[an]

[quote=FlyerInHi]
I think that zoning, building codes, and lack of supply of new houses, have much more to do with prices.

There’s a “housing establishment” that’s used to doing certain things that acts to protect its way of life. If we had innovative prefab houses and looser zoning restrictions, house prices would drop.

If you could put a prefab container house in your backyard, you could rent it out to a single tenant who would enjoy a nice modern, comfortable space.

Creative thinking can help solve the housing shortage very quickly.[/quote]
I totally agree with this 100%. If you want lower housing price, just loosen up the zoning laws. It’s simply supply and demand. If you loosen up zoning law to allow more supply, that would drive down price. If we prefab houses in a factory and ship to the location, you can also lower the cost of building the house as well.

[an]

[quote=FlyerInHi]
in the past there was no offshore banking. And few international transactions. Even the richest people kept their money locally and it wasn’t that hard to find out who owned what.

That’s how Thomas Piketty was able to do research on wealth over more than 100 years.

Now, thanks to offshore banking, globalization, easy air travel, it’s easier to diversify and protect your wealth from political risks.[/quote]easy air travel won’t be there if catastrophe really hit. You can’t even leave your own city much less fly out of the country. Your internet will be tracked and and new sign of additional money will be confiscated. If you’re lucky enough to exchange your foreign money to local currency to spend, all they have to do is change the currency and make your new exchange worth only as much as the paper it’s printed on.

[an]

[quote=spdrun]On the one hand, you have a liberal twit Mel Watt in charge of FHFA (even he is going incrementally, trying deeper loan mods in Detroit first, which has nothing to lose). On the other, you have Julian Castro at HUD who wants to wind down Fannie and Freddie. We also has QM come into force this year.

I think the net effect will be zero-sum. And why would you want higher prices? Wouldn’t you rather be able to buy MORE rental property and have more tenants?

My ideal world would be cheap homes and high rents.[/quote]bubble => crash => more chance to buy more properties at a steep discount.

[an]

Though I like to say, plan for the worse and hope for the best. I usually don’t plan for total catastrophe. If the catastrophe does happen, there’s really not much you can do, other than to hope you’re on the side that will rise in power and leech of them. Gold, RE, stock, even cash doesn’t mean anything. Just look at what happen to the South Vietnamese after the Vietnam war. The communist ransack all the wealthy family and take their gold and RE. Then they change the currency a few times, so that the cash you have under mattress is nothing more than paper.

[an]

[quote=FlyerInHi][quote=AN][quote=flu]You know maybe I’m crazy. But i actually like being a landlord.. If I had 11 or so rental properties locally, I wouldn’t mind doing it versus going to work everyday….

Unfortunately, I’m still ways off from it.[/quote]
I’m totally with you. I also love it too. If I have 10 places around SD, I too would call it quit on my W2 as well.[/quote]

I like it too. But it’s not like you sit back and the money just flows in. It’s like a job and if you can remodel and do work, your profits will be higher.

It’s harder to do in expensive markets, but in most of America even modest families can become landlords. Just eschews expensive purchases such as luxury cars and invest in rentals.[/quote]
Yes, it will require work. I never said you just sit around and money just flow in. But I don’t mind doing that work.

[an]

[quote=flu]You know maybe I’m crazy. But i actually like being a landlord.. If I had 11 or so rental properties locally, I wouldn’t mind doing it versus going to work everyday….

Unfortunately, I’m still ways off from it.[/quote]
I’m totally with you. I also love it too. If I have 10 places around SD, I too would call it quit on my W2 as well.

[an]

Congrats UCGal.

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[quote=The-Shoveler]Too obvious, maybe they will just increase wage inflation from the bottom up 🙂

Still waiting for the trillion dollar coin.[/quote]
Like I said before, I fully support raising the minimum wage to a living wage. I would also support it if they propose to raise it to $20/hr. I welcome wage inflation.

[an]

[quote=The-Shoveler]I think 1970’s-ish type inflation is very possible.

maybe 5-7 percent for 10 years.

And a strong-ish dollar to boot.[/quote]My crystal ball is broken, so I can’t say which way it will swing. But you definitely should ask yourself, are you ready for another 2006-2008 crash? If you are, then if we see another 70s/80s inflation, you’ll be golden.

[an]

[quote=livinincali]
I didn’t really say anything about rents. It’s the months of vacancy you might have to endure. Can you immediately undercut the rents of everybody else in the market and get a new tenant? Most likely you probably could. Basically the question is how long can you carry leveraged rental property without collecting the rent and how quickly are you willing to lower the rental price.[/quote]
As I said earlier, if you can’t handle the vacancy, then you shouldn’t be a landlord. If you can’t afford to lower rent, then you probably bought too high and have too low of a return. Bad time comes and go. There’s no such thing as guarantee return every year forever. There will be time when you have to deal with losses. If you take the profit you make during the good years to cover your bad years and if you have a big enough reserve, then you can weather the storm. Strong hands will benefit greatly while weak hands will fold and lose money. Just imagine if you bought a few rentals in the 90s to early 2000s, then instead of being forced to sell in 2006-2008, you buy more, because you have an abundant reserve, then you’d be even better off while renters continue to pay for your mortgage, even if you’re making less profit. Some people prefer to stay vacant waiting for their rent price, but I think most strong hands will not mind lowering the rent 5-10% to get the place rented.

[an]

Great post HLS. I agree with all of the points.

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[quote=livinincali]I can think of a scenario where this type of situation would apply here in San Diego. Suppose for a moment you gobbled up 3-4 cash flowing rental properties in a place like Mira Mesa and rented them out to young Qualcomm engineers or some people that were in related fields. Suppose then that mobile slows down and Qualcomm decides to layoff 5K people. 2 or 3 of your tenants get laid off and decide to leave your properties. Now you went from you nice 5% cap and the $500/month to a negative $2000/month situation. How long can you handle that situation and how long will it take you to find new tenants?[/quote]Rent in Mira Mesa only went up about $100-200 for a 1/1 and 2/2 over the last 15 years. QCOM was much smaller than than it is today. So, I don’t see rent in MM dropping $700/month anytime soon. If rent drop $700/month, then you’re talking about a 2/2 rent @ $800 and a 1/1 rent @500/month. I don’t see that ever happening. Rent for a 2/2 in MM hasn’t been that cheap for 20 years. At that time, QCOM was still in a startup mode and a lot of the QCOM buildings today were just empty land and UTC area was pretty empty compare to how it is today. If we do see that kind of rent drop, then there are much much worse thing to worry about. After all, rent was flat between 2005-2010, during the whole financial crisis.

[an]

HLS, I totally agree that one shouldn’t plan for sunny day scenario. They should be at least cognizant about the worse case scenario or plan for it. I also agree that people who can’t afford to take a few hundred loss a month shouldn’t be in the business of being a landlord. It’s like any other business. The higher your risk is, the higher your return. But you shouldn’t use sunny day scenario and compare it to stable stuff like CD. Which is why I tend to expect a much higher return from my money than some in order to pull the trigger on a particular property.

Though payout is not guarantee, it can be HUGE under certain circumstances. My sunny day scenario is we’ll see a 70s/80s style inflation. During that time, houses went up 3-4x nominal price. Along with increasing prices, rent also went up a lot too. If you locked in a 30 years fixed, you’re golden. I don’t expect that to happen, but who knows. Even a milder inflation period like the 90s-2000s, you see rent increasing and price increasing. If you have the cash to withstand the bad time, you’re stand to profit handsomely during the good time. Nothing is guarantee, but the potential is there.

[an]

[quote=flu]Wouldn’t it be cheaper to take out a HELOC?[/quote]
Unless you’re @ >=80% LTV

[an]

I hope this will stick.

[Author]

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