All Forum Posts by: Jim Stardust

I don't believe we'll ever pay our debt, at least not in the conventional way typical individuals/organizations pay their debt. It's simply too large to pay off and it will take 100 years of austerity measures, massive cuts to entitlements, the military, coupled with huge tax hikes. That will never happen, you can look back 20 years from now and you'll remember someone on some real estate message board said so.

What might happen though, and what would fit under the "unconventional" means, is for the Fed to inflate our way out of it - think about paying off a trillion dollar of debt in what's equivalent to $100 billion today, it's happened at some countries in the past and I fear we're on that path. There's also the possibility, and I know many people think it's unimaginable right now, is that the developed world total debt will become so huge that the powers that be decide to wipe everyone's slate clear, and declare a single, new currency.

As far as people like us are concerned, I think we should be okay if either scenario occurs - we own hard assets and people will always need a place to live, and they'll have to pay for it whether it's dollars, gold, or the new world currency. If inflation sets in, those with leveraged and mortgaged properties will pay for it with cheaper dollars, if there's a depression and deflation happens, then God help us all.

Money and risks won't keep you up at night if you have some clue about managing money. However, bad tenants can not only keep you up at night, but can cause harm to your health and well being. Invest the time and money in choosing the best tenants you can possibly put into your properties. If you hire a PM, have a system in place to verify that they're doing their job in regard to that selection. The biggest problems arise when tenants damage property, when they leave in the middle of the night without paying rent, when they cause problems and drive other tenants away, when they drag you into court because they refuse to abide by the rule of law. Take the time to check backgrounds, verify past tenancy issues, employment, and don't violate your criteria no matter how "good" they appear or sob story they pull, always put your business first.

Good luck!

This is the third time it's happened to me in less than two years - agents for REOs giving a heads-up on a property to someone close to them instead of doing what they swore to do - submit all offers to the bank. I just found out that a niece of the agent got her bid submitted the moment it went on the MLS then she was out of a touch for several days until the paperwork all went through. This is getting ridiculous...I mean, what happened to the ethics training they receive to get their license?

I've run into this problem several times, and almost in every case, it was that there were offers either being prepared (and the agent didn't want to let anyone else on the bidding for whatever reason) or offers submitted and they just didn't want to bother. The only way I was able to get information is through my agent, calling (and emailing) directly didn't help. It's very frustrating when the agents try to do favors instead of submitting ALL offers they receive, almost tried to follow through with complaints to their agency heads or the State but was talked out of it. I would like to hear about solutions to this problem, there are some bad agents that are giving the industry a black eye and I would think those in the industry would try to do something about it.

If Gold is actually going to $5000, then yeah, sell everything, including your kidneys, and buy Gold...But no one knows where Gold will be in 5 years, let alone next year.

If you have $100K to invest and you can get 10% ROI in real estate, you can have something over $160K in 5 years. Gold will have to be over $2700 by then to give you the same return, will it happen, maybe, could Gold go back to $700, it may very well could. It's in a bubble right now, if you read (and believe) Harry Dent, he says Gold could be between $200-$400 in the not too distant future.

So what did you do on your own and what did you hire contractors to do? How long did it all take from closing to renting it out?

How much of your own money will you be using? What's your rehab budget? A $150K will take $30-$50K to turn it into a $275K house, while a smaller house, you can get away with some cosmetic changes and few thousands out of pocket.

If you're starting out, you should look at your risk tolerance and see what you're comfortable with!? Higher end houses tend to sit on the market longer and buyers are more demanding, can you afford a big mistake or to wait few more months with a larger sum of hard money? On the flip side, with lower end housing you may find issues with people qualifying for loans, especially these days, so that could put on a damper on your plans as well.

PMI is one of the major private insurers though I understand that most of are in trouble and are under regulator scrutiny. I see this hurting the little guys most, anyone trying to get an FHA loan is going to be in a world of hurt and it's not like the government has any appetite to take on those risks as well.

All in all, the industry is going through a cleansing process, the days of buying real estate with mediocre credit score and low downpayment are just about over (if they're not already). As an investor in rental properties, I see a boom in the rental business as more and more people are going to have to save and wait before they can afford housing. This may be the last nail in the coffin!

I have a broker that I work with off and on, she got information that I contacted an agent directly (I just needed very specific information on a property and didn't want to bother her) and she sent me a somewhat nasty email saying that I should have enlist her to do my DD, that's what she's there for, and that there are certain protocols among agents, etc. I haven't replied to it yet, I didn't tell the listing agent anything except that I wanted a couple of questions answered, so it's not like I'm going around her back to buy something with her knowledge, what am I missing?

I'm relatively new to the board, several months, but this 50% rule "gospel" may not necessarily apply to all situations.

I see PITI in the range of $1000, so there's a lot of wiggle room to make this a good investment, especially if you have long term tenants in place, you plan to manage the property yourself, and it's in good shape on the interior as it is on the exterior. There are a lot of other benefits that need to be account for such as taxes and the power of amortization, especially these days when you can acquire an asset today that will probably have to pay for it with cheaper dollars in the not too distant future.