All Forum Posts by: Greg R.

@Collins Bonnema great analogy about car dealerships. I hate when they ask me how much I want my payment to be. I always respond with I don't care about the payment; I'm focused on the total price.  

You are 100% correct about wages not increasing to match inflation. Everything is so much more expensive now than it was a year ago. Gas, food/ drinks, entertainment, rents, services, etc. One thing is for sure, most "regular" people, (the non-investor type) are struggling. A majority of folks are living check to check, drowning in debt, and don't have enough money to cover a small emergency expense.  

Not really sure how this is going to play out with RE. At the moment there seems to be an ample supply of people with buying power, but the rates could change that. 

Mark, rather than cashing out on all 5 properties, maybe just cash out on one, and purchase (1) STR in NC. A lot less risk in this strategy and you'll be able to gauge whether it's a good idea or not. Yes, rates might go up to "x", but I would personally advise a more measured approach as opposed to the "all in" method. Who knows, maybe you do the one, learn the ropes with STR and a when you're ready to do more the rates might dip down. I personally feel like we are near a market peak, but I don't think there will be a big crash. My opinion is that the market will likely stabilize and perhaps a moderate correction in home prices.

@Nathan Grabau thanks much for the link, I've been looking for a site to monitor rates on a daily basis. Do you have a reference for where I can learn more about MBS's? Perhaps a YouTube video or detailed article? 

Thx.

@Martin Martinez if you can get in a place with little down and pay nothing on an ongoing basis, I would call that a hell of a deal. Rents in CA are out of this world at the moment (at least coastal CA). I'm not sure about Fresno though.

I have a similar thread going on this topic. The truth is that anyone's opinion is just that. My observation is that most people here don't seem to think that the rates are going to impact pricing much. One thing we can pretty much all agree on is that inventory is insanely low. In my mind that's the key. If we see inventory increase in the spring summer months like we normally do and the rates stay in the 5's or 6's, I think it's entirely possible that prices could dip. If that happens, the sellers would have no choice but to meet the buyers where they're able to qualify. Buyers using financing would have limited buying power due to high rates. 

There are only so many cash buyers out there. Purchases using financing represent about 70-80% of home sales. It's possible that the rate increases could generate some more inventory as well. Some sellers seeing rates increasing could think that they need to list now before rates balloon out of control and while values are still high. 

But who knows... 

@David Vanlandingham, I agree. Being fearful to pull the trigger is a bad thing. A lot of good opportunities are missed because of fear. My stance isn't that we should be petrified to the point that we never pull the trigger. However, a little fear is good. Even the best of us are one bad move away from losing some serious money.

You are absolutely right that good deals can even be found in the worst of times - which leads to my point. Good deals are much more difficult to find in the worst of times. Just because someone is able to make a deal in a poor market doesn't mean that they should. For some people the right move might be to sink some money into stocks, a fund, or some other low risk investment and come back in a few years when the market improves. 

I don't know much about you, but you seem very sharp and like you know what you're doing. Don't assume that a most others on BP are as knowledgeable as you. Finding good deals in a poor market isn't something that a lot of people can be successful with. 

Thank you for the kind wishes. The same back at you! I hope you find that home run.

Hey @David Vanlandingham, you are 100% right on your first point. What's making all this relocating possible is the ability to work remote (via the pandemic), and the "why" people are doing it is high taxes, cost of living, and politics.

A good friend of mine left San Diego a couple months ago for Tennessee. I'm seeing a lot of people from CA go to South Dakota, Tennessee, TX, Florida, South Carolina, and Arizona.

Where I disagree with you is your stance on trying to gauge/ time the market. This is a staple of good traders/ brokers. They look at the market, signs, indicators, etc. They make their moves based on what they see going on in the market. They are not trigger happy and rushing into every move. If I get a million dollar inheritance does that mean that I should invest 100% of my money right this second just because I am able?

I'm not saying wait forever either. I just bought a house 2 months ago and am buying again in the next 2-3 months. I'm making the point that "right now" is not always the best time just because you are capable.

I made that mistake in the past and even though my deal turned out well, it could have been WAY better if I had more patience/ maturity at the time. However, I followed the idea that right now there is a deal in front of me and I should take advantage of it out of fear that I might not be able to get a better deal. I didn't use digression and didn't carefully evaluate the market, the conditions, the rates, the inventory levels, ease/ difficulty of qualifying, etc. That cost me super lucrative/ once in a lifetime deal that was on the table a very short time afterwards.

I fully reject the idea that "now" is always the best time to buy, and that evaluating market conditions and being strategic on when to purchase is counter productive.

In my opinion the schools don't matter at all. Only a long term tenant is going to care what school district the house is in. Crime is a different story. If there is gang banging happening on the block, that's not going to bode well for you. As Marshall stated, if guests don't feel safe you are probably going to start getting bad reviews which can tank your STR.

Thanks @Salvatore Lentini. The low inventory is the key to the inflated housing valuations, IMO. I don't think it's all about the lack of new construction either. There was a major shift in the last couple of years due to a sizable segment of society becoming permanent "remote employees". This allowed millions of people to move around the country freely with no negative consequences from their job. In my opinion that was the major disrupting event that caused low inventory. Would the millions of people that flooded to FL and TX (and many other markets) been able to do so if they were tied to their job and not able to work remote? I think it's unlikely.

I agree that the options aren't limited to either raising prices or a crash. In my mind the more likely scenario is a stabilization of costs with slight market correction due to the rates. I don't have any data to support this but I feel that a majority of people who wanted to relocate around the country (due to their new found freedom) have already made their move. Further, we might see inventory levels raise due to sellers thinking that they need to sell their home before the rates get too high. A lot of different scenarios can play out. 

@Chris Mason great points. Funny video as well. Thanks again for the time and thoughtful/ detailed response. This is definitely a complex puzzle to solve. Great point about fixed rate though... for a principal residence, even with a high fixed rate, it will likely be worthwhile 3-5 years from now as rents continue to increase.

On a side note, I do kind of feel like that a**hole from CA going to TX. I'm going to be submitting offers in the next 2-3 weeks lol.