[EconProf]

Briansd1: You have an uncanny knack for misinterpretation.
To suggest that President Carter was responsible for the 1982 & onward booming economy is to truely be deluded by your own biases.
Carter appointed tight-money, high-interest-rate Volcker only because he was forced to act tough in the face of spiraling inflation he helped foster. It went against every liberal instinct in his populist body. Reagan happily kept Volcker on, pushed through supply-side tax cuts, which eventually (their full implementation was delayed by Congress) spurred the economy into perhaps the biggest growth spurt our economy had since WWII.
Carter’s best contribution was to be defeated in the 1980 election.

[EconProf]

Briansd1: You have an uncanny knack for misinterpretation.
To suggest that President Carter was responsible for the 1982 & onward booming economy is to truely be deluded by your own biases.
Carter appointed tight-money, high-interest-rate Volcker only because he was forced to act tough in the face of spiraling inflation he helped foster. It went against every liberal instinct in his populist body. Reagan happily kept Volcker on, pushed through supply-side tax cuts, which eventually (their full implementation was delayed by Congress) spurred the economy into perhaps the biggest growth spurt our economy had since WWII.
Carter’s best contribution was to be defeated in the 1980 election.

[EconProf]

Briansd1: You have an uncanny knack for misinterpretation.
To suggest that President Carter was responsible for the 1982 & onward booming economy is to truely be deluded by your own biases.
Carter appointed tight-money, high-interest-rate Volcker only because he was forced to act tough in the face of spiraling inflation he helped foster. It went against every liberal instinct in his populist body. Reagan happily kept Volcker on, pushed through supply-side tax cuts, which eventually (their full implementation was delayed by Congress) spurred the economy into perhaps the biggest growth spurt our economy had since WWII.
Carter’s best contribution was to be defeated in the 1980 election.

[EconProf]

Briansd1: You have an uncanny knack for misinterpretation.
To suggest that President Carter was responsible for the 1982 & onward booming economy is to truely be deluded by your own biases.
Carter appointed tight-money, high-interest-rate Volcker only because he was forced to act tough in the face of spiraling inflation he helped foster. It went against every liberal instinct in his populist body. Reagan happily kept Volcker on, pushed through supply-side tax cuts, which eventually (their full implementation was delayed by Congress) spurred the economy into perhaps the biggest growth spurt our economy had since WWII.
Carter’s best contribution was to be defeated in the 1980 election.

[EconProf]

Sorry, CA Renter, but I don’t think assumable loans were that big a factor in the real estate price runup in the late 1970s. The idea of carrying back a second TD was just too uncomfortable for many sellers. They were afraid they wouldn’t be able to unload it, and they were frightened about the discount they would have to take.
Instead, the price runup was because of the understandable panic people felt due to mounting inflation. The pessimism about our country’s future then was palpable, and the anger against President Carter and his lackey Fed chief fueled the appetite for inflation hedges such as gold (at $800/oz.) and houses. Remember also that Proposition 13 was passed in 1978, adding fuel to the fire. Carter finally got a backbone and appointed tough-guy Volcker to head up the Fed, who was willing to put the economy through the high-interest rate ringer in order to slay inflation. Reagan was elected over the hapless Carter. The economy briefly stayed in its deep tight-money slump, until people realized were not going to turn into the Weimar Republic, then exploded with 8% growth out of the recession. Real estate stayed fairly flat for the first half of the 1980s, then heated up for the second half, peaking around 1990.

[EconProf]

Sorry, CA Renter, but I don’t think assumable loans were that big a factor in the real estate price runup in the late 1970s. The idea of carrying back a second TD was just too uncomfortable for many sellers. They were afraid they wouldn’t be able to unload it, and they were frightened about the discount they would have to take.
Instead, the price runup was because of the understandable panic people felt due to mounting inflation. The pessimism about our country’s future then was palpable, and the anger against President Carter and his lackey Fed chief fueled the appetite for inflation hedges such as gold (at $800/oz.) and houses. Remember also that Proposition 13 was passed in 1978, adding fuel to the fire. Carter finally got a backbone and appointed tough-guy Volcker to head up the Fed, who was willing to put the economy through the high-interest rate ringer in order to slay inflation. Reagan was elected over the hapless Carter. The economy briefly stayed in its deep tight-money slump, until people realized were not going to turn into the Weimar Republic, then exploded with 8% growth out of the recession. Real estate stayed fairly flat for the first half of the 1980s, then heated up for the second half, peaking around 1990.

[EconProf]

Sorry, CA Renter, but I don’t think assumable loans were that big a factor in the real estate price runup in the late 1970s. The idea of carrying back a second TD was just too uncomfortable for many sellers. They were afraid they wouldn’t be able to unload it, and they were frightened about the discount they would have to take.
Instead, the price runup was because of the understandable panic people felt due to mounting inflation. The pessimism about our country’s future then was palpable, and the anger against President Carter and his lackey Fed chief fueled the appetite for inflation hedges such as gold (at $800/oz.) and houses. Remember also that Proposition 13 was passed in 1978, adding fuel to the fire. Carter finally got a backbone and appointed tough-guy Volcker to head up the Fed, who was willing to put the economy through the high-interest rate ringer in order to slay inflation. Reagan was elected over the hapless Carter. The economy briefly stayed in its deep tight-money slump, until people realized were not going to turn into the Weimar Republic, then exploded with 8% growth out of the recession. Real estate stayed fairly flat for the first half of the 1980s, then heated up for the second half, peaking around 1990.

[EconProf]

Sorry, CA Renter, but I don’t think assumable loans were that big a factor in the real estate price runup in the late 1970s. The idea of carrying back a second TD was just too uncomfortable for many sellers. They were afraid they wouldn’t be able to unload it, and they were frightened about the discount they would have to take.
Instead, the price runup was because of the understandable panic people felt due to mounting inflation. The pessimism about our country’s future then was palpable, and the anger against President Carter and his lackey Fed chief fueled the appetite for inflation hedges such as gold (at $800/oz.) and houses. Remember also that Proposition 13 was passed in 1978, adding fuel to the fire. Carter finally got a backbone and appointed tough-guy Volcker to head up the Fed, who was willing to put the economy through the high-interest rate ringer in order to slay inflation. Reagan was elected over the hapless Carter. The economy briefly stayed in its deep tight-money slump, until people realized were not going to turn into the Weimar Republic, then exploded with 8% growth out of the recession. Real estate stayed fairly flat for the first half of the 1980s, then heated up for the second half, peaking around 1990.

[EconProf]

Sorry, CA Renter, but I don’t think assumable loans were that big a factor in the real estate price runup in the late 1970s. The idea of carrying back a second TD was just too uncomfortable for many sellers. They were afraid they wouldn’t be able to unload it, and they were frightened about the discount they would have to take.
Instead, the price runup was because of the understandable panic people felt due to mounting inflation. The pessimism about our country’s future then was palpable, and the anger against President Carter and his lackey Fed chief fueled the appetite for inflation hedges such as gold (at $800/oz.) and houses. Remember also that Proposition 13 was passed in 1978, adding fuel to the fire. Carter finally got a backbone and appointed tough-guy Volcker to head up the Fed, who was willing to put the economy through the high-interest rate ringer in order to slay inflation. Reagan was elected over the hapless Carter. The economy briefly stayed in its deep tight-money slump, until people realized were not going to turn into the Weimar Republic, then exploded with 8% growth out of the recession. Real estate stayed fairly flat for the first half of the 1980s, then heated up for the second half, peaking around 1990.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Those numbers look a little too risky to me too. The examples I have seen of Norris Group loans, admittedly a few months ago, definately had more invested by the flipper. I would hold back some of the loan until the improvements were made in case it can’t be sold and must be rented out. If the buyer can’t come in with $20k of his own money then he is not a good risk.
These fixer-uppers are generally in the Inland Empire, so it would be no fun to take back the property and finish the fix-up and rent it or sell it.

[EconProf]

Bearishgurl gives some, but not all, of the steps necessary to be sure your TD investment will be safe. All that takes time, which is why the up-front investment involves huge amounts of research, which adds to the “cost” of the investment, which lowers the real rate of return. Since many of the deals you investigate won’t pass the filters you need to apply, that multiplies your research investment costs at the outset.
Yes, some companies are set up to be intermediaries to do all the legwork & present you the investor with a take-it-or-leave-it package, as shown by the link. But think of it–15% to 18% interest rate, plus the sorry borrower pays 6 to 10 points on top of that! Who would do that? The Mafia could offer better terms. The borrower is such a bad risk they apparently can’t borrow from their relatives or a series of credit cards, so be prepared to own the property. Beware of far-away properties, 2d Trust Deeds, inflated appraisals, and the biggie–toxic waste or buried fuel tanks on the property from the 1920s. The property could have negative value.
Rather than the extortionate rates offered by the link, try TheNorrisGroup.com, which sticks to So CA houses, 65% LTV, 12% or so, 3 points to the borrower, and one year term. The borrower is typically a buy, fix up, & sell investor, so you are somewhat safer, LTV-wise. Not endorsing them; do your own due diligence, but it is where I’d put my excess liquidity.
A little history for those under 50 here. TD investments were once really big in the late 70s and 80s when prevailing interest rates were ramping up as inflation gathered steam. In those days existing mortgages were assumable by the next buyer of a house. Remember that mortgage rates and inflation rates peaked around 1980, pre-Reagan and pre-Volcker, at about 18% and 13% respectively. This meant that the lucky homeowners selling their house with a 6% assumable loan in an 18% new-loan-environment had a terrific selling point. So much so that it capitalized into a much higher market value of the house.
Trouble is, the mortgage might only be for 50% of the asking price. Enter the carry-back. The home seller would sell and create a 2d TD for 30% or 40% of the price, so the buyer would only have to come with 20% or 10% down. Terms of the 2d TD might be 10%, 3 – 5 years or so.
But the seller wants cash, not a note, so they immediately advertise in the classifieds (remember them?) or sell to a broker/middleman who would turn around and sell it. But who wants a 10% note in an 18% world? So the note would sell at a discount of, say, 50% or 25% off of face value. This bumps the effective yield to up to 15% or 20%. But if you buy this note, you are instantly buying safety because it is now at a better LTV. Plus, if the house sells or refi’s sometime in the five or so years till maturity, you must get paid off at FACE value, which makes the rate of return go through the ceiling. Trust me, nothing is more satisfying than to get a call from an escrow company saying your note is about to pay off and we’d like to confirm your address for sending the check! Ah, those were the days.

[Author]

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