patrick.net

Eman says

I believe his name was shared on here before. Looks like he expects the commercial real estate (CRE) market will experience a big downturn. If he’s right, the Fed will cut rates so fast when this CRE market hits the fan. Time will tell.

Last week I heard the Fed is absolutely going to be forced to cut rates soon if only because that insufferable cunt Yellen in the Treasury is flooding the Fed with bonds in order to force them to cut rates to fake a better economy for Biden in an election year.

Seems like the decade of inflation predictions may be true and we're not really heading out of the woods.

just_passing_through says

Last week I heard the Fed is absolutely going to be forced to cut rates soon if only because that insufferable cunt Yellen in the Treasury is flooding the Fed with bonds in order to force them to cut rates to fake a better economy for Biden in an election year.

Seems like the decade of inflation predictions may be true and we're not really heading out of the woods.

I don’t know how this downturn will play out be it inflation, deflation, or stagflation, but this cycle has taught me a valuable lesson. Interest rate can spike at a much faster pace than all previous cycles so taking “the average” is no good.

What we have done right is stress testing our portfolio on an annual basis and keeping adequate reserves using 25% vacancy/rent reduction. This has made our lenders very comfortable. Had lunch with two of them in December. They said our loans/portfolio are fine. Apparently, banks are stress testing their borrowers’ loans/portfolios too.

Whenever the next downturn comes, I’ll do things a little different. Experience is the best teacher.

Apparently, someone is using a formula similar as us. Buy flips at 50-60% ARV.

If anyone learns it from the gurus and buy at 70% ARV, good luck. Reality is different, and buying at 50-60% ARV is possible.

ARV = After Renovation Value, correct?

Eman says

Apparently, someone is using a formula similar as us. Buy flips at 50-60% ARV.

If anyone learns it from the gurus and buy at 70% ARV, good luck. Reality is different, and buying at 50-60% ARV is possible.

As the buyer I'd run. The only way to save money is to put "pretty" shit quality into it. That's what it looks like to me. Lipstick on a pig. Nothing post 1980 is built worth a shit. Not an opinion. Fact.

A flip is even more scary with the shit products coming out. Real hardwood floors were a thing at one time. And anyone with design sense would have painted it instead of white. That's a classic cheap flip look and the excuse is they'll want to paint it their colors. Bull shit. My wife isn't a designer by any means, but we get compliments on our paint colors any time someone comes over. If you're painting the walls make it fucking look good. It's not hard.

Most flippers are destroying housing. It's sad honestly. Cut corners. I rehabbed my entire house personally. Didn't use shit tile. Spent money on quality paint. Nice appliances. My fireplace wall and mantle is $7k. I could have painted the brick fireplace for $200 and call it a day. That's what flippers do. Don't ever buy a listing that was sold in less than a year previous. It 100% is shit. Life experience. You will get screwed. Our sellers screwed over countless people. I knew, but not my business or place to call it out. I just know what flippers do.

just_passing_through says

Last week I heard the Fed is absolutely going to be forced to cut rates soon if only because that insufferable cunt Yellen in the Treasury is flooding the Fed with bonds in order to force them to cut rates to fake a better economy for Biden in an election year.

What you heard is crap.

For the reasons you mention and more, there are vested interests in forcing the Fed to cut by pitching viral bullshit saying they will to present a fait accompli in an attempt to force the Fed's hand.

Sort of like how Justice Souter discovered he was retiring by reading about it first in the NY Times.

I smelled this a mile away when all the 'experts' on PatNet (and all over the internet & media) starting in mid to late last year were pitching this viral BS w/o applying any critical thinking to what was really going on.

In the end, the Fed could be as hopelessly politicized as the test of our institutions and cave in later this year. But I am betting otherwise. Inflation has transferred to services and wages. This was always going to happen because of demographics affecting the working age population. Biden's fiscal fuckups and supply chain probs before that were just the impetus to ignite that.

The cost of Capital financing is triple. And will triple again going forward. The Fed doesn't have to do anything.and that will still happen.

It goes to show the difference between Bay Area flips and Midwest flips. I’ve shared my flips on here. I’ve also shared why it makes sense to flip houses at $1k/sf than $500/sf. It makes sense why Midwest flippers use the cheapest materials as their property value is closer to $200-$250/sf.

Labor cost is the same for us. Just upgrade the materials, and the ARV will go through the roof. No reason to cheap out like the Midwest.

Elisa Covington is in my market. She has done well leaving her W2 and becoming a full time flipper for several years now. Just by her accent, everyone knows English is her 2nd language. America is truly the land of opportunity for immigrants. We don’t know everything…..sometime including the language, but we’re willing to work hard, and this country rewards us for it.

https://youtu.be/ID49a3DKJYk?si=XLFB2wN1crczU2BC

In high priced markets like the Bay Area, whatever upgrades we put in our house, we tend to get back and more sometimes. I’m not sure the same can be for many Midwest markets especially the lower ends. To put things in perspective, working class neighborhoods in San Jose are still trading for $750/sf on average. A mind boggling number for Midwest folks.

Eman says

Labor cost is the same for us. Just upgrade the materials, and the ARV will go through the roof. No reason to cheap out like the Midwest.

Nope. Labor is more. Materials are more. The midwest isn't cheap though either. I've been in enough CA properties on vacation. They're generally trash. You getting defensive as a flipper. Why? I know construction. My family has been in it for decades. My uncle has 3 gates to get to his home in Scottsdale. The tweet you posted is a trash flip. I've seen it. I know it.

Shit on me all you want. I know a shit flip when I see it. These are facts and not opinion. What you posted is pure trash.

A lot of sharks out there. Owner paid $28k for this house during the downturn, it’s now worth $150k. I guess the house is in a working class neighborhood in the Midwest somewhere? Seller financing at 11%? Yikes!

https://x.com/1chrismcg/status/1754169078585938213?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

WookieMan says

Eman says

Labor cost is the same for us. Just upgrade the materials, and the ARV will go through the roof. No reason to cheap out like the Midwest.

Nope. Labor is more. Materials are more. The midwest isn't cheap though either. I've been in enough CA properties on vacation. They're generally trash. You getting defensive as a flipper. Why? I know construction. My family has been in it for decades. My uncle has 3 gates to get to his home in Scottsdale. The tweet you posted is a trash flip. I've seen it. I know it.

Shit on me all you want. I know a shit flip when I see it. These are facts and not opinion. What you posted is pure trash.

Why would I be defensive? I said labor is the same for us, which is my partner and I. We get a higher ARV if we use better materials. No reason to cheap out like the Midwest where the cost per square foot is a lot lower.

I shared my flips on here with links for the readers to see. What did you share with links? It’s all your opinions, and we know what people say about opinions.

Eman says

I shared my flips on here with links for the readers to see. What did you share with links? It’s all your opinions, and we know what people say about opinions.

Dude, you're flipping for a profit. You definitely don't use quality products and materials. I've been in well over 5k properties. I've seen the links and photos. Just because you sold at a profit doesn't mean it was good work dude. I think you know this.

Never met a flipper that didn't cut a corner on labor, construction or materials. 100% of the time. Not even debatable and you know it. Just own it. You put lipstick on a pig and screwed someone. That's the game. I'm not an idiot.

WookieMan says

Never met a flipper that didn't cut a corner on labor, construction or materials. 100% of the time. Not even debatable and you know it. Just own it. You put lipstick on a pig and screwed someone. That's the game. I'm not an idiot.

So true. I met a victim who fell for a shack of ~1.6m that the flipper paid ~1.1m few months back!

Blue says

WookieMan says

Never met a flipper that didn't cut a corner on labor, construction or materials. 100% of the time. Not even debatable and you know it. Just own it. You put lipstick on a pig and screwed someone. That's the game. I'm not an idiot.

So true. I met a victim who fell for a shack of ~1.6m that the flipper paid ~1.1m few months back!

Yeah, flipping is generally a con job. There's incentive to NOT put quality products and materials into the home to increase profits. I've easily been on 500 inspections, they're cons too, but I've seen some of the worst work in the flips. It's just shit. Even if done right the materials used are the cheapest possible.

Maybe I'm spoiled but I like quality materials. Something like $400 a toilet is the level I like. Most flippers put in $100 toilets that suck. Cheap flooring that's all the rage with flippers. I tiled my 2nd bathroom walls around the vanity with $19/sf tiles. I'm not bragging, but I'm making the point that flippers will put in $4/sf tiles that will break and look like shit. Use fake hardwood that has to be replaced instead of being able to re-sand if there's damage.

I don't know, I couldn't live with myself doing that to a buyer. Hence why I don't flip properties. I literally could do the work myself over 3 months. I just like nice stuff and don't want to screw people, so I need deals of a lifetime.

This is why this housing cycle is different with previous housing cycles. CRE is much more being impacted in this cycle due to ARM loans.

The second biggest economy in the world is not doing well. What will cause the next recession for the US, or even the world? It has been known “every recession is different.” Happy to sit on my hands and wait



https://x.com/kobeissiletter/status/1754302767789694990?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

WookieMan says

I've easily been on 500 inspections, they're cons

Explain please. What should a home buyer know about inspections? Thanks for sharing your wisdom, I am learning.

Eman says

The second biggest economy in the world is not doing well. What will cause the next recession for the US, or even the world?

China, layoffs in technology, housing and automotive industry, artificial intelligence, US consumer, a new war.....

gabbar says

WookieMan says

I've easily been on 500 inspections, they're cons

Explain please. What should a home buyer know about inspections? Thanks for sharing your wisdom, I am learning.

Get somebody local the locals trust, they can be quite valuable

Eman says

Labor cost is the same for us. Just upgrade the materials, and the ARV will go through the roof.

I dated a gal in the rehab/flipping/landlording business. She was quite a mover and shaker. She spoke Chinese and Spanish and had a small army of non-citizen contractors who loved her because she could get them steady work. Some would even live in the house that was being worked on so they could live cheap and put in big hours. She would buy houses for herself or clients based on which contractors were finishing previous projects and would be available to move to the next one. In this case, her labor costs were probably in line with legal workers in other parts of the country.

In addition to using decent materials, the fact that the house is completely empty really helps speed the makeover. If you're going to replace wallboard anyway, it's a lot easier refitting ducting and rewiring the electrical after just ripping the wallboard off. Buyers can be willing to pay for a house that is move-in ready rather than dealing with a mess for months. Not only that, but buyers without all the contractor contacts will massively overpay for any remodeling. And, for the most part, prospective owners won't be doing the work themselves or know anything about how to do the work, since they are only able to afford a $2MM+ house because they are very busy in high-tech.

@SunnyvaleCA,

I see someone from MY market, who understands what Bay Area real estate market is like.

Yes, empty house makes the project move faster. We normally rip everything down to the studs, run new electrical wires, new plumbing, insulation and do a smooth drywall finish. Everything is done with permits and the city inspectors inspect everything. We also provide inspection reports to all buyers and be sure the flips are free of section 1 termites so there are no hiccups on closing. Also, all workmanship is guaranteed for 1-year in accordance with California State License Board.

I’ve never used $19/sf tile on any flips. In fact, I don’t even have $19/sf tile anywhere in my house. I don’t know of anyone in my sphere using $19/sf tile including my biz partner, who lives in a $4.5M house in Palo Alto.

Our toilets are all Kohler and they’re around $199-$229 each. This is what we use for our flips too. However, we have Brondell bidets installed in our home. Each costs $399.99. In fact, I just ordered one last week. Basically, just decent materials. 😅

Apparently, CA’s practice is different from other states where shoddy works would pass inspections, and there’s likely no guarantee of workmanship. Always learning something new.

Good post for problem solvers who like real estate.

https://x.com/thinkappraiser/status/1754562162843169254?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

Got this in my inbox today. Seeing this stuff from the Midwest makes me want to jump out of my couch and fly there to buy. Built in 2000 with 50,400sf finished office space with 464 parking spaces on 16 acres of land for $1.25M.

The median home price in San Jose is $1.6M on a 6,000sf lot. 🤯

gabbar says

WookieMan says

I've easily been on 500 inspections, they're cons

Explain please. What should a home buyer know about inspections? Thanks for sharing your wisdom, I am learning.

They're not knowledgable. Most probably couldn't change a tire and just got a license. Their core job is to scare people to justify a moron walking through the biggest purchase of their lives to scare them.

I know Dan the owner. Don't let the reviews fool you: https://www.yelp.com/biz/domicile-consulting-chicago-2?override_cta=Request+quote+%26+availability

Outside of oxygen you breath, everything is meant to extract money from you. Learn some trades. It's not difficult. Never rely on inspectors for your primary home or investments. They are dip shits. Don't buy flips. Buy a fixer upper and do it yourself. Real estate is math and what you want in a property. Commercial is way easier, but harder to get loans. I won't touch residential anymore. Not worth it.

Eman says

Got this in my inbox today. Seeing this stuff from the Midwest makes me want to jump out of my couch and fly there to buy. Built in 2000 with 50,400sf finished office space with 464 parking spaces on 16 acres of land for $1.25M.

The median home price in San Jose is $1.6M on a 6,000sf lot. 🤯

You should. I'm sure it's a slam dunk. If it's cheaper than a San Jose house, it's GOT TO BE the deal of a lifetime. :)

UkraineIsFucked says

What you heard is crap.

Maybe so? It was Mark Moss who I sometimes think it a bit of a shock-finance guy. It's also lame he stopped using Rumble, I rarely listen to him anymore but here is the short video where I heard that:

The Fed's Worst Nightmare: Yellen's Sly Maneuver Revealed
https://www.youtube.com/watch?v=vIlYkxsm-KQ

Re: Yellen/Treasury sending so many bonds to the Fed they have no choice but to drop interest rates...

Eman says

Got this in my inbox today. Seeing this stuff from the Midwest makes me want to jump out of my couch and fly there to buy. Built in 2000 with 50,400sf finished office space with 464 parking spaces on 16 acres of land for $1.25M.

The median home price in San Jose is $1.6M on a 6,000sf lot. 🤯

You do realize that NY is not the midwest, right?

I don't know that part of NY at all, but that's cheap. That's what my Uncle did along with my dad and another guy that recently passed who is also 9 figures deep. Unfortunately my dad was a dip shit, but I don't need his money anyway, he's also already dead. Never expected a damn thing from him.

I asked you if you leave the state of CA. There's plenty of good money elsewhere to make. And easy. CA with it's high cost of living is stupid to invest in. You'd make more in Oklahoma or Mississippi if you're doing volume. Less risk also.

Painted Post NY is the Southern Tier. For the most part, it is dirt fucking poor rustbelt. The Fortune 500 company is Corning - that's it, period.

Walton County, FL now getting on 7-8 month supply.

stereotomy says

Painted Post NY is the Southern Tier. For the most part, it is dirt fucking poor rustbelt. The Fortune 500 company is Corning - that's it, period.

Binghampton area, one of the saddest places I ever visited.

Here’s another one. I guess this one qualifies as the Midwest. 8 cap for a NNN. Unheard of in CA. 😅

I get a handful of these everyday.

This one hit the inbox today too. CA is a big state. ARV is still 500/sf for this small house.

AmericanKulak says

Binghampton area, one of the saddest places I ever visited.

LOL! My mother was brought up in Binghamton. Still have scads of Irish relatives I can't even remember meeting around there. It is the original home of IBM. Some people bought IBM penny stocks sold door to door for small money, almost as an act of charity, and left them in a drawer, only to discover later that the stocks appreciated and split so often they were paper millionaires. One of my uncles married one of them, a woman whose family got rich on IBM stock, and she inherited a net worth of five million when it was really worth a lot at the time. They had six kids, and she paid the Vatican to grant her an annulment when such things were barely heard of, because the uncle was a run around. He didn't need her money, because he and another uncle had become egregiously wealthy owning an insurance company.

The uncle blew into town at Berkeley and once when visiting my family when I was at Uni. He thought I could scrape up coeds for him to screw, he was on his way to a hunting resort in Canada. I had scarcely two dimes to rub together as a student, much less dream of a coed of my own or pimp for him. He was generally a wonderful fellow, though, I really liked him from childhood. I don't think he realized how poor I was.

My grandfather was the postmaster general of the area, whatever that was, sounds kinna Masonic. They lived in a huge, multistory house just down the street from IBM. When all the kids moved out, after grandfather passed, my grandmother subdivided the place into a rooming house.

AmericanKulak says

Walton County, FL now getting on 7-8 month supply.

Yep, 189 days inventory or supply for the lucrative Miramar Beach in Walton County: https://altos.re/r/c73ce9ff-3a8e-4ac5-8989-8b2801168291?data=count

.



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The rental market is warm (somewhat strong demand): https://www.zillow.com/rental-manager/market-trends/miramar-fl/

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WookieMan says

Outside of oxygen you breath, everything is meant to extract money from you.

I hear you. Thank you wookieman

zzyzzx says

The practice seems to be verified quite a bit from state to state. In CA, the lender is the one who chooses the appraiser. The appraiser wants to be conservative on their appraisal value to protect himself and the lender. Not sure where the fraudulent comes from.

On another note, 84% LTV bridge loan for CRE? I wouldn’t be surprised there was some holdback loan amount for renovation, but I don’t get to see the loan docs.

Here in the Bay Area, it was 75% LTV max while lenders pulled back to 70% max LTV in 2022. Crazy practice.

https://x.com/aryal1994/status/1754866523657711628?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

February 7, 2024 report:

Across the Panama City metro area, median home prices fell to $447,375, slightly lower than a month earlier. The median home had 1,404 square feet, at a list price of $343 per square foot.

In Florida, median home prices were $459,945, a slight increase from December. The median Florida home listed for sale had 1,651 square feet, with a price of $280 per square foot.

Throughout the United States, the median home price was $409,500, a slight decrease from the month prior. The median American home for sale was listed at 1,823 square feet, with a price of $221 per square foot.

reference: https://www.newsherald.com/story/news/local/2024/02/07/real-estate-listings-202401/72456417007/

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AD says

Across the Panama City metro area, median home prices fell to $447,375, slightly lower than a month earlier. The median home had 1,404 square feet, at a list price of $343 per square foot.

They do not look cheep many be because of the proximity to the beach! One can find new shacks similar or cheaper price/sft in CA away from dark blue metros. Lately, even starter shacks are slightly bigger as the builders do not make much profits on small shacks!

Blue says

One can find new shacks similar or cheaper price/sft in CA away from dark blue metros.

Yep. Ran a search for entire state of California with this criteria: detached home, no more than 3 years old, +2 bedrm/+2 bath

These new California homes are cheaper than the same type of home in Panama City Beach

https://www.zillow.com/community/skyborne-vega/29471799_plid/

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AD says

Yep. Ran a search for entire state of California with this criteria: detached home, no more than 3 years old, +2 bedrm/+2 bath

Look up Uhaul rates. For real. That's how you can judge housing prices. If it's more expensive to leave than coming in, do the math. Your home prices are going down 100% of the time. Not even a debate.

I guess 65-75% ARV works for her. I believe she flips with investors’ money and split the profit. This way, no holding cost on borrowing hard money and no paying points. Many ways to skin a cat.