[quote=wannabe2077]I visited a friend in Inland Empire. he lives in a place with a lot of foreclosures.
Rents have dropped from $2000 to $1500 for 3 bedroom home in a decent neighborhood
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Well I rented in one of the nicest places in the I.E. for the last couple of years and paid 1500 for a 3 br 3 ba, I just checked, rents haven’t budged in my old place. My anectdotal story vs yours, was the 2k rent overpriced? Be careful of basing economic conditions on a visit to friends house.
On the investor discussion, there are many people who choose to invest in R/E with no plan to ever sell, this may shock you but they are a chunk of the mom and pop investors. It also happens to be my plan. Let’s pull a Chris berman and go “inside the numbers,” not the marco economic numbers but the micro personal finance numbers. My anectdotal friend/relative story, retired couple with cash in cd’s, frustrated with current yields, fearful of inflation, decide to plunk down 130k to pay cash for a rental that rents/is rented for $1500 with $400 carry costs (hoa, taxes, maint reserve), so their yield is $1100 a month instead of 300 or 400 that they were getting. Ignoring appreciation entirely, the ability to triple or quad their cash flow makes it a wise choice, is it speculation? maybe, but for them it’s a bottom line decision to go with a better yield, if it goes up in value in ten years, that’s just a bonus but it’s not the plan. If cd rates hit 10%, then that cash would have been better left alone, so it is a bet, but a fairly safe one for someone with cash and retired, rents track inflation fairly well. They aren’t speculating with borrowed money, they own their primary outright, have a nice balanced portfolio and income stream as retirees, they just made a decision to place their bet with some of their cash, maybe they are the only ones out there in that situation but I have suspicion they aren’t, that there are many wise, prudent and conservative folks out there going against the grain, like they always have and it will likely work like it always has before.
