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

[Cdog]

$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.

3-4 yes. It’s shit!! Betting on future equity. Might as well wait & buy on a correction

 

[LargeOrangeFont]

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.

Same. Primary home is rent control, pure and simple.

 

[EmpirE231]

“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.

Who knows… but LOF got hung up on the term “smart money” so it’s kinda a thing now.

 

[LargeOrangeFont]

Who knows… but LOF got hung up on the term “smart money” so it’s kinda a thing now.

The smart money has been patting itself on the dick for pages and pages.

 

[Gonefishin5555]

I am confused who the "smart money" people are? They already sold all their properties (they are smart so they must have owned at least 20 or 30) at peak which was this spring and they are now 100% in cash waiting to buy back in at the very bottom?

 

[stillhustlin]

3-4 yes. It’s shit!! Betting on future equity. Might as well wait & buy on a correction

I prefer to stick out of state. Something about investing in a state that gives little to no right to the land lord seems very unappealing. To top it off the entitlement/permitting process is a nightmare is most jurisdictions from the development side.

 

[hallett21]

3-4 yes. It’s shit!! Betting on future equity. Might as well wait & buy on a correction

Honest and sincere question.

By the time you truly run the numbers and include income from rent as well as write offs etc. I’ll even concede and say you’re losing equity.

If a home costs 1 million today and will rent for 4k today. What price are you looking for? Let’s say CA to make it simple.

Not sure what figure you want to put on inflation…? 6% to keep it fair?

 

[Gonefishin5555]

Its not a specific price you are waiting for. You are waiting for the bottom what that price is no one knows. But you can read a graph and see when prices stop declining. Then its time to buy but of course beware of a false bottom or external factors like rent control or the CA legislature passing laws to hurt landlords.

 

[LargeOrangeFont]

3-4 yes. It’s shit!! Betting on future equity. Might as well wait & buy on a correction

At the current point we are at I believe this is the best strategy erring on the conservative side.

 

[MSum661]

Current 120 day California Foreclosure, etc., update for 7-12-2022:

1) Foreclosure's have climbed from 13,658 to 16,247
2) Active Residential Inventory has climbed from 41,568 to 55,361
3) For Sale Inventory has climbed from 27,910 to 39,114
4) Recently Sold Properties has dropped from 478,129 to 430,437 in 6 months. A reduction of 47,692 properties.

That is all for now.

 

[WhatExit?]

Democrats will not win again

They didn’t win last election. The only question that remains is will there be any more fair, uncorrupted elections?

 

[RVR SWPR]

They didn’t win last election. The only question that remains is will there be any more fair, uncorrupted elections?

^Thanks for posting^

 

[Sportin' Wood]

I am confused who the "smart money" people are? They already sold all their properties (they are smart so they must have owned at least 20 or 30) at peak which was this spring and they are now 100% in cash waiting to buy back in at the very bottom?

Buy Back Better. It's a thing, you'll get the memo from Joe as soon as he finds it.

 

[HTMike]

I wonder who will walk away from their homes when they realize they are hundreds of thousands upside down in equity in the near future.

 

[LargeOrangeFont]

I wonder who will walk away from their homes when they realize they are hundreds of thousands upside down in equity in the near future.

I’m sure they will happily walk away to pay more than their mortgage in rent .

 

[Cdog]

Honest and sincere question.

By the time you truly run the numbers and include income from rent as well as write offs etc. I’ll even concede and say you’re losing equity.

If a home costs 1 million today and will rent for 4k today. What price are you looking for? Let’s say CA to make it simple.

Not sure what figure you want to put on inflation…? 6% to keep it fair?

My investors get interested starting at a 6 cap. These are smart guys in it for the long haul with 25% down. We examine everything down to a sewer scope. Tons of tards out there advertising “value added” properties that are mis managed & under leased.

I have great resources, management & contractors here in Phx so if you’re ever in the market. Don’t be shy.

 

[Cdog]

I prefer to stick out of state. Something about investing in a state that gives little to no right to the land lord seems very unappealing. To top it off the entitlement/permitting process is a nightmare is most jurisdictions from the development side.

100% agree.

Although a vacation rental in Laguna hills or Carlsbad with no HOA is still on my maybe list. Maybe

 

[Sportin' Wood]

I’m sure they will happily walk away to pay more than their mortgage in rent .

I think you are right with a primary residence for the most part. I believe people tend to still live on the razor's edge in regard to debt ratio. A job disruption or medical event could make things difficult for some homeowners regardless of low-interest mortgages.

I also believe some people played pretty fast and loose with the short-term rental market and are holding a lot of risks. Rising cleaning and maintenance costs coupled with less travel could bind them up and force an increase in inventory. Up here in the Flathead Valley, I see a lot of the inventory that looks like STR going on the market. Inventory looks better this week than last. I did a drive-by on one that hit the market today well below $200 a square foot in a golf course community. I'm going to use the speed at which it sells as a barometer of the local market. It's a fair deal, just not what I am looking for.

Lastly, I do think people used the house as a piggy bank and they don't have as much equity as we all may think. People tend not to think clearly when they think the house is underwater and may disregard the benefit of the 3% rate they have locked in.

 

[HTMike]

I’m sure they will happily walk away to pay more than their mortgage in rent .

They will just move where rent is cheaper. Beggars can't be choosers. I know a few that are levered to their eyebawlz and an economic downturn was not in the cards. Going to be very interesting to watch, that's for sure.

 

[LargeOrangeFont]

I think you are right with a primary residence for the most part. I believe people tend to still live on the razor's edge in regard to debt ratio. A job disruption or medical event could make things difficult for some homeowners regardless of low-interest mortgages.

I also believe some people played pretty fast and loose with the short-term rental market and are holding a lot of risks. Rising cleaning and maintenance costs coupled with less travel could bind them up and force an increase in inventory. Up here in the Flathead Valley, I see a lot of the inventory that looks like STR going on the market. Inventory looks better this week than last. I did a drive-by on one that hit the market today well below $200 a square foot in a golf course community. I'm going to use the speed at which it sells as a barometer of the local market. It's a fair deal, just not what I am looking for.

Lastly, I do think people used the house as a piggy bank and they don't have as much equity as we all may think. People tend not to think clearly when they think the house is underwater and may disregard the benefit of the 3% rate they have locked in.

There are always those that play fast and loose and are a check away from calamity, even in good times.

Anyone with income properties knows the benefits of being locked in at a low rate regardless of value.

STRs will be impacted. Who knows if they will sell or be converted to LTR. If the only way they can make ends meet on the property is as an STR then they are exposed for sure. Do these people have equity in them? Who knows.

 

[PlanB]

There are always those that play fast and loose and are a check away from calamity, even in good times.

Anyone with income properties knows the benefits of being locked in at a low rate regardless of value.

STRs will be impacted. Who knows if they will sell or be converted to LTR. If the only way they can make ends meet on the property is as an STR then they are exposed for sure. Do these people have equity in them? Who knows.

Think of all the STR's bought in Havasu in the past few years. One next to us was bought for almost 1 million. That's a lot of cash for a STR in Havasu. I think Havasu is going to get hit hard personally. Second homes that require STR money to survive will be the first to go.

 

[Sportin' Wood]

There are always those that play fast and loose and are a check away from calamity, even in good times.

Anyone with income properties knows the benefits of being locked in at a low rate regardless of value.

STRs will be impacted. Who knows if they will sell or be converted to LTR. If the only way they can make ends meet on the property is as an STR then they are exposed for sure. Do these people have equity in them? Who knows.

I might be a cynic but I really feel like a whole bunch of people got into the game that don't know how to play and benefitted from free money, low-interest rates, and a robust economy. I know for the most part people are not honest about their personal business and finances, but damn I see some people doing some really stupid chess moves. I know they are stupid because I have made those moves and lost. Time will tell.

 

[LargeOrangeFont]

Think of all the STR's bought in Havasu in the past few years. One next to us was bought for almost 1 million. That's a lot of cash for a LTR in Havasu. I think Havasu is going to get hit hard personally. Second homes that require STR money to survive will be the first to go.

Agreed.

 

[LargeOrangeFont]

I might be a cynic but I really feel like a whole bunch of people got into the game that don't know how to play and benefitted from free money, low-interest rates, and a robust economy. I know for the most part people are not honest about their personal business and finances, but damn I see some people doing some really stupid chess moves. I know they are stupid because I have made those moves and lost. Time will tell.

People have always done dumb things. We will see what happens.

I don’t see people walking away from that free equity and low rates unless they absolutely have to.

 

[Orange Juice]

Democrats will not win again

They will (demo’s), if GOP’s only focus is 2A, a fence to no where, & abortion.
I can tell you, just from my perspective, the GOP has lost a huge chunk of their young female voters….
Those with kids in school want action, and those that potentially screwed up their personal life, don’t want others to not have that option they had the last 45 years.

Fuel costs is not the big picture. Many can’t even afford a car and insurance payment, then add daycare bill.

I hope Biden bows out of 2024, after the mid terms.

I looked at my Az republican primary ballot yesterday, what a disaster.

 

[monkeyswrench]

Reading all this, I'm not "Smart Money" or "Dumb Money"...more akin to pocket change. I don't "invest", I buy things I like, or things I may need or want in the future. Some increase in value, though more from luck than intent. I like @530RL 's statement about the home being a utensil. By luck I managed to use the equity from my first to bounce to a nicer one, in a better area...a few times. It wasn't an investment to gain wealth, but a tool to get what or where I wanted. I made my "last" payment on property 5 or 6 years ago. By "last", I mean property taxes suck. I won't die chasing paper, and I won't die destitute either. I work like a grunt some weeks, others I screw around. It's a good balance.

 

[was thatguy]

I have almost zero concern or even understanding of what most of this thread is about.
But I do know this.
The properties I’ve been following/ looking at in MO around LOTO general area and even homes and condos at the lake are dropping in 10% chunks.
That’s a good thing for this poor boy looking for my last home.

 

[CLdrinker]

Don’t worry everything is fine. 9% inflation and another .75% rate increase means nothing.

 

[hman442]

I know of two guys that took out significant 2nd mortgages on their homes, and bought bitcoin with the cash!!

 

[attitude]

I know of two guys that took out significant 2nd mortgages on their homes, and bought bitcoin with the cash!!

They paid cash? They must be on RDP!

 

[MSum661]

I know of two guys that took out significant 2nd mortgages on their homes, and bought bitcoin with the cash!!

People are f'n crazy.
And I'd bet large they've never heard of a stop Loss order.
Like dear in the headlights.

 

[CLdrinker]

I know of two guys that took out significant 2nd mortgages on their homes, and bought bitcoin with the cash!!

I considered pulling all of the equity of this house (Before rate increases)!and sit in the money for a while.
But i decided not to fuck with a good thing low debt tiny payment.

Now that I see this happening I should have went for it.

Oh well.. I will still buy if it comes down enough.

 

[LargeOrangeFont]

I know of two guys that took out significant 2nd mortgages on their homes, and bought bitcoin with the cash!!

Well the magic question is when? 2019 or last week?

 

[was thatguy]

Well the magic question is when? 2019 or last week?

Right?
My buddies are filling their bags at all costs right now.
I’m a little more cautious.
I’d never put more than 20% of any part of net worth into any one endeavor at this time.

 

[bentprops]

Its not a specific price you are waiting for. You are waiting for the bottom what that price is no one knows. But you can read a graph and see when prices stop declining. Then its time to buy but of course beware of a false bottom or external factors like rent control or the CA legislature passing laws to hurt landlords.

When everyone is lossing thier mind because prices have come down so much, when they are saying buying a home is the stupidest thing to do. Thats when its time to buy.

 

[LargeOrangeFont]

When everyone is lossing thier mind because prices have come down so much, when they are saying buying a home is the stupidest thing to do. Thats when its time to buy.

Reading through this thread, that day is today!

 

[was thatguy]

Reading through this thread, that day is today!

Not for this American idiot.
I just re-upped a one year lease on my little rental house.
If I posted the sq footage and what I pay for rent, 2FF would have a fucking stroke.
Let’s just say I’ve got the best deal hands down in Havasu right now as far as tossing rent.

I figure I’ll bank for a year and then scoop up at or near the bottom.

 

[DRYHEAT]

So, what’s the “smart” money doing this morning?

 

[c_land]

My investors get interested starting at a 6 cap. These are smart guys in it for the long haul with 25% down. We examine everything down to a sewer scope. Tons of tards out there advertising “value added” properties that are mis managed & under leased.

I have great resources, management & contractors here in Phx so if you’re ever in the market. Don’t be shy.

@hallett21 I bought with Corey. He knows what he's talking about and did good by me. In hindsight, I probably could have done better if I took more of his advice.

Highly recommend!

 

[was thatguy]

So, what’s the “smart” money doing this morning?

Luna classic!
Lol

 

[DRYHEAT]

This thread really needs some boating content.

 

[LargeOrangeFont]

Not for this American idiot.
I just re-upped a one year lease on my little rental house.
If I posted the sq footage and what I pay for rent, 2FF would have a fucking stroke.
Let’s just say I’ve got the best deal hands down in Havasu right now as far as tossing rent.

I figure I’ll bank for a year and then scoop up at or near the bottom.

There are a lot of locked in low rent deals in Havasu because the tenants are a known and take care of the place. The houses were bought years ago and the owner does not need top dollar if they tenant is low drama.

I’m glad you are locked in at a reasonable rate.

 

[was thatguy]

This thread really needs some boating content.
View attachment 1135818 View attachment 1135819

Looks like a negative ROI…better post it in the stock market thread…?

 

[DRYHEAT]

Looks like a negative ROI…better post it in the stock market thread…?

True, I ain’t making any money today

 

[NicPaus]

So, what’s the “smart” money doing this morning?

Sleeping in. Lol

 

[was thatguy]

There are a lot of locked in low rent deals in Havasu because the tenants are a known and take care of the place. The houses were bought years ago and the owner does not need top dollar if they tenant is low drama.

I’m glad you are locked in at a reasonable rate.

That is exactly my situation.
I dont know the owners but have little doubt the house is bought and paid for.
I am the dream tenant.
I have no pets, no kids in house, no spouse, no ball and chain, and few friends.
I’m there less than half the time. I pay the rent 2 weeks early just out of boredom.

I’m quite sure this latest rent structure was a real chore for the owners and management to balance.
House is 1950 ft. 3/ 2 1/2 with 2 car deep.
I can put 4 cars in the flat driveway, and I own the surveillance system.

There are a few members here that have been inside.
It’s a steal plain and simple.
I have no twitches about paying a monthly rent that is equivalent to what some members pay for a single truck payment.

Garage looks good this morning.

 

[pronstar]

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.

The challenge we will have is, jobs are a trailing indicator.
History shows that small business tend to keep hiring for several months into a recession.

So the Fed, by reacting to jobs reports, won’t ease monetary policy until well into the recession, making the landing that much harder.

The elephant In the room currently is the strength of the dollar. When it rises this high versus other currencies, only bad things happen to the global economy, and this includes our own.

Lets pray they don’t enact another Plaza Accord,where the dollar was purposely devalued…this bolstered every other economy by crippling our own.
if you think this can’t happen, think again. We’re led by people who don’t look at history, and they’re even talking about price controls.

The Plaza Accord's Effects on Currency Markets

In 1985, the G-5 nations signed an agreement to devalue the United States currency and correct the GDP. It worked, but there were casualties.

www.investopedia.com

 

[LargeOrangeFont]

The challenge we will have is, jobs are a trailing indicator.
History shows that small business tend to keep hiring for several months into a recession.

So the Fed, by reacting to jobs reports, won’t ease monetary policy until well into the recession, making the landing that much harder.

The elephant In the room currently is the strength of the dollar. When it rises this high versus other currencies, only bad things happen to the global economy, and this includes our own.

Lets pray they don’t enact another Plaza Accord,where the dollar was purposely devalued…this bolstered every other economy by crippling our own.
if you think this can’t happen, think again. We’re led by people who don’t look at history, and they’re even talking about price controls.

The Plaza Accord's Effects on Currency Markets

In 1985, the G-5 nations signed an agreement to devalue the United States currency and correct the GDP. It worked, but there were casualties.

www.investopedia.com

I agree with you on all counts. Jobs are the last indicator but that is the one that really matters when we are talking about a significant decrease in RE values (this thread). We are now seeing upticks in inventory and downticks in prices, but if no one is moving out and no one is moving in, we are seeing what we are seeing now, still historically low inventory and far fewer transactions.

The economy will be rebounding as home prices hit their lows… that has happened in every recession I have looked at data on.

 

[Canuck 1]

So, what’s the “smart” money doing this morning?

Not listening to Mr know-it-all......

He must be a multi billionaire with his great wealth of knowledge, or completely full of shit and a peasant ........ hard to decide on which

 

[zhandfull]

So, what’s the “smart” money doing this morning?

No money here but I’m making the best of it anyways. Just hanging out at the beach house.