[HLS]

Countrywide Bank dropped their 12 month CD’s to 5.50% from 5.65% (APY)
They are still at 5.50% for liquid accounts $10K+ and FDIC insured.

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I think everyone here knows how people will often invest in things that they have little to no knowledge about.
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It’s safe to say that the stock market is EXACTLY that…

Some day when there are few buyers, people will quote the prices at the peak, wanting to hold on until they break even, cuz they don’t wanna lose money, as the market falls much quicker than housing ever will.

Classic example of a legalized pyramid scheme, with the vast majority of players having no knowledge….

AND no chance of a govt bailout !

[HLS]

VISH,
It’s all about leverage….

At the right time, it makes more sense to buy 5 properties with 20% down on each than to pay 100% cash for one property, assuming that you can deal with the risk and carrying costs.

Many people have a pile of equity, and sleep soundly every night. They could have made 500% more.

You can reap rewards OR double your losses, depending on your timing.

Past history has shown that the magic of leverage in real estate is no secret. There is no guarantee that will continue, although most people seem to think that it’s a sure thing, but it isn’t.

[HLS]

The reality is that people who DON’T think like this may keep the market from getting to where it ought to go.

People who think that 200x monthly rent is worth buying will pay more than others think they should.

The big question is will there be enough of them willing to pay closer to 200x+ to support the avalanche. There will be plenty of buyers willing to step in at the lower factor.

Time will tell.

[HLS]

Lenders still only allow 75% of market rent when factoring income.

With 20% down, Full Doc, 30 YR Fixed, Fully Amortized, Credit Score above 680, Loan amount below $417K for one unit, today’s rate for investment property is 6.50% with a cost OR 7% at no cost.

With 25% down, you can get that rate closer to 6.25%

Conforming loan limits are higher for 2-3-4 units.

For Stated Income, Rates are 6.625%-6.75%, depending on credit score. 700+ gets you the lower.

It’s still a matter of qualifying.

I wouldn’t buy a property “expecting” any appreciation.
I’d want that to be the bonus. Sticking with around 125X monthly rent makes sense, but condo HOA’s can be a poor long term investment, as the monthly fee grows and mandatory assessments show up, and you have little control.

[HLS]

There was a story (not sure if true) about a bank that FDIC seized, and a married couple who had a $200K acct POD.

The husband died the same day that the bank was seized, meaning that the entire $200K became the wife’s and she was only covered to $100K…

Someone figured out that the husband died at 10pm, but the bank was seized as of 3pm, which meant that HE was alive and covered by FDIC at 3pm.

SO, the wife got the $200K coverage.

http://www.fdic.gov

Retirement accounts can be covered to $250K

[HLS]

Countrywide Bank is online.
You “move things out” without even leaving your computer.

With CW Savingslink, the account is linked to your checking account at any bank you want.
A request by 4pm transfers the money into your checking account the next morning.

I cannot imagine easier access to money. Having to go into a branch today, is no longer easy access to money.

World Savings has HUGE exposure to Negative Amortization Loans. They invented them about 25 years ago. They thought that they had them perfected.
Now owned by Wachovia, I don’t like them.

http://www.CountrywideBank.com

[HLS]

Countrywide Bank is still paying 5.35% APR (5.50% APY) on liquid deposits of $10K- $100K
For a $250K account 5.49% APR (5.65% APY)

On a 1 YR CD it’s 5.50%. All FDIC insured to the limits.

ANY FDIC account is just as “reputable” as another.

What makes you think WORLD SAVINGS is so reputable ???

[HLS]

If seller is paying a full commission of 6%, it’s $90K.

I’ll bet that the agents might split that $25K cost and take $65K to share instead of losing the deal completely
….don’tcha think ??

Or if seller offers $10K or whatever, it can all be worked out…. Can’t we all get along ??

If it were my deal, I’d make sure that it closed.
65 potatoes is better than no potatoes.

[HLS]

Temec,
I think what he is asking about is when the builders sell their models up front, and rent them back from the owner until complex is sold. Helps their cash flow if they can find a victim.

In an up market, they don’t want to do this! They keep raising prices in new phases etc…so they can get more at the end..

In this market, you buy the model now, and they rent back from you until they sell out.
That is why they want 6 month options.

A friend of mine has a rental like this in Las Vegas.
The original lease was 1 year, I think that he is on year 3 now, but I don’t think the house is worth what he paid anymore. They haven’t sold out yet.

Sometimes you can get a great lot and the upgrades etc, but there is wear and tear of people walking through, possibly for several years.
I’m sure that they repair or clean up any mess, and the landscaping is in too.

[HLS]

Of course it will help the economy!!

Average workers will be able to afford unpaid days off now. It will allow people to vacation more. On cruises they can now afford an outside cabin instead of an inside.

Those that shop at the 99c ONLY stores will be able to afford to shop at Big Lots now.

Those that usually travel coach can afford to fly First Class now.

It’s such a boost to the economy that auto workers are willing to go on strike…

I figured it out and it makes TOTAL sense!!

If you have $10,000 in credit card debt, you are going to save $4 a month in interest.
For each $100K of HELOC that you have, people will save $41 a month. Isn’t that enough to stimulate the economy ??

Also, you cannot compare a short term rate with a 30 yr fixed rate.

[HLS]

There was a huge over supply of people in these “sales” jobs. Many really weren’t needed, it was just dividing up the pie into smaller pieces.

The market can function without all of the people that have left. They can look for other sales jobs in different fields and find new victims.

Many people in real estate and mortgage weren’t qualified, able or capable to give average people advice about the largest financial transaction of their lives, but they did.

Most of the mortgage folks only knew that the worse they screwed the borrower, the more they put into their pocket, and they did.

It’s not like we are having a brain drain of highly intelligent, honest, ethical people flee the area.

It was a gravy train for many of them. They were so foolish, they didn’t even realize it and have nothing to show for it today except a pile of debt.

[HLS]

“I prefer the technique of buying stocks for products which I use and like. If you like Apple computers, buy Apple stock”

IMO, THAT has got be the worst advice in the world.
Sadly, I’ve heard it before.

[HLS]

The system has been crumbling and decaying in one way or another for a very long time, like 30+ years.

Do you think that every Worldcom/Enron/Tyco/Adelphia scam came to light ?
That every crooked “Duke Cunningham” got caught ?

The losses will be buried and traded sideways for as long as possible. They aren’t writing down securites that are worth 20c on the dollar until they absolutely have to. They will keep them on their books at cost.

As Warren Buffets wisely said, “It isn’t until the tide goes out that you see who has been swimming naked”

There will be MANY false alarms that will shake the markets a bit. A few hundred points here, a few basis points there, cut and raise, etc.

Dollar will drop, then recover a bit.
There already was a run on Countrywide Bank, but it’s FDIC insured.

The problems didn’t start this year or this week. In the big picture we are in the middle of a gigantic mess. It could continue in this limbo for 10 or 20 more years (or longer)until the tsunami hits, or it could be hours away.

The stock market is a minefield. Too many people are way too complacent about their “investment”. It’s totally built on the greater fool theory, just like housing was in 2005.

Houses take time to unravel. Stocks can unravel in hours, days, weeks, etc.
Nobody has an instruction manual on what to do in times of real crisis. Complete seat of their pants decisions (and some of those pants are gonna be stinky)

It IS going to come. It’s only a question of when. There is too much debt piled up and too many people without any integrity to care about the system. They only care about themselves and there own pile of cash. There are people making tens of millions while other people are barely getting by.

I read about a pension fund that had to have at least an 8.50% return to fund its obligations. That’s 50% higher than a riskless return, huge expectations. Just a probable example of exposure to ABS/MBS that may be worthless while they are looking for above market returns. City, county governments, Insurance companies, the fallout from this worthless debt is beyond wildest imaginations.

The trickle down will be to many “average” investors, including 401K’s and MMA at the local bank.

Be prepared. Expect what everybody else doesn’t. I’ve never wanted to be more wrong in my life.
Having a cushion of cash keeps me content.

[HLS]

CARDIFF,
It’s amazing what you can buy at the “99c ONLY” stores.
Those guys get some amazing stuff, and sell over a BILLION dollars a year at 99c.

Ramen is 9 for 99c, Mac & Cheese 2 boxes for 99c. they often get great frozen foods and many items that easily sell for $2 to $3.

They have fresh veggies and fruit too. And a dozen eggs. (do vegans eat eggs ?)

A pound of spaghetti is 50c and a can of sauce is 99c. You might be able to splurge!

[Author]

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