All Forum Posts by: Wayne Kerr

Quote from @Dave Smart:

Quote from @Wayne Kerr:

Quote from @Nick Barlow:

@Scott Trench I agree with what @Elbert O. Said-debt levels are much higher today, and government solvency is at Risk if we sustain higher interest rates for a long term.

Not getting too political, but higher costs leads to either default, or a combination of higher taxes and rationalizing social services/entitlements, and reducing the latter is politically damaging.

In my opinion, the Fed has a ceiling on interest rates, and I think we’re getting close to it.

I also think we won’t know that exact number until we’ve passed it, which we will, and they’ll be back to QE by end of year fixing the damage from “over correcting the response to inflation”.

 What makes you think we're close to the ceiling on interest rates? Fed Funds rate is still almost the lowest it's been...ever

Our national debt is most likely by far the highest it’s ever been too. The interest we pay on that debt would be more than the national budget alone if rates keep going up, and if they went to say 20% we are essentially done as a country

 So we'll just raise the debt ceiling...

Quote from @Nick Barlow:

@Scott Trench I agree with what @Elbert O. Said-debt levels are much higher today, and government solvency is at Risk if we sustain higher interest rates for a long term.

Not getting too political, but higher costs leads to either default, or a combination of higher taxes and rationalizing social services/entitlements, and reducing the latter is politically damaging.

In my opinion, the Fed has a ceiling on interest rates, and I think we’re getting close to it.

I also think we won’t know that exact number until we’ve passed it, which we will, and they’ll be back to QE by end of year fixing the damage from “over correcting the response to inflation”.

 What makes you think we're close to the ceiling on interest rates? Fed Funds rate is still almost the lowest it's been...ever

@Chris Seveney

"Also I see people focusing on the supply side saying we have a housing shortage. How did we go from a shortage in 2007 to oversupply in 2008? It was not due to the # of homes built is was due to demand."

 This has been my recent thinking big time. How did we go from a stable housing market in 2019 (if I remember correctly) to the frenzy we've seen the last 2 years? I don't see how supply would've changed majorly in 2 years. I see it as a demand increase due to (1) first time home buyers (Ie:people just wanting a house, but they didn't just ALL decide to purchase the last 2 years...there was a reason...maybe the (2) low interest rates. Low interest rates combined with lots of new printed money I think created this demand...for first time buyers/refinancers/investors/literally everyone. With higher interest rates I can't see the demand staying high...combine that with some layoffs, people not working from home, credit increasing, savings decreasing, these retail investors taking a huge L in the stock market/crypto and the demand has got to dry up a good bit, or a lot bit in some "overpriced markets" - florida, smokies, austin, bay area etc. 

I can see a supply shortage - but this is something that takes time - we don't see 37% appreciation in two years due to a sudden shortage of supply. There wasn't a meteor shower that suddenly wiped out millions of homes creating a supply shortage. It's been a change in demand driven by the pandemic. Let the economy return to normal and I have to think we're going to see at minimum a plateau but more likely a 10% decrease and maybe 20% or more in the coming years in "overpriced" markets. 

So a couple of things from my perspective:

We hear that supply is low - pricing is relative to supply AND demand. What's driving the demand? We have (1) a millenial population buying houses (34% of homes bought last year I believe were first time home buyers) and (2) a demand driven from low interest rates - if interest rates stayed where they were pre-pandemic we would not be having the "supply" crisis we are having today. We didn't have this supply crisis/bidding wars/overpaying/20% appreciation pre-pandemic...this makes me think a lot of the demand was tied to interest rates. I think some of it may be shadow demand. Demand was high for everyone due to the interest rates investors/first time homebuyers/literally everyone. I have to think the demand is going to dry up pretty quickly. Then the 'low supply' won't be as much of an issue and the market will stagnate and contract. It really seems to me the interest rates drove demand in the last 2 years or we would've been seeing this same appreciation well before low interest rates and the pandemic. 

The other thing is we had A LOT of money printed during the last 2 years. Lots of people at home with extra money. Stocks got over valued. Crypto got over valued. Lots of retail investors getting in - and hey you could've made money in almost any investment in the last 2 years. Now I think the party is going to be over - stocks coming back down, crypto coming down - things have to come back down to a true value. This means companies have to truly turn a profit - they may have to layoff workers to do so. Lots of companies that surged during the pandemic 

Why would the housing market be any different? These overprices areas, San Fran, Austin, parts of Tennessee, Florida, overpriced STRs, I have to think those are going to come down in price. How much? Not sure. The demand I think is going to dry up. Why? Higher interest rates, less disposable income, less remote jobs and we're seeing the layoff start since companies cannot be as profitable/get cheap loans as they could during the pandemic. 

The Fed literally tells us what they will do. JPow said we have to control inflation (increase interest rates and essentially force a recession) and that home prices need a "reset". What does "reset" mean - it means they need to come down. How do you get prices down (1) dry up demand (2) increase supply. I have to think he's telling us what they are going to do and we're going to see prices drop in a lot of places. 

Quote from @Marc Izquierdo:

The electrical work sounds right. I just had a panel, meter, and service cable upgraded from 100A to 200A for about the same price that your handyman charged you (mine was done by an electrician). I think the door installations sound about right also. I recently had 6 interior doors replaced (only the doors not the frames) and two exterior metal doors (similar to what you had done) for a total of $3200.

For the tile, it sounds like he's doing the tub surrounds only, not the flooring? I honestly don't think $5,500 is terrible for the two bathrooms. I'd maybe like to see it around $4,700-$5,000 since you bought the tile. There is a lot of back and forth for the contractor (waiting for stuff to dry, having to leave, come back, etc) which adds cost. However, I've done all of my tiling myself so I really can't say for sure that it's a decent price based on my experience. Tiling shower surrounds is pretty common so I would think someone would be able to chime in with those numbers. 

Awesome - sounds like we're not too far off then! It seems like he does a good job and he can do it cheaper than hiring a specialized person (Ie: electrician/plumber etc) from what I've found so far. The smaller things I usually get 3-4 quotes on, the bigger things I'll get 7-10. 

Once I get can an inspection and get the service line upgraded to 200 amps, we'll have AC and lights and be able to move in. The rest of the stuff I'm going to complete after we move in. (Planning on renting out the house I'm in currently and want to get it on the market in the summer before school starts). 

Ah, and yes it was just for the shower/tub surrounds. I'll probably have him go ahead and install the plumbing fixtures/valves too. That way they are done and I can focus on something else. 

Thanks again man, exactly what I was looking for! I'm sure I'll be back with a few more estimates from him lol

I'm in the Louisiana area and have a handyman completing a lot of the repairs on a foreclosure I recently bought - this one will become my primary residence. I want to make sure I'm not getting taken advantage of on the pricing since I'm new to the rehab part. 

I had him swap the electrical box and meter box - swapped from 100amp to 200amp from the weather head down to the meter box - charged me $2250 (Got quoted $3500 from my electrician). New larger electrical box, new meter box etc. 

Had him replace 2 doors today - went from wooden doors to metal doors. Included demo and buying and installing 2 pre-hung metal doors - one with a half window and one just plain white (included door, framing, bottom threshold, hinges, basic knobs and locks). I think these doors cost $300 or so for the one with the window and $200 or so for the plain white one. He's charging me $1400 - seems a bit high (but unsure). This did include the handles and locks - regular lock and deadbolt. He sent me pictures too, they seem to be installed well from the questions I asked (are the tight? any daylight?). One of them has a small dent in the bottom left corner. 

Have a quote from him for $5500 to tile 2 bathrooms. He'd have to demo the sheetrock, put up water proof cement board, and install about 140 sqft of 12x24 tile and frame out 2 stainless steel wall niches. I purchased the tile and wall niches so this would just include labor. This seems high to me and the research I've done. 

The guy does quality work and has a lot of experience and can literally "do it all". Just want to make sure I'm not getting taken advantage of here being new and all. What do you all think - do these costs seem ballpark? (Yes, I have read that popular book on the cost to rehab houses lol)

I would sell as well - I think you could take that capital and deploy it into something bigger. May be hard to find something in 45 days with the market the way it is...but this is a sellers market - we are literally at the top of the market right now. You're seeing a softening happen already, I still think it's a great time to sell. Pros are doing it. 

Quote from @Ron Brady:

@Wayne Kerr

I've spent enough time on BP to know when I am communicating with someone who engages in professional communication, and when I am not.  With what you've shared here, this is one of those moments. 

May God bless you.

 Exactly. Good luck to you. 

Quote from @Ron Brady:

@Wayne Kerr

Thanks for weighing in. As a executive in my previous career, my experience was that broad diversity of background among my staff--political persuasion, age, race, gender, experience, professional background--lead to richer discussions, more professional disagreement and thus, ultimately, better decisions and better outcomes.  And many business researchers find this same result.  I'm sure that's not the case for everyone, but it certainly was my experience.  So I found there to be a great benefit to all kinds of diversity.  I see that Wells Fargo, and you, have a different take than mine.  I trust that it's worked as well for you as my approach has worked for me. But, as I shared earlier, I'm certainly not doing business with Wells Fargo.

Re: "race-baiting", I've not found, in the media I consume, what you have.  But, that's the joy of real estate, I find--different strokes for different folks.  Best wishes to you in your investing!

No. You missed the point completely. Businesses can get tax breaks/credits for hiring minorities. Many are required by law to interview a certain percentage of minorities. Minorities can have lower test scores and get into the same college programs. There are scholarships for certain minority races exclusively. This is racist in itself. 

Why should we look at race when fulfilling a position, period? 

And you don't see race baiting in the media? I mean they don't even try to hide it anymore. If you don't think the media race baits...then I literally have NO idea what planet you could be on

Depends on the area - I have a duplex in an older area and don't have a dishwasher in either unit. I did add washer/dryer hook-ups though. These are 2br/1ba units. I have never gotten negative feedback on not having a dishwasher. 

The newer expensive units in the area have dishwashers, the older smaller ones don't. None of them. But the area is so good the old units rent out anyways. Most have window units or portable plug-in heaters too. 

If you already have the plumbing in place I'd go ahead and add it in. If you don't have the plumbing then I'd skip it. If it's designed for a family I'd add it too. Designed for a single or couple living there I'd skip it.