All Forum Posts by: Jay G.

Quote from @Carlos Ptriawan:

Quote from @Jay G.:

too much volatility in markets. It doesn't take much of an increase for very long of a time to cause a wreck (remember public companies report quarterly). You could probably overlay those avg mortgage rate trends on average housing price trends and see some nice correlations. Low interest = high prices, high interest = low prices. But what is "high" and how does leverage help define what is a "high" interest rate or interest rate increase? (refer to attempts to *slightly* raise rates from 2004 through 2008)

 thats not the way to do it, market is 90% capable of predicting 1-2 year ahead of Fed terminal rate.
We may see 5% FFR in 2023 , and slowly moved back to 2.5% in 2025.
There's real no need to guess, we shall follow what the Fed told us. 

The very big thing is to bring inflation, inflation would be 2% in 2025 per Ped.

>market is 90% capable of predicting 1-2 year ahead of Fed terminal rate.

I trade SPY options daily. This is wrong. Half the people believe a pivot is ... nope... ok next one... nope... ok definitely the next... nope.

Currency war happening now.  Fed isn't messing around. But if you guess 20% before 2% you might have a 50/50 chance at being right. :( 

too much volatility in markets. It doesn't take much of an increase for very long of a time to cause a wreck (remember public companies report quarterly). You could probably overlay those avg mortgage rate trends on average housing price trends and see some nice correlations. Low interest = high prices, high interest = low prices. But what is "high" and how does leverage help define what is a "high" interest rate or interest rate increase? (refer to attempts to *slightly* raise rates from 2004 through 2008)

Quote from @Carlos Ptriawan:

Quote from @Jay G.:

Quote from @Carlos Ptriawan:

Quote from @Jay G.:

Quote from @Greg Scott:

Carlos, if you have property radar you should walk your neighborhoods debt to value. Take note of WHEN new debt was accepted too. It doesn't matter how cautious YOU are with LTV debt if your neighbors were not as cautious.

 This is good point bro, but here's how it's being played out okay 
1. High Inflation/High Interest environment usually lasts only maximum 24 months, after that, the new bull cycle is restarted. When new QE restarted price at very least is having modest/slow growth

Be sure to notice the attempts of "slight" interest rate bump just before 2008/2009 crash.  Peak (stock) market crash ~MAR 2009.  

Quote from @Michael Wooldridge:

Quote from @Jay G.:

Quote from @Michael Wooldridge:

Quote from @Jay G.:

Quote from @Greg Scott:

The market may correct, but I firmly believe there won't be a crash.  The reason is simple, equity.

Before 2008 people with no income could get liars loans and buy much more real estate than they could afford.  We heard stories of cleaning ladies buying multiple million dollar homes.  When home prices starting falling, the whole thing collapses like a house of cards because nobody had any equity.  They couldn't sell and get out.  We had cascading foreclosures creating a downward spiral.

Recently, prices have been surging.  Given the laws passed after the Great Recession, appraisals and lending is highly restricted.  Appraisals have not been keeping up with prices and lenders won't lend above appraised value.  We sold a house in 2021 and in one day had 20 offers.  Several of them had acceleration clauses stating they would pay more than anyone else up to $X.  Both of them waived any financing contingency because they KNEW the house wouldn't appraise for what they were offering.  They had to make up the difference with cash.  Those people have a ton of equity in their homes.  If they had to sell, they might take a haircut, but they aren't going to get foreclosed. 

There is no  house of cards here to come tumbling down.

Greg, you can use something like property radar to travel a nicer neighborhood that you're familiar with and look at the notes/debt recorded. Do this for 10, 50, 100 homes and build some statistics of LTV to see what's really going on in your area and how much "correction" can be tolerated before people have no skin in the game. I think many people feel they were lucky to (cashout?) refi or buy new below 3% -- but if housing "corrects" as you put it, then combined with interest rates having nearly tripled, those people are stuck.

Many will have extracted (through cash out refi) all of the post-correction equity those that bought this year are in worlds of hurt - paying tops into increasing rates. Probably buying as much home as buying power will allow. 

So those may be first to (again) walk away and default due to little to no skin in the game. If we learn from history, it only takes single digit defaults to get the ball rolling.

And as you say things ARE different this time.... we had large publicly traded buyers like $BLK (Blackrock) who would come in and push market higher. So those companies, each quarterly report they release to shareholders may have to.... make adjustments... to their holdings. Possibly similar to the way Fannie and Freddie managed their REO's?

But no worries! After another 7-10 year bankruptcy cycle to lock buyers out of rock bottom cash and courthouse steps deals, we can do it all over again. 

 Predicting bankruptcy crisis similar to last time is interesting. You do know many people bought a second home before walking away last time right? And it was because they were upside down 80-90k and they were willing to take the credit hit. 

People won’t walk away from homes because they lost some equity. People walk away when they were upside down. Lending standards are very different.

Yes, so many "CASH" buyers right now.  It's very hard to get a HELOC when you have negative equity :)

 Very few people have negative equity. Half the country hasn’t even lost median value yet. 

The other half has lost nominal. And historically we’ve had more cash down and cash deals on housing than ever before over the last 3-4 years. People have lost equity. But housing would have to drop quite a bit more before you’d have risk of people with negative equity. 

Housing has barely started to drop vs interest. Interest nearing 400% increase from lows? If interest stays lofty, or worse, goes higher yet... there'll be some adjustments. Not everyone has fixed rate. And many FHA buyers from past 36mo could not afford to be in the houses they're in if they had to buy it again today. They would be denied. The chain being as strong as the weakest links etc.. FHA ARM's? 

Quote from @Michael Wooldridge:

Quote from @Jay G.:

Quote from @Greg Scott:

The market may correct, but I firmly believe there won't be a crash.  The reason is simple, equity.

Before 2008 people with no income could get liars loans and buy much more real estate than they could afford.  We heard stories of cleaning ladies buying multiple million dollar homes.  When home prices starting falling, the whole thing collapses like a house of cards because nobody had any equity.  They couldn't sell and get out.  We had cascading foreclosures creating a downward spiral.

Recently, prices have been surging.  Given the laws passed after the Great Recession, appraisals and lending is highly restricted.  Appraisals have not been keeping up with prices and lenders won't lend above appraised value.  We sold a house in 2021 and in one day had 20 offers.  Several of them had acceleration clauses stating they would pay more than anyone else up to $X.  Both of them waived any financing contingency because they KNEW the house wouldn't appraise for what they were offering.  They had to make up the difference with cash.  Those people have a ton of equity in their homes.  If they had to sell, they might take a haircut, but they aren't going to get foreclosed. 

There is no  house of cards here to come tumbling down.

Greg, you can use something like property radar to travel a nicer neighborhood that you're familiar with and look at the notes/debt recorded. Do this for 10, 50, 100 homes and build some statistics of LTV to see what's really going on in your area and how much "correction" can be tolerated before people have no skin in the game. I think many people feel they were lucky to (cashout?) refi or buy new below 3% -- but if housing "corrects" as you put it, then combined with interest rates having nearly tripled, those people are stuck.

Many will have extracted (through cash out refi) all of the post-correction equity those that bought this year are in worlds of hurt - paying tops into increasing rates. Probably buying as much home as buying power will allow. 

So those may be first to (again) walk away and default due to little to no skin in the game. If we learn from history, it only takes single digit defaults to get the ball rolling.

And as you say things ARE different this time.... we had large publicly traded buyers like $BLK (Blackrock) who would come in and push market higher. So those companies, each quarterly report they release to shareholders may have to.... make adjustments... to their holdings. Possibly similar to the way Fannie and Freddie managed their REO's?

But no worries! After another 7-10 year bankruptcy cycle to lock buyers out of rock bottom cash and courthouse steps deals, we can do it all over again. 

 Predicting bankruptcy crisis similar to last time is interesting. You do know many people bought a second home before walking away last time right? And it was because they were upside down 80-90k and they were willing to take the credit hit. 

People won’t walk away from homes because they lost some equity. People walk away when they were upside down. Lending standards are very different.

Yes, so many "CASH" buyers right now.  It's very hard to get a HELOC when you have negative equity :)

Quote from @Carlos Ptriawan:

Quote from @Jay G.:

Quote from @Greg Scott:

The market may correct, but I firmly believe there won't be a crash.  The reason is simple, equity.

Before 2008 people with no income could get liars loans and buy much more real estate than they could afford.  We heard stories of cleaning ladies buying multiple million dollar homes.  When home prices starting falling, the whole thing collapses like a house of cards because nobody had any equity.  They couldn't sell and get out.  We had cascading foreclosures creating a downward spiral.

Recently, prices have been surging.  Given the laws passed after the Great Recession, appraisals and lending is highly restricted.  Appraisals have not been keeping up with prices and lenders won't lend above appraised value.  We sold a house in 2021 and in one day had 20 offers.  Several of them had acceleration clauses stating they would pay more than anyone else up to $X.  Both of them waived any financing contingency because they KNEW the house wouldn't appraise for what they were offering.  They had to make up the difference with cash.  Those people have a ton of equity in their homes.  If they had to sell, they might take a haircut, but they aren't going to get foreclosed. 

There is no  house of cards here to come tumbling down.

Greg, you can use something like property radar to travel a nicer neighborhood that you're familiar with and look at the notes/debt recorded. Do this for 10, 50, 100 homes and build some statistics of LTV to see what's really going on in your area and how much "correction" can be tolerated before people have no skin in the game. I think many people feel they were lucky to (cashout?) refi or buy new below 3% -- but if housing "corrects" as you put it, then combined with interest rates having nearly tripled, those people are stuck.

Many will have extracted (through cash out refi) all of the post-correction equity those that bought this year are in worlds of hurt - paying tops into increasing rates. Probably buying as much home as buying power will allow. 

So those may be first to (again) walk away and default due to little to no skin in the game. If we learn from history, it only takes single digit defaults to get the ball rolling.

And as you say things ARE different this time.... we had large publicly traded buyers like $BLK (Blackrock) who would come in and push market higher. So those companies, each quarterly report they release to shareholders may have to.... make adjustments... to their holdings. Possibly similar to the way Fannie and Freddie managed their REO's?

But no worries! After another 7-10 year bankruptcy cycle to lock buyers out of rock bottom cash and courthouse steps deals, we can do it all over again. 

I am in that group of investor LOL, One thing that you forget is when we do refi I only refi up to 65% LTV so there're still lot of cushion from 2020 perspective. We have 2008 , 2001 experience with bear market so I personally careful not to over-leverage, but I'm not sure about others though :)

I really like all you "bear market/crash" group guys creating a bad/*****torm scenario that housing would crash and impact us. 

Bring it on, it makes us smarter LOL

Carlos, if you have property radar you should walk your neighborhoods debt to value. Take note of WHEN new debt was accepted too. It doesn't matter how cautious YOU are with LTV debt if your neighbors were not as cautious.

Quote from @Matthew McKee:

If you want a holistic view of your returns you need to factor in appreciation which typically beats cashflow, amortization, and the ninja perk; tax advantages. There are so many more perks that are unlocked when you BRRRR instead of flip. Instant gratification v. delayed gratification.

Timing is usually important?

What is the risk of starting/holding BRRRR's into a potential correction and increasing interest rates? Lose everything?

I guess rents would have to correct, too?  

How did pandemic eviction moratorium affect BRRRR investors who had little cushion?

I know someone in PA who had one tenant 12k+ behind in rent - basically 8 months. Couldn't evict. 

In CA a friend of mine had all his rentals behind in payments / non-payments (Natomas area).

This is a similar issue I had last year with unexpected >2M capital gains to deal with very late in year. I was looking for opportunity zone deals but everything was so overpriced and the risk of "correction" in 2022 + (essentially) being locked in for years until 2026 to pay the tax + investing into what could be a "correcting" value of the OZ property was too much of a concern -- due to the timing of things -- and just paid the tax. Painful.

Quote from @Greg Scott:

The market may correct, but I firmly believe there won't be a crash.  The reason is simple, equity.

Before 2008 people with no income could get liars loans and buy much more real estate than they could afford.  We heard stories of cleaning ladies buying multiple million dollar homes.  When home prices starting falling, the whole thing collapses like a house of cards because nobody had any equity.  They couldn't sell and get out.  We had cascading foreclosures creating a downward spiral.

Recently, prices have been surging.  Given the laws passed after the Great Recession, appraisals and lending is highly restricted.  Appraisals have not been keeping up with prices and lenders won't lend above appraised value.  We sold a house in 2021 and in one day had 20 offers.  Several of them had acceleration clauses stating they would pay more than anyone else up to $X.  Both of them waived any financing contingency because they KNEW the house wouldn't appraise for what they were offering.  They had to make up the difference with cash.  Those people have a ton of equity in their homes.  If they had to sell, they might take a haircut, but they aren't going to get foreclosed. 

There is no  house of cards here to come tumbling down.

Greg, you can use something like property radar to travel a nicer neighborhood that you're familiar with and look at the notes/debt recorded. Do this for 10, 50, 100 homes and build some statistics of LTV to see what's really going on in your area and how much "correction" can be tolerated before people have no skin in the game. I think many people feel they were lucky to (cashout?) refi or buy new below 3% -- but if housing "corrects" as you put it, then combined with interest rates having nearly tripled, those people are stuck.

Many will have extracted (through cash out refi) all of the post-correction equity those that bought this year are in worlds of hurt - paying tops into increasing rates. Probably buying as much home as buying power will allow. 

So those may be first to (again) walk away and default due to little to no skin in the game. If we learn from history, it only takes single digit defaults to get the ball rolling.

And as you say things ARE different this time.... we had large publicly traded buyers like $BLK (Blackrock) who would come in and push market higher. So those companies, each quarterly report they release to shareholders may have to.... make adjustments... to their holdings. Possibly similar to the way Fannie and Freddie managed their REO's?

But no worries! After another 7-10 year bankruptcy cycle to lock buyers out of rock bottom cash and courthouse steps deals, we can do it all over again. 

Sellers have a few gift months here left in my opinion. 

After mid-terms, forget it. Markets tied to markets. No more need to pump markets for votes after that. 

I expect we're going to see all time highs in everything and a 5000 S&P index before mid terms. Then over. Kaput.

Alright let's check a few current county 30 day averages for updates...

ADA County, ID......................... 26/day

Dallas County,TX  ..................... 67/day 

Clark County, NV....................... 108/day

San Diego County, CA................. 82/day

Everything is looking totally peachy!  (Caveat Emptor) 

Unless you're on the real estate services side of the house... then it's Carpe Diem! 

"Oh, that's unfortunate. That's the rent in your hands though, right?"  

Nothing has changed? ... they were roommates on day 1 and they're roommates now. 

Anyway, my bet is they're back together now or within a couple of days anyway. A lot of arguments seem to happen around end/start of month.... for some totally unknown reason. If it doesn't work out, she'll probably find a new guy (or him a new girl) and the new bf/gf isn't going to want them living with their exes, so it'll work itself out for you.. 

Just let him/them know NOW -- if SHE wants off the lease, you could all mutually agree to terminate the existing lease without penalty and write a new 1 year for him alone since his income qualifies alone. This is presuming no damage, all rents paid up, etc.

Btw are you related to Cindy?