All Forum Posts by: John Carbone

 Extra pay though by default doesn’t mean better performance. I also pay per the job, but I’ve had issues where the checklist wasn’t followed by the person executing it. It’s rare, and these people will be replaced instantly but Cleaners can cut corners despite being paid by the “job” (despite it being an effective high hourly rate) but they wanted to get done faster for whatever reason, whether to have a shorter day or to do another side job to make even more money. 

Same goes for property management companies that charge hidden fees, I’d venture to guess that OP probably pays hidden fees to her PM (most do) but if we go by the notion that higher pay received by the PM should mean better results…..doesn’t necessarily make that true. 

point is, it doesn’t matter how compensation is paid out, if the people doing the job are lazy or have a bad work ethic you will have poor performance whether hourly or per job. This isn’t isolated to just cleaners, I’ve seen this in corporate world as well. 

 What do you see on Sevier county tennessee?

 Yeah this seems to be extremely common around the smokies. I don’t know anybody that had a “smooth” process, and with construction loans being so expensive with high rates I can’t imagine doing that. 

I just ran numbers on my 4 bed in the smokies. 

Cleaning - $1400 month (going rate is $200 a turn)

Electric average - $185

Direct tv - $175

Internet - $110

Pest control - $80 

Miscellaneous -  $150 (No major expenses this year)

Insurance - $250

Taxes - $125

$2,475 a month without servicing. I think a safe number is to add a 5-10k buffer for replacements. I know I’ll have water well maintenance, hvac, driveway work, and electronic replacements and furniture on the horizon. So add another $500 a month to get to $3,000 without debt service. 

This brings in around $100,000 gross (it’s a smaller 4 bed that sleeps 9) and I paid 400k for it with a 3 percent mortgage. my guess is someone in this market would pay around 700 for it now and if they financed 600k at 7 percent they would have a 4K mortgage. So the all in cost for someone would be 7k a month bringing in $8300 a month. 

New buyer nets - $1300 plus principle 

I’m netting - $3800 plus principle 

I personally think the amount of people coming in at these price levels won’t do well. Interest rates matter a lot. I’m essentially getting a massive subsidy each month that turns into cash flow. I wouldn’t be buying at these prices and rates, but I also won’t be selling because of my interest rate subsidy. All my new money I’m just investing outside of real estate right now until real estate gets cheaper. 

also for someone buying into this market, there isn’t a buffer if revenues drop. The market is priced for perfection right now on revenues. I wouldn’t be shocked to see a 20 percent drop in revenues in 2023. 

I think if you are trying to base numbers off of 150k plus revenue, these are few and far between. This is averaging over $500 a night year round. Some properties command this, but it’s a massive gamble and just because you do an enemy method thinking you can undercut, there are a bunch of buyers pre Covid who have extremely low operating costs, and if needed they can undercut you right back without forcing themselves into liquidation. Following this path as a new buyer is a kamikaze mission. 

You were promised a minimum 20 percent drop by end of 2023. Housing will always be the last leg to drop. I also never said to sell everything and come back and buy. I said hold existing but wait to purchase new holdings. I don’t see how a 7.1 percent inflation print changes anything other than short term interest rate declines. If we are in the same spot after Q1 as we are now, I’ll start to say it may have been overblown, but jobs should be a train wreck Q1 and we know jobs are the only thing that matters in housing with rates following.  

Perhaps everyone here will owe grandpa Jerome an apology for steering the ship correctly?

Quote from @James Hamling:

Recently some said "the sky is falling! show me data to prove otherwise" and I did. Then they said "but that's national, the sky is falling that just, doesnt show it because, IDK, uhm, aaahh, because i said so, the sky is falling" lol. 

Well, here is some more data for you. Inventory moving up a touch (which it does every year this time), closed sales DOWN 35%! Days on market UP 21%!    And still..... STILL..... median sales price goes UP! Freaking UP!    This is becoming the tale of the Titanium Median Sale Price, holly-cow.    Even I predicted a minor decline in median sale price by this time, in concert with consolidation but apparently I undervalued the power of this inflation cycle and front-loading.     If waiting the sidelines, yes, your going to sorely regret it, AGAIN. Just like the last 24+ months of waiting the sidelines. 

 Seems like a lot of R/E jobs are going to be lost from lower transactions. Once jobs are lost, that’s when the values will drop. 

 Yeah that is for sure rates won’t be higher in 2025. We still haven’t proven yet the economy can fully function on a high terminal rate for prolonged period of time. Powell has 25 percent wiggle room in spx before he needs to telegraph rate cuts next year. Layoffs will be en masse after New Years. If job market is weak, “plans” for these new giants will go on hold. Market sentiment can change quickly. Inflation still has a lot to fall as well so not expecting in back pedaling from Powell at all until 2-3 percent annualized inflation.