[Coronita]

[quote=FlyerInHi]So how would the son use his mom’s houses as collateral? If he owned the houses, he could. No?
[/quote]

He doesn’t own the home. His mom is still alive and it’s her property. He is a beneficiary, and when his mom’s time passes, the percentage of ownership for those homes relative to his other 4 siblings also depends on what his mom’s trust says (as well as what sort of capital gains taxes that ends up getting passed, if any, since none of them will be owner occupied. Inheritance taxes will will most likely be $0 for them in this specific case)

Talking about what he can do if he owned those properties is a moot point because they aren’t his. They are his mom’s.

[quote]
My experience is if title is held in a trust, you first have to transfer the house to the individual, refinance, then quit claim to the trust.

That’s because lien priority is first come first served as far as recording is concerned.[/quote]

Every time I refinanced my properties held in a trust, I never had a problem because the title of the property was held in a trust. The only thing some lenders have done was made me fill out paperwork that would take it out of the trust and then another paperwork that would put it right back in. But both deed paperwork would be completed and done at the same time. It didn’t hinder the loan application or closing the loan. Just extra paperwork that were filed while closing escrow. Putting property in a corp is a complete different beast.

[Coronita]

[quote=spdrun]

Why would I want to sell my homes and “fire” borrowed money from Fannie that I currently “employ” to work generating income for me, when I wouldn’t be able to “rehire” borrowed from Fannie (or any other source) to “work” in a 10% CD?

You’re not thinking like the average homeowner, who thinks in terms of resale value, not rental income. Values are dictated by the market. Most people don’t buy with cash, and won’t qualify at a higher rate at current price levels.

Whether rates will rise is a different question, but there’s certainly a lot of political pressure against further QE at this point, and things like 3% down are also being brought into question. Yay GOP![/quote]

Actually, that might be true. Until they start relaxing lending standards again. And reality is, you know that will eventually happen.

[Coronita]

[quote]
Yes, you’d be right to hold on to your real estate if CD rates are <1%, but what if rates were to skyrocket to 10%, or higher? How would you feel then? And what if housing prices were likely to decline at the same time that other investments were offering much higher returns (and the potential for much higher capital gains, too), particularly if rates rise significantly?[/quote]

I think you need to step back and not think in terms of "doom" and "gloom". I think the Fed has proven it likes to intervene. The "powers" won't "let" rates "skyrocket" to 10% really very quickly. Afterall, they are really good at "fixing" things. And if they did let that happen, it would end up wreaking havoc on the financial markets, on businesses,etc, and then the majority of Americans would have a much bigger problem at hand than thinking about buying real estate. Just ask the Russians.

Any sort of rate move would mostly be a slow and steady trickle up, so that it causes a little discomfort, but manageable and tolerable for most people. Just like the how rates on mortgages have already risen 1% since the bottom, slow and steady.
Has that 1% rise thus far caused a real estate meltdown?

Second, what happens with CD rates might be good for my own money (or maybe not), but it doesn't affect the money from fannie I borrowed for 30 years to finance the home purchases. What does matter is my tenant's ability to help me build equity and generate some cash flow. It's not like fannie would directly lend to me money to invest in dividend stocks or 10%CD. That's what I use my own money for.

Why would I want to sell my homes and "fire" borrowed money from Fannie that I currently "employ" to work generating income for me, when I wouldn't be able to "rehire" borrowed from Fannie (or any other source) to "work" in a 10% CD? (Not to mention, as part of "firing" Fannie money, I would also have to pay capital gains taxes, depreciation recapture,etc,etc)?

[Coronita]

[quote=harvey]I personally would stress less if I had $800K liquid and $400K debt vs. $400K liquid and zero debt, especially if the cost of that debt were very low and fixed rate.

Accounting net worth is the same – the relative value of the different scenarios are subjective.

Different people value liquidity and opportunity cost differently. In general I think the benefits of paying off a home loan are often overstated.[/quote]

Depends on your age, which I didn’t really get until I started to get older…

[Coronita]

[quote=scaredyclassic]i saw a pretty ordinary but largeish (3300 sq ft) house a week ago in temecula right near my kid’s piano teacher that was renting for 2300. that struck me as superhigh. piano lesson was tonight but i didn’t notice if it was rented.[/quote]

More of my colleagues have been successful renting their 3000sqft homes in my hood for close to $4000/month, and people are paying.

[Coronita]

strong hands won’t sell if they cash flow much better than that 1%CD that most people have been tucking their money into. Just saying.

Also, there’s a fundamental reason why some of the latest foreigners from asia are different from what happened during the japan days..When the Japanese went on the real estate binge, it was about speculation. The latest real estate binge isn’t strictly about speculation. It’s about the 1% in those countries taking a hedge against political/economic instability in their homeland, in case the government decides to start going after them. Besides, foreign purchase, BTW still doesn’t make the majority of home purchases, despite the media the rhetoric- 25% i believe was the last number for all foreign purchases, most of them from canada. And most of them from asia are at the high end of real estate. So you folks worried about an “Red Dawn” like invasion can stop worrying.

Also, don’t discount how much homes are held by institutions. Remember that many of them got into the rental business as well and are just waiting to home prices to rise to sell and profit, as many other folks that bought at low prices will.

Personally, I’m in no hurry to sell. The only time I would is if/when home prices reach 2x of what I paid for, and then I might consider it of if San Diego turns into blight town (which is unlikely, and if that happened, you wouldn’t be interested in buying anyway). Why sell when it’s a steady source of rental income, that will most likely beat that CD for a long long time? And for more “affordable homes” that were bought at good times, that’s the problem that I see. There’s no hurry to sell.

[Coronita]

[quote=harvey]The points on your current loan are a sunk cost.

Why would you pay off a 2.5% loan early?[/quote]

So I can buy a bigger house with a new loan and rent this one out, hopefully with a $4000/month cash flow by then. It’s getting pretty close.

[Coronita]

[quote=moneymaker]Now at 2.25% Time to refi? flu? Anyone think it will get down to 2.00? On a separate but related note, will the gold buying be from the bond market or the stock market people?[/quote]

My 15 year is at 2.5% with 0 points 0 cost. So unless it’s something similar, I don’t think I’ll bite.
Besides, I’m following ucgal’s lead and adding in extra principal payments to try to pay this off earlier, hopefully without 4-5 years, so that by the time my kid goes to junior high, I this will be free and clear, without disturbing the rest of my investments.

[Coronita]

[quote=Jazzman]Rents in my neighborhood have gone bananas. It’s the same disease that afflicts house prices. Landlords just gouge the market and get away with it because there is so little to choose from. They can be the dumbest creatures preferring to let their investment sit empty than ask a reasonable rent. Some renters never even question it. They just pay. Unbelievable, really.[/quote]

Beggars can’t be choosers 🙂

[Coronita]

[quote=kev374]All I can say is that reading these comments here about rents being sky high all I can say is that I must be lucky to have a spacious terrific 750sqft 1bd within such close proximity to Newport Beach and a good sized 1 car garage paying only 1200/mo.

My buddy must be luckier than me because he has a very similar apartment in Huntington beach, just a block from the beach, with a garage at $1300/mo.

A few other friends are lucky as well… one has a 2bd 1100 sqft place close by and pays $1525.

We are all exceptions to the rule of course, as rents are crazy high in line with mortgages on houses here that are listed at $500,000 for a 1000sqft shack…according to the media and the economists.[/quote]

I remember not to far ago, you were mentioning how ridiculously high rent prices were.

And then also, you were considering moving to Atlanta.

[Coronita]

[quote=svelte][quote=flu][quote=svelte]I don’t know. I doubt I would crawl under the car if only hydraulics were keeping it from crushing me. I would still use jack stands even if I used the Quick Jack to get it into the air.

No auto repair is worth risk of severe injury or death to me.[/quote]

Interesting… Do they make 20″ jack stands?[/quote]

Lots of them on the market. Google “tall jack stands”

I mean, even floor jacks are hydraulic and we throw jack stands under a car when using those.[/quote]

Good point.

[Coronita]

[quote=livinincali][quote=AN]
Transaction cost only apply if you sell. You’re, right, there is maintenance cost. If you add that, you should also add appreciation as well.[/quote]

But you can’t realize net equity until you sell right. Even if you take out a HELOC you also create a liability until you sell.

The bottom line is rent vs buy calculations can get tricky. I think you either need to keep it really simple like Mortgage monthly payment vs rent or it needs to be really complicated. In our low rate environment MID is mostly canceled out by Property Tax. Appreciation is probably mostly canceled out by maintenance. Equity build is mostly canceled out transaction costs. It’s only once you get past 5-10 years before you really start to see economic positives in ownership vs renting.

The biggest unknown right now is will rates move higher, how much will they move higher, and what potential effect does that have on the price of homes. In the worst case scenario I could see home prices significantly lower than they are now.[/quote]

In the worst case scenario, we could have a big earthquake and fall into the ocean, and then Las Vegas becomes ocean front real estate.

And don’t worry. If interest rates do rise, I’m sure the Fed and/or banks will pull another rabbit out of the hat. For example, I think by then, it will probably ok to re-introduce subprime lending again, so that people who normally can’t qualify for a loan can once again make purchases again. Just like the auto-industry.

Personally, I’d like to try to stack up as many homes as I possibly can right before we start moving that way. I think I’d rather take my chances and buy real estate high and risk losing say 10% on a home purchase over the course of years rather than I’d say many people that lost almost 10% on stocks overnight. Just saying..

[Coronita]

I think people are making the decision to buy a home way too complicated in present day.

The only thing that really should matter is (1) can you really afford to own and (2) where you can afford to own, do you really want to live in that area for a few years or are you just making compromises so you can say you own a home.

There’s a dozen or so things that can happen that makes trying to get the most optimal price on your primary home in hindsight not a big deal.

The only concern you should have really is if you can really afford what you want.

[Coronita]

[quote=svelte]I don’t know. I doubt I would crawl under the car if only hydraulics were keeping it from crushing me. I would still use jack stands even if I used the Quick Jack to get it into the air.

No auto repair is worth risk of severe injury or death to me.[/quote]

Interesting… Do they make 20″ jack stands?

[Coronita]

[quote=AN][quote=bewildering][quote=deadzone]If you have to put 20% down then it is not an apples to apples comparison (rent vs. mortgage) in terms of affordability. I would say Mira Mesa is borderline undesirable.[/quote]

Mira Mesa is undesirable to single folks, but very desirable to families. Schools are great and easy to get around. Newer as well, so not as many ghetto houses as North Park, South Park, Clairemont etc.

As mentioned above, use the New York times rent vs. buy calculator. And remember when markets work everyone can spot a bargain. I doubt their are great deals to be had in this market.[/quote]Unless deadzone is rich and anything less than Carmel Valley/Del Mar/etc is undesirable.[/quote]

you rift rafts in Mira Mesa need to stay in your hood AN…

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