of anyone. Value doesn't matter much if I don't plan to sell for 30 years. I'd rather it stay flat then suddenly spike at year 29!

This is the downfall of being a landlord rather than letting the property management company handle it. We’ve been getting record rents on our apartments while a handle units, that I still manage, the tenants are still paying way below market rents. They’ve been with me for too long to raise rent too much on them.

Eman says

For this reason, I went all in and bought as much as I could afford, borrowed and financed between 2009-2013.

Smart choice and a product of your age...opportunity + preparedness. And there is always at least just a bit of luck involved.

Bitcoiner says

Onvacation says

Bitcoiner says

When you spell it all out it becomes clear why inflation is considered your friend if you are a homeowner.

Or a sociopath that likes war and hates people.

But he's right.

Inflation is an attack on both the middle and lower class. The way inflation works is that it makes you a slave to the banking system, it's also used to pay for war as a hidden tax, and it's used to make savings as difficult as possible.

Debt isn't wealth, but that's what our Keynesian system makes you think. It will eventually destroy the country, what is left of it.

richwicks says

Bitcoiner says

Onvacation says

Bitcoiner says

When you spell it all out it becomes clear why inflation is considered your friend if you are a homeowner.

Or a sociopath that likes war and hates people.

But he's right.

Inflation is an attack on both the middle and lower class. The way inflation works is that it makes you a slave to the banking system, it's also used to pay for war as a hidden tax, and it's used to make savings as difficult as possible.

Debt isn't wealth, but that's what our Keynesian system makes you think.

And this is what should anger everyone. But, it is what it is and we are all responsible for our own selves.

Bitcoiner says

Can you point to moment in time where house prices dipped during inflation?

Debt is used as a bludgeon against society. It should be obvious now.

GNL says

Eman says

For this reason, I went all in and bought as much as I could afford, borrowed and financed between 2009-2013.

Smart choice and a product of your age...opportunity + preparedness. And there is always at least just a bit of luck involved.

A couple events happened in my life that has stuck with me. I had dinner with my college buddy last week. He reminded me that when I quit my engineering job to do RE in 2009, he told his wife I would be rich. He said no one hustled like me in college. 🤣

When I turned in my resignation in 2009, my supervisor, who is a PhD MIT graduate said “regardless of what you do, you will always land on your feet.”

These are the things that people saw in me, but they didn’t tell me until I quit. It’s our job to figure out our strengths.

Al_Sharpton_for_President says

Bitcoiner says

Can you point to moment in time where house prices dipped during inflation?

We know 2-3% inflation is a unicorn.

Eman says

This is the downfall of being a landlord rather than letting the property management company handle it. We’ve been getting record rents on our apartments while a handle units, that I still manage, the tenants are still paying way below market rents. They’ve been with me for too long to raise rent too much on them.

I get free property management from a broker in the family who's been in this market (Texas) for 40 years. My rents are slightly below market. I just make yes/no decisions, pay for stuff and the only thing I manage myself is my VRBO in Maui.

Now that I'm back in TX I am doing some odd jobs whenever I don't feel like paying a contractor but there is always an option for contracting work out which is what I typically do.

Eman says

It’s our job to figure out our strengths.

You're not wrong.

Bitcoiner says

With inflation, income and rents go up.

There is no shortage of articles describing how wages are not keeping up with inflation. IOW, real wages are decreasing.

Why Salary Increases Do Not Keep Pace With Inflation
https://www.forbes.com/sites/johnbremen/2022/04/07/why-salary-increases-do-not-keep-pace-with-inflation/

This is an insidious theft of workers’ wages.

Rents are going down, too, in many markets.

Rents are now dropping in 57 out of 100 Large US Cities - Reventure Consulting
https://nyugrad.substack.com/p/rents-are-now-dropping-in-57-out

Like a realtor, or stock pitcher, you are talking your book. But reality is reality.

Bitcoiner says

Don’t see inflation as good or bad. It’s part of our system. The RE owners got a lot richer in the past few years

Yeah, fuck those poor people. They should have bought at the bottom.

I see inflation as the kleptocracy's plan to own everything. We just dodged their endgame bullet of the "Great Reset" where you will own nothing and be happy.

If we lose the middle class there is no one to protect the wealthy from the poor that have nothing to lose.

Bitcoiner says

Never. I said, with inflation income and rents rise.

How are incomes rising for the majority of Americans when real wages are not keeping up with inflation?

Onvacation says

If we lose the middle class there is no one to protect the wealthy from the poor that have nothing to lose.

Big Brother and the "outer party" will protect the "inner party" from the "proles" if any "prole" get unruly.

That is if by then any "prole" is capable of effective resistance.

.

Bitcoiner says

It wouldn’t make sense to pay off my primary with a rate of 2.75%. If the money would sit in my bank account to pay off the house I would rather buy another house on debt. You are rewarded for accumulating housing debt. There is bad debt like credit card debt (unless you pay it off right away) and then there is good debt (housing).

Of course, inflation is outpacing income. You are making my point. You need to own assets otherwise you lose. Someone who rents out houses gets a tailwind on the appreciation of the asset plus ever increasing rents.

I don't like owing anyone, so I pay things off early, but I don't know your financial situation, so will defer to you. YES you are incentivized to accumulate debt. Makes it easier to track and control you. Your time and labor is the only thing of value in our system. The people at the top never have to pay back their bad decisions, so they can keep taking what you put into the system, leveraging it even more, and win they gain, lose you pay.

My friend has owned his rentals in the Bay Area for at least 10 years. He has to raise rent due to his expenses going up 50%, but he's capped by state law at 10% a year for rent increases. Your scenario is very limited in perspective, not realistic for everyone. In contrast, all I have to do to offset inflation is move somewhere cheaper. California can't do shit about that.

Bitcoiner says

Your income is increasing but it doesn’t keep pace with inflation. You lose.

You seem to live in a simplistic nominal world. If wages do not keep up with inflation, real income is falling. This is the case currently.

just_passing_through says

For my 3 SFRs inflation sucks. First, I had to raise rents more than normal and I hate that. But also my insurance, property taxes and maintenance costs are way up as well. I don't think I covered it with the rent increase. Giant pain in the ass is what it is.

How much did this stuff go up for you?? My insurance has been the same for 9 years. Property taxes up $400/yr over 9 years. $2,800 to $3,200/yr. I rehabbed the house so little maintenance besides what anyone would need to do.

Are you talking a $2-4k increase in expenses a year or something?

Raising rent sucks, but it is what it is. Be glad you're not in Chicago. Rent increase in Chicago are capped at 5% annually by the city. So a $1k/mo studio you could only do $50/mo more. A studio would likely be in a condo development so a special assessment and you're fucked. Unless it's the steal of the century NEVER EVER buy rental real estate in Chicago. You can make money, but the exodus is still occurring in Chicago, just not a much as 8-10 years ago.

Bitcoiner says

Yikes. Good to know.
AZ (phoenix) has been good for my rentals. My PM says judges are sometimes ruling in favor of renters……they have no idea how bad other places like CA are for landlords.

From back in the day when I'd attend RE conferences with Keller Williams, other brokers would laugh. They're like bull shit. I'm like no, it's flipping real.

I should clarify a bit as well. I'd never buy a condo as an investment in Chicago unless it was a commuter crash pad if you had to work downtown. You can make solid money on multi-units and be protected from HOA's. The problem with Chicago is they artificially kept property taxes low and have now been raising them. So a 4 unit building could see a $3k/yr rise in property taxes. If it's a low income area it might take 2-3 years to break even on the increase of taxes because rents are lower hit that 5% cap. Plus people are moving out.

There will be a point in the future where it's a good idea to pounce on Chicago. I'd avoid it for now if one wants to be a remote landlord.

WookieMan says

Are you talking a $2-4k increase in expenses a year or something?

Yeah, that's a great guess, about 2.5-3.2 maybe depending on the property. But that's only because I paid hefty escrow catchups ~1600 each this year to keep my mortgage payments as small as possible. Never had that before. Other things I'm not entirely sure but things like tile have doubled in a decade, same with rain gutters I'd like, carpet I'm not sure, paint 60%.

These were ~200-230K properties and in the past 2 years are suddenly 300-330K. Nice nearly new when I bought them. San Antonio is just inexpensive like that.

Onvacation says

Yeah, fuck those poor people. They should have bought at the bottom.

^-- This! A $200 rent increase here in San Antonio sucks for my renters. In CA that would seem like nothing but there is much less $ sloshing around here.

On that note I'm in the county so no restrictions of raising rent in the most landlord friendly state. I still don't like it and so far in 10 years have only gained large increases in between tenants. Even then I didn't raise $200 or I would have sat on the market and eventually learned I needed to drop the prices.

https://finance.yahoo.com/news/mortgage-rates-hit-the-highest-point-of-the-year-160015951.html

Mortgage rates hit the highest point of the year

Why not say..."the highest in X number of years"?

Been tracking Yuma rental market for months, and things are definitely nose-diving hard there. Out of all the rentals we've looked at, only two have rented. Most of them have dropped their price, some significantly($400 or more). More than one is asking less than what they got from their last tenant.

What's weird is agencies there are slow as fuck to lock people in. We were willing to sign lease at several places, but they took a week to get us anything, and by that time, we saw something better, so we passed. Every time we've ever rented in the past, turn around is usually 24 hours from receiving the application, 48 tops. But in Yuma a week seems to be standard.

Beware home owners, I know of two properties we would have taken at the price they were asking if they had been faster on the lease. But because the managers were so slow, we moved on and both had to drop $100 of their rent, and still without tenants. I might be ok letting these places collect rent and do maintenance, but I wouldn't trust them to handle applications.

NuttBoxer says

I might be ok letting these places collect rent and do maintenance, but I wouldn't trust them to handle applications.

80/20 rule. Property managers are largely scum. There are some good ones, but you need to kind of get lucky as an owner. Once you have a good one don't let them go. It's a shitty job either way. But handling applications is literally the easiest part. You can sit at a desk and do that. You don't even need to go to the property.

Booger says

They are counting on being able to refinance once rates go down.

Booger says

The first 50 years are all interest.

For those Canadian mortgages, it don't really matter much how far they can extend out the loan. Only the US has 30 year FIXED rate mortgages. Sure the repayment terms can go to 60, 70, even 90 years, but the Canadians are still sucky variable rate mortgages. Yep, the kind that the Banksters can shoot up the payments on by fucking with interest rates.

Our forefathers didn't trust the banksters so we get long term fixed rate mortgages.

Rubicon says

Inventory continues to decline. Now negative YoY.

I have yet to hear an explanation for why I have been able to rent hundreds of dollars under market, and move countless times in Southern California that lines up with there being a shortage of housing.

Or explain all the rentals that have sat all summer in Yuma, and owners having to drop rents below what they got from previous tenants.

The simplest explanation for the lack of listings is the rise of interest rates, and people who bought at the top being unable to sell without losing money. As I've mentioned here I know of two owners in Yuma who opted to rent after initially trying to sell, likely because they would lose money.