Hottest housing markets
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It's good to own 4 homes and an apartment building in the hottest housing market in the nation.
Nick
It's good to own 4 homes and an apartment building in the hottest housing market in the nation.
Nick
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However, the fact that stuff like this is making the news reminds me of any other market bubble. I get this uneasy feeling that the housing market may be peaking and that it's time to unload. When ditech.com offers to finance a home for 125% of the value, that's when the speculators get involved (you know, the ones with no income other than flipping) and once a few of these guys get caught in their own games, the finance companies end up sucking the pipe, and, well, you know the rest of the story... it happened just a few years ago on the NASDAQ.
Just like dotcom, make you're obscene profit and GET OUT! I don't expect to become a billionaire on one investment that has "no end in sight."
Originally posted by trumptman
CNN-Hottest housing markets
It's good to own 4 homes and an apartment building in the hottest housing market in the nation.
Nick
do you say stuff like this, out loud, to real people, in your real life?
Originally posted by JimDreamworx
Well, we had to put our money somewhere just before dotcom became dotbomb...
However, the fact that stuff like this is making the news reminds me of any other market bubble. I get this uneasy feeling that the housing market may be peaking and that it's time to unload. When ditech.com offers to finance a home for 125% of the value, that's when the speculators get involved (you know, the ones with no income other than flipping) and once a few of these guys get caught in their own games, the finance companies end up sucking the pipe, and, well, you know the rest of the story... it happened just a few years ago on the NASDAQ.
Just like dotcom, make you're obscene profit and GET OUT! I don't expect to become a billionaire on one investment that has "no end in sight."
I don't worry about housing the same way. Everyone needs a place to live. Not everyone needs to own stock in Sun, Apple or some other company.
Likewise for example Corel was trading at a high price and then basically withered away to like $1.50 a share. Well that is the nature of software. You are taking some intellectual property, slapping it on a 50 cent medium and attempting to charge hundreds of dollars for it. It really can become worthless. However that isn't the nature of houses. The value is still in the house even if the market were to temporarily depreciate.
Besides if the market crashed, I wouldn't be getting out, I would be buying even more. The first property I ever owned someone basically signed over to me in a down market. It made me $15,000 when I sold it however I had to rent it out at the mortgage cost for 4 years to do that.
A down market for a couple years would be great.
Nick
Originally posted by trumptman
I don't worry about housing the same way. Everyone needs a place to live. Not everyone needs to own stock in Sun, Apple or some other company.
Likewise for example Corel...
Nick
Funny to mention Corel. I remember two years before dotbomb, I bought a good chunk of it for fun (being cheap), then one day, this Linux thing took hold, and it was rising like crazy in one week. Started selling out at $20 even though it went higher, and just kept selling and selling... Eventually held 50 shares as a reminder (with the other 50 going at top price), but once the dust settled, that was my house down payment and credit card answer!
I always guessed Linux would crash and burn on the market... as was mentioned above, how much profit can you make selling something that's free?
I agree that everyone needs a place to live, and while it is true that some folks will always own where they live, and others who rent are waiting for the right moment to get in, it's the folks who have "nothing to lose" that you worry about. You could say everyone needs to eat, but that doesn't mean I'm becoming a farmer.
If the housing market had a blip where your 125% mortgage payment was costing you substantially more per month than a rental, wouldn't you just hand in the keys? Especially if the economy was doing and bad and you lost your job? And you were desparate to find a way out - any way out? It's these dominoes that you have to worry about that might cascade into what you have.
Mind you, such extreme circumstances usually happen in boom towns (like out west, as per oil and how it works), but these things do affect income properties and their perceived returns. People may live there, but the way they are traded among owners, and for what values, reflect on the rest of real estate. And on the mortgage and money markets for how the interest rates will go.
Originally posted by JimDreamworx
Funny to mention Corel. I remember two years before dotbomb, I bought a good chunk of it for fun (being cheap), then one day, this Linux thing took hold, and it was rising like crazy in one week. Started selling out at $20 even though it went higher, and just kept selling and selling... Eventually held 50 shares as a reminder (with the other 50 going at top price), but once the dust settled, that was my house down payment and credit card answer!
I always guessed Linux would crash and burn on the market... as was mentioned above, how much profit can you make selling something that's free?
I agree that everyone needs a place to live, and while it is true that some folks will always own where they live, and others who rent are waiting for the right moment to get in, it's the folks who have "nothing to lose" that you worry about. You could say everyone needs to eat, but that doesn't mean I'm becoming a farmer.
If the housing market had a blip where your 125% mortgage payment was costing you substantially more per month than a rental, wouldn't you just hand in the keys? Especially if the economy was doing and bad and you lost your job? And you were desparate to find a way out - any way out? It's these dominoes that you have to worry about that might cascade into what you have.
Mind you, such extreme circumstances usually happen in boom towns (like out west, as per oil and how it works), but these things do affect income properties and their perceived returns. People may live there, but the way they are traded among owners, and for what values, reflect on the rest of real estate. And on the mortgage and money markets for how the interest rates will go.
First, please understand that I have no 125% mortgages. Most of my mortgages are approximately 50-70% of the houses value in this market.
I'll assume you are speaking of a hypothetical person though.
Of course I know that those folks would turn in the keys, walk away and never look back. That is why I said I would buy even more during those times.
Imagine buying two or three houses as repos for say $80,000 that use to be valued at $160,000. You only need about $24,000 (less than the price of many cars) to get into three houses. I could find someone who could rent them for that sort of mortgage payment easily. I mean it is less than $700. Then a few years down the road the market recovers and they move back up to $160 and zoom past to about $200,000. (This is exactly what has happened in California over about the last 8 years) You would have about $375-$400k of equity with which to create even more wealth. That would be fantastic!
I wouldn't mind getting caught in that at all.
I assure you that when the dot bomb occurred and depressed the stock market in general there were people coming in and cleaning up big time on certain stocks that are bound to return to normal levels. I even mentioned one on here that I wanted to buy, McDonalds. They had been down so long that they were due for a turn around.
Look at them now.
I wished I had jumped on that. Still looking for the next one though.
Down and up markets are good if you have financial intelligence.
Nick
Originally posted by trumptman
Down and up markets are good if you have financial intelligence.
If you have equity you mean.
Originally posted by trumptman
First, please understand that I have no 125% mortgages. Most of my mortgages are approximately 50-70% of the houses value in this market.
I'll assume you are speaking of a hypothetical person though.
Nick
Oh, no, I wasn't assuming you would have these, I just speak of the people who do, and when they turn things in, they are the first dominoes to fall that would affect those who already have positions in real estate.
By all means, picking up bargains after the crash is great.
Personally, I don't like holding on to things just as I see a crash coming on the horizon. And that is what I fear is happening in housing, hence the decision of whether to unload.
Originally posted by bunge
If you have equity you mean.
bunge,
I bought my first condo for nothing. What equity?
Likewise I bought my first house by borrowing against my 403b plan that I had set up working as a teacher. I had them take out $300 a month of my income and I was able to get a 95% loan on a house that was being purchased for $116,500. It took me three years to save the money in that 403b.
When I assumed that condo it flipped soon afterward. In fact the cheapest unit in the building was $38,000 when I owed $80,000.
So I was 26 years old and had -$42,000 of equity.
Sounds promising huh? I had to learn how to landlord in part because I couldn't sell that condo at the time. It literally was learning to make lemonade out of lemons. I wanted to move and had no chance of selling that condo. I didn't want to give it back to the bank and ruin my credit score. So I bought a book or two on landlording and read then while I was at a music festival for a week. I came back and bam, I'm a landlord.
Of course if I had been more optimistic and had the sense then that I do now, I would have just kept finding more renters and assuming more units in that building. I think about 8 of them ended up going into foreclosure.(out of 16) The last one in the building just sold for $150,000. I sold mine over a year ago for $109,000.
If I had been smarter back them I could have bought 8 condos for about $400,000 that would be worth 1.2 million now.
So pessimism and lack of financial foresight cost me the opportunity to make $800 grand. Does that make you feel better?
I also didn't have any money in the late 90's to invest in the stock market so I didn't make any money there either.
But where there is a will, there is a way, and there is always an opportunity. I know that now and I wish I knew it then.
Nick