All Forum Posts by: Mark D.

I own several rental properties in Memphis and I highly recommend that you use a property management company if you are from out of town. From my experience, the tenants in Memphis will walk all over you unless you have the right management company. I used a few different management companies until I found the one that worked best for me. There are some older threads with property management company referrals in Memphis.

It will be a good idea to sell your gold when there is a hint that things are headed in the right direction, and right now I don't see that at all. Just last week we had a market meltdown reminiscent of 2008 due to Euro Zone Debt contagion (Italy CDS and 10 year yields headed to the point of no return) that caused Gold to soar to a record high. The only reason the market has recovered in the short term is because Merkel and Sarkosy are meeting tomorrow to come up with a plan to help stem the tide. Italy is suggesting a "Euro Bond" but the Germans are not to keen on the idea to say the least. If they can't come up with a credible plan that will firewall this crisis then you will see more market turbulence and surely another banking crisis. You are right Tim this is not 2008, governments are out of $ to throw at another banking crisis this time around.

In 2010 U.S. bank stress tests were held to determine the resilience of banks in the event of a possible euro zone debt default. The results indicated that U.S would be fine as long as Italy didn't default. The fed spokesman who spoke anonymously said "If Italy goes, God help us all". http://dealbook.nytimes.com/2011/08/10/in-u-s-stress-tests-a-tool-to-gauge-contagion-in-europe/

Instead of asking if it is time to sell your gold, I think you should be wishing you purchased more. Greece, Portugal, Ireland, Spain, and recently Italy are nearly insolvent. Banks in the U.S. and Eurozone have enormous exposure to Italy. Bailing out Italy will most likely cost France it's AAA rating and maybe even Germany. We are talking a $4-6 trillion dollar bailout. Need I mention that the U.S. just got downgraded at the same time that several recent slowdowns point to a new recession. Also, France's 2nd quarter GDP came in flat at 0% and Germany's GDP just came in below expectations. China's inflation is still running rampant at the same time growth is slowing. With emerging market economies slowing, demand for our exports will falter (the only advantage of our plummeting dollar).

Still want to sell your gold cause I can keep going? How about the fact that U.S. stimulus money is drying up at the same time that the public sector needs to start deleveraging (more job losses) and unemployment benefits are going to permanently run out for 3.7 million americans in a few months.

Use your Gold as an insurance policy against the once unthinkable but ever so possible collapse of the current monetary system as we know it. I hate sounding negative but I'm just calling it how I see it.

The Fed has so much skin in the game right now with their inflated balance sheet that they have no choice but to inflate or else face insolvency. The immediate concern regarding Deflation should not be focused on U.S. deficit reduction but rather on concerns over Euro Zone debt defaults, most notably Italy. A recent run up in Italy's CDS and 10 year yields approaching the so called "point of no return" had markets plunging and Deflation concerns resurfacing. The market has been able to thus far digest worries over Greece, Portugal, Ireland, and even Spain, but Italy is a different story. They are the world's 8th largest economy and banks all over Europe and even in the U.S. have large exposure (one reason Bank of America's stock took a nose dive). Also, last week rumors were flying that bailing out Italy would cost France it's AAA rating and even Germany eventually.

If the Euro Zone cannot stop this contagion, then it will surely lead to another banking crisis and that will plunge us into a global deflationary depression rather quickly (as evidenced by the recent global market's tanking). Market's have somewhat recovered on news that Merkel, Sarkosy, and Trichet are meeting to come up with a solution, so we shall see. Either Europe finds a solution to backstop and firewall this Euro zone debt contagion once and for all or else we are surely headed for Deflationary Depression ASAP.

Unlike Europe, we have the luxury or the curse to print our own $ at will. This will be the likely course of action as the U.S. will never actually default on it's debt. So assuming Euro Zone and all other default related crisis events (which are highly deflationary) can be prevented, then get ready for INFLATION! Let's cross our fingers and hope that all the Dollar printing doesn't lead us to a Hyperinflationary depression.

Today the ECB began buying Spanish and Italian bonds which is extremely bullish for gold. Also, watch Bernanke tomorrow and see if his language indicates further QE easing in the U.S. As long as central banks continue to buy government bonds, gold will perform well.

The downgrade is serious business but was to be expected with the budget deficit that was just passed. They keep pumping $ into the system and hoping for growth but to no avail. We are in a liquidity trap and the Fed is out of ammo. Investors and countries around the world are diversifying out of dollars and searching for so called safe havens. Eventually this will likely lead to the Dollar losing reserve currency status. I think we are in for a long bumpy ride and I agree with Will that this will have serious implications for Americans and our standard of living.

I wouldn't worry in the immediate near term. It is not much surprise that the U.S. got downgraded as rating agencies have been warning of this for a while. Rates have been artificially manipulated lower with the Fed's QE1 and QE2 bond buying. With the recent sputtering of the U.S. economy and fears of deflation re-emerging, I can almost guarantee that the Fed will announce another round of balance sheet expansion or re-investment of maturing securities into longer term bonds at their next meeting. They won't call it QE3 but it will be more monetization of the nation's debt. Also, although there is no question that the U.S. has serious deficit issues, the near term concern is with the Eurozone crisis and this has actually caused mortgage rates do drop in the past week.

Unlike other countries, the U.S. has the ability to print more $ so the risk of actual default is slim to none. The alternative is for the fed to continue to monetize the debt. Eventually bond vigilantes will wake up and rates will soar but not while you are trying to secure financing on your deal.

I re-read your post and realized that you purchased the property with 5% down so nevermind my previous question. I was going to explain a strategy that had worked for me in the past when purchasing all cash.

Spoke to my lender today and he confirmed that you can do cash-out after six months (Fannie Mae) based on new appraised value. However, your challenge could lie with the appraisal. With the new appraisal rules, there is no telling what appraiser will be selected for your refi. I have already had issues with this on a few of my deals. The appraiser's opinion of value can vary quite a bit and some appraiser's insist on including distressed sales to determine the value. I have had to pay for multiple appraisals in order to close some deals.

Last I checked it was a 6 month seasoning requirement for cash-out. Did you use hard or private money to acquire the property or your own cash? In other words, do you currently have a lien on the property for your purchase money?

I'm not an expert on lending but it is my personal experience that post 2008 credit crisis, very few banks will refi with an LLC as a borrower. Banks want individuals as personal guarantors for any mortgage loan. You can refi in your name and then grant title to your LLC. However, sometimes this can trigger an acceleration clause and the bank will call the loan due so check with the bank ahead of time.

Capitalism 4.0 by Anatole Kaletsky is another great read about the credit crisis and offers insight about the survival of Capitalism.