[HLS]

DWC,
Plenty of people have bought real estate (and stocks) without really understanding the fundamentals, and have STILL made money.

Was it luck, skill, intelligence or stupidity ? (I’ll let you decide) You can make money by making “stupid” decisions.

Houses that I used to buy for $90K-$125K are $350K-$400K+ today. It’s insane. The value ISN’T there.(The price is)

Even if I only think that they are worth $200K today, and never buy another one, that’s OK with me. If someone else wants to pay $201 or 225 or 250, I don’t care.

There are plenty of others that think like me. We aren’t going to fight over these stucco boxes or get into bidding wars.

If enough people step up to the plate sooner rather than later, maybe prices won’t drop as far as I think that they should.

Buying a rental in So Cal today is a gamble. Most are not going to pencil out for a long time. If someone wants to speculate, that’s not investing IMO.

A boat is a hole in the water that you throw money into, an “investment” house shouldn’t be one too.

Prices aren’t cheap today, they are only cheaper than they were 2 years ago.

Most people have a false sense of security of what their home is worth today. In reality, it’s virtually unsaleable at more than 80%-90% of what they think.

over 90% of what is currently listed in SD isn’t selling, and thousands more have listings that have expired, and would still love to sell, but they can’t.

[HLS]

DWC,
Plenty of people have bought real estate (and stocks) without really understanding the fundamentals, and have STILL made money.

Was it luck, skill, intelligence or stupidity ? (I’ll let you decide) You can make money by making “stupid” decisions.

Houses that I used to buy for $90K-$125K are $350K-$400K+ today. It’s insane. The value ISN’T there.(The price is)

Even if I only think that they are worth $200K today, and never buy another one, that’s OK with me. If someone else wants to pay $201 or 225 or 250, I don’t care.

There are plenty of others that think like me. We aren’t going to fight over these stucco boxes or get into bidding wars.

If enough people step up to the plate sooner rather than later, maybe prices won’t drop as far as I think that they should.

Buying a rental in So Cal today is a gamble. Most are not going to pencil out for a long time. If someone wants to speculate, that’s not investing IMO.

A boat is a hole in the water that you throw money into, an “investment” house shouldn’t be one too.

Prices aren’t cheap today, they are only cheaper than they were 2 years ago.

Most people have a false sense of security of what their home is worth today. In reality, it’s virtually unsaleable at more than 80%-90% of what they think.

over 90% of what is currently listed in SD isn’t selling, and thousands more have listings that have expired, and would still love to sell, but they can’t.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

Notwithstanding any Seller required pre-approval, Buyer is not required to obtain financing from CHL or Seller- Buyer may obtain financing from any source..

RUST,  For a loan below $417K, it's possible to get a FNMA approval within 2 minutes of submission of an application, with all conditions showing.

Weight is given to credit score, assets, income and LTV, etc.

The actual cost for this is a max of $40, including credit report and FNMA submission fee.

The "findings" will list what needs to be verified. It's basically an underwritten loan, just needs to be verified by an underwriter.

If you list assets or income that cannot be verified, the approved findings become meaningless.

May need to be able to prove what is listed.

A strong borrower may not need to verify income, just verify their job and assets.

[HLS]

Notwithstanding any Seller required pre-approval, Buyer is not required to obtain financing from CHL or Seller- Buyer may obtain financing from any source..

RUST,  For a loan below $417K, it's possible to get a FNMA approval within 2 minutes of submission of an application, with all conditions showing.

Weight is given to credit score, assets, income and LTV, etc.

The actual cost for this is a max of $40, including credit report and FNMA submission fee.

The "findings" will list what needs to be verified. It's basically an underwritten loan, just needs to be verified by an underwriter.

If you list assets or income that cannot be verified, the approved findings become meaningless.

May need to be able to prove what is listed.

A strong borrower may not need to verify income, just verify their job and assets.

[HLS]

Notwithstanding any Seller required pre-approval, Buyer is not required to obtain financing from CHL or Seller- Buyer may obtain financing from any source..

RUST,  For a loan below $417K, it's possible to get a FNMA approval within 2 minutes of submission of an application, with all conditions showing.

Weight is given to credit score, assets, income and LTV, etc.

The actual cost for this is a max of $40, including credit report and FNMA submission fee.

The "findings" will list what needs to be verified. It's basically an underwritten loan, just needs to be verified by an underwriter.

If you list assets or income that cannot be verified, the approved findings become meaningless.

May need to be able to prove what is listed.

A strong borrower may not need to verify income, just verify their job and assets.

[HLS]

Notwithstanding any Seller required pre-approval, Buyer is not required to obtain financing from CHL or Seller- Buyer may obtain financing from any source..

RUST,  For a loan below $417K, it's possible to get a FNMA approval within 2 minutes of submission of an application, with all conditions showing.

Weight is given to credit score, assets, income and LTV, etc.

The actual cost for this is a max of $40, including credit report and FNMA submission fee.

The "findings" will list what needs to be verified. It's basically an underwritten loan, just needs to be verified by an underwriter.

If you list assets or income that cannot be verified, the approved findings become meaningless.

May need to be able to prove what is listed.

A strong borrower may not need to verify income, just verify their job and assets.

[HLS]

Notwithstanding any Seller required pre-approval, Buyer is not required to obtain financing from CHL or Seller- Buyer may obtain financing from any source..

RUST,  For a loan below $417K, it's possible to get a FNMA approval within 2 minutes of submission of an application, with all conditions showing.

Weight is given to credit score, assets, income and LTV, etc.

The actual cost for this is a max of $40, including credit report and FNMA submission fee.

The "findings" will list what needs to be verified. It's basically an underwritten loan, just needs to be verified by an underwriter.

If you list assets or income that cannot be verified, the approved findings become meaningless.

May need to be able to prove what is listed.

A strong borrower may not need to verify income, just verify their job and assets.

[HLS]

HLS, you stated earlier that you multiply the monthly rent a place would rent for by 125 and that is the real value of the property. What is the rational behind that? 

If you multiply the current rents in this area, you get a number that is WAY lower than anything in this area. Like 50% reduction from todays prices.

DWC, it's just a common sense generalization. I'm not saying that values will drop 50% further, but they could.

If looking for a reasonable investment that will pencil out, without needing appreciation to have it make sense, it's just a rough number.

There are plenty of places in the country where you can buy for closer to 100X monthly rent, esp multi units.

If I buy as an investment, I would like to see a return on my investment, not something that I need to support every month with additional cash.

It's also a generalization that if monthly rent is less than the price of the property divided by 150, you are better off renting, financially speaking.

To me, the reasonable rent in an area determines the true value of the property; the price of the property doesn't determine the reasonable rent.

There is a big difference between price and value.

[HLS]

HLS, you stated earlier that you multiply the monthly rent a place would rent for by 125 and that is the real value of the property. What is the rational behind that? 

If you multiply the current rents in this area, you get a number that is WAY lower than anything in this area. Like 50% reduction from todays prices.

DWC, it's just a common sense generalization. I'm not saying that values will drop 50% further, but they could.

If looking for a reasonable investment that will pencil out, without needing appreciation to have it make sense, it's just a rough number.

There are plenty of places in the country where you can buy for closer to 100X monthly rent, esp multi units.

If I buy as an investment, I would like to see a return on my investment, not something that I need to support every month with additional cash.

It's also a generalization that if monthly rent is less than the price of the property divided by 150, you are better off renting, financially speaking.

To me, the reasonable rent in an area determines the true value of the property; the price of the property doesn't determine the reasonable rent.

There is a big difference between price and value.

[HLS]

HLS, you stated earlier that you multiply the monthly rent a place would rent for by 125 and that is the real value of the property. What is the rational behind that? 

If you multiply the current rents in this area, you get a number that is WAY lower than anything in this area. Like 50% reduction from todays prices.

DWC, it's just a common sense generalization. I'm not saying that values will drop 50% further, but they could.

If looking for a reasonable investment that will pencil out, without needing appreciation to have it make sense, it's just a rough number.

There are plenty of places in the country where you can buy for closer to 100X monthly rent, esp multi units.

If I buy as an investment, I would like to see a return on my investment, not something that I need to support every month with additional cash.

It's also a generalization that if monthly rent is less than the price of the property divided by 150, you are better off renting, financially speaking.

To me, the reasonable rent in an area determines the true value of the property; the price of the property doesn't determine the reasonable rent.

There is a big difference between price and value.

[Author]

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