20dollar

Inflation in Focus

Obfuscation. I love that word! Also it is what the Government does best!

23 Reasons to Be Wildly Optimistic About the Economy

Phoenix, Las Vegas, Cape Coral FL, and Mpls/St. Paul.

23 Reasons to Be Wildly Optimistic About the Economy

I agree. I am very optimistic about the economy. In fact, I am putting my money where my mouth is.

I am buying more cash flowing properties now than ever before. Prices on these properties have NEVER made more sense than they do today- even with depressed rents. This is a fear driven market, most people are afraid (foolishly I might add) to get in. This spells OPPORTUNITY!

I just hope the masses remain fearful for a while, so I can buy about 100 more before the market rebounds (as it surely will when the sheeple get back on the band wagon)

Mortgage Debt as a Percentage of Consumer Credit: Welcome to Hell

True, goverment meddling in the secondary mortgage market has led us to where we are now, allowing people to qualify for highly inflatted mortgage approval. It seemed at the height of the bubble all you needed to qualify for a zero-down cash-back mortagage was warm blood and a pulse.

Sadly, the goverment continues to meddle with the mortgage and housing market, wasting more of our hard-earned tax dollars on yet more programs doomed for failure.

It is time to stop this nonsensicle goverment involvment in this market. Let the chips fall where they may and the people that deserve to survive will be given the opportunity they truely have earned(i.e. much less expensive housing/investment property prices.)

Unfortunately, this will never happen. Our current goverment is way too progressive to even consider the concept. Hopefully some of the grassroots organizations such as the Tea Party, will attract enough leadership to reverse this truely scary path that America is on.

Borrowers Not Borrowing: What It Really Means for the Economy

EVP,
We are in this mess because the lenders were giving money to any one with warm blood and a pulse. These people were not true investors nor even credit worthy for that matter.

In the peak of the "credit giveaway" days, I had tenants that could not even pay their rent (working part time at McDonald's) giving me notice to vacate because they were approved for $300,000 mortgage No money down deal. It was down right frightening as to how irresponsible lending had become!

Fannie/Freddie was buying this soon to be worthless paper no less!! Lenders had nothing to looose and everything to gain as they got paid more for underwriting these types of loans. All they had to do is sell them to Fannie/Freedie and repeat over and over.

I do not buy properties that don't make sense (cash flow). When all the other "investors" were buying properties that were upside down from day one, I watched in amazement and chose not to buy at that time. Full well knowing those types of prices could not be sustained.

What really bothers me though, is that now I am being punished for everybody else's sins. (Lender's AND Borrower's) But who says life is ever fair?

Borrowers Not Borrowing: What It Really Means for the Economy

I am a real estate investor of 25 years. My credit is perfect and my net worth is substantial.

I have to say I have NEVER seen credit so tight in my entire career.

If it's not Government money (Fannie, Freddie, FHA, VA), good luck getting any kind of financing right now. If you don't fit perfectly into their little box (Fannie, Freddie, FHA, VA), you will not qualify for financing.

In my business, of course I do not qualify for any of these programs. It has been very difficult to finance anything as of late. There are some Hard Money lenders out there STARTING at about 12% with about 65% LTV. Pretty tough to make that work, even at today's prices.

All this talk about historically low rates is a bunch of BS. Rates for some one like me have NEVER been higher and terms NEVER more onerous.

So, even with bargain real estate prices, I can only buy a select few properties as without adequate financing, the money eventually will run out.

There will be no recovery until Banks, Insurance Companies, Conduits, etc. (in house lending) actually start lending agian. And that may take YEARS.

Less Obvious Consequences of the Massachusetts Election

Finallyproudinma, I absolutely agree with your comment. The government does need to get out of the way and let the private sector work.

I happen to live in socialist California. I love the weather, mountains, and ocean but I can't stand the politics.

I am a Real Estate Broker and I sometimes will do small subdivions of land. The BS a person has to go through in this state to subdivide is SICK!

It can take years to get through all of the "environmental studies" and dealing with the countless agencies. Having to hire very expensive "consultants" to prepare ridiculous reports for the government that MAY give me the right to actually cut down an Oak Tree, fill in a 2 inch deep by 1 foot puddle, or heaven forbid cut down an Elderberry bush, has gone way too far.

These regulations are even more ridiculous if you are trying to operate a business in this state (worse yet manufacturing) Don't even get me going on the other civil liberties they have taken away or are working on taking away. Example-seatbelt law, no talking on cell phone law while driving, no smoking in your car with kids, no smoking in bars, etc.

No wonder the Bay area Median price of a home is 550,000 and employers are moving to other states/overseas.

Unfortunately, this Californication is infecting the rest of the country. It needs to be stopped. I am glad to see another left winged state almost as bad as California, finally come to their senses and vote for change that represents less govt intrusion on our lives.

Housing Market Preshocks

Just a comment on financing. if you fall outside the box of owner occupied FHA, (which many of us do) good luck getting a decent loan. On a good day you will be lucky to get a 25% down mortgage at about 7.5% percent. Mind you this is a full documentation loan. If it is a non owner occupied property the down payment jumps to 35% and the rate is more like 8%. That doesn't sound like easy financing to me!!!

Barney Frank's Bad Housing Loans

'All this was justified as a means of increasing homeownership among minorities and the poor. Affirmative-action policies trumped sound business practices. A manual issued by the Federal Reserve Bank of Boston advised mortgage lenders to disregard financial common sense. "Lack of credit history should not be seen as a negative factor," the Fed's guidelines instructed. Lenders were directed to accept welfare payments and unemployment benefits as "valid income sources" to qualify for a mortgage. Failure to comply could mean a lawsuit.'

I witnessed this crap first hand.

From about 2003 to 2006, I had tenants (low income, mostly black) that could not even pay their rent giving me notice to vacate. Mind you these people had credit scores in the 500's. Meaning they did not pay most of their bills. Yet they were being approved for 100 plus percent financing? Astounding!

What did they (the government, in their infinite wisdom) think would happen? That somehow, because these people were now "home owners", they would magically change their behavior and actually pay their bills on time? (or even at all??)

History has proven how foolish this policy was...

Homebuyer Nirvana: Low Prices, Low Rates

Interest rates are low on Governement products only (Fannie, Freddie, FHA). The rest of the lending market across all fronts-small business, commercial, residential is in a funk like I have never seen before.

On a good day I might be able to get 60% Loan to Value on a residential rental at 7.75% full recourse. Forget about trying to pull cash out with a refi, again unless the LTV is ridiculously low. (non government products)

Then there is the appraisal issue. Appraisors are so conservitive (scared) right now, most appraisals are coming in very low. Not to mention most of the comps are distressed sales. (even with government products)

Despite all of these challenges, I am still buying right now. There are deals that make sense even with these onerous terms. Of course you have to be selective and NEVER buy assuming the property will appreciate. If it does, it is gravy. ALWAYS buy for long term cash flow...and there are plenty of properties to choose from right now that did not make sense just 2 years ago.

When lending does finally loosen, the economy will be back on track. Appreciation/Inflation will once again reign.

Plan Orange for Mortgages: Immolate the Crisis

Pitchingpennies,

I have been there done that. How do you think I have managed to become so successful?

I have been in the situation of being upside down on real estate and chose to sell, loose money and move on. It not only was morally the right thing to do, but it ensured there were no dings on my credit to show lenders in the future that I am an excellent credit risk-no matter what happens to the secured asset.

I do beleive there is a moral obligation to pay your debts as you agreed to-whether or not it is your son/daughter etc. And whether or not the secured asset looses value. There never have been any guarantees that Real Estate always increases in value. Oh, but if it does not, it's OK to let the bank take the loss (ya know they have a bunch of money any way) and you are on the hook for nothing?!?! That is simply wrong.

I treat any business partner/lender as if they were my son or daughter. Apparantly you and the majority of America doesn't. Hence the reason we are in the mess we are in now.

Now if there were truly usurious terms that were not fully disclosed, I would probably pursue legal action against that lender. Although I have not had that problem yet, and I have had many, many loans, lines of credit etc. A large percentage of the borrowers now defaulting were not subjected to usurious terms.

There needs to be an enforcable full recourse clause in the contract. That way people may think twice about defaulting because they actually might have to pay it back. They sure don't seem to think it is morally wrong!



On Jul 05 07:23 PM pitchingpennies wrote:

> 20 Dollar,
>
> Obviously you're a real estate hotshot and still believe the asset
> class is a winner. I also note that some of your previous comments
> note that the Banks were taking away your credit lines. Biz is always
> great when you are liquid, although you must be somewhat les liquid
> from these actrions by your Bankers. Good to hear your local bankers
> (small b) are still around to support your efforts. I hope you have
> a big stack in reserve, congtratulations on your success of 25 years.
>
>
> You do however need to realize that a note secured by real estate
> is a contract. There is nothing moral or immoral about it. The terms
> may be unconscionable or not, but there are options and remedies
> written into the document. Both parties have options. As to your,
> and others, rants about "irresposible homeowners" you really need
> to get off your moralistic high-horse. Markets and situations change,
> which has been more than obvious over the last several years. Both
> parties, Lenders and Homeowners, entered into to these contracts
> to benefit themselves economically, so your moral obligation argument
> does not hold water. Now, if you were personally lending to your
> son, I might agree with your feeling of betrayal.
>
> Nonetheless, I wish for you that your real estate appreciates, your
> access to credit remains plentiful, and that your stack never gets
> too short to experience a less than blissful night's sleep.

Plan Orange for Mortgages: Immolate the Crisis

How about plan Green?
This plan actually would give only the responsible borrowers a write down to 80% of the current value of their real estate. Whether or not they have a mortgage.
There are alot more of us than the irresponsible types that chose to overleverage or simply not make payments because they are "upside down". I guarantee this would jump start the econmy immediately, and would soon enough weed out the people that didn't deserve to be home owners in the first place!
How about we add to this full recourse. meaning there would actually be consequences if you choose to walk away from your mortgage!

U.S. Banks Halt New Mortgage Lending

True, if it is not Fannie, Freddie or FHA, banks are extremely conservative with their lending.

I am a Real Estate investor of 25 years. I am perfect in every way on paper (800+ FICO, plenty of documentable income, a lot of liquid cash in the bank, and a very strong net worth). On a good day I am lucky to get 65% LTV (non Fannie, Freddie, FHA) on a non owner occupied property. (banks really don't like these as they are perceived to be risky)

I used to have personal relationships with 9 different banks. Because they knew me, they were able to lend to me on reasonable terms. Now, out of the 9 that I have done business with for over 20 years, there are only two that will work with me. (or at least quote terms that are not laughable) That's how bad things really are.

Wells Fargo out the blue took away a large credit line recently. Their reason? "For my protection as a customer" You have got to be kidding me!

I called them and got the run around. They informed me I could re apply! Again, mind you I am perfect in every way and have never ever been late on a payment to anybody EVER IN MY LIFE!

Then the same crap just happened with Inter Bank. They took away a substantial line of credit from me for no reason. Got the same run around from them!

So against my better judgement I have maxed out my additional credit lines with the big banks-Chase, Bank of America, US Bank before they take them away as well (I will say right now they are cheap-they are all indexed with prime). I have not done this with the smaller local lenders that know me however. I have been assured by the president in both cases, they would NEVER pull a stunt like that on me-but I'm not holding my breath.

This why the economy is in the tank!

Creating Debt to Reduce Debt Doesn't Work

The only solution the government has now is to print more money and inflate our way out of this(which they are already doing). Giving the illusion that housing prices have rebounded (not accounting for inflation of course). But the masses won't know any better and will be duped into beleiving every thing is OK as they anxiously await to see who the next American Idol will be.

Commercial Real Estate Is Plunging

I am getting excited just thinking about the good deals to come in commercial real estate!

The cycle has begun and it will soon be time to buy. (if you have cash and/or a good banking relationship because attractive financing will be difficult to obtain)

Not only will vacant buildings be cheap, but long term "A credit tenant" buildings will also be cheap as the owners will be unable to refinance their debt at today's conservative terms. This will usher in a tsunami of forclosures, putting even more downward pressure on prices.

I see cap rates (on long term A credit tenant buildings) coming up to the double digits in the very near future.