Comments on: Through The Looking Glass: A Future Look at the Real Estate Marketplace. http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/ Learn, Network, Invest Thu, 20 Nov 2008 22:13:43 +0000 http://wordpress.org/?v=2.6.1 By: Commercial Mortgage Loans - MasterPlan Capital - Glenn http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/#comment-58410 Commercial Mortgage Loans - MasterPlan Capital - Glenn Tue, 15 Jul 2008 18:13:49 +0000 http://www.biggerpockets.com/renewsblog/?p=1017#comment-58410 I agree; easy money is gone. But, only gone for now. We have seen cycles like this before and, I'm afraid, we will see them again. I agree; easy money is gone. But, only gone for now. We have seen cycles like this before and, I’m afraid, we will see them again.

]]> By: MoneyMan http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/#comment-57419 MoneyMan Sat, 14 Jun 2008 22:04:51 +0000 http://www.biggerpockets.com/renewsblog/?p=1017#comment-57419 No money down = walk away mortgage. What were the lenders thinking! Actually I get guys trying to borrow 1 million + with no money down on a daily basis. Put some skin in the deal! Everyone these days wants something for nothing...and fast too!!! It's the Mickey D mentality. No money down = walk away mortgage. What were the lenders thinking! Actually I get guys trying to borrow 1 million + with no money down on a daily basis. Put some skin in the deal! Everyone these days wants something for nothing…and fast too!!! It’s the Mickey D mentality.

]]> By: Mr glass washer http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/#comment-57348 Mr glass washer Wed, 11 Jun 2008 11:03:50 +0000 http://www.biggerpockets.com/renewsblog/?p=1017#comment-57348 I never undestoond why people let themselves get into 100% mortgages in the first place with lending up to 8 *s their annual income and worse. Surely this was never attractive to anyone even when the market was good. I have to admit to a combination of luck, stubbornness and intuition when I bought my first house - just before property prices started to go up in 2000. I was never tempted to sell during the boom, and now prices are coming down its getting towards the right time for me to upgrade to a bigger place. Looking around properties at my end of the market haven't really been hit yet and prices are still going up on my street. Get to the £300,000 range though and prices are dropping nicely, so it could be time to think about my next move and see if I can clean up again. Oh and I also completely ignored 1 mortgage broker and one mortgage advisor during this time and I was right both times and am still feeling smug. I never undestoond why people let themselves get into 100% mortgages in the first place with lending up to 8 *s their annual income and worse. Surely this was never attractive to anyone even when the market was good.

I have to admit to a combination of luck, stubbornness and intuition when I bought my first house - just before property prices started to go up in 2000. I was never tempted to sell during the boom, and now prices are coming down its getting towards the right time for me to upgrade to a bigger place. Looking around properties at my end of the market haven’t really been hit yet and prices are still going up on my street. Get to the £300,000 range though and prices are dropping nicely, so it could be time to think about my next move and see if I can clean up again.

Oh and I also completely ignored 1 mortgage broker and one mortgage advisor during this time and I was right both times and am still feeling smug.

]]> By: Staten Island Real Estate http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/#comment-57319 Staten Island Real Estate Tue, 10 Jun 2008 00:23:48 +0000 http://www.biggerpockets.com/renewsblog/?p=1017#comment-57319 No money down mortgages were one the dumbest products lenders ever offered. They were basically lending money to people without much concern that those borrowers had nothing to loose when they decided to stop sending mortgage payments. Can you say foreclosure? Now that's a rocket science! No money down mortgages were one the dumbest products lenders ever offered. They were basically lending money to people without much concern that those borrowers had nothing to loose when they decided to stop sending mortgage payments. Can you say foreclosure? Now that’s a rocket science!

]]> By: real estate investor software http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/#comment-57317 real estate investor software Mon, 09 Jun 2008 23:28:31 +0000 http://www.biggerpockets.com/renewsblog/?p=1017#comment-57317 As far as I am concerned, buying a rental property is like starting a business. Most businesses lose money for the first few years before they build momentum, and often take large amounts of capital to survive that period. Anyone getting into the rental business needs to be prepaired to go the distance and survive that inital first few years while they are building up a portolio that will eventually pay off. Far too many new investors get into the game and dont properly estimate the commitment to the rental property business. As far as I am concerned, buying a rental property is like starting a business. Most businesses lose money for the first few years before they build momentum, and often take large amounts of capital to survive that period. Anyone getting into the rental business needs to be prepaired to go the distance and survive that inital first few years while they are building up a portolio that will eventually pay off. Far too many new investors get into the game and dont properly estimate the commitment to the rental property business.

]]> By: BawldGuy Talking http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/#comment-57311 BawldGuy Talking Mon, 09 Jun 2008 18:29:29 +0000 http://www.biggerpockets.com/renewsblog/?p=1017#comment-57311 In my nearly four decades of real estate investment brokering/investing there's only been one short window of time I've ever advised a client to purposefully get into negative cash flow. During the 80's when Reagan gave us 15 year depreciation schedules. This made the 5% of investors making big money pretty big winners too. Remember, back then there was no ceiling on the amount of annual depreciation used against ordinary income. This resulted in massive increases in after tax income, and in some cases a nearly 90% reduction in income taxes paid. Their choice back then was to pay the 'cash flow' into the black hole of the IRS, or into an appreciating asset. This strategy produced incredible results as long as the investor was in the highest tax bracket fed & state. Alas, this short window of time in history is indeed the exception that proves the rule. Don't intentionally invest in negative cash flow unless you know in your heart you can turn it around quickly into some black ink. The idea is to remain as far as you can from the cliff's edge -- not how close. In my nearly four decades of real estate investment brokering/investing there’s only been one short window of time I’ve ever advised a client to purposefully get into negative cash flow.

During the 80’s when Reagan gave us 15 year depreciation schedules. This made the 5% of investors making big money pretty big winners too. Remember, back then there was no ceiling on the amount of annual depreciation used against ordinary income.

This resulted in massive increases in after tax income, and in some cases a nearly 90% reduction in income taxes paid. Their choice back then was to pay the ‘cash flow’ into the black hole of the IRS, or into an appreciating asset. This strategy produced incredible results as long as the investor was in the highest tax bracket fed & state.

Alas, this short window of time in history is indeed the exception that proves the rule. Don’t intentionally invest in negative cash flow unless you know in your heart you can turn it around quickly into some black ink.

The idea is to remain as far as you can from the cliff’s edge — not how close.

]]> By: Redfish Mark http://www.biggerpockets.com/renewsblog/2008/06/09/through-the-looking-glass/#comment-57308 Redfish Mark Mon, 09 Jun 2008 13:50:20 +0000 http://www.biggerpockets.com/renewsblog/?p=1017#comment-57308 Richard – nice post with several great foundational points. One key point is that real estate values throughout history have gone up and they’ve come down. The real estate market cycle is a cold reality (these days). People seem to have forgotten that all markets progress through every phase of the cycle. They seem to have forgotten that you need different strategies to invest in different phases of the market cycle (you’re right – asset values don’t go up forever). The bloodbath we’re seeing in some markets is due to folks forgetting (or never learning) the truth about cycles; but wait, spending a little time learning about how things work is part of that hard work you’re talking about........ Richard – nice post with several great foundational points. One key point is that real estate values throughout history have gone up and they’ve come down. The real estate market cycle is a cold reality (these days). People seem to have forgotten that all markets progress through every phase of the cycle. They seem to have forgotten that you need different strategies to invest in different phases of the market cycle (you’re right – asset values don’t go up forever). The bloodbath we’re seeing in some markets is due to folks forgetting (or never learning) the truth about cycles; but wait, spending a little time learning about how things work is part of that hard work you’re talking about……..

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