All Forum Posts by: Cesar S.

Do you recommend anyone that would finance an investment condo using ARMs ?  Trying to get financing in Virginia.  Thanks.

Any lenders for investment properties that give decent 5/1 , 7/1 or 10/1 ARMs? Or are they just way higher than the fixed rates for investment properties? If so how much (roughly)? In particular I am looking at condos. Thanks.

@Jingjun Zhou try pennfed , they do up to 80% ltv I believe but it's a variable rate (12 yr balloon). Flagstar bank might do fix but it's short term I believe.

@Dylan Mathias a lot of experts have said they expect a correction in 2019 or 2020. I don't think you're going out on a limb there. Personally I think prices will stay stagnant. I don't see a crash but more of a slowdown in the next few years.

Its not hard picking stocks, at least not in this current environment. The challenge us doing it when it's a bearish market. Unless you have gone through that then you can't relate. Similar to folks who bought real estate at peak and the market tanked in 2008. I invest in both real estate and equity. My returns over past two years for one condo is 35% (unrealized) and for my stock IRA portfolio is over 100% . However the big difference is leverage. That 35% return in RE equals more money for me due to the size of the investment $200k. I think one should definitely be investing in both, otherwise you're not maximizing you're returns.

You can do a HELOC up to 80% LTV . I got one last year with Pennfed, no closing costs and no appraisal since they do a desk appraisal and if it's sufficient they wont do a regular one. If it isnt then you'll be out $300 but that's it. Keep in mind it will be a 12 yr variable with a balloon payment due but that's not bad at all even if rates increase. Good luck!

@peter t.  Westfield is just one town, most other towns have gone up substantially...

I live in North NJ and nothing has been slowing down so not sure what this post a out NJ slashing prices and rent decreases are coming from.  My house just went up about 10% and I bought it in August .  My rentals are up another 15% or so YoY....would love to know whic NJ market the poster is looking at.

Originally posted by @Russell Brazil:

Originally posted by @Peter Tverdov:

Originally posted by @Russell Brazil:

Originally posted by @Peter Tverdov:

Originally posted by @Russell Brazil:

Originally posted by @Peter Tverdov:

Originally posted by @Russell Brazil:

Originally posted by @Josh Huber:

@Russell Brazil - Your post above stating that investors should load up on properties while interest rates are still low got my brain turning. 

As interest rates rise, which do you think is more likely to happen; increased rents or decreased property values? 

If all other variables remain equal (cost to purchase a property, tax, insurance, etc...) as interest rates continue to rise, profit margins for new purchases should continue to shrink. So wouldn't something have give somewhere? Otherwise there won't be enough ROI to motivate buyers to purchase properties.

In my opinion, I can see property prices decrease as interest rates continue to increase. If that's the case, then wouldn't it be better to load up when interest rates are high, then refinance when they go back down?

P.S. - I'm new to the REI world, so please don't take any part of this message negatively. I'm simply looking for your opinion/knowledge.

 Numerous studies, including those by Nobel laureate Robert Shiller have shown that movements in interest rates have no impact on residential real estate.  For most of the general public, this seems counter intuitive...but for loan officers and real estate agents it makes perfect sense.  When a buyer goes into the market place, and they are preapproved for say a $400k house...they will buy a $400k house.  If rates increase and now they can only afford a $350k house,....that original property they wanted at $400k, the price of that does not drop...but instead the buyer moves down to a cheaper property to coincide with their purchasing power. So as rates go up or down, the buyers simply move up or down in price range with the rates while the property values remain unaffected by rates.

 I completely disagree with this. Rates have gone up 75 bps since January and the town I was looking to move to (putting it off 2 years) has sent me nothing but alerts of prices being slashed. Prices on million dollar homes all the way to homes in the 500s. Interest rates up equals housing prices down. It's supply and demand. 

Post hoc ergo propter hoc

 I guess what I am seeing is magic then. 

 By your same logic, then prices rising in my market (as well as rising prices across the nation) should be attributable to rising interest rates?

 I don't know where your market is. I live in one of the hottest real estate markets in the country, an area that is nearly recession proof. When rents and real estate prices start tightening up on the coasts, it's a sign for the rest of the country. I have seen prices cool in multiple markets as well as landlords slash rents. 

 You further prove the point here.  Rising interest rates certainly have no correlation to falling rents, so in whatever anecdotal evidence you have on falling prices, likely is a market condition to the market you are looking at as opposed to an effect of rising interest rates, since you state there are other factors that are not correlated to your thesis.  Because what we do see historically is higher interest rates will actually correlate with rising rents.

And if the market you are referring to is Northern Jersey....a much likelier cause of falling prices would be essentially the elimination of the deductibility of property taxes.  Most economists have conjectured that Northern Jersey with it having the highest real estate tax rates in the country in some of these cities would be the most susceptible to change in prices due to the new tax structure.

And everyone in the country feels they lived in the hottest market in the country. NYC, DC, San Fran, Boston, Seattle...everyone.  It is simply a matter of confirmation bias.

Im not even arguing that prices are falling where you see them....Im acknowledging that as a possibility...but prices are rising nationally, so as @Joe Splitrock said, it is very unlikely to have 1 thing cause two separate outcomes in 2 different areas.  The likelier  instance is X is causing falling prices in your market while Y is causing rising prices in another market, as opposed to Z causing a rise in one place and a fall in another place.  Although if Z were to be something like a major corporation moving from one market to another...that very well could cause opposite outcomes in different markets.

Where have you seen that? I live in Union county and I've seen increases for nearly all towns within the county.  Same for Hudson where I have two rentals.