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FHA already upped it’s monthly mortgage insurance to 1.15% of the loan amount starting in April. Less than 6 mos ago it was only .55%! They more that doubled it! So if you are getting a $350,000 FHA loan you have $335/mo just in mortgage insurance. They are trying to reduce FHA’s footprint in the mortgage market and one way to do that is to keep jacking up mortgage insurance.

Fannie Mae loans have also recently got a lot more expensive if you have anything less than perfect credit and 20% down. We are headed towards very expensive mortgages unless you have 20% down and perfect credit. This will all impact prices. Maybe even more so in the blue collar areas where FHA loans are more popular. It is getting REALLY expensive to get a 3.5% down FHA loan. And add higher rates into that cocktail too. I can’t see how that doesn’t put a lot more downward pressure on prices for years to come, unless this is offset by a job/income boom.

Saying we will not have the “tailwind” of accommodative lending pushing prices this go around (like we did starting in the late 1990’s) is an understatement.

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FHA already upped it’s monthly mortgage insurance to 1.15% of the loan amount starting in April. Less than 6 mos ago it was only .55%! They more that doubled it! So if you are getting a $350,000 FHA loan you have $335/mo just in mortgage insurance. They are trying to reduce FHA’s footprint in the mortgage market and one way to do that is to keep jacking up mortgage insurance.

Fannie Mae loans have also recently got a lot more expensive if you have anything less than perfect credit and 20% down. We are headed towards very expensive mortgages unless you have 20% down and perfect credit. This will all impact prices. Maybe even more so in the blue collar areas where FHA loans are more popular. It is getting REALLY expensive to get a 3.5% down FHA loan. And add higher rates into that cocktail too. I can’t see how that doesn’t put a lot more downward pressure on prices for years to come, unless this is offset by a job/income boom.

Saying we will not have the “tailwind” of accommodative lending pushing prices this go around (like we did starting in the late 1990’s) is an understatement.

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What would these rent for?

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What would these rent for?

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What would these rent for?

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What would these rent for?

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What would these rent for?

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What range of rents are you seeing in your search for a 2/2 condo in Poway?

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What range of rents are you seeing in your search for a 2/2 condo in Poway?

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What range of rents are you seeing in your search for a 2/2 condo in Poway?

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What range of rents are you seeing in your search for a 2/2 condo in Poway?

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What range of rents are you seeing in your search for a 2/2 condo in Poway?

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Thanks every one for the great comments! And especially Temecula Guy, thanks for your very helpful input!

Couple of random comments:
1. I feel pretty comfortable when I can buy a SFR BELOW construction costs. If I can buy it for FAR less than they can build it, if they EVER build a house again in Riverside Co. I’ll be in the money. Some of these houses just have to get back to construction costs and you will have decent equity. And I think they will get back there and I don’t think it will take 10 yrs. They have not built hardly anything in the Inland Empire (or the entire state of CA for that matter) in 3 years, they won’t build much in 2011, so that is 4 yrs with NO new homes being built (or multifamily). Eventually the existing inventory will get absorbed and I don’t think it will take 10 yrs. That could also push rents up.

2. I think when you can get an asset below construction costs, 60% below peak price, finance with a 5% 30 year fixed rate, and the tenant can pay that asset off for you in 15 years, it’s hard to see how that is a bad investment.

3. I do worry about the effect of gas prices on rents and values especially in the far flung regions of Riverside Co. Esp if they get up to $5-$6 a gallon. This fear favors buying close in SD condos.

What do investors think of condos in San Diego vs. SFR’s in Riverside Co.? Obviously San Diego is a much better rental market and more premium location than Riverside Co., but SFR’s are a more desirable asset b/c NO HOA risks. The cash flow numbers work for a lot of condos in SD County, and in good locations. The numbers do not work great for SFR’s in SD, even SFR’s in rougher neighs.

Personally I would only go SFR’s in Riverside. If I’m going to buy a condo I would go SD over Riverside in a heartbeat.

Any thoughts on Vegas and Phoenix? I know both are hurting bad. But like Riverside Co. you can buy way below construction costs and get new built SFR’s that cash flow. Yes I know there are crappy areas in both cities, but if you are careful you can pick the better areas. I hear they do rent up if you are very, very careful on neighborhood selection.

My personal goal is to get 6-10 houses paid off in 15 years as my personal pension plan. I have the down payments and can get 8 more conventional loans (I have 2 rentals already). I’m 40 yrs old right now. My plan is 20%-25% down on each and get them paid off in 15 years. Just need to choose where and what to buy!!

[ctr70]

Thanks every one for the great comments! And especially Temecula Guy, thanks for your very helpful input!

Couple of random comments:
1. I feel pretty comfortable when I can buy a SFR BELOW construction costs. If I can buy it for FAR less than they can build it, if they EVER build a house again in Riverside Co. I’ll be in the money. Some of these houses just have to get back to construction costs and you will have decent equity. And I think they will get back there and I don’t think it will take 10 yrs. They have not built hardly anything in the Inland Empire (or the entire state of CA for that matter) in 3 years, they won’t build much in 2011, so that is 4 yrs with NO new homes being built (or multifamily). Eventually the existing inventory will get absorbed and I don’t think it will take 10 yrs. That could also push rents up.

2. I think when you can get an asset below construction costs, 60% below peak price, finance with a 5% 30 year fixed rate, and the tenant can pay that asset off for you in 15 years, it’s hard to see how that is a bad investment.

3. I do worry about the effect of gas prices on rents and values especially in the far flung regions of Riverside Co. Esp if they get up to $5-$6 a gallon. This fear favors buying close in SD condos.

What do investors think of condos in San Diego vs. SFR’s in Riverside Co.? Obviously San Diego is a much better rental market and more premium location than Riverside Co., but SFR’s are a more desirable asset b/c NO HOA risks. The cash flow numbers work for a lot of condos in SD County, and in good locations. The numbers do not work great for SFR’s in SD, even SFR’s in rougher neighs.

Personally I would only go SFR’s in Riverside. If I’m going to buy a condo I would go SD over Riverside in a heartbeat.

Any thoughts on Vegas and Phoenix? I know both are hurting bad. But like Riverside Co. you can buy way below construction costs and get new built SFR’s that cash flow. Yes I know there are crappy areas in both cities, but if you are careful you can pick the better areas. I hear they do rent up if you are very, very careful on neighborhood selection.

My personal goal is to get 6-10 houses paid off in 15 years as my personal pension plan. I have the down payments and can get 8 more conventional loans (I have 2 rentals already). I’m 40 yrs old right now. My plan is 20%-25% down on each and get them paid off in 15 years. Just need to choose where and what to buy!!

[ctr70]

Thanks every one for the great comments! And especially Temecula Guy, thanks for your very helpful input!

Couple of random comments:
1. I feel pretty comfortable when I can buy a SFR BELOW construction costs. If I can buy it for FAR less than they can build it, if they EVER build a house again in Riverside Co. I’ll be in the money. Some of these houses just have to get back to construction costs and you will have decent equity. And I think they will get back there and I don’t think it will take 10 yrs. They have not built hardly anything in the Inland Empire (or the entire state of CA for that matter) in 3 years, they won’t build much in 2011, so that is 4 yrs with NO new homes being built (or multifamily). Eventually the existing inventory will get absorbed and I don’t think it will take 10 yrs. That could also push rents up.

2. I think when you can get an asset below construction costs, 60% below peak price, finance with a 5% 30 year fixed rate, and the tenant can pay that asset off for you in 15 years, it’s hard to see how that is a bad investment.

3. I do worry about the effect of gas prices on rents and values especially in the far flung regions of Riverside Co. Esp if they get up to $5-$6 a gallon. This fear favors buying close in SD condos.

What do investors think of condos in San Diego vs. SFR’s in Riverside Co.? Obviously San Diego is a much better rental market and more premium location than Riverside Co., but SFR’s are a more desirable asset b/c NO HOA risks. The cash flow numbers work for a lot of condos in SD County, and in good locations. The numbers do not work great for SFR’s in SD, even SFR’s in rougher neighs.

Personally I would only go SFR’s in Riverside. If I’m going to buy a condo I would go SD over Riverside in a heartbeat.

Any thoughts on Vegas and Phoenix? I know both are hurting bad. But like Riverside Co. you can buy way below construction costs and get new built SFR’s that cash flow. Yes I know there are crappy areas in both cities, but if you are careful you can pick the better areas. I hear they do rent up if you are very, very careful on neighborhood selection.

My personal goal is to get 6-10 houses paid off in 15 years as my personal pension plan. I have the down payments and can get 8 more conventional loans (I have 2 rentals already). I’m 40 yrs old right now. My plan is 20%-25% down on each and get them paid off in 15 years. Just need to choose where and what to buy!!

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