All Forum Posts by: John Myers

I don't put a lot of faith into the 50% rule.  My personal experience is that is way to high for expenses.  I looked back at my rental properties and found my expenses were no where near 50%.

I prefer to evaluate the estimated costs/expenses for each property.  Newer properties will have much lower expense ratios.  This rule does not take into account any tax benefits also.

Being a landlord in Santa Fe for a house is Albuquerque is a little bit of a challenge.  There was a great thread regarding how to show rentals to avoid no shows.  I recommend you read it, lots of great ideas in that thread.

Screen the heck out of your tenants.  Good tenants = good life.  Bad tenants = life sucks.

Smaller homes in Albuquerque are renting for $1 to $1.50 per square foot based on location and condition.  Your estimate for furnished may be low, could be higher.

New Mexico has a first time home buyers loan that allows you to buy a home for as little as $500.  There are may restrictions and in Albuquerque there is no way (because of the price of homes) to buy a home for $500.  This is only for New Mexico residents.  You may want to see if Ohio offers something similar.  This program is only for owner occupied.

Personally, I don't purchase properties that have negative cash flow with the hopes for appreciation.  Who knows what this market is going to do.  I personally do not believe we will see a crash, but do think we will see homes decline in value slightly over the next few years.

$14k per year is a pretty big nut to crack each year.

@Michael Wooldridge

I don't think we will see a decline like 2008.  Although, every local market is different and will respond differently.  I think we will see some declines in prices from here.

Most homeowners are in much better shape this time.  

However, layoffs will create problems.  There are plenty of job openings at this time.  So if someone loses a job now, there are plenty of jobs.  However, the number of jobs available will decline if the economy declines.

Inflation and high interest rates were easy to predict. Washington DC has been printing money like crazy. Check out these links and see what has been happening with M1 money supply and M2 money supply. This is a HUGE problem and this is all you need to know. How can the government print so much money and not think we would have inflation. Jerome Powell has access to this data (this is government produced data) and was running around telling us the inflation was transitory. That was not true. So Jerome Powell is either STUPID or he is a LIAR. You can make your own decision.

Too many people on Bigger Pockets are evaluating the housing market compared to the last recession. The housing market is in better condition than prior to the last recession. However, everyone needs to look at the bigger picture, the US economy and the global economy. Europe (especially Germany) is in big trouble with energy. This is due to several years of bad decisions by their governments. It is too late to save them in the near future.

The US economy is in trouble. The CEO of FedEx stated their business is slowing down. FedEx is a great predictor of the economy. If they are not shipping as much, guess what? Consumers are not buying and suppliers are not shipping.

The housing market will follow the overall economy. Things are not looking good for the economy and we are at the beginning (my opinion) of the down trend in the economy.

I think home prices will decline more (not like 2008) and rents will continue to increase although not as much as recently.

Very lively conversation and let's face it, nobody knows what is going to happen.  That includes me!

Several posts have stated the housing market now is different from 2008. That is true, however, I always worry when someone tells me "it is different this time.

Inflation is high and not going to end any time soon. This is typically good for hard assets like gold, silver, real estate, etc.........

Interest rates are increasing, this is bad for almost every person and every business.

There is definitely a scenario for a crash in the housing market. That scenario is a crash in the economy and high unemployment. The CEO of FedEx gave a dire outlook on their business. If their business is down, guess what, so are a lot of other businesses.

Many Americans live paycheck to paycheck. If they lose their jobs, they will lose their houses (unless the government steps in). They may have equity so they can sell their houses if there are willing buyers.

The good news is there are a ton of job openings at this time. People can find a job if they need one. How long will this last?

I am in the camp that believes we are in a recession, 2 consecutive quarters of negative GDP. Our government and many pundits say we are not in a recession because "this time it is different."

I also believe we are at the beginning of the recession cycle and the beginning of the interest rate increase cycle. The printing of money and out of control spending in DC is the cause of many of these problems. Nothing you or I can do about that.

This will not bode well for the stock market or the economy!

The worst is yet to come and we will see how bad things get. For the most part, the real estate market will follow the economy.

This thread may be going for a while and come back to life in a few months!

Good luck to all!!!

@Greg H.

Congratulations on starting a very robust and interesting post!!

@James Hamling

It seems like you think the problem is a revenue problem for the government. That is wrong, the US government has a spending problem not a revenue problem.

The biggest problem right now is all of the money printing. See my previous post about the expansion of the M1 & M2 money supply. The past few years are unprecedented in terms of money printing. Neither party in the US government gives a sh** about controlling spending.

The US government printed money like crazy and they knew the consequences. Now the economy and its citizens will pay the price!

@Greg R.

I guess it depends on your definition of a crash. Currently the median home price in Albuquerque is down about 3% from the high. Hardly a crash but who knows what the future holds. The Federal Reserve Chairman is clueless. Remember inflation is transitory. That was a lie. The US is in uncharted territory. The US government has been printing money like crazy. Check out these two graphs M1 money supply and M2 money supply. (Do some research if you don't know what the money supply is)  This is why we have inflation. Way too much money chasing not enough supply. Supply and demand 101. These graphs are produced by the US government so Jerome Powell has access to this if he wants to see it.

Jerome Powell has no idea what to do but raise interest rates. A rising interest rate environment is bad for almost everyone and every company.  Rising interest rates will cause a lot of other problems for the US Government and its citizens.

Just a reminder, we are at the beginning of this cycle of higher interest rates and inflation.   This will not be fixed in the next few months!