New lending standards, what’s your prediction?

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New lending standards, what’s your prediction?

Nick Rutkowski
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes

I’m hearing on the internet, television, and BP the lending standards for big banks are starting to change. Some theorized prices for housing will fall, others think nothing will happen and we’ll all go back to our once “booming” economy. What do you think will happen?

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Cameron TopePro Member
Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
6y

I don't think we'll have a housing market issue.

The jobs that are lost are mostly small businesses and low-paying jobs, which the trillions of stimulus money will assist. The high paying jobs are either furloughed (for a few weeks) or working from home. These people are still making mortgage payments and buying properties.

I don't think you're going to see the 10% appreciation growth like you have in the past but a more sustainable 2-3%. Rentals are going to be more popular because tenants are using savings (which they had saved for a downpayment on a house) for living expenses, making them tenants for longer.

I think the only people that are going to get hurt are the clowns that need 10% appreciation and rent growth to make their syndication deals look enticing to new investors that don't know any better.

The investors that buy (and continue to buy) solid cashflowing rentals will be fine.

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  • Casey Rolland
    Investor · Port Townsend, WA · Member since 2014 · 103 posts · 50 votes
    6y

    @Bill B.

    If your below statistics is correct, I feel so much better for LV economy. I totally agree with you that the cure is worse than the disease at the moment (except some Eastern States where it's still very very active). In S. Korea where restaurants have been staying open the whole time, people are still not going out to eat or buy clothes (non-essential  economic activity mostly dead)...lots of suicide there by small business owners...very sad...once people read/watch enough news about many people dying due to CV, fear sets in and it really restricts the economic activity. I see rough roads ahead for our US economy.

    "A little more than 60% of our tourists drive here. The casinos off the strip are probably 80% drive in tourists and locals maye higher if they don’t host conventions. I think they’ll be desperate to come. Especially if California Indian casinos are still closed."

    0Reply
  • Casey Rolland
    Investor · Port Townsend, WA · Member since 2014 · 103 posts · 50 votes
    6y

    @Account Closed

    I am so glad to see the AZ numbers not going up too fast. I lived there for 17 years and I have many friends & ex-co-workers there and some of them in their senior years. Some of my friends in Sequim/Port Angeles have been telling me that they have been drinking way more than usual. All going crazy with all of their kids at home....I thought closing State Parks & Hiking trails was stupid above all, then realized that near Big cities like Seattle/Tacoma, the trails get really crowded unlike where I live, we might see 10 people over 7 hours of hiking.

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  • Account Closed
    Rental Property Investor · AZ · Member since 2013 · 213 posts · 50 votes
    6y
    Originally posted by @Casey Rolland:

    @Account Closed

    I am so glad to see the AZ numbers not going up too fast. I lived there for 17 years and I have many friends & ex-co-workers there and some of them in their senior years. Some of my friends in Sequim/Port Angeles have been telling me that they have been drinking way more than usual. All going crazy with all of their kids at home....I thought closing State Parks & Hiking trails was stupid above all, then realized that near Big cities like Seattle/Tacoma, the trails get really crowded unlike where I live, we might see 10 people over 7 hours of hiking.

    Yes, I am glad the AZ numbers are not going up too fast also and I was kind of surprised due to the population in AZ. I live near Scottsdale. I am sure so many people are going crazy with the kids at home and the kids are probably going crazy too. I read a statistic that a lot more people are boozing it up working from home!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Matthew Peterson:

    @Jay Hinrichs I spoke too soon. He was throwing so much out at me yesterday. I just texted him and he responded. New rules for chase are:

    Primary - 20% down, 6 months worth of liquid PITI in your bank

    Investment - 30% down, 18 months worth PITI in bank

    I checked with my Mortgage broker in Oregon since your post basically freaked me out LOL.. FHA still going on our market and Convential can go as low as 3% down.. now thats as of Saturday.. Now they are a broker who table funds their own deals they are not a bank.

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  • Matthew Peterson
    Developer · Atlanta Ga · Member since 2011 · 47 posts · 37 votes
    6y

    @Jay Hinrichs that’s good to hear! My guy at chase that I work with, said they are watching companies like Quicken loans and some others very carefully. Talk at Chase of companies like that not making it through this.

    On a different note, can you tell me about your managed fund that you mention in your profile. Interested to learn more about that and what your returns are.

    0Reply
  • Amit M.
    Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
    6y

    @Jay Hinrichs Yes it’s getting harder to get financing, and people are also speculating on a drop in overall RE prices (highly dependent on location, product, etc. of course.)

    But what is your take on mid to long term inflation? Given the massive And unprecedented amount of stimulus government will need to give in the near term, I expect that we will have significant inflation sometime over the next several years. So when happy meal costs approach $10, people sitting on hard real estate assets In prime markets have the best chance to reap huge benefits.  Do you agree?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Amit M.:

    @Jay Hinrichs Yes it’s getting harder to get financing, and people are also speculating on a drop in overall RE prices (highly dependent on location, product, etc. of course.)

    But what is your take on mid to long term inflation? Given the massive And unprecedented amount of stimulus government will need to give in the near term, I expect that we will have significant inflation sometime over the next several years. So when happy meal costs approach $10, people sitting on hard real estate assets In prime markets have the best chance to reap huge benefits.  Do you agree?

    I really don't know.. but what I do know is I NEVER ever eat at Mcdonalds  :) 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
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    0Reply
  • Joe Cassandra
    Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
    6y

    Banks like Goldman Sachs and Chase are putting RECORD amounts in credit reserves

    i.e. bad debt cushion.

    Until the banks see that a tidal wave of foreclosures arent going to happen in 6-12 months, they'll keep their belts tight so not to go Lehman.

    The big concern may not be their residential clients but hedging their risk for the multi and commercial foreclosures that could happen...including massive properties like hotels.

    0Reply
  • Chai Jonn
    Rental Property Investor · Nashville, TN · Member since 2016 · 179 posts · 42 votes
    6y

    @Matthew Irish-Jones

    Sent you a PM

    0Reply
  • Cameron TopePro Member
    Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Nick Rutkowski:

    @Cameron Tope

    Solid response. I like the optimism and your point about tenants using their savings for a downpayment on rent instead of buying a house. Would you say the single family construction will feel a big hit?

    I would say it depends on how long the pandemic lasts. If we're back to business as usual next month then no but if this is a 6-12 month thing then yes. 

    [email protected]832-770-7090
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  • Michael WallimannPro Member
    Rental Property Investor · Western Washington · Member since 2018 · 151 posts · 60 votes
    6y

    I've been seeing banks drag their feet over the past month or so. It's hard to say how it will all play out. I've heard both sides give their thoughts and I see validity in many different thoughts. It's still way too earlier for me to give my opinion. All I know is that the and brokers I am dealing with aren't quite hitting pause but definitely seem to be hitting the slow motion button.

    0Reply
  • Calvin Thomas
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    6y
    Originally posted by @Nick Rutkowski:

    @Calvin T.

    It depends on how you look at the current situation. I think those that own a small unflagged hotel right now are about to see their end soon. Which to me could be my way of moving up. People aren’t booking hotels when they are out of work and are forced to stay at home. Hotel owners still have to pay their mortgage even though they are considered essential and are open. It could be an opportunity.

    Very true.  You'll also see smaller major chain franchises have issues too.  I always wanted to own a Marriott or Hilton.  Perhaps my day is coming soon enough.

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