We’re back…… Using home equity as ATM’s!!!!

[earlyretirement]

[quote=spdrun]Not hoping for a systemic crash, but Dow dropping to 9 or 10k inside of a few months would be awesome. Besides, a lot of the “imminent systemic crash” hype was just that — [/quote]

Well, that’s good that you’re not hoping for a systemic crash. But again, I reiterate that what you saw back in 2007 – 2009 wasn’t a normal bear market or simply the stock market crashing.

And no, it wasn’t just “hype”. I’m not sure how involved you are with the financial markets but I can tell you that it wasn’t just “hype”. Look at all the CDOs, SCDO’s, SIV’s, SPE’s, HCDO’s, CDPC’s, and other very toxic derivatives from 2000 to 2006 and it was some scary stuff! The exposure out there was very frightening. I mean look at Lehman Bros. A company that was around for 160+ years. You’re talking about the 4th largest investment bank in the USA. What successfully lasted for 160+ years was undone in a very short period of a few years with leverage. Just one example of many.

And yes, most people that use leverage will tell you that they use it responsibly. After all, how many people have you met that told you that they were irresponsibly using leverage???? LOL. You will probably NEVER hear those words out of someone that is using leverage. They ALWAYS tell you how they are using it responsibly or why it makes sense in THEIR situation.

Heck, even these investment banks that were using insane leverage were fighting off regulators that tried to reign in on their insane leverage multiples. NO ONE will admit they are irresponsibly using leverage. That’s human nature.

And of course you will have many examples of people out there that have almost no retirement savings, credit card debt, kids coming up in college and don’t have savings for them….. Yet they will tell you why they HAVE to take that HELOC so they can renovate their house. They will tell you how it’s wise…yadda yadda.

Some of my friends and clients were at the highest levels of some of these banks and also I have friends at the Federal Reserve Bank. Yes, it could have been close to a systemic crash. That isn’t some hype.

I’m glad that you made money during those tough times and all the power to you if you like volatility but you can’t try to downplay what went on. It was some scary stuff that I hope we never have to think about again.

[earlyretirement]

[quote=flu]Good luck people. Since I guess most of you here have already “made it”, you obviously know what the ticket is to financial independence…[/quote]

Flu,

I don’t think there is anything wrong with wanting financial independence. In fact, I think that is a great thing to strive for in life.

I think the point many people are making is it’s good to try to achieve that with reasonable/responsible risk. I”m not even speaking about you or anyone else’s situation on this board as I don’t know most on this board (Yes, I’ve met a few on this board and they were all very intelligent and great guys).

When I’m typing on here I’m speaking in generalities. I type about 175 words a minute so I’m just typing fast and giving my opinion but speaking in general.

It just seems like some people on this board and in life are trying to hit many “home runs” in a very short amount of time and get rich in a relatively short amount of time with limited risk.

Possible? Yes, absolutely. Probable? I’m not sure in all these scenarios.

[Coronita]

[quote=earlyretirement][quote=flu]Good luck people. Since I guess most of you here have already “made it”, you obviously know what the ticket is to financial independence…[/quote]

Flu,

I don’t think there is anything wrong with wanting financial independence. In fact, I think that is a great thing to strive for in life.

I think the point many people are making is it’s good to try to achieve that with reasonable/responsible risk. I”m not even speaking about you or anyone else’s situation on this board as I don’t know most on this board (Yes, I’ve met a few on this board and they were all very intelligent and great guys).

It just seems like some people on this board are trying to hit many “home runs” in a very short amount of time and get rich in a relatively short amount of time with limited risk.

Possible? Yes, absolutely. Probable? I’m not sure in all these scenarios.[/quote]

ER, not necessarily you.

But I think a lot of people are full of shit… A lot of people were/are the ubber bears that will convince themselves not to do anything. It’s the same MO… “I heard a friend that got their ass kicked, therefore it’s a bad idea”… I have a friend that XYZ didn’t work out for them, therefore it’s a bad idea.

(Perhaps you’re friends are just morons and you should get yourself new friends, maybe???)

…Ironically, it ends up being the more accurate people were the realtors that use to post on the board telling everyone else that things are picking up, start to buy…They’re not around anymore because well, for obvious reasons….But I’m sure we still have folks thinking 50+% off and/or deflation is coming soon…

If you think it’s an opportunity to buy, pull the trigger and buy..If you don’t than don’t bother looking… I don’t get this, yes I think the opportunity is there to buy, but no I’m going to sit on my ass and not do anything. Or I don’t think it’s a good idea to do X, but gee people who do X are really dumb for doing X (despite it working out for X)…

Some people will always miss the boat through there own inaction.

[spdrun]

50% off is unlikely. Deflation is possible — remember that in 2005-6, everyone was yammering that “property values will never decrease, buy while you can get in.”

However, the relevant metric is RENTS. If you can lock in a good rate and rent to some poor sap for significantly more than expenses, then you’re golden.

[earlyretirement]

[quote=flu]

But I think a lot of people are full of shit… A lot of people were/are the ubber bears that will convince themselves not to do anything.
Some people will always miss the boat through there own inaction.[/quote]

Yep. I’ll agree with you on this point. I also think the same thing. Especially on internet message boards. And yes, some people are permabears and some are permabulls. The key is not to be in either category and swing with the punches.

I always got a kick out of sites like http://www.patrick.net where permabears thought real estate would fall to $0. LOL.

[Coronita]

[quote=spdrun]50% off is unlikely. Deflation is possible — remember that in 2005-6, everyone was yammering that “property values will never decrease, buy while you can get in.”

However, the relevant metric is RENTS. If you can lock in a good rate and rent to some poor sap for significantly more than expenses, then you’re golden.[/quote]

Hell, the world could freeze over tomorrow or we can get hit by another asteroid making everything a moot point…. I prefer to live in the present.

What’s the point of making gazzillions of dollars 10,20,30+ years from now if by the time you do it you’re 50+ and are shitting into your depends diaper?

If you think you can make money now, albeit at some risk…. Go for it…Fail now…You will fail at something anyway…Fail now, fail fast, fail young….Learn something from it…better than failing later when your 50+…..And apparently failing now is much easier to be forgiven than possibly in the future…

Clearly sitting on one’s ass isn’t gonna work in the future… Ok, it might work in California (for now)…. but probably not sustainable.

Oh and find friends smarter than you….I like to think I’m a moron and much dumber than my friends…I’d rather that be the case than to be the “smart” person surrounded by a bunch of dumb people. Smart friends can help/educate dumb people like me….It doesn’t work the other way around and a lot harder if you have to do all the discovery/lessons learned yourself.

[spdrun]

BTW, I actually wasn’t arguing for sitting, since the rent metric works pretty well almost anywhere in the US right now. I’m not looking to make a fuckton of money, actually. Just for $50-60k/yr from property investments, so I have enough excess annual income to be left alone, and not ever be beholden to some PoS of a boss at a full-time job.

[bearishgurl]

[quote=flu] . . . If you think it’s an opportunity to buy, pull the trigger and buy..If you don’t than don’t bother looking… I don’t get this, yes I think the opportunity is there to buy, but no I’m going to sit on my ass and not do anything. Or I don’t think it’s a good idea to do X, but gee people who do X are really dumb for doing X (despite it working out for X)…

Some people will always miss the boat through there own inaction.[/quote]

Agreed, flu. However, a buyer looking for a home for themselves and possibly their family members also (ESP FTB’s) need to be realistic or they will end up with ZERO.

With the mortgage qualification stds in place today (unlike the days of free-flowing “funny money”), these buyers are NOT going to get the “move-up” or “luxury” home that FTB’s “bought” (lol) in that “era.”

I think FTB’s and STB’s of today got used to seeing their peers live in areas that were never meant for FTB “consumption.”

Even after witnessing some of these people crash and burn over their RE “investments” (lol) gone horribly wrong, a lot of today’s buyers just don’t seem to understand that what they actually qualify to buy is in a “FTB area.”

That’s the way it was before the era of “easy-qual” purchase money and that’s the way it is now.

As I have posted here several times, SD County residential RE is arranged in a “caste system.” This will never change.

[spdrun]

Strangely, the stuff that you describe as being at the “top” of the caste system, is the kind of stuff that tops my do-not-want list. I’d rather have a bungalow or condo in one of the beach cities than a 3500 sf monster further inland.

[bearishgurl]

[quote=spdrun]Strangely, the stuff that you describe as being at the “top” of the caste system, is the kind of stuff that tops my do-not-want list. I’d rather have a bungalow or condo in one of the beach cities than a 3500 sf monster further inland.[/quote]

spdrun, you must be mixing me up with another Pigg. I never described a “McHome” as being “at or near the top of the caste system.”

Actually, most McHome’s are at or near the bottom (depending on location, of course).

I go by overall equity percentage of neighborhood owners in determining a micro-area’s hierarchy in SD’s RE “caste system.”

Those owners with high-equity stakes are the members of the “caste system” who have “paid their dues.”

As it should be :=]

[flyer]

I agree everyone should do whatever they want to do to get where they want to be in life–I did, and I know many others here have done so as well.

I don’t think anyone is discouraging anyone from going all in, but we’re just mentioning the possible consequences, and trying to be helpful.

In the final analysis–regardless of what is posted on a chat board–it’s every person for him or herself–and, in the end, as long as you can say you lived the life you wanted to live–that’s what really matters!!

[CA renter]

flu,

Who, exactly, is recommending “sitting on your ass” or “doing nothing”? Even some of the most bearish Piggs (including myself) have bought in the past few years, and many of us actively manage our own money. Most of the bears on the Housing Bubble Blog (some would argue they’re some of the most bearish folks on the internet) have bought, too!

BTW, the people I’m talking about (and I’m sure ER’s examples, too) are nowhere near dumb. Some of them are exceptionally intelligent and have had significant success in life, often multiple successes. That’s what makes it so scary — these ARE the smart ones, and they fail in a big way. It’s humbling because you realize how vulnerable we ALL are, no matter how smart or rich or well set-up in life.

Nobody’s saying you should do nothing, but to ignore the potential for fairly dramatic economic shifts would be foolish. Using leverage for asset purchases in the hopes that someone else will leverage even more so that they can pay you a higher price for these assets in the future is very risky, especially when everybody else is doing it at the same time. With money so cheap/interest rates so low, there is a much greater chance of things going sideways. And then, there are the demographic issues to contend with. I think that a lot of people don’t really understand how risky it really is.

[earlyretirement]

[quote=flu].. I prefer to live in the present.

What’s the point of making gazzillions of dollars 10,20,30+ years from now if by the time you do it you’re 50+ and are shitting into your depends diaper?

If you think you can make money now, albeit at some risk…. Go for it…Fail now…You will fail at something anyway…Fail now, fail fast, fail young….Learn something from it…better than failing later when your 50+…..And apparently failing now is much easier to be forgiven than possibly in the future…

Clearly sitting on one’s ass isn’t gonna work in the future… Ok, it might work in California (for now)…. but probably not sustainable

Oh and find friends smarter than you….I like to think I’m a moron and much dumber than my friends…I’d rather that be the case than to be the “smart” person surrounded by a bunch of dumb people. Smart friends can help/educate dumb people like me….It doesn’t work the other way around and a lot harder if you have to do all the discovery/lessons learned yourself.[/quote]

I missed this post first time around. I just read CAR’s post and I agree. I don’t think anyone is advocating to sit on their ass and do nothing. Quite the opposite in fact. Short of winning the lottery, inheriting a windfall, etc. building up net worth usually takes a lot of time and VERY hard work. So I’d say it’s the exact opposite of sitting on your ass and doing nothing.

Also, I know you were being sarcastic above with the “Depends Diaper at 50 years old” comment. But see, that’s where I have a different outlook. You might look at 50 years old as older and I don’t look at it that way. The average lifespan now with modern science is approaching 80’s and I’d imagine a few decades from now it will increase even further.

At the turn of the Century when the average life expectancy age in the USA was only around 46-48 years old, you could say 50’s was “Depends Diaper” age. But now it’s a totally different story. Yes, it’s great in a way that modern science allows us to live so long but in a way it’s scary as well!

Time flies by too damn fast. I don’t think anyone on this board is a gazzilionare. And in life most aren’t. They are just people that worked hard most of their lives and are fighting the “fight” to not outlive their savings.

And sure having smart friends helps. I have lots of intelligent friends. Most of them are highly educated, hard workers, not only book smart but also street smart and even they have made hiccups in life. Some of them major hiccups. Most of us have all made financial hiccups in life.

[quote=flyer]
Even though many of us took some risk to build our wealth, I think, most likely, it was very calculated. Today, it seems, some people seem to be willing to throw all caution to the wind, leverage to the point that they could lose everything, and “hope” for the best.

The stats on the net worth in this country tell the whole story. They aren’t pretty. .[/quote]

EXACTLY flyer. It’s all about calculated risk. Heck, I’m not even saying some of the players on this board aren’t calculating their risk. As I mentioned, I don’t know the personalities too well yet on this board or their personal situations.

I do agree that the net worth statistics and also the numbers of people that don’t have a sizable nest egg for retirement tell the true story.

[The-Shoveler]

2006-2009 we had most of our assets in FDIC insured CD’s getting close to 5% returns.
In our 401K we were in money market doing about the same.

We felt like financial geniuses.

Although not so much lately however as I have been out of the market this last year as well, win some lose some, just don’t lose it all !!!

[flyer]

Good thoughts ER and CAR.

As far as the 50+ thing goes–no one I know (including myself) really gives it much thought. We all achieved the lives we wanted–and we’re happy. Like it or not–everyone was young, and everyone will be old.

Besides, regardless of our beliefs, I think we can all agree our time on earth is temporary–whether we’re a billionaire or a pauper–and my family and I are at peace about where we believe we’ll be spending eternity. Eternity is a very long time, and, IMO, that’s far more important than anything else.

[Author]

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