For the Real Estate Drop in sales and price Naysayers HOLD ONTO YOUR HATS

[EmpirE231]

It's all okay, until it is not. In my adult lifetime, things are either HOT or they are not... it seems like peaks and valley's are more common. So the fact that things are cooling off, makes be believe we're headed for a valley. Also the fact that we are in uncharted territories when it comes to govt fiscal policies and almost a decade of zero rate interest definitely makes predicting the future much more difficult...... who the eff knows.

also, my "smart money" friends and clients are also calling the bubble, and have been calling it for several years now... makes me think we are in one as well. Almost all of them have been out of the stock market since late 2020 / early 2021, most of them have not bought any new properties in the last 6-4 years or so. These people all have at least 10x my net worth, and have zero debt...... so yeah... I'll follow their lead on this.

 

[PaPaG]

It's all okay, until it is not. In my adult lifetime, things are either HOT or they are not... it seems like peaks and valley's are more common. So the fact that things are cooling off, makes be believe we're headed for a valley. Also the fact that we are in uncharted territories when it comes to govt fiscal policies and almost a decade of zero rate interest definitely makes predicting the future much more difficult...... who the eff knows.

also, my "smart money" friends and clients are also calling the bubble, and have been calling it for several years now... makes me think we are in one as well. Almost all of them have been out of the stock market since late 2020 / early 2021, most of them have not bought any new properties in the last 6-4 years or so. These people all have at least 10x my net worth, and have zero debt...... so yeah... I'll follow their lead on this.

Agreed, Always follow the "Smart Money" The only difference is that a decent percentage of the larger day traders I know are making a grip of dough especially this past 18 months. If they are willing to risk big money big money can be made (and lost if they are not careful)...

 

[Sportin' Wood]

“Only when the tide goes out do you discover who's been swimming naked.”

2008 crushed me. I was swimming naked. I graduated in a recession (1988), I remember most of them back into childhood, they affected our family greatly, because my Mom worked in Real Estate most of the time (Single Mother of two challenging boys). Family friends tell me stories about how she made and lost lots of money over the years, she does not talk about it.

In my adult life (until 2008) Recessions mattered because I worked in construction and you feel them especially hard. Thankfully over the last 12 years, I made changes in my life that I hope will shield me from a painful recession and I frankly look forward to this next go around, and here is why.

When times are good it rewards mediocrity. I was a crappy businessman in the early 2000s but succeeded regardless because you could throw a rock and pick up work.
The pretenders do just fine when times are good, we see the real players excel when the times get hard. I've invested a lot to learn from that experience.

Maybe some of the loan and RE agents will go get jobs in other areas, maybe cars, boats, and RVs won't be so stupid, and maybe housing will come back to normal? Who the hell knows, as I've said before it won't cut as deep as some will like, and it will be too deep for others. I'm holding out for a realistic price on a decent 25-27 MCOB in October-Dec, and hope to buy a second house in May-Sept 2023. Bring on the pain!

Recessions are a fact of life and history provides a lot of clues, but not a playbook on how to manage them.

Something I have been considering is how the boomers play into this?
Is retirement contributing to workforce shortages? I feel like I can see the generational split between aging boomers, GenX, and Millennial contributions. GenX is easing into leadership roles made available in my industry, but it does not feel like there is a deep bench. I'm not having to fight very hard against my peer group for opportunities. The Millennials are just not there yet and frankly, they don't seem to have it in them, but perhaps Boomers said that about us Slacker GenXers as well. I see a huge opportunity for educated GenX women BTW. With a smaller demographic these pioneering women could brake the Good Ol Boys Club.

Social CPMs dive double digits as marketers navigate monetization challenges

Paid search CPMs declined by double digits YoY every quarter in the past four quarters—29% in Q2 2023 alone, per Skai. Paid search CTRs have not seen the same pattern of decline.

www.insiderintelligence.com

I can't help but wonder if the challenges we see with Millennials are compounded by the 2008 Recession? They are certainly old enough to remember it and perhaps it contributes to their lack of perceived work ethic and general no fucks given attitude because they saw their parents lose their house, go bankrupt, and have the rug ripped out from under them.

It took me 12 years to recover from 2008, my kids saw all of that. Up until Trump, the economy just kind of slowly chugged along like a two-day hangover. I've got a son who is a gifted welder who can write his own check but gets by building race cars because he likes it. He seems to have little desire to get a wife, buy a house or have kids. He is 25 and is perfectly happy not living someone else's American Dream. I can't wait to see how these kids manage middle age.

I suspect our workforce shortage is never going to go away regardless of the economic conditions. Robotics and Automation are the future. This is why I got out of construction years ago and moved to industrial manufacturing. FN Robots; They never get hangovers but they are hungry for more work. You can depreciate them, and finance them and they don't need health insurance, WOKE policies, or safe space.

 

[EmpirE231]

Agreed, Always follow the "Smart Money" The only difference is that a decent percentage of the larger day traders I know are making a grip of dough especially this past 18 months. If they are willing to risk big money big money can be made (and lost if they are not careful)...

definitely some good money to be made... but also requires a lot of risk.

This is where I differentiate between smart money, and not so smart money lol

I have a friend who's crushing it right now, runs multiple businesses, cash flowing like crazy.... but also has a lot of debt to service. He's living the high life right now and if all timing works out in his favor, will continue to do so. But we all know living that way carries a lot of risk.... all it takes is one bad quarter to end up in a massive hole. The other guys, that I consider in the smart money category are also doing great business wise, but have not debt to go with it...... not because of luck or inheritance, but because they all built and grew their businesses that way. So if everything falls apart, they are all still sitting pretty with enough money on the sidelines to capitalize on a down market.

 

[hallett21]

It's all okay, until it is not. In my adult lifetime, things are either HOT or they are not... it seems like peaks and valley's are more common. So the fact that things are cooling off, makes be believe we're headed for a valley. Also the fact that we are in uncharted territories when it comes to govt fiscal policies and almost a decade of zero rate interest definitely makes predicting the future much more difficult...... who the eff knows.

also, my "smart money" friends and clients are also calling the bubble, and have been calling it for several years now... makes me think we are in one as well. Almost all of them have been out of the stock market since late 2020 / early 2021, most of them have not bought any new properties in the last 6-4 years or so. These people all have at least 10x my net worth, and have zero debt...... so yeah... I'll follow their lead on this.

They missed a hell of a run on the stock market if that’s true

 

[Cdog]

“Only when the tide goes out do you discover who's been swimming naked.”

2008 crushed me. I was swimming naked. I graduated in a recession (1988), I remember most of them back into childhood, they affected our family greatly, because my Mom worked in Real Estate most of the time (Single Mother of two challenging boys). Family friends tell me stories about how she made and lost lots of money over the years, she does not talk about it.

In my adult life (until 2008) Recessions mattered because I worked in construction and you feel them especially hard. Thankfully over the last 12 years, I made changes in my life that I hope will shield me from a painful recession and I frankly look forward to this next go around, and here is why.

When times are good it rewards mediocrity. I was a crappy businessman in the early 2000s but succeeded regardless because you could throw a rock and pick up work.
The pretenders do just fine when times are good, we see the real players excel when the times get hard. I've invested a lot to learn from that experience.

Maybe some of the loan and RE agents will go get jobs in other areas, maybe cars, boats, and RVs won't be so stupid, and maybe housing will come back to normal? Who the hell knows, as I've said before it won't cut as deep as some will like, and it will be too deep for others. I'm holding out for a realistic price on a decent 25-27 MCOB in October-Dec, and hope to buy a second house in May-Sept 2023. Bring on the pain!

Recessions are a fact of life and history provides a lot of clues, but not a playbook on how to manage them.

Something I have been considering is how the boomers play into this?
Is retirement contributing to workforce shortages? I feel like I can see the generational split between aging boomers, GenX, and Millennial contributions. GenX is easing into leadership roles made available in my industry, but it does not feel like there is a deep bench. I'm not having to fight very hard against my peer group for opportunities. The Millennials are just not there yet and frankly, they don't seem to have it in them, but perhaps Boomers said that about us Slacker GenXers as well. I see a huge opportunity for educated GenX women BTW. With a smaller demographic these pioneering women could brake the Good Ol Boys Club.

Social CPMs dive double digits as marketers navigate monetization challenges

Paid search CPMs declined by double digits YoY every quarter in the past four quarters—29% in Q2 2023 alone, per Skai. Paid search CTRs have not seen the same pattern of decline.

www.insiderintelligence.com

I can't help but wonder if the challenges we see with Millennials are compounded by the 2008 Recession? They are certainly old enough to remember it and perhaps it contributes to their lack of perceived work ethic and general no fucks given attitude because they saw their parents lose their house, go bankrupt, and have the rug ripped out from under them.

It took me 12 years to recover from 2008, my kids saw all of that. Up until Trump, the economy just kind of slowly chugged along like a two-day hangover. I've got a son who is a gifted welder who can write his own check but gets by building race cars because he likes it. He seems to have little desire to get a wife, buy a house or have kids. He is 25 and is perfectly happy not living someone else's American Dream. I can't wait to see how these kids manage middle age.

I suspect our workforce shortage is never going to go away regardless of the economic conditions. Robotics and Automation are the future. This is why I got out of construction years ago and moved to industrial manufacturing. FN Robots; They never get hangovers but they are hungry for more work. You can depreciate them, and finance them and they don't need health insurance, WOKE policies, or safe space.

Well said. Btw. Did you see that chinaman get smashed by the robotic arm online? Crazy shit!!

I’ve always loved watching mechanical assembly lines and robotic assembly. Absolutely admire the engineering behind it. If I had a chance to do it over again I’d probably do something in that field.

 

[FishSniper]

I think the wildcard here is that people who got 3% (ish) rates like myself have said Eff it. I'm not moving to a bigger home and paying double the rate and double the property taxes in this shithole state. If many people like me decide to stay, supply will be a problem. Havasu is a whole different beast.

We are still doing deals in so cal. 9 opened yesterday. I am so torn on how this turns out in 2 years. I can see a soft landing and an all out shit-show...The only hope I have of a soft landing is the election. Dem's will manipulate ANYTHING to get elected. The last thing this disastrous admin needs is 50% real estate losses.


People fail to realize that they all staffed-up during the refi craze. Its a normal contraction. The low hanging fruit was let go.

Your thinking is exactly as mine is for my CA property have a 2.375 rate and not buying anything else in this shithole to add to the absurd amount of tax etc already paying. Will ride it out here then decide whether to sell when I retire and flee this liberal hell hole.

 

[LargeOrangeFont]

They missed a hell of a run on the stock market if that’s true

Notice how everyone dismisses that. Must have not been the “smart money”

The people that have been paralyzed by fear for the last half decade will continue to be paralyzed by fear through the bottom of whatever we are heading towards now. The economic place they are in will never be low enough than it might be in “18 months”.

 

[EmpirE231]

They missed a hell of a run on the stock market if that’s true

how so? most the run up from that point to now... is all wiped out? So yeah it was a good year if you timed it and got out on top? but that rarely ever happens. They just saw it as too volatile with a bunch of data that didn't make sense...

 

[hallett21]

how so? most the run up from that point to now... is all wiped out? So yeah it was a good year if you timed it and got out on top? but that rarely ever happens. They just saw it as too volatile with a bunch of data that didn't make sense...

End of 2020 to the peak in 2022 the S&P gained 20% when the lifetime average is 10%. I’d say that’s a hell of a run to miss if you’ve pulled out of the stock market.

Totally understand pulling out for 100 different reasons and they very well may have been correct, and just pulled out early.

Just trying to keep the doomsdayers honest . Once the market corrects you can say “see we told you this would happen.” But I just think we should point out the money “lost” by sitting and waiting.

That includes stock market, real estate, 2003 7.3s, storage condos, and Iraqi Dinar

 

[BajaT]

 

[Activated]

I have no Idea but in November I moved my wifes’ and my 401k to 2025 retirement funds, hoping for the best After losing our asses any way, I just moved one to cash and the other to Treasury basically…not going to make anything but I can’t watch the bleeding any longer.

I have been saving for too long to ride this out and I technically have a bit to go until retirement…although we are trying to make it the next few years if we can.

 

[LargeOrangeFont]

how so? most the run up from that point to now... is all wiped out? So yeah it was a good year if you timed it and got out on top? but that rarely ever happens. They just saw it as too volatile with a bunch of data that didn't make sense...

So the “Smart Money” sits out on 20% of profits but knows exactly when to jump back in to maximize profit!

 

[EmpirE231]

So the “Smart Money” sits out on 20% of profits but knows exactly when to jump back in to maximize profit!

you know that old saying... buy low / sell high... right?

You sure do have a hang up with "smart money" which is why I keep putting in quotations for you lol

Yes... I'd say smart money invests when the time is right, and don't take on too much unnecessary risk. In one year, all those gains were wiped out. Would you say that is a solid investment? or pretty damn volatile? You could have enjoyed the run up from 13,14,15 all the way to 21... will it go back below those levels, who know?? you sure seem to know though and that's good. Some people thought bitcoin was a great buy at 40k, it was even better at 30k... look at it now. Sure buy and hold.... but you are gambling... it's pretty risky.... it's Vegas to an extent... not really "investing"

 

[Sportin' Wood]

Damn it, I only have dumb money. I knew there was something terribly wrong with my life. No wonder this shit does not multiple. It's FN dumb money. Likely a few bad dollars dumbed down the rest of it. Shit is it contagious?

 

[Englewood]

you know that old saying... buy low / sell high... right?

You sure do have a hang up with "smart money" which is why I keep putting in quotations for you lol

Yes... I'd say smart money invests when the time is right, and don't take on too much unnecessary risk. In one year, all those gains were wiped out. Would you say that is a solid investment? or pretty damn volatile? You could have enjoyed the run up from 13,14,15 all the way to 21... will it go back below those levels, who know?? you sure seem to know though and that's good. Some people thought bitcoin was a great buy at 40k, it was even better at 30k... look at it now. Sure buy and hold.... but you are gambling... it's pretty risky.... it's Vegas to an extent... not really "investing"

Did Warren Buffet, Jeff Bezos, Elon Musk, etc stop buying?

 

[EmpirE231]

Did Warren Buffet, Jeff Bezos, Elon Musk, etc stop buying?

I don't know them personally... do you?

I have heard that buffet was criticized about having a lot of cash on the sidelines...... so I'd guess he was being less aggressive in buying recently.

also now you're talking about multi billionaires... king of a whole other ball game.

 

[hallett21]

“Smart money” only invests when they can turn a profit.

Today if you had the cash you could buy a 1 million dollar home in the Los Angeles area and rent it for 4-5k a month.

4.8-6% return on your money today.

If you can throw down 1 million odds are you can weather a 1-5 year downturn. You’d likely embrace the downturn because you have a few million waiting to buy more property at a discount.


Same goes for the stock market. Warren Buffett has been buying .

 

[hallett21]

I don't know them personally... do you?

I have heard that buffet was criticized about having a lot of cash on the sidelines...... so I'd guess he was being less aggressive in buying recently.

also now you're talking about multi billionaires... king of a whole other ball game.

They all have to disclose publicly what they are buying

Google what Buffet has bought in 2022

 

[LargeOrangeFont]

Did Warren Buffet, Jeff Bezos, Elon Musk, etc stop buying?

They aren’t part of RDP’s “Smart Money” team.

 

[monkeyswrench]

I see the same things others do. I don’t know how many times I can tell you we are in a recession. Here it is again - We are in a recession. It is a different recession than we have seen before and we are in the first inning.

I’m not going to get a panic attack over every article that says 200 layoffs here 2000 there on the way down. Why not? Because we are in a recession, that is what happens. And frankly it is meaningless right now. No one talks about 2007. They talk about 2009.
Of course the mortgage industry is laying people off, they aren’t doing any business.

I’ve said this for 7 years - nothing thing is going to happen in real estate until people start loosing jobs. We are not there yet. As of last month the economy is still net gaining jobs.

If the sky actually falls I see it as an opportunity, not a calamity. I’m prepared and whatever happens I will make the best of it.

Soooo, what I gather from this is you, like everyone else, don't actually know anything for certain...and yet seem to have a smug outlook on "smart money" people being more "conservative money". The differences being what you feel is smart may not align with what others feel is smart. Even though no one knows the outcome.

You're in the finance realm. You probably have an education regarding the same. Yet, at the end of the day, you have roughly the same outlook as I do.
That tells me two things:
1)Different people can come to the same conclusions via different methods.
2)I'm glad I chose to buy my first house instead of going to school

 

[LargeOrangeFont]

you know that old saying... buy low / sell high... right?

You sure do have a hang up with "smart money" which is why I keep putting in quotations for you lol

Yes... I'd say smart money invests when the time is right, and don't take on too much unnecessary risk. In one year, all those gains were wiped out. Would you say that is a solid investment? or pretty damn volatile? You could have enjoyed the run up from 13,14,15 all the way to 21... will it go back below those levels, who know?? you sure seem to know though and that's good. Some people thought bitcoin was a great buy at 40k, it was even better at 30k... look at it now. Sure buy and hold.... but you are gambling... it's pretty risky.... it's Vegas to an extent... not really "investing"

If the “Smart Money” was so smart, why did they sit out on the quickest asset run up in the history of the world even today they would still be ahead of when they pulled out?

Sorry I guess that was a “Dumb Money” question.

 

[LargeOrangeFont]

Soooo, what I gather from this is you, like everyone else, don't actually know anything for certain...and yet seem to have a smug outlook on "smart money" people being more "conservative money". The differences being what you feel is smart may not align with what others feel is smart. Even though no one knows the outcome.

You're in the finance realm. You probably have an education regarding the same. Yet, at the end of the day, you have roughly the same outlook as I do.
That tells me two things:
1)Different people can come to the same conclusions via different methods.
2)I'm glad I chose to buy my first house instead of going to school

Remember the Carlin quote, “Think of how stupid the average person is, then realize half are dumber than that.”

Nobody knows anything. No one knows how this is going to end. And at the end of the day if you are prepared, why waste your life worrying about it? I would run especially fast from the people lecturing you that they are the “Smart Money” who proceed to tell you they have been sitting on the sidelines for 7 years with their arms folded waiting for financial armageddon.

At the end of the day if the numbers make sense TO YOU in your situation, then do the deal. Everyone’s level of acceptable risk is different. Everyone’s situation is different, but anyone telling you they are smart that sat out on 50-60-80 or 100% profits waiting for the bottom is the opposite.

 

[530RL]

Remember the Carlin quote, “Think of how stupid the average person is, then realize half are dumber than that.”

Nobody knows anything. No one knows how this is going to end. And at the end of the day if you are prepared, why waste your life worrying about it? I would run especially fast from the people lecturing you that they are the “Smart Money” who proceed to tell you they have been sitting on the sidelines for 7 years with their arms folded waiting for financial armageddon.

At the end of the day if the numbers make sense TO YOU in your situation, then do the deal. Everyone’s level of acceptable risk is different. Everyone’s situation is different, but anyone telling you they are smart that sat out on 50-60-80 or 100% profits waiting for the bottom is the opposite.

I know how it is going to end.........

 

[EmpirE231]

If the “Smart Money” was so smart, why did they sit out on the quickest asset run up in the history of the world even today they would still be ahead of when they pulled out?

Sorry I guess that was a “Dumb Money” question.

they made money, and pulled when things got more risky,..... I guess if you always like putting your money at risk, then yes that would qualify as dumb money lol

these guys all are still making money, just not with stocks or real estate at the time... none are "sitting there with their arms folded waiting for Armageddon"

also I'm not claiming to be "smart money" here. You on the other hand seem to have all the answers and should maybe be giving these guys financial advise...

 

[LargeOrangeFont]

they made money, and pulled when things got more risky,..... I guess if you always like putting your money at risk, then yes that would qualify as dumb money lol

these guys all are still making money, just not with stocks or real estate at the time... none are "sitting there with their arms folded waiting for Armageddon"

also I'm not claiming to be "smart money" here. You on the other hand seem to have all the answers and should maybe be giving these guys financial advise...

How could I have all the answers? I don’t even have the “Smart Money” friends that are killing it.

 

[Christopher Lucero]

Thank you to all. This thread is so interesting and useful.

I have bookmarked MANY for reference, and they got me thinking about my own experience.

like this one where people were willing to pay earnest money toward a home without a known contract value. When we were shopping 30 years back btw 1988 and 1990, buyers locally could at best hope to have their name drawn in a Developer's lottery (no shit, really) to get onto a waiting list at an ever escalating but not truly specified price, and then more money for them to deliver a year or so later. Some were suspicious of this lottery as a way to 'red line' certain classes out of the community. but it did not last because...then came...1990 ... and CHILL. Clearance sale. Deals. Prices dropped by around 30% and no more waiting list, no more lottery to get onto a waiting list for the house they 'assigned' to you. We spent 1988-90 shopping for homes, found the builder and model we truly loved, and kept going back for three years until we finally selected the lot and model (1991). Watched it get built. Initial interest rate was >10%, but we continuously rode that downward for 20 years (our last mortgagee was at 2.35%). For the first few years we felt good...a little underwater and neg am, but still food to have a home. Thought we had made a shrewd move to buy at the bottom, but soon found we did not find the ABSOLUTE bottom, because the absolute bottom was due to an unpredictable event: 1994 Northridge earthquake. That event caused many of my neighbors from out-of-state to become terrified and they left, as did many in the LA area, and prices in LA were depressed. The Rodney King stuff did not help either. An examination of almost any other CA locale (esp comps like OC) shows that the earthquake and RK riots were stunting to what would have been equivalent growth. Oh well, bad luck.

I also like these two 1 , 2 where the "CaliBashing" inevitably came into view. Likewise, this 1 and others like it humble bragging/bemoaning the "Californiafication" of ID, TX, IA, ND, OR, etc etc that demonstrate the nature of economic behavior and personal thrift. People come to CA to strike it rich, make coin, then leave. It is still happenning. Me and Wifey are natives, so we are comfortably numb and don't know any better. We enjoy warm days and cool nights most of the year, and honestly maybe we don't know any better because we have never lived anywhere else. I think I would never cash out because, "You can check out any time you like but you can never" come back, at least not without compromising something pretty seriously, or some major stroke of fortune.

and finally, this one explaining the extraordinary times we are in.

So, my perspective is this. As Craig Ferguson used to say when opening his show "It's a great time for America everybody".

First. Inflation. For young people it is not necessarily a bad thing. in the early 80's Reganomics, the Reagan defense policies, and inflation were ongoing and I therefore graduated into a hot job market like this one, and was able to demand the salary I wanted for the job i wanted. Job jumped a few quick and large. My parents were aghast at my employment and thrift. Inflation means that young people just entering the market can enjoy the same conditions of employment prospect that I did. Its my perspective, and I do know that not everyone will take advantage of it or even recognize the advantage. For example, though, my grandson is now working his first salaried job. Hourly wage is about 50% higher than he expected only one year ago. So, there he is, making unexpectedly good money.

Second. Homes, mortgages, and property as an investment. Real Property is typically a low growth rent payer, like a dividend stock. You 'invest' in it to rent it back to yourself, or for its capacity to provide cash. For some, like me before I met my woman, renting was much preferred to owning. I did not want to be tied down, since at any moment a wild job offer might pop up... I bought my boat, partied constantly, spent like mad and had some unbelievably good times...FKING UNBELIEVABLE times and I am not going to tell you more. But with my woman and her children in mind, those days were, after she and I coalesced in 87, historical.

Also, regarding property markets, I like that in this thread some do identify that there are forces from the hedge fund and pension fund demand for stable income that are driving those entities to form REITs or buy whole property portfolios outright as a cash generator. That is a real thing. How are normal consumers ever going to compete with that?

Third. Bubbles. In 1988-90 I was looking around and asking "Who in the hell is putting money down on a chance to buy whatever property is available" (the 'lottery for homes' I mentioned above). I also, in that time frame, was wondering who is paying that much for a home, it seemed out of range for most normal wage earners...an affordability crisis. Eventually, the bubble deflated in 1990. There was yet another moment of exuberance (2007), fueled by the securitization of mortgages and a GW Bush policy that encouraged very free credit policies where home prices reflected demand fueled by easy credit. Again i was befuddled..."Who is buying these houses, just like mine, at that impossibly unrealistic price". I recall people getting credit cards for their pooches. Then - again - POOF! the bubble burst.

As Craig Ferguson used to say when opening his show "It's a great time for America everybody".

The dollar is strong. What does that mean? it means US consumers get a 'discount' on imported goods while the other countries supplying those goods seek the strong dollars. There is only one major currency that is up this year relative to the dollar (guess which one). We import most of our stuff. The price of oil is up, BUT ...USA is the world's largest oil producer, (unless you count OPEC+ as a single producer). OPEC+ sets the price, USA rides the wave. Likewise, the price of methane (natural gas) is ramping because of the Russian invasion of Ukraine and the geopolitical moves the west is enacting, and so LNG facilities in USA and worldwide are running at capacity just to try to fill up the tanks before next winter.

I know this might be an unpopular position for those who have to bear the discomfort of economic facts of it, but patience and thrift will help any or all of us weather this as Americans have always done. I recommend that we take account of how we each personally contribute to the inflation, if it benefits or harms us, and how we manage our position as consumers or as business people to get through this weird time.

Thank you for your attention.

 

[shintoooo]

Have you guys priced wooden shutters lately?

 

[LargeOrangeFont]

I know how it is going to end.........

View attachment 1135690

Dylan didn’t waste 10% of his life waiting for a great deal on a house in Havasu.

 

[LargeOrangeFont]

Have you guys priced wooden shutters lately?

Fuuuuck that. The smart money gets roller shades.

 

[EmpirE231]

How could I have all the answers? I don’t even have the “Smart Money” friends that are killing it.

wait... so you're saying you don't have all the answers?

 

[hallett21]

Fuuuuck that. The smart money gets roller shades.

Have you guys priced wooden shutters lately?

Let me tell you guys about automated ones

 

[EmpirE231]

“Smart money” only invests when they can turn a profit.

Today if you had the cash you could buy a 1 million dollar home in the Los Angeles area and rent it for 4-5k a month.

4.8-6% return on your money today.

If you can throw down 1 million odds are you can weather a 1-5 year downturn. You’d likely embrace the downturn because you have a few million waiting to buy more property at a discount.


Same goes for the stock market. Warren Buffett has been buying .

correct... but if you were in the position to throw down 1 mil cash on a rental, in the current moment... You'd probably be looking around and anticipating the market to drop... and you might grab that 1mil LA shitbox for 850k in a year. Unless you think that 6-7% interest rates wont impact the real estate market at all, and maybe that shitbox should be worth 1.2mil .

 

[zhandfull]

I think the wildcard here is that people who got 3% (ish) rates like myself have said Eff it. I'm not moving to a bigger home and paying double the rate and double the property taxes in this shithole state. If many people like me decide to stay, supply will be a problem. Havasu is a whole different beast.

Right there with you on that. Not selling my primary with a 3% mortgage.

The thing is though that some people have life events where they will need to sell and/or move on for other reasons. Who buys those properties for the same crazy prices or more when rates have doubled or tripled from that low 3% level? Not me, however I would consider renting out my primary house. Providing I could find a new home that is nicer and affordable, even at a higher rate.

 

[hallett21]

correct... but if you were in the position to throw down 1 mil cash on a rental, in the current moment... You'd probably be looking around and anticipating the market to drop... and you might grab that 1mil LA shitbox for 850k in a year. Unless you think that 6-7% interest rates wont impact the real estate market at all, and maybe that shitbox should be worth 1.2mil .

I think the “shit box” will be worth 1.5 in a decade or less. Not factoring in rental income that’s a 5% annual return.

If I have the cash why do I care if I time it right? As long as it’s decently profitable I should buy the investment. The income, write offs and eventual appreciation far out weigh the risk of losing equity over the short term.

Property taxes are about the only thing you’d be “timing”.

Let’s say you do wait for a 850k value. What are you doing with your money in the mean time? Sounds like the stock market is out (I’d argue you could make some decent option plays).

You can’t just use the blanket term of “investments”. Are they involved in franchises? Playing short term treasuries? Hard money loans?

“Smart money” does not just sit with 6 and 7 figures in their checking account waiting for Hallett 270s to go on sale.


Edit.

CA and specifically Los Angeles new construction costs are nuts, permitted remodels are not much better. Real estate here is not getting any cheaper. Unfortunately it’s becoming harder and harder for people to purchase homes.

Couple that with 100s of thousands of home owners who locked in sub 3% rates. I think we could be headed towards a stall (lack of for sale inventory) in the so cal area.

 

[Havasu blue label]

Very true 1 million don’t buy shit in California

 

[EmpirE231]

I think the “shit box” will be worth 1.5 in a decade or less. Not factoring in rental income that’s a 5% annual return.

If I have the cash why do I care if I time it right? As long as it’s decently profitable I should buy the investment. The income, write offs and eventual appreciation far out way the risk of losing equity over the short term.

Property taxes are about the only thing you’d be “timing”.

Let’s say you do wait for a 850k value. What are you doing with your money in the mean time? Sounds like the stock market is out (I’d argue you could make some decent option plays).

You can’t just use the blanket term of “investments”. Are they involved in franchises? Playing short term treasuries? Hard money loans?

“Smart money” does not just sit with 6 and 7 figures in their checking account waiting for Hallett 270s to go on sale.


Edit.

CA and specifically Los Angeles new construction costs are nuts, permitted remodels are not much better. Real estate here is not getting any cheaper. Unfortunately it’s becoming harder and harder for people to purchase homes.

Couple that with 100s of thousands of home owners who locked in sub 3% rates. I think we could be headed towards a stall (lack of for sale inventory) in the so cal area.

So you would just pour all your money into the real estate market, or stock market...all the time in anticipation that it will all rise overtime? Not be strategic about when to buy and when not to?

money on the sidelines? losing money in the last 6 months due to inflation is still a lot better than having had it in any index fund for the last 6 months or so, or crypto, or?

believe it or not, there are people sitting there with 6 & 7 figures in bank accounts. Call them the dumb ones..... but they have 10x what I do, so I'll listen to them for the time being.

CA is not immune, but I agree across the board, anyone with a 3% rate is not willingly gonna want to go anywhere, which can create a real "supply" issue....... but the fact that rates are rising, and a shitbox is now 1 million dollars... also cancels out a lot of people who can qualify for the loans in the first place..... meaning prices will come down when someone really needs to sell their home. we're already seeing price cuts (granted they are small cuts for now) but we're seeing it, and seeing inventory rising in the socal area as well.

 

[Havasu blue label]

You could sell your home in California that you have been in for 20 years clean up your debt then move to a different state and brag that you have a 3 percent loan and post everything about how Financial strong you are . Why would you have a note with all that equity in 20 years

 

[Havasu blue label]

I lost my ass in the stock market last week move on and make some money

 

[LargeOrangeFont]

wait... so you're saying you don't have all the answers?

I’d ask the “Smart Money” guys for answers you seek. They are by definition “Smart”.

 

[LargeOrangeFont]

You could sell your home in California that you have been in for 20 years clean up your debt then move to a different state and brag that you have a 3 percent loan and post everything about how Financial strong you are . Why would you have a note with all that equity in 20 years

Is that the smart money talking or the drunk money?

If you are referencing me, neither money knows what they are talking about.

 

[hallett21]

So you would just pour all your money into the real estate market, or stock market...all the time in anticipation that it will all rise overtime? Not be strategic about when to buy and when not to?

money on the sidelines? losing money in the last 6 months due to inflation is still a lot better than having had it in any index fund for the last 6 months or so, or crypto, or?

believe it or not, there are people sitting there with 6 & 7 figures in bank accounts. Call them the dumb ones..... but they have 10x what I do, so I'll listen to them for the time being.

CA is not immune, but I agree across the board, anyone with a 3% rate is not willingly gonna want to go anywhere, which can create a real "supply" issue....... but the fact that rates are rising, and a shitbox is now 1 million dollars... also cancels out a lot of people who can qualify for the loans in the first place..... meaning prices will come down when someone really needs to sell their home. we're already seeing price cuts (granted they are small cuts for now) but we're seeing it, and seeing inventory rising in the socal area as well.

I don’t think anyone would go all in on anything unless they are trying to be the next Musk or Bezos.

But my point was if I have the means to buy today I would. Assuming we are using that 1 million dollar shit box (I reassemble that btw lol). It’s a 4-6% return renting it out.

Now let’s say values fall and the same shit box is worth 850k. By all means I’d buy it again. Im getting a better return on my investment. Meanwhile the “crappy” 1 million dollar investment netted me $50-60k.

Assuming it’ll take 1 year to go from 1 million to 850k the 1 million dollar property lost 150k in equity. But it made 50k in rental income. Next year it’ll make another 50k and by year 3 it won’t matter.

Of course there will be repairs etc. Buy Im a 6-7 Figure sideline guy so Im assuming I have cash in the bank to cover these issues.

I don’t buy into “smart money” just sitting on the sideline. I believe conservative money is doing that, but conservative money never takes risks anyways.

 

[LargeOrangeFont]

I don’t think anyone would go all in on anything unless they are trying to be the next Musk or Bezos.

But my point was if I have the means to buy today I would. Assuming we are using that 1 million dollar shit box (I reassemble that btw lol). It’s a 4-6% return renting it out.

Now let’s say values fall and the same shit box is worth 850k. By all means I’d buy it again. Im getting a better return on my investment. Meanwhile the “crappy” 1 million dollar investment netted me $50-60k.

Assuming it’ll take 1 year to go from 1 million to 850k the 1 million dollar property lost 150k in equity. But it made 50k in rental income. Next year it’ll make another 50k and by year 3 it won’t matter.

Of course there will be repairs etc. Buy Im a 6-7 Figure sideline guy so Im assuming I have cash in the bank to cover these issues.

I don’t buy into “smart money” just sitting on the sideline. I believe conservative money is doing that, but conservative money never takes risks anyways.

This guy gets it.

I also sympathize with the million dollar shit box.

 

[530RL]

What’s most interesting to me about these threads is that my generation never looked at a house as an investment. It was a roof over our head and we would probably die in it so it’s value was pretty immaterial. It was a tool or a utensil, not an investment.

 

[Englewood]

I don’t think anyone would go all in on anything unless they are trying to be the next Musk or Bezos.

But my point was if I have the means to buy today I would. Assuming we are using that 1 million dollar shit box (I reassemble that btw lol). It’s a 4-6% return renting it out.

Now let’s say values fall and the same shit box is worth 850k. By all means I’d buy it again. Im getting a better return on my investment. Meanwhile the “crappy” 1 million dollar investment netted me $50-60k.

Assuming it’ll take 1 year to go from 1 million to 850k the 1 million dollar property lost 150k in equity. But it made 50k in rental income. Next year it’ll make another 50k and by year 3 it won’t matter.

Of course there will be repairs etc. Buy Im a 6-7 Figure sideline guy so Im assuming I have cash in the bank to cover these issues.

I don’t buy into “smart money” just sitting on the sideline. I believe conservative money is doing that, but conservative money never takes risks anyways.

“Smart money” doesn’t sit, it pivots. Scared money sits.

WTF is smart money anyways? People with fuck-you money? Successful investors? At the end of the day we just have our own opinions. “Smart money” is no different.

 

[Englewood]

What’s most interesting to me about these threads is that my generation never looked at a house as an investment. It was a roof over our head and we would probably die in it so it’s value was pretty immaterial. It was a tool or a utensil, not an investment.

Finally! I’ve been preaching this forever. Buy a house for shelter!!! It’s a hedge against rental increases. Any appreciation is an added bonus.

If you can afford your home and it fits your needs, you bought at the right time.

 

[hallett21]

“Smart money” doesn’t sit, it pivots. Scared money sits.

WTF is smart money anyways? People with fuck-you money? Successful investors? At the end of the day we just have our own opinions. “Smart money” is no different.

To me smart money doesn’t fly commercial lol

 

[530RL]

To me smart money doesn’t fly commercial lol

Commercial beats the bus.

 

[stillhustlin]

“Smart money” only invests when they can turn a profit.

Today if you had the cash you could buy a 1 million dollar home in the Los Angeles area and rent it for 4-5k a month.

4.8-6% return on your money today.

If you can throw down 1 million odds are you can weather a 1-5 year downturn. You’d likely embrace the downturn because you have a few million waiting to buy more property at a discount.


Same goes for the stock market. Warren Buffett has been buying .

$1 million dollar home will have a tax bill of $12.5k a year. Cap rates are incredibly low in California with my experience. I feel like 3-4 cap is normal with anything at a 5 cap would be crazy.

 

[EmpirE231]

I’d ask the “Smart Money” guys for answers you seek. They are by definition “Smart”.

Well I did ask the “Smart money” people I know. and then shared in here what they’re doing. You’re criticizing and mocking it, so I’m assuming you are “smarter money”