Save TG, he’s reaching for the knife

[temeculaguy]

Flu, squatting is out but a nice idea, I’m a running water kind of guy.

Snail, I kinda like the castle thingy, I plan on getting a paper crown from burger king and putting it on to answer the door.

Bear, I’m with you but affordability isn’t the issue, 400k isn’t a stretch, but 300k would allow me even more discretionary income to invest (or spend on drinking, gambling and women of ill repute, o.k maybe not ill repute but below standard repute for sure). I actually laugh at my own frugality because I already did what you suggested, lived like a pauper on a kings salary and eventually gave in and rented something reasonable, my pauper days are over but it is still good advice. Realistically I can afford suitable housing, I’m just a cheap bastard who’s little bubble theory is getting to the point of insanity. I’m well into the six figures, no debt, loads of cash in money market accounts and stocks and I’m hemming and hawing over another 50k drop in prices, I feel almost petty. I agree that the the uber bears hoping for $75 houses are dreaming but is 300k out of line for the properties I listed? It’s no longer about money, my strategy has paid off thus far and have saved 200k, now it’s about winning, no matter where I buy I wan’t to have paid the least, dammit. It’s all about respect at the block party. Respected by men, desired by women, you get the picture, it’s down to ego now.

[temeculaguy]

Flu, squatting is out but a nice idea, I’m a running water kind of guy.

Snail, I kinda like the castle thingy, I plan on getting a paper crown from burger king and putting it on to answer the door.

Bear, I’m with you but affordability isn’t the issue, 400k isn’t a stretch, but 300k would allow me even more discretionary income to invest (or spend on drinking, gambling and women of ill repute, o.k maybe not ill repute but below standard repute for sure). I actually laugh at my own frugality because I already did what you suggested, lived like a pauper on a kings salary and eventually gave in and rented something reasonable, my pauper days are over but it is still good advice. Realistically I can afford suitable housing, I’m just a cheap bastard who’s little bubble theory is getting to the point of insanity. I’m well into the six figures, no debt, loads of cash in money market accounts and stocks and I’m hemming and hawing over another 50k drop in prices, I feel almost petty. I agree that the the uber bears hoping for $75 houses are dreaming but is 300k out of line for the properties I listed? It’s no longer about money, my strategy has paid off thus far and have saved 200k, now it’s about winning, no matter where I buy I wan’t to have paid the least, dammit. It’s all about respect at the block party. Respected by men, desired by women, you get the picture, it’s down to ego now.

[Ex-SD]

IMHO: Prices in this area will drop to $100-$120 per sq. ft. and not a penny higher……………(I’m betting on $100 per ft.) I’ve read enough of your posts to know that you are a savvy guy who understands what is going on and where the market is going to go………..so, if you choose to catch a falling knife, at least you won’t be surprised if the prices fall further after you buy.
Good luck to you whatever you choose to do.

[Ex-SD]

IMHO: Prices in this area will drop to $100-$120 per sq. ft. and not a penny higher……………(I’m betting on $100 per ft.) I’ve read enough of your posts to know that you are a savvy guy who understands what is going on and where the market is going to go………..so, if you choose to catch a falling knife, at least you won’t be surprised if the prices fall further after you buy.
Good luck to you whatever you choose to do.

[Ex-SD]

IMHO: Prices in this area will drop to $100-$120 per sq. ft. and not a penny higher……………(I’m betting on $100 per ft.) I’ve read enough of your posts to know that you are a savvy guy who understands what is going on and where the market is going to go………..so, if you choose to catch a falling knife, at least you won’t be surprised if the prices fall further after you buy.
Good luck to you whatever you choose to do.

[Ex-SD]

IMHO: Prices in this area will drop to $100-$120 per sq. ft. and not a penny higher……………(I’m betting on $100 per ft.) I’ve read enough of your posts to know that you are a savvy guy who understands what is going on and where the market is going to go………..so, if you choose to catch a falling knife, at least you won’t be surprised if the prices fall further after you buy.
Good luck to you whatever you choose to do.

[TheBreeze]

From previous posts, I believe you said you were using a rent multiplier to decide when to buy, correct? If so, are you using today’s rents?

If I were trying to convince myself not to buy, I would try to determine what happened to rents during the last downturn in housing/recession. If you can’t get your hands on historical rent data, then you could attempt to make your own SWAG guess about rents using some fraction of the current number of expected abandoned houses.

For example, what would happen to rents if 70% of houses bought in Temecula since 2005 went into foreclosure and 25% of those foreclosures became rentals? Let’s say there is 100,000 square feet of rental property currently in Temecula renting for on average $100/square foot (no idea if these numbers are anywhere close to being correct). This gives us a total rental demand of $10 million (something tells me this is way low). In any event, using the theoretical numbers above, if the foreclosures add another 30,000 square feet, assuming that the demand for rentals doesn’t change (it may even go down in a recession), then you get an average rent price of $10 million/130,000 square feet ~ $77 per square foot.

As an alternative to trying to figure out the numbers for the above calculation, maybe you could just use a rental multiplier assuming 2003 rental prices. In any event, my point is that the rent multiplier you are using today may be based on an artificially low supply of rentals due to so many current and future unoccupied houses and a higher demand number for rentals than may exist in the future if we are going into a recession.

For the sake of full disclosure, I’ve never owned real estate in my life and there is a good chance I never will. However, it’s always a good idea to play around with whatever metrics you are using to at least try and get a feel for the worst- and best-case scenarios.

[TheBreeze]

From previous posts, I believe you said you were using a rent multiplier to decide when to buy, correct? If so, are you using today’s rents?

If I were trying to convince myself not to buy, I would try to determine what happened to rents during the last downturn in housing/recession. If you can’t get your hands on historical rent data, then you could attempt to make your own SWAG guess about rents using some fraction of the current number of expected abandoned houses.

For example, what would happen to rents if 70% of houses bought in Temecula since 2005 went into foreclosure and 25% of those foreclosures became rentals? Let’s say there is 100,000 square feet of rental property currently in Temecula renting for on average $100/square foot (no idea if these numbers are anywhere close to being correct). This gives us a total rental demand of $10 million (something tells me this is way low). In any event, using the theoretical numbers above, if the foreclosures add another 30,000 square feet, assuming that the demand for rentals doesn’t change (it may even go down in a recession), then you get an average rent price of $10 million/130,000 square feet ~ $77 per square foot.

As an alternative to trying to figure out the numbers for the above calculation, maybe you could just use a rental multiplier assuming 2003 rental prices. In any event, my point is that the rent multiplier you are using today may be based on an artificially low supply of rentals due to so many current and future unoccupied houses and a higher demand number for rentals than may exist in the future if we are going into a recession.

For the sake of full disclosure, I’ve never owned real estate in my life and there is a good chance I never will. However, it’s always a good idea to play around with whatever metrics you are using to at least try and get a feel for the worst- and best-case scenarios.

[TheBreeze]

From previous posts, I believe you said you were using a rent multiplier to decide when to buy, correct? If so, are you using today’s rents?

If I were trying to convince myself not to buy, I would try to determine what happened to rents during the last downturn in housing/recession. If you can’t get your hands on historical rent data, then you could attempt to make your own SWAG guess about rents using some fraction of the current number of expected abandoned houses.

For example, what would happen to rents if 70% of houses bought in Temecula since 2005 went into foreclosure and 25% of those foreclosures became rentals? Let’s say there is 100,000 square feet of rental property currently in Temecula renting for on average $100/square foot (no idea if these numbers are anywhere close to being correct). This gives us a total rental demand of $10 million (something tells me this is way low). In any event, using the theoretical numbers above, if the foreclosures add another 30,000 square feet, assuming that the demand for rentals doesn’t change (it may even go down in a recession), then you get an average rent price of $10 million/130,000 square feet ~ $77 per square foot.

As an alternative to trying to figure out the numbers for the above calculation, maybe you could just use a rental multiplier assuming 2003 rental prices. In any event, my point is that the rent multiplier you are using today may be based on an artificially low supply of rentals due to so many current and future unoccupied houses and a higher demand number for rentals than may exist in the future if we are going into a recession.

For the sake of full disclosure, I’ve never owned real estate in my life and there is a good chance I never will. However, it’s always a good idea to play around with whatever metrics you are using to at least try and get a feel for the worst- and best-case scenarios.

[TheBreeze]

From previous posts, I believe you said you were using a rent multiplier to decide when to buy, correct? If so, are you using today’s rents?

If I were trying to convince myself not to buy, I would try to determine what happened to rents during the last downturn in housing/recession. If you can’t get your hands on historical rent data, then you could attempt to make your own SWAG guess about rents using some fraction of the current number of expected abandoned houses.

For example, what would happen to rents if 70% of houses bought in Temecula since 2005 went into foreclosure and 25% of those foreclosures became rentals? Let’s say there is 100,000 square feet of rental property currently in Temecula renting for on average $100/square foot (no idea if these numbers are anywhere close to being correct). This gives us a total rental demand of $10 million (something tells me this is way low). In any event, using the theoretical numbers above, if the foreclosures add another 30,000 square feet, assuming that the demand for rentals doesn’t change (it may even go down in a recession), then you get an average rent price of $10 million/130,000 square feet ~ $77 per square foot.

As an alternative to trying to figure out the numbers for the above calculation, maybe you could just use a rental multiplier assuming 2003 rental prices. In any event, my point is that the rent multiplier you are using today may be based on an artificially low supply of rentals due to so many current and future unoccupied houses and a higher demand number for rentals than may exist in the future if we are going into a recession.

For the sake of full disclosure, I’ve never owned real estate in my life and there is a good chance I never will. However, it’s always a good idea to play around with whatever metrics you are using to at least try and get a feel for the worst- and best-case scenarios.

[NotCranky]

If you buy, buy the best property under or as near to your 300k cap as you can go. Given your financial picture, there is no way in hell that is going to hurt you much. If the big old hunking luxury house on the golf course drops to a point where you feel like you will be laughing all the way to the bank if you take it, buy it too, if you still want it at that time. DCA for Temecula homes.

[NotCranky]

If you buy, buy the best property under or as near to your 300k cap as you can go. Given your financial picture, there is no way in hell that is going to hurt you much. If the big old hunking luxury house on the golf course drops to a point where you feel like you will be laughing all the way to the bank if you take it, buy it too, if you still want it at that time. DCA for Temecula homes.

[NotCranky]

If you buy, buy the best property under or as near to your 300k cap as you can go. Given your financial picture, there is no way in hell that is going to hurt you much. If the big old hunking luxury house on the golf course drops to a point where you feel like you will be laughing all the way to the bank if you take it, buy it too, if you still want it at that time. DCA for Temecula homes.

[NotCranky]

If you buy, buy the best property under or as near to your 300k cap as you can go. Given your financial picture, there is no way in hell that is going to hurt you much. If the big old hunking luxury house on the golf course drops to a point where you feel like you will be laughing all the way to the bank if you take it, buy it too, if you still want it at that time. DCA for Temecula homes.

[bearvine]

Clarification: WIN TG-

Thanks for the clarification on what you want, now to me the answer for you TG is clear, WIN. I wasn’t saying live frugally, but live easy to move. Go get that 50″ Vizio, have nice furniture, have nice clothes, just not too much crap in the house so it is easy to move. Stock the place with the best liquor, and you are good to go.

We have some things in common, I buy lux cars 2 years old not because I can’t afford to buy them new, but because I get it it cheaper and that’s the way I beat the system and win. Clearly then, If you buy now even at a great deal, it will piss you off when the house next door goes REO and sells for $90k less 6 months later.

I still have some of the brochures from the areas I liked over the years in Temecula, I kept the good ones so that I knew what the resales were all about. Obviously there are people in Redhawk that paid $150 in the late 90’s, but many of those neighborhoods simply look to old. US Homes/Lennar 3000sq ft homes could’ve been had in 01 for $300. Can it get back there? Absolutely.

The area you posted some homes on Fairway Estates, the nicer section where Saint Tisbury is, many of the original owners flipped their homes in 05 and 06 at high prices, bet one will see some of those REO. Not to mention the 1st phasers didnt pay high 5’s and 6’s.

An REO on Mumm in Morgan sold for under 4, and there is another one right now under 4 waiting for you if you really want to buy.

Prices WILL continue to drop.

So my advice on the new plan:

RENT nice, live simply but with nice stuff, drive the car you want, and enjoy your wine women and song.

Continue to build that war chest, decide what percentage of such that you are willing to risk, and use your obvious intelligence and due diligence skills to go high risk high reward on that extra scratch you save from renting vs owning.

When one of the five investments you make pays off with a 10-20x, and house prices have plummeted, you will be KING of Temecula moving into a Santiago Estates custom for under $1m.

[Author]

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