[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

ucodegen

There are certainly inflection point that optimizw purchae price and interest rates.

To me you would be hard pressed to get me to put a lot of cash down on a house. I will put down what is necessary only to get the most opportunistic interst rate. The rest of my cash will continue to remain liquid I I don’t mind being negative short term on a mortgage vs money market. Over the long haul I beleive there will be enough periods of time when interest reates paid by banks will be higher than the interest rates paid on current mortgages. This will begin to lower my over all cost of housing.

Whatevr the case may be you plunk down cash you give something up, you take out a mortgage you are tied into a payament and need to be able to manage the cash flow. You’ll only know if you hit it perfectly 5 to 10 years after you bought.

[Raybyrnes]

ucodegen

There are certainly inflection point that optimizw purchae price and interest rates.

To me you would be hard pressed to get me to put a lot of cash down on a house. I will put down what is necessary only to get the most opportunistic interst rate. The rest of my cash will continue to remain liquid I I don’t mind being negative short term on a mortgage vs money market. Over the long haul I beleive there will be enough periods of time when interest reates paid by banks will be higher than the interest rates paid on current mortgages. This will begin to lower my over all cost of housing.

Whatevr the case may be you plunk down cash you give something up, you take out a mortgage you are tied into a payament and need to be able to manage the cash flow. You’ll only know if you hit it perfectly 5 to 10 years after you bought.

[Raybyrnes]

ucodegen

There are certainly inflection point that optimizw purchae price and interest rates.

To me you would be hard pressed to get me to put a lot of cash down on a house. I will put down what is necessary only to get the most opportunistic interst rate. The rest of my cash will continue to remain liquid I I don’t mind being negative short term on a mortgage vs money market. Over the long haul I beleive there will be enough periods of time when interest reates paid by banks will be higher than the interest rates paid on current mortgages. This will begin to lower my over all cost of housing.

Whatevr the case may be you plunk down cash you give something up, you take out a mortgage you are tied into a payament and need to be able to manage the cash flow. You’ll only know if you hit it perfectly 5 to 10 years after you bought.

[Raybyrnes]

ucodegen

There are certainly inflection point that optimizw purchae price and interest rates.

To me you would be hard pressed to get me to put a lot of cash down on a house. I will put down what is necessary only to get the most opportunistic interst rate. The rest of my cash will continue to remain liquid I I don’t mind being negative short term on a mortgage vs money market. Over the long haul I beleive there will be enough periods of time when interest reates paid by banks will be higher than the interest rates paid on current mortgages. This will begin to lower my over all cost of housing.

Whatevr the case may be you plunk down cash you give something up, you take out a mortgage you are tied into a payament and need to be able to manage the cash flow. You’ll only know if you hit it perfectly 5 to 10 years after you bought.

[Raybyrnes]

ucodegen

There are certainly inflection point that optimizw purchae price and interest rates.

To me you would be hard pressed to get me to put a lot of cash down on a house. I will put down what is necessary only to get the most opportunistic interst rate. The rest of my cash will continue to remain liquid I I don’t mind being negative short term on a mortgage vs money market. Over the long haul I beleive there will be enough periods of time when interest reates paid by banks will be higher than the interest rates paid on current mortgages. This will begin to lower my over all cost of housing.

Whatevr the case may be you plunk down cash you give something up, you take out a mortgage you are tied into a payament and need to be able to manage the cash flow. You’ll only know if you hit it perfectly 5 to 10 years after you bought.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Author]

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