All Forum Posts by: Chris Martin

Quote from @Chris Seveney:

So I saw the data below and am wondering, are americans fighting inflation with debt? Have incomes kept up with inflation? What will happen when the credit card companies and banks tighten their lending standards?

Do you think the the economy is on the upswing or downswing? Personally not an economist but like to think I have good instincts and will say downswing. Share your thoughts...

According to Kobeissi:

1. Record $17.5 trillion in household debt

2. Record $12.3 trillion in mortgages

3. Record $1.6 trillion in auto loans

4. Near Record $1.6 trillion in student loans

5. Record $1.1 trillion in credit card debt

the total mortgage debt is more than double the 2006 peak and total credit card debt is up 50% since 2020.

Also delinquency rates on credit cards and auto loans just hit their highest since 2008.

These are good questions to ask. First, I'd like to say that context is important. In absolute terms the source is correct. But if you look at the historic graphs relative to (say) percent of disposable income, the charts are neither abnormal (not records at all) or alarming (mostly not anomalies and follow long term trends). Here are the metrics that I would use in the five categories you cite:

 - Household Debt Service Payments as a Percent of Disposable Personal Income (TDSP)
 - Mortgage Debt Service Payments as a Percent of Disposable Personal Income (MDSP)
 - Consumer Loans: Other Consumer Loans: Automobile Loans, All Commercial Banks (CARACBW027SBOG)
 - Student Loans Owned and Securitized (SLOAS)
 - Consumer Loans: Credit Cards and Other Revolving Plans, All Commercial Banks (CCLACBW027SBOG)

I put in links rather than images since BP tends to delete my images for some reason. By deleting the content, BP makes their site weaker. I wish they would stop doing that. Regarding the default rates on credit cards, I'm not seeing it in the recent (not including current and last quarter) statistics. I put that image below, hopefully to get people to check the other charts for themselves. 


References:
https://fred.stlouisfed.org/series/TDSP
https://fred.stlouisfed.org/series/MDSP
https://fred.stlouisfed.org/series/CARACBW027SBOG
https://fred.stlouisfed.org/series/SLOAS
https://fred.stlouisfed.org/series/CCLACBW027SBOG

Quote from @Brandon Becsi:

Quote from @Chris Martin:

Are these properties in Wake County? 

 Nash, do you operate in that area?

No. 

Are these properties in Wake County? 

The scary part is that the Triangle has more than $1 billion worth of CRE CMBS loans coming due by the end of the year, according to the Triangle Business journal. Some of those loans might be under performing apartments that, after a loan reset, might be sold in a distress sale. I'm just speculating, but we've already seen strategic defaults in commercial real estate in the last 6 months or so (example: Marriott hotel in RTP to be released to lender after loan default). If anyone has apartment sector specifics on potential loan rate resets, please post the details.

From Avison Young, about the 2023Q4 Raleigh-Durham office market report, "Class A availability has reached a post covid high (27.3%) as demand for office space slows and occupiers decrease overall hiring." 

I see lots of uncertainty in multiple RE sectors. I don't see any reason to commit new capital in this market given that anyone can get a guaranteed 5%+ via Treasury Direct short-term 4-week T-bills. 

There are still a lot of new apartments under construction. I would expect vacancy rates to remain elevated for several quarters, which will keep pressure on rents and possibly lead to concessions by apartment owner/operators. Source: CoStar

You tenant's insurance policy (tenant insurance) should provide for the tenant. Your insurance should be covering your lost rent and any repairs needed. If I were in your shoes, I would be contacting the insurance company daily to make sure the issues get resolved. My 2 cents. 

I recommend the text used for your state's real estate licensing exam. There is no better way to educate yourself, regardless of if you achieve a licensed status or not. Most of what you will learn can apply to most states in the US, assuming you are from the US. 

Quote from @V.G Jason:

Quote from @Adam Schneider:

It sounds like most people on this thread are viewing the issue of a non-refundable deposit from the lens of the buyer. From the lens of the seller, the DD fee is a vetting tool, and a protection against a buyer who locks up a property and wants to negotiate late in the contract. It's a 2 way street. There's a line in the standard NC P and S agreement (2T) for an additional deposit...you can always make an offer with a small DD amount, and then an additional deposit say 5 days later....to give time to do your inspection. Just a thought...

 How is it a two-way street, you can literally checkmark no representation on the seller's disclosure? I have to blindly give you a check, there's zero recourse for you to not mention a thing about the property, and there is nothing I can do about it. If the inspection fails, what recourse is there for a seller?

This is a one way street. And no agent will tell you or recommend you do DD fees like that, we both know that.  If you want it as a two way street, and keep the DD. The sellers need to perform an inspection prior to listing and have it available, the inspector must fill out the seller's disclosure form with the sellers to the best of their knowledge. If anything is wrong during the post-inspection, inspector/seller must be held accountable-- not liable. Meaning they should look to fix it or address, but not necessarily be sued because mistakes do happen. 

I disagree with your second paragraph. As a seller of non-owner occupied property, I'm going to put "no representation" on practically every line of the property disclosure because I literally don't live there. Buyers can walk the property, most with their contractor or handyman, and determine a reasonable Property Condition Report. In this market, the inspection is the buyer's responsibility. That has not always been the case. In 2011 I bought a property in Garner for about 56% of list value and received an inspection provided by the seller. My disclosure: I have not been buying rentals in the Raleigh area for years, but I've sold a handful. And, yes, the DD numbers are above historical averages, but so are property values and demand.

If you don't like the contract terms, put $500 for DD. Or do as I do... don't play the game when the numbers don't work. There is no rule that investors must buy, unless you are doing 1031 exchanges. That's a different topic. 

Regarding "She would owe gift taxes on a gift that large in a single year...", I believe the OP will use the form 709 exclusion - see https://www.irs.gov/forms-pubs/about-form-709, the form and instructions. My understanding is that the recipient of a gift is not responsible for the tax, the giver of the gift is. Specifically, the exclusion amount is on Part 2 - Tax Computation (Page 1 of Form 709), Line 7:

The applicable credit (formerly unified credit) amount is the tentative tax on the applicable exclusion amount. For gifts made in 2023, the applicable exclusion amount equals:

The basic exclusion amount of $12,920,000...

I agree with Jonathan, especially the "in writing" part. You've probably seen the OI definition at https://durham.municipal.codes/UDO/4.3.3:

4.3.3Office and Institutional (OI)

The OI District is established for employment and community service activities. Some support facilities and residential uses are also allowed when compatible with surrounding uses. The OI district is designed for use on sites that have convenient access to arterials, since development of moderate to high intensity is allowed.

The OI District is used to implement the Comprehensive Plan within those areas shown as part of the Rural, Suburban, Urban, or Compact Neighborhood Tiers.

It looks to me to potentially allow/support residential development.