One American household out of 10 under water

[Eugene]

I personally know a guy who’s most likely underwater even though he bought his house with 20% down of his hard earned money. I tried to talk him out of the purchase, too.

Unless he loses his job, he won’t walk away. There’s no point. His monthly carrying costs are MAYBE $500 more than it would cost him to rent a comparable house. Is $500/month worth ruining your credit history?

Don’t assume that everyone who’s underwater will walk.

[HappyHouseHunting]

Esmith,
But isn’t that the point of all these conversations we have? Your friend may have been a prudent buyer in the microeconomic sense but he was a f*cked borrower in the macro world? That is the point of the thread “Harveston Down the Drain.” How smart is it to sit in a house that you can well afford to stay in,but is now worth $100,000 to $200,000
less? Doesn’t the opportunity cost of your money weigh in?

Not only that, how many prudent buyers thought they were buying into one kind of neighborhood only to find out any ninny with a pulse could buy there? A lot of people on this web site are looking for upper middle class neighborhoods and they do so for a reason but suppose you thought you were buying into that but it was all a lie? Those people were stretching beyond their reach and buying more home than they should have and are in a different neighborhood altogether.

I think this is going to get a whole lot worse.

HHH

[HappyHouseHunting]

Esmith,
But isn’t that the point of all these conversations we have? Your friend may have been a prudent buyer in the microeconomic sense but he was a f*cked borrower in the macro world? That is the point of the thread “Harveston Down the Drain.” How smart is it to sit in a house that you can well afford to stay in,but is now worth $100,000 to $200,000
less? Doesn’t the opportunity cost of your money weigh in?

Not only that, how many prudent buyers thought they were buying into one kind of neighborhood only to find out any ninny with a pulse could buy there? A lot of people on this web site are looking for upper middle class neighborhoods and they do so for a reason but suppose you thought you were buying into that but it was all a lie? Those people were stretching beyond their reach and buying more home than they should have and are in a different neighborhood altogether.

I think this is going to get a whole lot worse.

HHH

[HappyHouseHunting]

Esmith,
But isn’t that the point of all these conversations we have? Your friend may have been a prudent buyer in the microeconomic sense but he was a f*cked borrower in the macro world? That is the point of the thread “Harveston Down the Drain.” How smart is it to sit in a house that you can well afford to stay in,but is now worth $100,000 to $200,000
less? Doesn’t the opportunity cost of your money weigh in?

Not only that, how many prudent buyers thought they were buying into one kind of neighborhood only to find out any ninny with a pulse could buy there? A lot of people on this web site are looking for upper middle class neighborhoods and they do so for a reason but suppose you thought you were buying into that but it was all a lie? Those people were stretching beyond their reach and buying more home than they should have and are in a different neighborhood altogether.

I think this is going to get a whole lot worse.

HHH

[HappyHouseHunting]

Esmith,
But isn’t that the point of all these conversations we have? Your friend may have been a prudent buyer in the microeconomic sense but he was a f*cked borrower in the macro world? That is the point of the thread “Harveston Down the Drain.” How smart is it to sit in a house that you can well afford to stay in,but is now worth $100,000 to $200,000
less? Doesn’t the opportunity cost of your money weigh in?

Not only that, how many prudent buyers thought they were buying into one kind of neighborhood only to find out any ninny with a pulse could buy there? A lot of people on this web site are looking for upper middle class neighborhoods and they do so for a reason but suppose you thought you were buying into that but it was all a lie? Those people were stretching beyond their reach and buying more home than they should have and are in a different neighborhood altogether.

I think this is going to get a whole lot worse.

HHH

[HappyHouseHunting]

Esmith,
But isn’t that the point of all these conversations we have? Your friend may have been a prudent buyer in the microeconomic sense but he was a f*cked borrower in the macro world? That is the point of the thread “Harveston Down the Drain.” How smart is it to sit in a house that you can well afford to stay in,but is now worth $100,000 to $200,000
less? Doesn’t the opportunity cost of your money weigh in?

Not only that, how many prudent buyers thought they were buying into one kind of neighborhood only to find out any ninny with a pulse could buy there? A lot of people on this web site are looking for upper middle class neighborhoods and they do so for a reason but suppose you thought you were buying into that but it was all a lie? Those people were stretching beyond their reach and buying more home than they should have and are in a different neighborhood altogether.

I think this is going to get a whole lot worse.

HHH

[Deal Hunter]

I’m only 2nd generation RE investor. My parents bought SFR to rent out. They still have their dozen or so all paid for and giving them income. Their philosophy was to put a crap load of money down and pay off the mortgage. They didn’t help me get any of my rentals – although they did give me a “gift” of cash to buy my house after I got married.

I’ve followed all their advice, except for the one house I got in 2006. I didn’t put enough down to make it so the rent covered the mortgage. The other ones I have are cash flowing.

Whether it takes 2 years or 20, ALL my investments produce an income – through rent. The PROBLEM in real estate happens when people try to employ the appreciating nature of real estate to make quick money through flips. That’s how people end up “underwater.”

In any kind of economy, but especially a recessionary and hightly inflationary economy like the one we are in today, the fundamentals (and wisdom) of buying an income-producing asset are as sound as they have ever been.

[Deal Hunter]

I’m only 2nd generation RE investor. My parents bought SFR to rent out. They still have their dozen or so all paid for and giving them income. Their philosophy was to put a crap load of money down and pay off the mortgage. They didn’t help me get any of my rentals – although they did give me a “gift” of cash to buy my house after I got married.

I’ve followed all their advice, except for the one house I got in 2006. I didn’t put enough down to make it so the rent covered the mortgage. The other ones I have are cash flowing.

Whether it takes 2 years or 20, ALL my investments produce an income – through rent. The PROBLEM in real estate happens when people try to employ the appreciating nature of real estate to make quick money through flips. That’s how people end up “underwater.”

In any kind of economy, but especially a recessionary and hightly inflationary economy like the one we are in today, the fundamentals (and wisdom) of buying an income-producing asset are as sound as they have ever been.

[Deal Hunter]

I’m only 2nd generation RE investor. My parents bought SFR to rent out. They still have their dozen or so all paid for and giving them income. Their philosophy was to put a crap load of money down and pay off the mortgage. They didn’t help me get any of my rentals – although they did give me a “gift” of cash to buy my house after I got married.

I’ve followed all their advice, except for the one house I got in 2006. I didn’t put enough down to make it so the rent covered the mortgage. The other ones I have are cash flowing.

Whether it takes 2 years or 20, ALL my investments produce an income – through rent. The PROBLEM in real estate happens when people try to employ the appreciating nature of real estate to make quick money through flips. That’s how people end up “underwater.”

In any kind of economy, but especially a recessionary and hightly inflationary economy like the one we are in today, the fundamentals (and wisdom) of buying an income-producing asset are as sound as they have ever been.

[Deal Hunter]

I’m only 2nd generation RE investor. My parents bought SFR to rent out. They still have their dozen or so all paid for and giving them income. Their philosophy was to put a crap load of money down and pay off the mortgage. They didn’t help me get any of my rentals – although they did give me a “gift” of cash to buy my house after I got married.

I’ve followed all their advice, except for the one house I got in 2006. I didn’t put enough down to make it so the rent covered the mortgage. The other ones I have are cash flowing.

Whether it takes 2 years or 20, ALL my investments produce an income – through rent. The PROBLEM in real estate happens when people try to employ the appreciating nature of real estate to make quick money through flips. That’s how people end up “underwater.”

In any kind of economy, but especially a recessionary and hightly inflationary economy like the one we are in today, the fundamentals (and wisdom) of buying an income-producing asset are as sound as they have ever been.

[Deal Hunter]

I’m only 2nd generation RE investor. My parents bought SFR to rent out. They still have their dozen or so all paid for and giving them income. Their philosophy was to put a crap load of money down and pay off the mortgage. They didn’t help me get any of my rentals – although they did give me a “gift” of cash to buy my house after I got married.

I’ve followed all their advice, except for the one house I got in 2006. I didn’t put enough down to make it so the rent covered the mortgage. The other ones I have are cash flowing.

Whether it takes 2 years or 20, ALL my investments produce an income – through rent. The PROBLEM in real estate happens when people try to employ the appreciating nature of real estate to make quick money through flips. That’s how people end up “underwater.”

In any kind of economy, but especially a recessionary and hightly inflationary economy like the one we are in today, the fundamentals (and wisdom) of buying an income-producing asset are as sound as they have ever been.

[Multiplepropertyowner]

Well said Deal Hunter.We are from some of the same roots in regard to families in RE. My family got to SD in the 40’s after the war and my Pop’s pretty much built Mission Valley with his partnership group (Mission Valley Inn, The Town and Country and a few others)
You comment on Real Estate always coming back reminded me of his 8 keys to real estate investing.
1. Use other peoples money to make yours. (Thus, i am a big fan of the 100% loan and used for all it was worth)
2. It is not the price you pay, it is the terms of the agreement that matter.
3. You make your best deals when you have the least cash.
4. Never live more then an afternoons drive from your properties.
5. Stay out of stocks!!!!!!
6. Scour the papers for divorce and death notices. Desperate people make desperate decisions.
7. Cash is King
8. Real Estate always comes back.
Follow those rules and you will make a killing no matter what the market conditions!

[Multiplepropertyowner]

Well said Deal Hunter.We are from some of the same roots in regard to families in RE. My family got to SD in the 40’s after the war and my Pop’s pretty much built Mission Valley with his partnership group (Mission Valley Inn, The Town and Country and a few others)
You comment on Real Estate always coming back reminded me of his 8 keys to real estate investing.
1. Use other peoples money to make yours. (Thus, i am a big fan of the 100% loan and used for all it was worth)
2. It is not the price you pay, it is the terms of the agreement that matter.
3. You make your best deals when you have the least cash.
4. Never live more then an afternoons drive from your properties.
5. Stay out of stocks!!!!!!
6. Scour the papers for divorce and death notices. Desperate people make desperate decisions.
7. Cash is King
8. Real Estate always comes back.
Follow those rules and you will make a killing no matter what the market conditions!

[Multiplepropertyowner]

Well said Deal Hunter.We are from some of the same roots in regard to families in RE. My family got to SD in the 40’s after the war and my Pop’s pretty much built Mission Valley with his partnership group (Mission Valley Inn, The Town and Country and a few others)
You comment on Real Estate always coming back reminded me of his 8 keys to real estate investing.
1. Use other peoples money to make yours. (Thus, i am a big fan of the 100% loan and used for all it was worth)
2. It is not the price you pay, it is the terms of the agreement that matter.
3. You make your best deals when you have the least cash.
4. Never live more then an afternoons drive from your properties.
5. Stay out of stocks!!!!!!
6. Scour the papers for divorce and death notices. Desperate people make desperate decisions.
7. Cash is King
8. Real Estate always comes back.
Follow those rules and you will make a killing no matter what the market conditions!

[Multiplepropertyowner]

Well said Deal Hunter.We are from some of the same roots in regard to families in RE. My family got to SD in the 40’s after the war and my Pop’s pretty much built Mission Valley with his partnership group (Mission Valley Inn, The Town and Country and a few others)
You comment on Real Estate always coming back reminded me of his 8 keys to real estate investing.
1. Use other peoples money to make yours. (Thus, i am a big fan of the 100% loan and used for all it was worth)
2. It is not the price you pay, it is the terms of the agreement that matter.
3. You make your best deals when you have the least cash.
4. Never live more then an afternoons drive from your properties.
5. Stay out of stocks!!!!!!
6. Scour the papers for divorce and death notices. Desperate people make desperate decisions.
7. Cash is King
8. Real Estate always comes back.
Follow those rules and you will make a killing no matter what the market conditions!

[Author]

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