hmm. New here, will take a stab. I started investing in 1998. Live in Orange County, CA. Made a lot of money from 1998 to 2006. Saw the funny money loans in 04, 05 figured there was another year or two, I was right .
Back then I did a lot of business with PFF which is now US bank. On my last deal in 2005 a bank vice president and senior loan officer took me to lunch, told me this is the last loan they will do with me for a while. The bank has been around a long time and sees dark times ahead. Very dark. Another deal and I will be too leveraged to survive. I took the advice. Too many easy loans after enough had been let told them time to stop.
My take on today:
-freddiemac recently started a 3% down program to compete with FHA. Sign that the "machine" wants the market to go on.
-TREPP reports and RV stocks are great barometers of where the economy is and headed. TREPP shows commercial mortgage delinquencies DECLINING. RV stocks are up.
- wealthy people homes last time went first as always. Right now that's tough to read.
-here in LA basin rents are going up 5-8% a year or more depending on location. If that goes on another 3 years as predicted in the LUSK report, that's a 20% growth minimum, because investors buy into future returns here. What will interest rates be is the breaking point, and salary growth balance to it.
During the great recession, values on some of my 4plexes went from 2006 high of 940 to 980 down to 650. Know what? People still paid the rent. No increases, few more evictions and in some cases I saw 2 fridges in some units indicating doubling up. Income largely held. Even in the crash, it was a better deal to live in CA.
If you buy conservative with 25 down and are not too heavily leveraged when it turns south you will be fine.
You can also do a dollar cost average approach similar to stocks..when you think it's getting closer you sell a highly appreciated asset, cash out clean and pocket it for emergencies and opportunities, put into a charitable remainder trust and drip the income to you, or you can refinance and set cash aside . Same strategy different outcomes.
Cb
