Temecula’s falling knife :)

[hipmatt]

Temecula is a disaster and has a LONG way to fall. Inventory is insane, and sellers still have little clue that their home isn’t worth close to what they thought. The next 6 months will be foreclosure mania.

Anyone buying right now thinking this is the bottom, or that you are getting a great deal, more power to you.

[hipmatt]

Temecula is a disaster and has a LONG way to fall. Inventory is insane, and sellers still have little clue that their home isn’t worth close to what they thought. The next 6 months will be foreclosure mania.

Anyone buying right now thinking this is the bottom, or that you are getting a great deal, more power to you.

[patientlywaiting]

” Anyone buying right now thinking this is the bottom, or that you are getting a great deal, more power to you. ”

I totally agree with hipmatt. What will happen to Temecula when gas is $4 to $5 per gallon?

**

bsrsharma, yes that loan is a good loan. But it goes without saying that any subsidized loan is better than market rate loans. Basing a purchase decision on financing is stupid in my view considering that prices will drop. Better to buy low and pay a high interest rate at the time, then refi when rates drop. (My conventional loan is 5% so I have no incentive to pay it off since I make more money in a CD)

BTW, I agree with you on inflation in 30 years. But better to focus on NPV when making a purchasing decision.

[patientlywaiting]

” Anyone buying right now thinking this is the bottom, or that you are getting a great deal, more power to you. ”

I totally agree with hipmatt. What will happen to Temecula when gas is $4 to $5 per gallon?

**

bsrsharma, yes that loan is a good loan. But it goes without saying that any subsidized loan is better than market rate loans. Basing a purchase decision on financing is stupid in my view considering that prices will drop. Better to buy low and pay a high interest rate at the time, then refi when rates drop. (My conventional loan is 5% so I have no incentive to pay it off since I make more money in a CD)

BTW, I agree with you on inflation in 30 years. But better to focus on NPV when making a purchasing decision.

[patientlywaiting]

” Anyone buying right now thinking this is the bottom, or that you are getting a great deal, more power to you. ”

I totally agree with hipmatt. What will happen to Temecula when gas is $4 to $5 per gallon?

**

bsrsharma, yes that loan is a good loan. But it goes without saying that any subsidized loan is better than market rate loans. Basing a purchase decision on financing is stupid in my view considering that prices will drop. Better to buy low and pay a high interest rate at the time, then refi when rates drop. (My conventional loan is 5% so I have no incentive to pay it off since I make more money in a CD)

BTW, I agree with you on inflation in 30 years. But better to focus on NPV when making a purchasing decision.

[patientlywaiting]

” Anyone buying right now thinking this is the bottom, or that you are getting a great deal, more power to you. ”

I totally agree with hipmatt. What will happen to Temecula when gas is $4 to $5 per gallon?

**

bsrsharma, yes that loan is a good loan. But it goes without saying that any subsidized loan is better than market rate loans. Basing a purchase decision on financing is stupid in my view considering that prices will drop. Better to buy low and pay a high interest rate at the time, then refi when rates drop. (My conventional loan is 5% so I have no incentive to pay it off since I make more money in a CD)

BTW, I agree with you on inflation in 30 years. But better to focus on NPV when making a purchasing decision.

[temeculaguy]

Matt and patient, I expect more from both of you in the way of argument other than blanket statements, both of you are talented enough to articulate your position. I threw down some hard numbers backed with fundamental formulas such as rent multiplier. While the scenario described above has some listings at 350k, the one at 221k is not subject to “a long way to fall.” 350k has a long way to fall but 221k has maybe max 70k left before a bear like me would buy it as a rental that would be cash positive from day one. That complex of about 200 units never has more than two or three for rent and they are in the 1400-1600 range. The carry costs on a townhouse for 150k, association is between 100 and 200 a month (not exactly sure but it was reasonable when I checked and it’s gated and has a pool and landscaping/trash is included). An investor with 30k can have a mortgage of $720, taxes and hoa take it to about 1100-1200 total carry and it rents for 1400-1600. How it goes below that, you got me. Cash positive rentals don’t last very long in any market.

[temeculaguy]

Matt and patient, I expect more from both of you in the way of argument other than blanket statements, both of you are talented enough to articulate your position. I threw down some hard numbers backed with fundamental formulas such as rent multiplier. While the scenario described above has some listings at 350k, the one at 221k is not subject to “a long way to fall.” 350k has a long way to fall but 221k has maybe max 70k left before a bear like me would buy it as a rental that would be cash positive from day one. That complex of about 200 units never has more than two or three for rent and they are in the 1400-1600 range. The carry costs on a townhouse for 150k, association is between 100 and 200 a month (not exactly sure but it was reasonable when I checked and it’s gated and has a pool and landscaping/trash is included). An investor with 30k can have a mortgage of $720, taxes and hoa take it to about 1100-1200 total carry and it rents for 1400-1600. How it goes below that, you got me. Cash positive rentals don’t last very long in any market.

[temeculaguy]

Matt and patient, I expect more from both of you in the way of argument other than blanket statements, both of you are talented enough to articulate your position. I threw down some hard numbers backed with fundamental formulas such as rent multiplier. While the scenario described above has some listings at 350k, the one at 221k is not subject to “a long way to fall.” 350k has a long way to fall but 221k has maybe max 70k left before a bear like me would buy it as a rental that would be cash positive from day one. That complex of about 200 units never has more than two or three for rent and they are in the 1400-1600 range. The carry costs on a townhouse for 150k, association is between 100 and 200 a month (not exactly sure but it was reasonable when I checked and it’s gated and has a pool and landscaping/trash is included). An investor with 30k can have a mortgage of $720, taxes and hoa take it to about 1100-1200 total carry and it rents for 1400-1600. How it goes below that, you got me. Cash positive rentals don’t last very long in any market.

[temeculaguy]

Matt and patient, I expect more from both of you in the way of argument other than blanket statements, both of you are talented enough to articulate your position. I threw down some hard numbers backed with fundamental formulas such as rent multiplier. While the scenario described above has some listings at 350k, the one at 221k is not subject to “a long way to fall.” 350k has a long way to fall but 221k has maybe max 70k left before a bear like me would buy it as a rental that would be cash positive from day one. That complex of about 200 units never has more than two or three for rent and they are in the 1400-1600 range. The carry costs on a townhouse for 150k, association is between 100 and 200 a month (not exactly sure but it was reasonable when I checked and it’s gated and has a pool and landscaping/trash is included). An investor with 30k can have a mortgage of $720, taxes and hoa take it to about 1100-1200 total carry and it rents for 1400-1600. How it goes below that, you got me. Cash positive rentals don’t last very long in any market.

[ocean]

I’d buy it for 175k…hoa fees are 189,I think….

[ocean]

I’d buy it for 175k…hoa fees are 189,I think….

[ocean]

I’d buy it for 175k…hoa fees are 189,I think….

[ocean]

I’d buy it for 175k…hoa fees are 189,I think….

[gn]

Cash positive rentals don't last very long in any market.

Temeculaguy, you make a good point.

Now, I think that rents will go down in Temecula. That's because the glut of houses will attract cash-flow investors which will increase the rental supply, thus, result in lower rents.

So, the fact the numbers currently "pencil out" doesn't mean that they will "pencil out" in 2009. This is especially true in places like Temecula where there is so much excess inventories & builders are still building.

 

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