Let oil stocks and physical gold come lower. Then split your 60K between each of those. Then simply HOLD for the long-term.
Oil is falling today with OPEC having held off (at least a few weeks) on making another cut in oil production. I may buy oil stocks within the next several weeks.
I hope to see gold come back down to the $710/ounce range before I buy gold long.
I think you’ll have many here advise you to buy US stocks and hold them long. I predict that would be a mistake. This could easily be an “L-shaped recession,” meaning the economy and stock market drops off a cliff, then stays down in the gutter for years and years. It could be ten years (or more!) before this stock market recovers to Oct 2007 levels.
No way would I recommend you put that money in your home, unless it would dramatically improve your use and enjoyment of a home you plan to live in for years and years.
cr
December 2, 2008 @
3:22 PM
How long are you planning on How long are you planning on leaving the money there? Or how long until you sell your house?
Stocks may be right about the economy but in all likelihood the stock market will hit 14,000 again, it just may take 20 years.
UCGal
December 2, 2008 @
4:10 PM
The investments in your house The investments in your house are only a good idea if a) you plan to be in the house for a while and can recoup it from energy savings/quality of life. and b) you have a secure job.
Given the current economy, the latter is what would worry me. So I voted keeping the money in the bank. It gives you options if life throws the unexpected at you.
Bugs
December 2, 2008 @
7:11 PM
I just dropped by to say “Hi” I just dropped by to say “Hi” and came on this thread. I’m not current with the prevailing wisdom here, but I do have a suggestion for that $60k.
It’s just about time to start thinking about RE again.
2-4 unit properties in SD County are starting to sell at 100x gross income on the bottom end. When combined with current interest rates you might be looking at some real opportunities. If the markets were rational the pricing wouldn’t drop below 100x gross when combined with sub-7% mortgage interest rates.
It may not yet be time to pull the trigger, but it wouldn’t hurt you to start looking around.
Just a thought. Forgive me if I just rehashed something you guys regularly discuss.
peterb
December 2, 2008 @
7:22 PM
Save it, you’ll probably need Save it, you’ll probably need it in the future. It’s gaining anyway and the market is all over the map. Too dangerous. Cash in a crash.
socrattt
December 2, 2008 @
10:04 PM
peterb wrote:Save it, you’ll [quote=peterb]Save it, you’ll probably need it in the future. It’s gaining anyway and the market is all over the map. Too dangerous. Cash in a crash.[/quote]
I disagree with this statement because soon our cash will be worthless. It is my belief that with over $8.5 trillion of infused funds by the Fed that our dollar will at some point very soon feel the effects. I believe that within 6-12 months the price of goods will rise dramatically. Don’t hold your dollars. Make smart investments and I agree with stocktradr, it’s hard to believe that gold, silver and oil have much downside with their current pricing.
Buying rental units has risks as well. At some point I see rentals coming down due to a drastic rise in unemployment along with a few other key factors.
I have plenty of cash in the bank, but I also have a large percentage of gold, silver and other commodities. Diversify yourself because we are going to be in some extreme conditions in the next year!!
scaredyclassic
December 2, 2008 @
10:35 PM
gold gold
barnaby33
December 2, 2008 @
9:08 PM
I only voted, invest in the I only voted, invest in the stock market, because you can go short.
Josh
DWCAP
December 2, 2008 @
9:58 PM
Bugs, glad to hear you still Bugs, glad to hear you still come around. I hope you keep saying hi more often. Your opnions are most valued.
Carl Veritas
December 3, 2008 @
12:19 AM
If you won’t be needing the If you won’t be needing the money for other things, paying down your mortgage is guaranteed to help your net worth.
And if it’s only for 2009 I’d park it in a fund like Vanguard Money Market–U.S. Treasury Portfolio. The FDIC puts the money that backs bank deposits in T-bills, so should you. Stay away from banks for now,you’ll have a headache if they go belly up.
If it’s for at least 10 years, blue chips like Coca-Cola, American Express or Johnson & Johnson look
cheap (Jesus, KO p/e is 13!). Or a good stock fund. Wish I had that $60k
4plexowner
December 3, 2008 @
5:50 AM
Hi, Bugs! Very pleased to Hi, Bugs! Very pleased to see your moniker this morning.
What do you think about rents?
One of the things that happens in economic downturns is that housing density increases – kids move back in with parents – parents move in with kids – multiple families share the same rental – families go live in Orange County tent city – etc
Many people assume that rents will remain stable or rise during this housing downturn because there will be more demand for rentals as people lose / leave their “purchased” houses / condos – I don’t see this happening
What’s your take?
Bugs
December 3, 2008 @
8:54 AM
I think rents will drop some, I think rents will drop some, but I don’t know that it will be catastrophic.
I like to look at the numbers. Right now, SANDAG reports about 412,000 multi-family units in the region. Household incomes are broken out as well. The bottom 3 layers amount to 488,000 households and that top layer tops out at ~$50,000/year. Of the 488,000, 62% earn less than $30,000/year, meaning 38% earn more.
Where that fits into the rental structure is by way of using ratios of rents to incomes, just as with buyers of homes. A household that makes $30,000 a year can spend about $12,000 or so on their housing. That $12,000 represents a 40% share of their income, but that’s been the reality of the situation the poor have faced for a long time now.
That’s just for the families. I don’t know if I’ve ever appraised an apartment building that didn’t have some roommate action going on, which technically involves 2 households as SANDAG is defining them.
Now the apartment associations like to throw around the rents as averaging $1400 or some ridiculous number like that. I don’t trust that number at all. I can go all through the Northpark/University Heights/Normal Heights/City Heights areas, which have huge amounts of rental stock, and not find any $1400 rents that don’t involve either a detached house or a condo of recent construction. I know this because I just conducted a rent survey on the North Park side of the North Park/Normal Heights area last week.
Anyways, to make a long story short, based on what I’ve seen all through the county, the average rent for a 1bd apartment is somewhere around $850/month; and the average rent for a 2bd apartment is around $1100/month or so. Obviously some areas are a lot higher than that, but the sheer numbers of units in the areas that are lower dwarf the numbers in the more desirable areas. BTW, contrary to what the apartment owners association would have people believe, the big luxo apartment complexes only represent a small portion of the total number of apartment rental units. They certainly don’t drive the market.
Anyways, if you compare those average rents to my previous down-n-dirty look at incomes you’ll see that these figures are not extremely high. Inasmuch as the poor have always paid 35% or 40% of their income for their rents, I don’t see any reason to assume that rents will drop by all that much going forward. I could be wrong about that, but the past cycles don’t demonstrate it.
My bottom line on this is that I think rents can drop by as much as 15% or 20% off their peak. I think some of that movement has already occurred in certain areas like El Cajon and National City and Escondido. Short of delving into speculating about the Apocalypse, I’m not anticipating a 35% or 50% drop in rents.
But you never know.
Bugs
December 3, 2008 @
9:03 AM
One other little afterthought One other little afterthought is the comparison of rental units to SFRs on the low end. If an investor is looking at a 120x gross indicator as being a green light for an SFR investment, there’s no reason for them to be extremely skittish about a GRM of 100x gross for 2-4 units. Which, BTW, are eligible for residential financing programs.
lostcat92120
December 3, 2008 @
9:28 AM
I was just interested to see I was just interested to see what pigginton’s would do with their money. It really has nothing to do with me. The question came up after talking to a friend about his house and how he wanted new windows because his family gets cold at night.
December 2, 2008 @ 1:20 PM
My advice?
Let oil stocks and
My advice?
Let oil stocks and physical gold come lower. Then split your 60K between each of those. Then simply HOLD for the long-term.
Oil is falling today with OPEC having held off (at least a few weeks) on making another cut in oil production. I may buy oil stocks within the next several weeks.
I hope to see gold come back down to the $710/ounce range before I buy gold long.
I think you’ll have many here advise you to buy US stocks and hold them long. I predict that would be a mistake. This could easily be an “L-shaped recession,” meaning the economy and stock market drops off a cliff, then stays down in the gutter for years and years. It could be ten years (or more!) before this stock market recovers to Oct 2007 levels.
No way would I recommend you put that money in your home, unless it would dramatically improve your use and enjoyment of a home you plan to live in for years and years.
December 2, 2008 @ 3:22 PM
How long are you planning on
How long are you planning on leaving the money there? Or how long until you sell your house?
Stocks may be right about the economy but in all likelihood the stock market will hit 14,000 again, it just may take 20 years.
December 2, 2008 @ 4:10 PM
The investments in your house
The investments in your house are only a good idea if a) you plan to be in the house for a while and can recoup it from energy savings/quality of life. and b) you have a secure job.
Given the current economy, the latter is what would worry me. So I voted keeping the money in the bank. It gives you options if life throws the unexpected at you.
December 2, 2008 @ 7:11 PM
I just dropped by to say “Hi”
I just dropped by to say “Hi” and came on this thread. I’m not current with the prevailing wisdom here, but I do have a suggestion for that $60k.
It’s just about time to start thinking about RE again.
2-4 unit properties in SD County are starting to sell at 100x gross income on the bottom end. When combined with current interest rates you might be looking at some real opportunities. If the markets were rational the pricing wouldn’t drop below 100x gross when combined with sub-7% mortgage interest rates.
It may not yet be time to pull the trigger, but it wouldn’t hurt you to start looking around.
Just a thought. Forgive me if I just rehashed something you guys regularly discuss.
December 2, 2008 @ 7:22 PM
Save it, you’ll probably need
Save it, you’ll probably need it in the future. It’s gaining anyway and the market is all over the map. Too dangerous. Cash in a crash.
December 2, 2008 @ 10:04 PM
peterb wrote:Save it, you’ll
[quote=peterb]Save it, you’ll probably need it in the future. It’s gaining anyway and the market is all over the map. Too dangerous. Cash in a crash.[/quote]
I disagree with this statement because soon our cash will be worthless. It is my belief that with over $8.5 trillion of infused funds by the Fed that our dollar will at some point very soon feel the effects. I believe that within 6-12 months the price of goods will rise dramatically. Don’t hold your dollars. Make smart investments and I agree with stocktradr, it’s hard to believe that gold, silver and oil have much downside with their current pricing.
Buying rental units has risks as well. At some point I see rentals coming down due to a drastic rise in unemployment along with a few other key factors.
I have plenty of cash in the bank, but I also have a large percentage of gold, silver and other commodities. Diversify yourself because we are going to be in some extreme conditions in the next year!!
December 2, 2008 @ 10:35 PM
gold
gold
December 2, 2008 @ 9:08 PM
I only voted, invest in the
I only voted, invest in the stock market, because you can go short.
Josh
December 2, 2008 @ 9:58 PM
Bugs, glad to hear you still
Bugs, glad to hear you still come around. I hope you keep saying hi more often. Your opnions are most valued.
December 3, 2008 @ 12:19 AM
If you won’t be needing the
If you won’t be needing the money for other things, paying down your mortgage is guaranteed to help your net worth.
And if it’s only for 2009 I’d park it in a fund like Vanguard Money Market–U.S. Treasury Portfolio. The FDIC puts the money that backs bank deposits in T-bills, so should you. Stay away from banks for now,you’ll have a headache if they go belly up.
If it’s for at least 10 years, blue chips like Coca-Cola, American Express or Johnson & Johnson look
cheap (Jesus, KO p/e is 13!). Or a good stock fund. Wish I had that $60k
December 3, 2008 @ 5:50 AM
Hi, Bugs! Very pleased to
Hi, Bugs! Very pleased to see your moniker this morning.
What do you think about rents?
One of the things that happens in economic downturns is that housing density increases – kids move back in with parents – parents move in with kids – multiple families share the same rental – families go live in Orange County tent city – etc
Many people assume that rents will remain stable or rise during this housing downturn because there will be more demand for rentals as people lose / leave their “purchased” houses / condos – I don’t see this happening
What’s your take?
December 3, 2008 @ 8:54 AM
I think rents will drop some,
I think rents will drop some, but I don’t know that it will be catastrophic.
I like to look at the numbers. Right now, SANDAG reports about 412,000 multi-family units in the region. Household incomes are broken out as well. The bottom 3 layers amount to 488,000 households and that top layer tops out at ~$50,000/year. Of the 488,000, 62% earn less than $30,000/year, meaning 38% earn more.
Where that fits into the rental structure is by way of using ratios of rents to incomes, just as with buyers of homes. A household that makes $30,000 a year can spend about $12,000 or so on their housing. That $12,000 represents a 40% share of their income, but that’s been the reality of the situation the poor have faced for a long time now.
That’s just for the families. I don’t know if I’ve ever appraised an apartment building that didn’t have some roommate action going on, which technically involves 2 households as SANDAG is defining them.
Now the apartment associations like to throw around the rents as averaging $1400 or some ridiculous number like that. I don’t trust that number at all. I can go all through the Northpark/University Heights/Normal Heights/City Heights areas, which have huge amounts of rental stock, and not find any $1400 rents that don’t involve either a detached house or a condo of recent construction. I know this because I just conducted a rent survey on the North Park side of the North Park/Normal Heights area last week.
Anyways, to make a long story short, based on what I’ve seen all through the county, the average rent for a 1bd apartment is somewhere around $850/month; and the average rent for a 2bd apartment is around $1100/month or so. Obviously some areas are a lot higher than that, but the sheer numbers of units in the areas that are lower dwarf the numbers in the more desirable areas. BTW, contrary to what the apartment owners association would have people believe, the big luxo apartment complexes only represent a small portion of the total number of apartment rental units. They certainly don’t drive the market.
Anyways, if you compare those average rents to my previous down-n-dirty look at incomes you’ll see that these figures are not extremely high. Inasmuch as the poor have always paid 35% or 40% of their income for their rents, I don’t see any reason to assume that rents will drop by all that much going forward. I could be wrong about that, but the past cycles don’t demonstrate it.
My bottom line on this is that I think rents can drop by as much as 15% or 20% off their peak. I think some of that movement has already occurred in certain areas like El Cajon and National City and Escondido. Short of delving into speculating about the Apocalypse, I’m not anticipating a 35% or 50% drop in rents.
But you never know.
December 3, 2008 @ 9:03 AM
One other little afterthought
One other little afterthought is the comparison of rental units to SFRs on the low end. If an investor is looking at a 120x gross indicator as being a green light for an SFR investment, there’s no reason for them to be extremely skittish about a GRM of 100x gross for 2-4 units. Which, BTW, are eligible for residential financing programs.
December 3, 2008 @ 9:28 AM
I was just interested to see
I was just interested to see what pigginton’s would do with their money. It really has nothing to do with me. The question came up after talking to a friend about his house and how he wanted new windows because his family gets cold at night.