All Forum Posts by: Dan D.

Inflation is about the only thing constant in our economy for the last 50 years. Our economy grows mainly due to inflation. 

Yes, housing prices are going up because of inflation, but I don't think that means a crash is going to occur.

Just because prices are going up doesn't mean people suddenly a bubble of people are taking out bad loans or buying more home than they can afford. In fact, it would seem very unlikely since the word was just a couple years ago that millennials are scared of buying homes because of 2008.

By any tangible measurement compared to other economies, our housing prices are very cheap.  I think if people are waiting for a investors buyers market to occur, they'll be holding their cash for quite some time.

What are the factors people are using to determine home prices are high?

Compared to other countries, our home prices are cheap when using any of the following metrics:

• Price to rent ratio
• Price to income ratio
• Affordability Index
• Mortgage as a percentage of income

If we "normalize our price to income ratio from about 4.5 to something similar to other countries (Take Canada fro example at 7.6), our average home value of $248k (on average income of $56k per household)  would reflect a price of $429k.  A 70% increase.

What is there to make us think landlord pricing ratios will prevail rather than we normalizing to the price ratios of other countries?

Market corrections will take place, but that doesn't always mean that market corrections mean listing prices will reduce.  

Rent prices may be well under what they should be and housing prices even at these higher levels may still be perceived as "cheap" when we look at this in 2023 - 2027.

The housing market and housing prices are driven by supply and demand, not by what generates sufficient ROI for landlords when they don't include possible effects of appreciation.

Keep in mind, the market is what the market is. Very seldom in history has the housing market been a bubble.  Notably it happened recently (2008), but that was a rare occurrence.

With the lack of new houses being built since 2008, there is a pent up demand and that won't be resolved anytime soon.  Also, far more education out there about becoming landlords. The idea of buying property to rent it out has never been less scary for first time investors.

If you want to be in the game, you need to buy at current market prices. Either that, sit on cash, or invest in the stock market which currently has a PE of 22 something.  (Earnings of $2 per $44 stock spent = 4.5% returns).  Or find something else that provides better value.

For longtime investors, the rules of purchasing from 2008-2013 aren't going to apply again for some time.

That doesn't mean current market is insane. Just means more people are willing to take lower returns, or more people are willing to bet on appreciation.

Here's my free 2-step guru lesson.

Step 1: Go buy a house.

Step 2: Rent it out

@Lee Haenschen

Well, the advantage of not finding something right away means you have more time to accumulate a down payment. Some markets aren't going to show cash flow and might be more of appreciation plays.

Worst case you save up more money to put more money down on a house and you buy in a market that might appreciate a bit.  For a first rental property it wouldn't be the worst.  You can rent out houses that don't need repairs first as well.

Keep in mind, most people buy a house with little down, put very little value into the houses, and never rent them out for any income.  Only 15-20 years later they consider it the best investment they ever made.

If you have the itch, just buy a house in a growing area that doesn't have an obsolete floor plan and rent it out.  As long as you don't leverage yourself too far or don't have some reserves, worst case is you sell it in a couple years to invest in something else.

Don't paralyze yourself by trying to find perfect numbers.  Get in the game.

It's not hard to see what's going on here.

I just find it odd that someone who could be investing in multi-million commercial and new residential developments decide to purchase trailer parks on an regional or national scale.

What's the motive for entering that space? 

I was wondering why this is happening as well.

Most financial planners are insurance salespeople.

They are usually less educated on creating wealth and more educated on how to get commissions.  Their paycheck depends on it.

 I would suggest you have them give you a number.

It might be close to what you'll get a from a realtor with a lot less work.

The fees are probably similar to what you would pay in regular agent fees.