All Forum Posts by: Greg R.

Hey @Daniel Han, really depends on your strategy and what you're wanting to accomplish. As a relatively younger investor, I see my properties as my retirement. I'm about 20-25 years out from retirement, and I don't think there is going to be social security or anything similar when I get to the age. So for me, I have held on to all my properties with the long game in mind. 

Sounds like you're not using your VA loan to its full potential, but would you need to sell this property to buy another? Seems like you might have enough entitlement to purchase a second home w/ the VA. If not and you want to keep the home, might not be a bad idea to refi into conventional. Your rate and payment are going to increase, but if you can increase rents as you're projecting, it would make up for it. If you are able to leverage the VA loan to get another home AND keep this one (and cash flow), I see that as a win-win.

Thanks for the insightful post @Michael P. Lindekugel.

I tend to agree with you that there is a market correction coming. I am absolutely astonished with the amount of people who insist that prices are going to rise indefinitely despite all the signs we're seeing. There were many reasons why prices soared over the last couple years, but one of the biggest reasons was because of historically low rates. If rates were between 4.5-5 over the last 2 years would the market have done the same exact thing? The answer is obvious. A question I've asked and have never got a good answer to is: how can the market NOT change when rates go up by 50-100%, and hyper inflation thrashes the country impacting the affordability of basic necessities, food, gas, clothes, etc. 

The same life changing reasons are going to keep coming up that force people to sell, e.g., divorce, relocation, death in the family, etc. It's very reasonable to think that the pool of buyers is going to shrink as rates increase. Even if millennials hit the market, for the more part they are going to be looking at condos/ lower end properties. Look at the stats about how most millennials are doing financially. A significant amount of them have insane amounts of student debt and many live in expensive metro areas where they're living check to check. I don't understand the idea that millennials are going to flood the market injecting millions of qualified buyers with bulging pockets into the real estate market. 

Seems to me like a lot of the people who are refusing to accept the possibility of a recession/ market correction are doing so out of self-interest. Brokers, realtors, lenders, etc., are going to be heavily impacted by a recession/ market devaluation. If the consensus becomes that homes are grossly overvalued (as they are), rates are sky rocketing (as they are), we are battling hyperinflation (which we are), and that pay rates are not increasing quick enough to keep this trend going (which they aren't, and not by a long shot), that could be the start of the downhill slide. In my opinion the denial of these facts is why the market correction hasn't happened sooner. Plus, rates just started shooting up very recently... we very well could be feeling the full effects of this by the summer if rates hit the 5's. 

Oh, and I forgot to mention the food shortage. Does anyone care about these things anymore? Or should we all just ignore what's happening around us and assume that real estate values will continue a meteoric rise despite the US being on the brink of financial collapse and a significant amount of people being a single paycheck away from homelessness. 

Quote from @Cody Hunter:

It all depends on where you read. Here is an article from CNBC this morning: https://www.cnbc.com/2022/03/2... However like the above agents mentioned, the market is still hot in some areas. Typically rates increase are meant to slow. Some differences between 08 and 22 but some similarities. 

Thanks for the article @Cody Hunter, good info. But as you said this is national info. In hot markets it's probably not hitting as hard, but I find it impossible for the housing market to remain the same when rates hit 5. That will significantly impact qualification of buyers and their DTI.

Quote from @Bruce Lynn:

2008 and 2022 very very different.

I don't expect prices to drop in DFW area any time soon.  You look at inventory and you look at the building supply and you look at how many people are moving here and it's just the perfect storm probably for at least the next 3 years.

Rents going up too.    Just bumped one from $1750/month from 2 years ago to $2750/month now.

I have a lender that will lock rates for 90 days...so if you know you want to buy, you might do something like that.

From the offers we see that are significantly over asking and plenty of offers....maybe interest rate rise makes it go from 30 offers to 20 offers....only 1 gets the house. and there are still 19 hungry tigers out there bidding and buying....even if no one else enters the market.

Nationwide I think mortgage applications are only down 15% or something like that.  That doesn't necessarily mean less buyers, but maybe just more people waiting for more inventory or opportunity.

With prices going up 1% a month or more and interest rates going up, you might well do better to buy sooner than waiting until the super busy season in May/June.

 Thanks @Bruce Lynn. I don’t think we can use the rental market as an indication of what rates will do for buyers/ sellers. 
If what you are saying is true, then the pool of buyers are going to be in a lower tier of housing. For instance if I was in the range of 850-950k before rates were up to 4.5, maybe now I’m in the range of 700-800k.

All those buyers who were in the 550-700k range are now going to be in the 400-550k range, correct? Maybe not that dramatic, but the point is valid. 
As rates increase, buyers pay doesn’t. If I was making 100k annualized last month, my pay rate doesn’t slide up to 130k this month as the rates increase. 
Therefore, something will have to give, I don’t see how there will be no change in the market. 

Gas is another way to illustrate this. Are people still going to drive their cars even though there is record gas prices? Yup. But are people going to drive less, less road trips, try to stay close to home? You bet.

My question is, how could there not be a change in the market based on the costs of loans? Loans cost signicantly more now then they did last month, and if you believe the projections they are only going to go up. How can the market be unaffected if that’s the case?

Maybe it will take a few months for the impact of these high rates to show their impact on the market.

Thanks @Noah Thacher

I'm going to preface this with what I've said on other posts... I understand that no one has a crystal ball.

I'm going to be moving to Plano/ Rockwall TX in July/ August (can't move earlier due to kids in school). I'm planning on making offers on a principal residence around late May/ June.

According to every projection I've seen, rates are going to be (at least) 4.5+ on a 30 year fixed.

Is there a consensus that prices will have to drop if that's the case? Or will the insane prices continue no matter high the rates go? I'm not sure if we're in a period of time where in the next 6 months we'll see a market correction based on high rates and buyers not being able to qualify for as much.

I feel like I'm about to buy right at the peak of the 2008 bubble. Would it be better to rent for a year?

Any thoughts would be appreciated.

Regarding the STR insurance, I'm almost positive USAA doesn't cover STRs. I have two STRs with policies that specifically cover STR uses. One is Guard through Berkshire Hathaway, can't think of the other one. I would recommend calling a insurance broker in your area and tell them you're looking for a home insurance policy that covers STRs.

Quote from @Bruce Woodruff:

Having thought this over, are you sure you need to proceed with the over-the-top cleaning, duct replacement et. al....?

You could throw in a few air cleaners and run the AC for a few days and get rid of all the residue. End of problem. IF you choose to go ahead with the expense, that would be your choice I guess....

Completely agree Bruce. I would maybe hire a company to do a through cleaning, maybe some HEPA filters throughout the house, leave all the windows open for a day or two.

Hello BP community. Anyone happen to have a referral to a good STR cleaning company in Albuquerque?

Thx,
Greg

Quote from @Brittany Flem:

@Greg R. If you are worried about a sign looking cheap, there are hundreds of Etsy shops that do custom, decorative wood or even metal signs. Something like that might be considered decorative, but also informative. Put it somewhere that they, or any guest, can see right when they walk in the front door. Here's a cute one: https://www.etsy.com/listing/861947702/personalized-family-rules-in-this-house

Thank you Brittany.