All Forum Posts by: Brad D.

@John Patterson the banks are already borrowing from the fed at no interest (actually I think it's .25 %). But it doesn't matter at all. If you are the bank, and you can get a loan at zero percent from the fed (or even negative interest as is the case in europe), do you want to take that loan out and then lend it to someone to buy a house that will drop 10% or more each year for the next four years?  

He's in no position to invest with that small amount in reserve at his age. The damage that will be done to him by losing 50% is far greater than the reward he'll reap by increasing it 50%. 

He needs to keep that money in a money market fund for emergencies. The only options are not 'invest it' or 'waste it.' The third option is keep it as an emergency fund.

I have a couple of Grant Cardone books on audible. I like his approach on mindset, sales, etc. I've also watched a couple of Meet Kevin videos 'exposing' cardone's lack of actual real estate background and I wasn't too surprised. He is definitely more carnival barker midwit selling to bozos than harvard mba hedge funder selling to blue bloods. 

That said: I know there are discussions about Cardone having stopped paying dividend payments. Again, not too surprising. But I was curious about how his process works, so I watched a few of his videos on the Cardone Capital FAQ page. To see the most interesting video, which I can't link directly to, start here: 
https://cardonecapital.com/faq...
then scroll down underneath to "How Long is the Term of the Fund? 

So first, the term of the fund is 10 years! Are you kidding me? This term is for everyone, un-accredited and accredited. But I can't imagine anyone with 200k single/300k joint income or 1million net worth would wrap up money for 10 years with Grant. But anyway, moving on, it gets better. Start watching again at the 1 minute mark. He actually says it may not be 10 years; at his discretion it might 12, or 14 or 16 years. The way he words it, he doesn't put a cap on the time limit, which may not rule out "forever." 

Also, even more interestingly, there are two edits: at just after 1:01 there is an edit, where Grant seems to have added this statement about the ten year term. Then another edit at about 1:06 where Cardone goes into the fact it may be 12, 14, 16 or whatever.

An obvious edit isn't so surprising in general, except for the fact that the content added in the edit is so surprising and Grant is pretty much as smooth as they come, basically he's 'one take Grant' who doesn't need a lot of edits.

So the questions are:
1. Did investors know Grant might keep there money for up to 16 years (or more*)?
2. Most importantly, how long can Cardone keep your money? Is it 16 years, the final number he mentioned, or is it forever? Note at no point did he ever say it 'would be no more than 16,' that is just the last number he tossed out.

Obviously this is point is moot if Cardone goes bust in the upcoming multifamily crash. But it probably is important to see if unsaavy, un-accredited investors were roped into something they didn't understand. 

Chase now requiring 20% down/700 credit score. Other lenders probably doing the same or will follow:
https://uk.reuters.com/article...

So it begins: 
Banks really don't want to lend and this is how they express it. They are worried prices will fall and don't want to be on the hook for more than the home is worth in case they have to foreclose on it. They raise standards, and now far fewer potential homebuyers can qualify and buy. 

Meanwhile, investors don't buy because they expect prices to drop. So there are far fewer buyers and prices do drop. The economic fallout from the shutdown causes problems for middle class and working class homeowners who suddenly need to sell and downsize. But if they bought in the last few years, they are very possibly upside down, don't have money to be able to bring to close and sell. So they go into foreclosure, causing a rise in inventory/further price implosion. 

With investors and saavy wealthy potential buyers also deciding not to purchase, the houses on the uppper end also fall in price.  Many rich homeowners who could easily pay soon stop paying. They owe 4 million on a house now worth two. They decide their good credit is worth less than 2 million and walk away. 

Thus the market is in a death spiral downward. It seems crazy, but it's really just the opposite of what happens during the rise. In the mania, everyone is sure the market will rise, and greedy to participate. Banks are sure too, so they relax lending and so it rises. This will be the opposite of that. But as Warren Buffet says, be greedy when others are fearful and be fearful when they are greedy. Easier said than done when lending should still be extremely tight in 1-2 years when buying opportunities will start getting good. That's why they say 'keep your powder dry,' 'cash is king' ect.

@Eric Fernwood you are obviously very intelligent, greatly contribute to this forum, and can hold frame with the best of them, but I strongly disagree.

It's a good time to invest in real estate in Vegas or anywhere now like it was a good time to invest in the S&P in mid February.  People can find a good deal now the same way people can make money in a market crash with Bill Ackman skills or Sen Richard Burr "insight." The smart play for regular people is to pull out of your index funds, into cash and wait for the bottom. Even Warren Buffet was down for 2-3 years during the Great Recession and would have been better off in doing nothing, all in cash, but would have had a problem justifying his fees. 

The Coronavirus was fairly easy to spot and avoid damage in the market (get out if you're in and don't get in if you're out); it's overwhelmingly easy to spot in Real Estate (as a potential buyer).  On the buying side, don't side. However, the illiquid nature of real estate is a challenge if you currently hold rentals. @Eric Fernwood if you think you're clients could get anywhere near Feb 2020 market value (they can't), they should definitely sell now. If not, they need to be ready to hold on for 8-12 years until they'll again see Feb 2020 prices in nominal prices (will be much longer in real prices). 

If your people are all going to ride this out, the only question is how much of a rent drop will occur and how much can they handle. Hopefully you put people into good deals and with a 20% drop in rent, they can still cover PITI, vacancies, repairs, management, possibly worse tenants, etc.

I hope this isn't the case, but I think maybe Las Vegas is the Titanic and RE industry pros are leading the band playing "Nearer, My God, To Thee." There's no way this is not very bad, and nothing has even really started. Las Vegas was ground zero last time and this time will be worse.

The only thing we learn from history is that people don't learn from history:
https://www.reviewjournal.com/...

Sinclair Lewis said, "Never expect a man to understand something when his job depends on him not understand it." That's definitely true here. While it does provide some Twilight Zone-esque dark comedy, it might also convince some of the younger, less experienced investors to act on it and ruin their lives. While the best buying opportunities of this century are about 18 months away, the worst opportunities are right now at full price. 

If you care about your investors, you should be telling them to buy nothing right now. It will certainly be cheaper in 6 months. Real Estate lags the stock market. Many among the biggest stock losses were real estate, builders etc.  This is the big one, will be the once every ten or twenty years buying opportunity. For stocks, it will be sooner, maybe when has gone down maybe 50% and shows signs it is turning (GR was 57% top to bottom). Real estate will probably take 2 years+ to bottom out, but even if you buy before then you won' t be buying at the worst time since you wouldn't have bought at the top. Basically, everyone was predicting an early 2020 recession as it was, and now we get this. 

Here's a house, at 600k. Sold 11/20/19 for $347k. Nothing has been done to it:

https://www.zillow.com/homedetails/2964-Cabrillo-Mesa-Dr-San-Diego-CA-92123/16930461_zpid/

How do I find out if that was for cash at auction, or something else? I can't find any details on the sale. The county site, parcelquest offers transaction details for $19.99 but doesn't say what those entail. 

I posted this in the Gen Foreclosure forum as well, but I was hoping to hear from some boots on the ground, since I know SD and all of CA is an in person auction process, and it's hard to get sold price data from auction.com.

What are the discounts happening now at the El Cajon auctions? How does this compare to 3 years ago? How does it compare to what you'll expect to see in a couple of years once the correction (maybe) is in full effect? I'm really wondering if, since it's an actual cash buyer situation and most investors are taking a wait and see position, if there may be a deal for me to buy something to live in despite the market being near a top. I have cash and could buy a SFH decently discounted from the median in a good, not great area.

I'm moving out west soon, 95% percent it's to SD, as I have relatives/friends there, and it should benefit my business. I'm planning to rent initially, Bay Ho, Bay Park, Clairement West, UC, or someplace similar. I could go with a year lease or do something shorter, like an airbnb if i was planning to buy. 

From what I've seen, with the lowered interest rates and lowered lending standards, cheaper inventory is way down and selling quick. But I did a search on zillow for recently sold in last year and some sold prices look pretty good; but I don't know if those were foreclosure sales or something else.

What's the best and most efficient way to get information of what houses are selling at in the foreclosure county auctions. It seems the houses are listed on auction.com, and if they are sold, they disappear. 

I did search on zillow for recently sold houses at a below market range. The problem with this is that I don't know if those were sold at at foreclosure auction or in some shady way between associates, or if it was  just structured that way for business purposes. 

I'm trying to establish the level of discount people are seeing in the last year when they buy at auction in this area where I will be moving in the near future.