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May 11, 2009 at 11:44 AM #397225May 11, 2009 at 2:03 PM #396643PadreBrianParticipant
[quote=danthedart]http://piggington.com/images/dec08pmttorent.gif
That chart seems to suggest that the rent to price ratio is the lowest it has been in recent history for SD. Perhaps this is the reason demand is so high?
If you use the 20% down to calculate the rent to price ratio… do you need to calculate the opportunity cost in putting that much capital down? That’s what an investor would do. [/quote]
I haven’t seen that one yet.May 11, 2009 at 2:03 PM #396894PadreBrianParticipant[quote=danthedart]http://piggington.com/images/dec08pmttorent.gif
That chart seems to suggest that the rent to price ratio is the lowest it has been in recent history for SD. Perhaps this is the reason demand is so high?
If you use the 20% down to calculate the rent to price ratio… do you need to calculate the opportunity cost in putting that much capital down? That’s what an investor would do. [/quote]
I haven’t seen that one yet.May 11, 2009 at 2:03 PM #397117PadreBrianParticipant[quote=danthedart]http://piggington.com/images/dec08pmttorent.gif
That chart seems to suggest that the rent to price ratio is the lowest it has been in recent history for SD. Perhaps this is the reason demand is so high?
If you use the 20% down to calculate the rent to price ratio… do you need to calculate the opportunity cost in putting that much capital down? That’s what an investor would do. [/quote]
I haven’t seen that one yet.May 11, 2009 at 2:03 PM #397176PadreBrianParticipant[quote=danthedart]http://piggington.com/images/dec08pmttorent.gif
That chart seems to suggest that the rent to price ratio is the lowest it has been in recent history for SD. Perhaps this is the reason demand is so high?
If you use the 20% down to calculate the rent to price ratio… do you need to calculate the opportunity cost in putting that much capital down? That’s what an investor would do. [/quote]
I haven’t seen that one yet.May 11, 2009 at 2:03 PM #397320PadreBrianParticipant[quote=danthedart]http://piggington.com/images/dec08pmttorent.gif
That chart seems to suggest that the rent to price ratio is the lowest it has been in recent history for SD. Perhaps this is the reason demand is so high?
If you use the 20% down to calculate the rent to price ratio… do you need to calculate the opportunity cost in putting that much capital down? That’s what an investor would do. [/quote]
I haven’t seen that one yet.May 11, 2009 at 8:26 PM #396748patientrenterParticipant[quote=SDEngineer][quote=jpinpb]
…All I can go by is what I see and there are people owning multiple properties, clearly investments and not just small time investments, and they’re 100% financed getting NODs….
Liar loans were popular, banks weren’t checking and pretty darn easy for an investor to say he lives there and not put 20% down. Heck, Rich posted Kelly’s VOSD story on fraud. People are creative, that’s for sure. They will find a way and work the system.
[/quote]While this was true during the bubble run-up, it really wasn’t true before it (when banks were actually paying attention to loan qualifications), nor will it be true going into the future (now that banks have recovered some sense). Flippers, by the way, are not, and never were, RE investors – they were RE gamblers, even if they called themselves “investors”.
We’re not talking about the same mentality. A long term RE investor pays far less attention to appreciation, and much more attention to cash flow. An investment property should pay for itself (after the initial investment). During the bubble, the flipper mentality was to leverage oneself to the hilt with as many properties as you could rob Peter and pay Paul with the mortgages, and hope that you made yourself a multimillionaire with the appreciation before the music stopped and you were left holding more mortgages than you were worth. Cash flow didn’t factor into it.
When trying to determine rental parity today, you need to imagine how a long term RE investor would view the property. A long term RE investor will look at a property using the 20% down, since that is the minimum cash they need to put in to qualify for loans (without lying) and to eliminate unnecessary carrying costs (i.e. PMI). Once a property drops to a valuation where buying it as an investment makes sense, someone is likely to do just that.[/quote]
SDEngineer, in the old days, lenders kept loans on their own books, and took 100% of the loss from a failure to repay, or a failure to pay the full agreed original monthly payment. Today, nonrepayment of most mortgages is covered by guarantees from a govt agency, e.g. the FHA (directly) or the FDIC (indirectly). So the mortgage and housing markets will look nothing like they used to.
May 11, 2009 at 8:26 PM #396999patientrenterParticipant[quote=SDEngineer][quote=jpinpb]
…All I can go by is what I see and there are people owning multiple properties, clearly investments and not just small time investments, and they’re 100% financed getting NODs….
Liar loans were popular, banks weren’t checking and pretty darn easy for an investor to say he lives there and not put 20% down. Heck, Rich posted Kelly’s VOSD story on fraud. People are creative, that’s for sure. They will find a way and work the system.
[/quote]While this was true during the bubble run-up, it really wasn’t true before it (when banks were actually paying attention to loan qualifications), nor will it be true going into the future (now that banks have recovered some sense). Flippers, by the way, are not, and never were, RE investors – they were RE gamblers, even if they called themselves “investors”.
We’re not talking about the same mentality. A long term RE investor pays far less attention to appreciation, and much more attention to cash flow. An investment property should pay for itself (after the initial investment). During the bubble, the flipper mentality was to leverage oneself to the hilt with as many properties as you could rob Peter and pay Paul with the mortgages, and hope that you made yourself a multimillionaire with the appreciation before the music stopped and you were left holding more mortgages than you were worth. Cash flow didn’t factor into it.
When trying to determine rental parity today, you need to imagine how a long term RE investor would view the property. A long term RE investor will look at a property using the 20% down, since that is the minimum cash they need to put in to qualify for loans (without lying) and to eliminate unnecessary carrying costs (i.e. PMI). Once a property drops to a valuation where buying it as an investment makes sense, someone is likely to do just that.[/quote]
SDEngineer, in the old days, lenders kept loans on their own books, and took 100% of the loss from a failure to repay, or a failure to pay the full agreed original monthly payment. Today, nonrepayment of most mortgages is covered by guarantees from a govt agency, e.g. the FHA (directly) or the FDIC (indirectly). So the mortgage and housing markets will look nothing like they used to.
May 11, 2009 at 8:26 PM #397222patientrenterParticipant[quote=SDEngineer][quote=jpinpb]
…All I can go by is what I see and there are people owning multiple properties, clearly investments and not just small time investments, and they’re 100% financed getting NODs….
Liar loans were popular, banks weren’t checking and pretty darn easy for an investor to say he lives there and not put 20% down. Heck, Rich posted Kelly’s VOSD story on fraud. People are creative, that’s for sure. They will find a way and work the system.
[/quote]While this was true during the bubble run-up, it really wasn’t true before it (when banks were actually paying attention to loan qualifications), nor will it be true going into the future (now that banks have recovered some sense). Flippers, by the way, are not, and never were, RE investors – they were RE gamblers, even if they called themselves “investors”.
We’re not talking about the same mentality. A long term RE investor pays far less attention to appreciation, and much more attention to cash flow. An investment property should pay for itself (after the initial investment). During the bubble, the flipper mentality was to leverage oneself to the hilt with as many properties as you could rob Peter and pay Paul with the mortgages, and hope that you made yourself a multimillionaire with the appreciation before the music stopped and you were left holding more mortgages than you were worth. Cash flow didn’t factor into it.
When trying to determine rental parity today, you need to imagine how a long term RE investor would view the property. A long term RE investor will look at a property using the 20% down, since that is the minimum cash they need to put in to qualify for loans (without lying) and to eliminate unnecessary carrying costs (i.e. PMI). Once a property drops to a valuation where buying it as an investment makes sense, someone is likely to do just that.[/quote]
SDEngineer, in the old days, lenders kept loans on their own books, and took 100% of the loss from a failure to repay, or a failure to pay the full agreed original monthly payment. Today, nonrepayment of most mortgages is covered by guarantees from a govt agency, e.g. the FHA (directly) or the FDIC (indirectly). So the mortgage and housing markets will look nothing like they used to.
May 11, 2009 at 8:26 PM #397281patientrenterParticipant[quote=SDEngineer][quote=jpinpb]
…All I can go by is what I see and there are people owning multiple properties, clearly investments and not just small time investments, and they’re 100% financed getting NODs….
Liar loans were popular, banks weren’t checking and pretty darn easy for an investor to say he lives there and not put 20% down. Heck, Rich posted Kelly’s VOSD story on fraud. People are creative, that’s for sure. They will find a way and work the system.
[/quote]While this was true during the bubble run-up, it really wasn’t true before it (when banks were actually paying attention to loan qualifications), nor will it be true going into the future (now that banks have recovered some sense). Flippers, by the way, are not, and never were, RE investors – they were RE gamblers, even if they called themselves “investors”.
We’re not talking about the same mentality. A long term RE investor pays far less attention to appreciation, and much more attention to cash flow. An investment property should pay for itself (after the initial investment). During the bubble, the flipper mentality was to leverage oneself to the hilt with as many properties as you could rob Peter and pay Paul with the mortgages, and hope that you made yourself a multimillionaire with the appreciation before the music stopped and you were left holding more mortgages than you were worth. Cash flow didn’t factor into it.
When trying to determine rental parity today, you need to imagine how a long term RE investor would view the property. A long term RE investor will look at a property using the 20% down, since that is the minimum cash they need to put in to qualify for loans (without lying) and to eliminate unnecessary carrying costs (i.e. PMI). Once a property drops to a valuation where buying it as an investment makes sense, someone is likely to do just that.[/quote]
SDEngineer, in the old days, lenders kept loans on their own books, and took 100% of the loss from a failure to repay, or a failure to pay the full agreed original monthly payment. Today, nonrepayment of most mortgages is covered by guarantees from a govt agency, e.g. the FHA (directly) or the FDIC (indirectly). So the mortgage and housing markets will look nothing like they used to.
May 11, 2009 at 8:26 PM #397424patientrenterParticipant[quote=SDEngineer][quote=jpinpb]
…All I can go by is what I see and there are people owning multiple properties, clearly investments and not just small time investments, and they’re 100% financed getting NODs….
Liar loans were popular, banks weren’t checking and pretty darn easy for an investor to say he lives there and not put 20% down. Heck, Rich posted Kelly’s VOSD story on fraud. People are creative, that’s for sure. They will find a way and work the system.
[/quote]While this was true during the bubble run-up, it really wasn’t true before it (when banks were actually paying attention to loan qualifications), nor will it be true going into the future (now that banks have recovered some sense). Flippers, by the way, are not, and never were, RE investors – they were RE gamblers, even if they called themselves “investors”.
We’re not talking about the same mentality. A long term RE investor pays far less attention to appreciation, and much more attention to cash flow. An investment property should pay for itself (after the initial investment). During the bubble, the flipper mentality was to leverage oneself to the hilt with as many properties as you could rob Peter and pay Paul with the mortgages, and hope that you made yourself a multimillionaire with the appreciation before the music stopped and you were left holding more mortgages than you were worth. Cash flow didn’t factor into it.
When trying to determine rental parity today, you need to imagine how a long term RE investor would view the property. A long term RE investor will look at a property using the 20% down, since that is the minimum cash they need to put in to qualify for loans (without lying) and to eliminate unnecessary carrying costs (i.e. PMI). Once a property drops to a valuation where buying it as an investment makes sense, someone is likely to do just that.[/quote]
SDEngineer, in the old days, lenders kept loans on their own books, and took 100% of the loss from a failure to repay, or a failure to pay the full agreed original monthly payment. Today, nonrepayment of most mortgages is covered by guarantees from a govt agency, e.g. the FHA (directly) or the FDIC (indirectly). So the mortgage and housing markets will look nothing like they used to.
May 11, 2009 at 8:39 PM #396763lifeisgoodParticipantMy wife and I closed in March and understand that our property will lose value. The question is how much? None of us know and can only speculate. We bought a new home in 4s and know that a lot of people on this board believe that this area is on the way to losing a lot more value. It seems like its getting to the point where builders, in this area and others like it, are close to being as low as they can go to be able to still build and survive. After reading many posts on this board, it seems like most of you would like to see this happen so that property values will fall more. Bottom line, recently there are many buyers in this market like us that bought property for the long term and not to flip. We put about 10% down and used my VA benefit no PMI. We also locked a 5% fixed 30. We prepared unlike a lot of people from the past by paying off all debt and now only have a mortgage and utilities. Believe it or not, many people today have done the same given todays in depth lending standards. As far as employment, I have been in the military for 11 years and my wife is a dental hygienist. A lot of current buyers, I’m assuming, are in the same position as far as employment security. Good luck to all in your decisions.
May 11, 2009 at 8:39 PM #397014lifeisgoodParticipantMy wife and I closed in March and understand that our property will lose value. The question is how much? None of us know and can only speculate. We bought a new home in 4s and know that a lot of people on this board believe that this area is on the way to losing a lot more value. It seems like its getting to the point where builders, in this area and others like it, are close to being as low as they can go to be able to still build and survive. After reading many posts on this board, it seems like most of you would like to see this happen so that property values will fall more. Bottom line, recently there are many buyers in this market like us that bought property for the long term and not to flip. We put about 10% down and used my VA benefit no PMI. We also locked a 5% fixed 30. We prepared unlike a lot of people from the past by paying off all debt and now only have a mortgage and utilities. Believe it or not, many people today have done the same given todays in depth lending standards. As far as employment, I have been in the military for 11 years and my wife is a dental hygienist. A lot of current buyers, I’m assuming, are in the same position as far as employment security. Good luck to all in your decisions.
May 11, 2009 at 8:39 PM #397237lifeisgoodParticipantMy wife and I closed in March and understand that our property will lose value. The question is how much? None of us know and can only speculate. We bought a new home in 4s and know that a lot of people on this board believe that this area is on the way to losing a lot more value. It seems like its getting to the point where builders, in this area and others like it, are close to being as low as they can go to be able to still build and survive. After reading many posts on this board, it seems like most of you would like to see this happen so that property values will fall more. Bottom line, recently there are many buyers in this market like us that bought property for the long term and not to flip. We put about 10% down and used my VA benefit no PMI. We also locked a 5% fixed 30. We prepared unlike a lot of people from the past by paying off all debt and now only have a mortgage and utilities. Believe it or not, many people today have done the same given todays in depth lending standards. As far as employment, I have been in the military for 11 years and my wife is a dental hygienist. A lot of current buyers, I’m assuming, are in the same position as far as employment security. Good luck to all in your decisions.
May 11, 2009 at 8:39 PM #397296lifeisgoodParticipantMy wife and I closed in March and understand that our property will lose value. The question is how much? None of us know and can only speculate. We bought a new home in 4s and know that a lot of people on this board believe that this area is on the way to losing a lot more value. It seems like its getting to the point where builders, in this area and others like it, are close to being as low as they can go to be able to still build and survive. After reading many posts on this board, it seems like most of you would like to see this happen so that property values will fall more. Bottom line, recently there are many buyers in this market like us that bought property for the long term and not to flip. We put about 10% down and used my VA benefit no PMI. We also locked a 5% fixed 30. We prepared unlike a lot of people from the past by paying off all debt and now only have a mortgage and utilities. Believe it or not, many people today have done the same given todays in depth lending standards. As far as employment, I have been in the military for 11 years and my wife is a dental hygienist. A lot of current buyers, I’m assuming, are in the same position as far as employment security. Good luck to all in your decisions.
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