[ltokuda]

golfgal, I’m still unclear on how a BSC bankruptcy could bring down the whole banking system. You seem knowledgeable in this area so maybe you can provide more details.

Here’s my confusion: BSC is not a bank. Its not regulated by the Fed and under normal circumstances, the Fed isn’t supposed to be lending money to BSC or JPM. Roubini refers to this as the shadow banking system. In any case, we’re not talking about a real bank that’s threatening to go under. This is really about an investment firm that’s being bailed out.

My question is, how does BSC going bankrupt lead to a run on a real bank, like say, Bank of America? Is there some direct link where BSC’s demise would immediately bring down Bank of America as well? Do those kinds of hard links really exist? Or is the cause and effect more foggy or just plain unpredictable? Is this about saving the real banks at all? Or maybe the Fed is afraid that there will be a run on all the investment banks … so this is a way of assuring everyone that investment banks are still “safe”?

[ltokuda]

golfgal, I’m still unclear on how a BSC bankruptcy could bring down the whole banking system. You seem knowledgeable in this area so maybe you can provide more details.

Here’s my confusion: BSC is not a bank. Its not regulated by the Fed and under normal circumstances, the Fed isn’t supposed to be lending money to BSC or JPM. Roubini refers to this as the shadow banking system. In any case, we’re not talking about a real bank that’s threatening to go under. This is really about an investment firm that’s being bailed out.

My question is, how does BSC going bankrupt lead to a run on a real bank, like say, Bank of America? Is there some direct link where BSC’s demise would immediately bring down Bank of America as well? Do those kinds of hard links really exist? Or is the cause and effect more foggy or just plain unpredictable? Is this about saving the real banks at all? Or maybe the Fed is afraid that there will be a run on all the investment banks … so this is a way of assuring everyone that investment banks are still “safe”?

[ltokuda]

“he said he purchased with cash, n = 100%”

Sorry for the confusion. I was actually talking about two things. I asked about how much of a downpayment felix made. He bought it in cash so his actual value of N is 100%.

The other thing I was trying to figure out was the theoretical minimum value of N (let’s call it “minN”) that he could have used and still generated a positive cash flow. If minN was 50%, then it probably wasn’t a good deal. If minN was 5%, then he probably got a great deal.

[ltokuda]

“he said he purchased with cash, n = 100%”

Sorry for the confusion. I was actually talking about two things. I asked about how much of a downpayment felix made. He bought it in cash so his actual value of N is 100%.

The other thing I was trying to figure out was the theoretical minimum value of N (let’s call it “minN”) that he could have used and still generated a positive cash flow. If minN was 50%, then it probably wasn’t a good deal. If minN was 5%, then he probably got a great deal.

[ltokuda]

“he said he purchased with cash, n = 100%”

Sorry for the confusion. I was actually talking about two things. I asked about how much of a downpayment felix made. He bought it in cash so his actual value of N is 100%.

The other thing I was trying to figure out was the theoretical minimum value of N (let’s call it “minN”) that he could have used and still generated a positive cash flow. If minN was 50%, then it probably wasn’t a good deal. If minN was 5%, then he probably got a great deal.

[ltokuda]

“he said he purchased with cash, n = 100%”

Sorry for the confusion. I was actually talking about two things. I asked about how much of a downpayment felix made. He bought it in cash so his actual value of N is 100%.

The other thing I was trying to figure out was the theoretical minimum value of N (let’s call it “minN”) that he could have used and still generated a positive cash flow. If minN was 50%, then it probably wasn’t a good deal. If minN was 5%, then he probably got a great deal.

[ltokuda]

“he said he purchased with cash, n = 100%”

Sorry for the confusion. I was actually talking about two things. I asked about how much of a downpayment felix made. He bought it in cash so his actual value of N is 100%.

The other thing I was trying to figure out was the theoretical minimum value of N (let’s call it “minN”) that he could have used and still generated a positive cash flow. If minN was 50%, then it probably wasn’t a good deal. If minN was 5%, then he probably got a great deal.

[ltokuda]

felix, the reason I ask is that a lot of people on Piggington’s believe that the “ultimate” bottom of the market is when you can buy a property with N % down, rent it out, and get a positive cash flow. If N = 20%, that’s pretty good. If N = 10%, that’s even better. If N = 5%, that’s fantastic. In theory, you should never be able to get to N = 0%. Providing real numbers would let people calculate the value of N for your house.

The other reason I ask is that the experienced rental property owners on this site have talked about “unexpected” costs of owning a rental unit. Besides financing, you have to consider taxes, maintenance, vacancy, insurance, and miscelaneous fees (like trash) if applicable. Its unclear whether you factored in all the parameters when you decided that you got a good deal. It seems like most first time investors don’t take all the costs into account and end up losing money because of it. There are experts on this site who can break down the details much better than I can.

Once you plug in the right numbers, then you can more accurately calculate the expected return on your investment. Then its up to you to decide if that’s a good return or not.

I certainly won’t press you to review personal information that you’re not comfortable sharing. At this point, telling us what numbers you used for vacancy rate, maintenace, etc and telling us your rate of return would basically give away the price you paid. I guess we’ll have to leave it at that. Hopefully, you took all the expenses into account and truly did get a good deal. If so, then we may be getting to the point where there are good buying opportunities again.

[ltokuda]

felix, the reason I ask is that a lot of people on Piggington’s believe that the “ultimate” bottom of the market is when you can buy a property with N % down, rent it out, and get a positive cash flow. If N = 20%, that’s pretty good. If N = 10%, that’s even better. If N = 5%, that’s fantastic. In theory, you should never be able to get to N = 0%. Providing real numbers would let people calculate the value of N for your house.

The other reason I ask is that the experienced rental property owners on this site have talked about “unexpected” costs of owning a rental unit. Besides financing, you have to consider taxes, maintenance, vacancy, insurance, and miscelaneous fees (like trash) if applicable. Its unclear whether you factored in all the parameters when you decided that you got a good deal. It seems like most first time investors don’t take all the costs into account and end up losing money because of it. There are experts on this site who can break down the details much better than I can.

Once you plug in the right numbers, then you can more accurately calculate the expected return on your investment. Then its up to you to decide if that’s a good return or not.

I certainly won’t press you to review personal information that you’re not comfortable sharing. At this point, telling us what numbers you used for vacancy rate, maintenace, etc and telling us your rate of return would basically give away the price you paid. I guess we’ll have to leave it at that. Hopefully, you took all the expenses into account and truly did get a good deal. If so, then we may be getting to the point where there are good buying opportunities again.

[ltokuda]

felix, the reason I ask is that a lot of people on Piggington’s believe that the “ultimate” bottom of the market is when you can buy a property with N % down, rent it out, and get a positive cash flow. If N = 20%, that’s pretty good. If N = 10%, that’s even better. If N = 5%, that’s fantastic. In theory, you should never be able to get to N = 0%. Providing real numbers would let people calculate the value of N for your house.

The other reason I ask is that the experienced rental property owners on this site have talked about “unexpected” costs of owning a rental unit. Besides financing, you have to consider taxes, maintenance, vacancy, insurance, and miscelaneous fees (like trash) if applicable. Its unclear whether you factored in all the parameters when you decided that you got a good deal. It seems like most first time investors don’t take all the costs into account and end up losing money because of it. There are experts on this site who can break down the details much better than I can.

Once you plug in the right numbers, then you can more accurately calculate the expected return on your investment. Then its up to you to decide if that’s a good return or not.

I certainly won’t press you to review personal information that you’re not comfortable sharing. At this point, telling us what numbers you used for vacancy rate, maintenace, etc and telling us your rate of return would basically give away the price you paid. I guess we’ll have to leave it at that. Hopefully, you took all the expenses into account and truly did get a good deal. If so, then we may be getting to the point where there are good buying opportunities again.

[ltokuda]

felix, the reason I ask is that a lot of people on Piggington’s believe that the “ultimate” bottom of the market is when you can buy a property with N % down, rent it out, and get a positive cash flow. If N = 20%, that’s pretty good. If N = 10%, that’s even better. If N = 5%, that’s fantastic. In theory, you should never be able to get to N = 0%. Providing real numbers would let people calculate the value of N for your house.

The other reason I ask is that the experienced rental property owners on this site have talked about “unexpected” costs of owning a rental unit. Besides financing, you have to consider taxes, maintenance, vacancy, insurance, and miscelaneous fees (like trash) if applicable. Its unclear whether you factored in all the parameters when you decided that you got a good deal. It seems like most first time investors don’t take all the costs into account and end up losing money because of it. There are experts on this site who can break down the details much better than I can.

Once you plug in the right numbers, then you can more accurately calculate the expected return on your investment. Then its up to you to decide if that’s a good return or not.

I certainly won’t press you to review personal information that you’re not comfortable sharing. At this point, telling us what numbers you used for vacancy rate, maintenace, etc and telling us your rate of return would basically give away the price you paid. I guess we’ll have to leave it at that. Hopefully, you took all the expenses into account and truly did get a good deal. If so, then we may be getting to the point where there are good buying opportunities again.

[ltokuda]

felix, the reason I ask is that a lot of people on Piggington’s believe that the “ultimate” bottom of the market is when you can buy a property with N % down, rent it out, and get a positive cash flow. If N = 20%, that’s pretty good. If N = 10%, that’s even better. If N = 5%, that’s fantastic. In theory, you should never be able to get to N = 0%. Providing real numbers would let people calculate the value of N for your house.

The other reason I ask is that the experienced rental property owners on this site have talked about “unexpected” costs of owning a rental unit. Besides financing, you have to consider taxes, maintenance, vacancy, insurance, and miscelaneous fees (like trash) if applicable. Its unclear whether you factored in all the parameters when you decided that you got a good deal. It seems like most first time investors don’t take all the costs into account and end up losing money because of it. There are experts on this site who can break down the details much better than I can.

Once you plug in the right numbers, then you can more accurately calculate the expected return on your investment. Then its up to you to decide if that’s a good return or not.

I certainly won’t press you to review personal information that you’re not comfortable sharing. At this point, telling us what numbers you used for vacancy rate, maintenace, etc and telling us your rate of return would basically give away the price you paid. I guess we’ll have to leave it at that. Hopefully, you took all the expenses into account and truly did get a good deal. If so, then we may be getting to the point where there are good buying opportunities again.

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

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