All Forum Posts by: Juan Pardo

Originally posted by @Sam B.:

Clearly we should be cashing out on all this sweet sweet equity, leveraging ourselves to the gills and buying more rental property at current valuations, am I right? I think we've reached a new golden era where asset prices just go up and up forever, even if the real economy sucks.

I thought the idea always was buy cheap sell expensive. And now prices are just very high. 

Originally posted by @Danny Webber:

June 2020 Austin Home Sale Stats
Everything points to lower inventory, more sales and less days on market with an increased median sales price.
It's a good time to be a seller!

I personally will be trying to sell a couple of my rentals. I have been in sell mode for a couple of years now so this fits my investment strategy well.

#stackdrypowder
Get ready for investment opportunities

. 

It is good time to be a seller anywhere, because there is a bubble in real estate prices.

I would probably take the offer.

In Spain the short term rentals have become a nightmare for owners. Most landlords have turned them in long term rentals and even so rent prices are starting to go down.

 People who can rent for 650 USD cannot spend just 10.000 USD on purchasing a property? Really? 10k is like no money at all...

What kind of tenant would spend 7.800 USD per year to rent a property they can just purchase por 10.000 USD?

Politicians have the duty to be optimistic no matter what. However, hearing Donald Trump say that the coronavirus would disappear "just like a miracle" was surreal.

Maybe people are not still noticing acute economic pain due to the short term reaction of central banks, together with government checks and the possibility of delaying mortgage payments. These are all short term patches to try to fix what could be a long term crisis.

In Europe, the EU has not been able to respond as fast as the US, but conversations about the "reconstruction fund" are making some unexpected topics arise, for instance, the tax breaks (or maybe tax evasion) some US technological companies (FAANG) are getting in the EU. And the future of 5G (Huawei?). And the relationship with countries outside the union, like the UK, the US or China.

In countries that depend on tourism this crisis is already worrying, and since the summer season is going to be over soon, there will be a long year ahead with a lagging economy to support (somehow), with rampant unemployment, empty comercial real estate, small business going bankrupt... not a great picture really.

I think it is a big mistake to rely on cheap borrowing to make shaky investments, or even investments that, as of today, seem to cash-flow and look good on paper for the short - medium term. The analysis to purchase a property has to be deeper. One needs to know the market well, how that property is specific in that market, what makes it different from properties around, the potential for appreciation, and also historical prices, as it happens with stocks in the stock market. Debt plays a role in this game, and debt can mean opportunity but also leverage (just as futures over an index are leveraged).

Cheap interest rates come at a cost to pay, a much higher property price.

I have been around enough to know what a distressed market looks like, and prices can just plummet as they did after 2008. Prices did fall a lot.

Even with higher interest rates, it pays off waiting to buy properties at prices that can fall 30 - 50% from today's prices.

Hi Marianne, if I were in your situation I would try to save and make a very safe move, buying a property in a solid market when rents are high and there is the possibility of appreciation. I would specifically look for that combination of good rents and appreciation in the long run.

I would not take more debt in your situation, and would not invest more money in the same place where you are based, since you said the price of your property decreased.

Also, take into account that at this moment prices are very high, real estate prices (taken as an overall picture) have been climbing since 2012, so in my opinion is a good moment to sell but a very bad moment to buy property.

It can happen again:

Banks Get Ready for Wave of Coronavirus Loan Defaults

JPMorgan, Citigroup and Wells Fargo signaled that the worst of the coronavirus recession is yet to come, opting to stow away tens of billions of dollars to prepare for an expected wave of loan losses.
https://www.wsj.com/articles/t...

I somehow have the same feeling than in 2007. Prices have gotten unrealistic for real estate, so I am prepared for a price correction, or for a long-lasting crisis, depending on the country.ç

In Europe the only way to maintain the welfare state is charging more taxes and one of the easiest way for governments to get more money through taxes is focusing on real estate (property tax, a tax percentage on properties that are vacant etc)