patrick.net

HeadSet says

GNL says

Unearned wealth is, in my experience, cancerous.

Correct. Every man who has been born poor but became successful has the issue of stopping his kids from being spoiled.

Did you hear what the founder of Hobby Lobby said/did? He gave his company to a charity because he didn't want to burden his kids with the wealth. Sounds crazy but that's as I heard it.

GNL says

Well, some families and people handle things better I assume.

Buffet said that he gave his kids enough money to do anything they wanted but not enough to do nothing at all.

RWSGFY says

Buffet said that he gave his kids enough money to do anything they wanted but not enough to do nothing at all.

That means absolutely nothing. Those Buffet kids need not worry about doing well in a career in order to afford common needs like a home, cars, medical care, or kid's schooling.

rates recently gone up, prices will go down in a few month as markets catch up. in our area average house price went down from about 420 to 380 so far. thinking of getting another rental prop. its not same as CA though, property taxes can go up and landlord pays for many utilities as they can be a lean on a property. and values don’t go up most of the time.

FortwayeAsFuckJoeBiden says

landlord pays for many utilities as they can be a lean on a property.

Luckily that is not the case in Virginia. The tenant I had to evict was over $1,000 due on the water bill and thus had the water shut off. All I had to do to get the water turned on after the tenant was removed was to give the water works a copy of the eviction notice. They turned the water on and filed a claim against the tenant.

HeadSet says

Those Buffet kids need not worry about doing well in a career in order to afford common needs like a home, cars, medical care, or kid's schooling.

With UPS drivers getting $170,000 package nobody really needs to worry about doing well in a career. =)) But with that kind of job one can get bored out of their fucking mind (while others find it perfectly ok).

What to do with this house? Rent at negative cash flow or sell for a big loss?

https://www.reddit.com/r/realestateinvesting/comments/15qyujp/what_to_do_with_this_house_rent_at_negative_cash/

Rubicon says

How’s the eviction process in Virginia? How long did it take from the time he was past due until you got the fucker out? Lots of details please! Thanks!

Virginia has a standard Landlord Tenant Act that applies everywhere in the state - a locality cannot form its own rules. The L-T Act is very fair. If the rent is not paid by the date it is due, the Landlord sends a 5 Day pay or quit notice. If not paid in 5 days, the Landlord can terminate the rental agreement and file will the court for eviction. It takes about a month to get the court date. If the tenant has not paid in full by the time you see the judge, the judge will authorize the sheriff to do the eviction. Scheduling with the sheriff usually takes a week. Then the sheriff meets the landlord at the house to throw out the tenants if they are still there. Then the sheriff watches while the landlord changes all the locks. At that point, the tenants have 24 hours to come by and get their stuff and after 24 hours, everything inside the house becomes the property of the landlord.

When you show up in court, the judge will check to see that you sent the proper 5-day notice (I had registered mail). If so, he will not only set the eviction, but he will also compile a judgement of any back rent that applies interest until paid. I did not use a lawyer as the judge did all the paperwork since it is very straight forward.

The landlord must use the courts for eviction and cannot degrade the premises in any way. Also, if the tenant shows up in court with a cashier's check for the rent owed, the eviction is halted and the remaining term of the lease applies. A tenant can only do this trick once, however. Also, when a tenant leaves at the end of a lease the landlord has 30 days to refund the deposit or give a detailed list of deductions for damages. If the landlord is even one day late refunding the deposit, the full deposit is due regardless of any damages.

zzyzzx says

What to do with this house? Rent at negative cash flow or sell for a big loss?

https://www.reddit.com/r/realestateinvesting/comments/15qyujp/what_to_do_with_this_house_rent_at_negative_cash/

The post has been deleted. Based on the comments, it seems like the owner has options. Not all is lost.

RWSGFY says

GNL says

Well, some families and people handle things better I assume.

Buffet said that he gave his kids enough money to do anything they wanted but not enough to do nothing at all.

Actually this was his wife’s idea to give the kids money early in their lives rather than wait until later. He started to give each give $100k/year in the mid 1990’s. That was a lot of money then IMO. In 2006 when his wife died, his daughter took over her funds, over $3B worth, and continued to do charity work based on what her mom wanted to do. Drawing a salary from a $3B fund is pretty nice for anyone. 😅

Eman says

RWSGFY says

GNL says

Well, some families and people handle things better I assume.

Buffet said that he gave his kids enough money to do anything they wanted but not enough to do nothing at all.

Actually this was his wife’s idea to give the kids money early in their lives rather than wait until later. He started to give each give $100k/year in the mid 1990’s. That was a lot of money then IMO. In 2006 when his wife died, his daughter took over her funds, over $3B worth, and continued to do charity work based on what her mom wanted to do. Drawing a salary from a $3B fund is pretty nice for anyone. 😅

Yeah, this is WAY more than enough to do ablolutely nothing. So the guy lied.

FortwayeAsFuckJoeBiden says

rates recently gone up, prices will go down in a few month as markets catch up. in our area average house price went down from about 420 to 380 so far. thinking of getting another rental prop. its not same as CA though, property taxes can go up and landlord pays for many utilities as they can be a lean on a property. and values don’t go up most of the time.

If there’s hardly any appreciation, what’s the point of buying rentals? The capex will absorb all your cash flow and more. Appreciation is the most passive income/equity that people don’t talk about. Without appreciation, people apply the 2% rule to buying rentals.

I wouldn’t say Buffett lied. “Enough” is all relative. He could have given each kid a million dollar per year and still wouldn’t run out of money ever, but he gave them $100k/year instead.

Eman says

he gave them $100k/year instead.

$100k/year, especially in 2006 and in Omaha, is plenty of money to sit around and do nothing.

Eman says

FortwayeAsFuckJoeBiden says

rates recently gone up, prices will go down in a few month as markets catch up. in our area average house price went down from about 420 to 380 so far. thinking of getting another rental prop. its not same as CA though, property taxes can go up and landlord pays for many utilities as they can be a lean on a property. and values don’t go up most of the time.

If there’s hardly any appreciation, what’s the point of buying rentals? The capex will absorb all your cash flow and more. Appreciation is the most passive income/equity that people don’t talk about. Without appreciation, people apply the 2% rule to buying rentals.

well there’s been some appreciation lately with many people fleeing big cities. i don’t know if it’ll last, but 2% is impossible here. 2,000 rent is what’s affordable here for a 400k house. way under 2 rule.

i just don’t see it appreciating, incomes here are low.

HeadSet says

Eman says

he gave them $100k/year instead.

$100k/year, especially in 2006 and in Omaha, is plenty of money to sit around and do nothing.

people don’t value what they don’t earn. i’ve known kids of wealthy who were collecting third a million a year and weren’t saving a penny of it. just spent it frivolously.

zzyzzx says

Oh wait...

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4193596/

Been there, done that... have the Tshirt.

What could go wrong... just wait until the talking heads complain that loan are "racist"

zzyzzx says

Detroit? These loans will be for $10K tops. Nothing to see here. =))

I remember this loan program came out during the peak of the housing market last year and thought what could go wrong. Apparently, it’s mostly for low income areas with $10-$15k down payment.

“The move by one of the nation's largest lenders comes at a time when skyrocketing home prices have threatened to deepen the alarming divide between White homeownership and that of minorities.

Black homeownership stood at just 43.4% at the end of 2020, according to the most recent statistics available from the National Association of Realtors. That is lower than the rate a decade earlier.

The Hispanic homeownership rate has climbed to a record high of 51.1%, according to the NAR. However, both rates are still well below the White homeownership rate of 72.1%.

A year ago the Biden administration announced several recommendations to close the racial homeownership gap. Earlier this year, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, unveiled a sweeping plan to address discrimination in access to homeownership.”

Interesting how it’s ALWAYS about "race" with Democrats.

https://www.cnn.com/2022/09/01/homes/bank-of-america-zero-down-mortgages/index.html

GNL says

No one could have foreseen the last 3 years.

Bill Gates did. Event 201. It was all plannned.

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Even CNN is sounding the warning alarm about housing affordability with the +7% rate for the 30 year mortgage (reference: https://www.cnn.com/2023/08/20/homes/mortgage-rates-housing-affordability/index.html).

For every 1% increase in the 30 year rate, there should be a 10% drop in price.

Peak prices were around 4%, so prices would need to drop 30%. They've already dropped 14% (reference: https://fred.stlouisfed.org/series/MSPUS).

A drop of 30% would correspond to prices in quarter 3 of 2020.

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WookieMan says

Rubicon says

EMAN,

“ Now, record low inventory, strict lending requirements for the last 1.5 decades, home builders are not over building, we need massive job losses to create distressed sales.”

Bingo! Until we see significant increases in unemployment we don’t need to worry about skyrocketing inventory.

Agree/disagree. At some point interest rates will make a difference if they get high enough. Historically they're not bad. We just grew up or lived with low interest rates most of our adult lives. Job losses and really high interest rates are the only thing that can bring it down in my opinion. I don't see either getting massively out of line. Flat line, maybe a slight decrease. Housing ain't the issue in this economy. I don't have an answer, but housing isn't gonna be the "thing" this time.

another anecdotal - a neighbor of a friend in south (east) San Jose who is almost free from mortgage living in 3b, found a 4b on sale at down the street and decided to move and pay a 16k/mo! his rational was, 'we both are working' and can afford 4b!
I doubt if average family buy these shakes with some exceptions unless the price get corrected for the raising interest rates.

Rubicon says

There is no rule or law that says that a family with median income is supposed to afford a SFH.

That's right. Let them eat cake. We'll exploit them and they will like it.

ad says

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Even CNN is sounding the warning alarm about housing affordability with the +7% rate for the 30 year mortgage (reference: https://www.cnn.com/2023/08/20/homes/mortgage-rates-housing-affordability/index.html).

For every 1% increase in the 30 year rate, there should be a 10% drop in price.

Peak prices were around 4%, so prices would need to drop 30%. They've already dropped 14% (reference: https://fred.stlouisfed.org/series/MSPUS).

A drop of 30% would correspond to prices in quarter 3 of 2020.

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Interest rates can affect housing sale prices some, but will not adjust down the price below a cost to build and procure land. The fact that the dollar keeps being devalued will bouy the floor. If rates get too bad and prices are too high the volume will just drop until there is enough capital looking to make it work again. You’re not going to be able to buy a livable house for a shit ton less than replacement cost just because interest rates are high. Sure the Foreclosures will probably be cheaper but that is the exception and not the rule.

“This is survival of the fittest.”

@Rubicon,

Did you hear this repeatedly from Robert Campbell? He’s into fitness, and he carried it over to real estate. I’m not a fan of his btw.

When enough people don't have acceptable living arrangements, we might see a new measurement of fitness. And of course, maybe not.

Rubicon says

They projected that significantly increases in rates will crash the market.

Some recent year 20something% of sales were to corporate owners. Blackrock gets their purchase money for virtually free.

ForcedTQ says

Interest rates can affect housing sale prices some, but will not adjust down the price below a cost to build and procure land.

Yes, as there will be a minimal cost to build as labor and material cost are impacted by supply of workers and material (versus demand to build new homes).

I am not sure residential construction labor costs such as per square foot will trend down regardless of home buyer demand. Lumber prices have gone down a lot since 2021.

The fact of the matter is people want to own their own house. Renting is a necessary evil. People want prices to be affordable so they can buy. However, whenever prices are depressed, it’s likely due to bad economic conditions, where they may not have a job, or a stable job to afford to buy. Underwriting standard is also stringent during bad times. It’s a catch 22.

Some people move out of state so they can afford to buy a house. It’s that important to own the American dream. To say anything else is deceiving themselves

Eman says

Some people move out of state so they can afford to buy a house. It’s that important to own the American dream. To say anything else is deceiving themselves

That is your opinion if you were to consider what Patrick wrote about in his book and what he stated on 20/20. That 20/20 episode brought me to this site.

But I understand renting makes you essentially more subservient than owning. The Rent vs Buy calculator on the NY Times website helps a lot with this,

The best time to have bought was between 2011 and 2013 in many zip codes after housing crashed due to the Great Recession.
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ad says

Eman says

Some people move out of state so they can afford to buy a house. It’s that important to own the American dream. To say anything else is deceiving themselves

That is your opinion if you were to consider what Patrick wrote about in his book and what he stated on 20/20. That 20/20 episode brought me to this site.

But I understand renting makes you essentially more subservient than owning. The Rent vs Buy calculator on the NY Times website helps a lot with this,

The best time to have bought was between 2011 and 2013 in many zip codes after housing crashed due to the Great Recession.
.

IMO, there are flaws in Patrick’s buy/rent thesis as well as the NYT calculators. We debated on this topic more than a decade ago. This was why the average Joe like myself saw the opportunity in 2009-2012. We dove in head first and bought as many properties as we could borrow and finance. It was a life changing financial decision. Just one right decision can alter the course of our lives and the future generations.

Based on my experience, it’s a matter of time before the kids of Patrick’s current property owner will sell, and Patrick will no longer be shielded from the rent inflation. It’s the cycle of life that I’ve witnessed over and over again in the last decade.

Eman says

Based on my experience, it’s a matter of time before the kids of Patrick’s current property owner will sell, and Patrick will no longer be shielded from the rent inflation. It’s the cycle of life that I’ve witnessed over and over again in the last decade.

Depends what Patrick did with the amount of money saved by renting. Patrick could have invested it and earned 10% a year.

That savings and its capital gains could be used to buy a home in a cheaper real estate market. It is all based on discounting or time value of money, and analysis of alternatives.

I recall Patrick stating he is still there in San Fran Bay Area because of his wife's work (i.e., public school teacher?).

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Eman says

Based on my experience, it’s a matter of time before the kids of Patrick’s current property owner will sell, and Patrick will no longer be shielded from the rent inflation.

If somebody is shielded from rent inflation it means that the owner is not running his rental as a business (or there is rent control in place which is not the case here) . So it's a fluke.

Until globohomo achieves its stated WEF goal of 500,000,000 humans on the planet, housing will be largely unaffordable except for those who can find a stake in east bumblefuck or rural flyover country.

That's the rub - you want "the life," then you have to be financially independent/retired. This is a lot easier with bachelors or empty nest families. For women in general - HAHAHAHAHAHAHAHAH.

Rubicon says

I gave up a long time ago to believe things for the avg joe will get better. They get worse every year instead.

Debt may be becoming more manageable, albeit it seems like the Federal Reserve and federal government are trying to inflate out of a future debt crisis. So the tax we pay is through inflation for this policy.

Granted, Professor Robert Shiller claimed that housing prices increased 4% a year from the early 1950s to 2019. I am not sure if that is true today with the +40% increase in prices over the last few years. Rent has gone up a lot also.

Seems like the ratio is returning to pre pandemic levels.

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Rubicon says

This is survival of the fittest. Brutal reality. It’s still much better here compared to living in any other country though.

Said Marie Antoinette.

B.A.C.A.H. says

Rubicon says

This is survival of the fittest. Brutal reality. It’s still much better here compared to living in any other country though.

Said Marie Antoinette.

Certainly among the better/best countries, and it all depends on where in the country you're at, but certainly not among the top 5 in terms if quality of life on average. That being said, real estate relative to wages has become expensive in most countries worth living, mostly due to unfettered immigration from shitholes

Warren Buffett's $31,500 House Is Now Worth $1.44 Million But He Says He Would Have Made Far More Money By Renting Instead

https://www.benzinga.com/real-estate/23/08/33577953/warren-buffetts-31-500-house-is-now-worth-1-44-million-but-he-says-he-would-have-made-far-more-money

ad says

Warren Buffett's $31,500 House Is Now Worth $1.44 Million But He Says He Would Have Made Far More Money By Renting Instead

https://www.benzinga.com/real-estate/23/08/33577953/warren-buffetts-31-500-house-is-now-worth-1-44-million-but-he-says-he-would-have-made-far-more-money

Keep in mind Buffett is part of the WEF Schwab crew, which means they want to push people to own nothing and you will be happy. I'm not say he's wrong, but there is broader motivation at play IMO.