All Forum Posts by: John Carbone

A little primer of the housekeeping world, at least in eastern TN:  

Managing cleaners (hiring and firing) consumes about 80 percent of our time.  The typical pattern is that they do good for a few cleanings, and then start falling off of the wagon.  We have someone that checks their work routinely, which helps.  But when you cease checking their work, you're toast.  Pretty much anything goes.  No matter what company you choose, and no matter how much you pay, at the bottom of the food chain, the actual cleaners are making minimum wage.  Someone else is usually skimming the profit.  

You might say "well I'm going to hire Sue to clean my cabin and pay her twice the market to do it right!"  Sounds good, except Sue figures out her niece, Gwenavere, will do it for half of that much, so Sue pays Gwenavere half of what you are paying her to do the job, and pockets the rest.

We call this "housekeeping pimps", and it is the rule rather than the exception.

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Well @Carlos Ptriawan, it's now looking like the "doomsday" scenario I mentioned, is actually possibly happening. 

My mistake, I thought y'all understood inflation, national debt, cause and effect, oil imports, macro economics, that sort of thing. But, no matter, our nice little conversation isn't going to change minds. At least not the minds of those making those decisions to deflate the dollar. Here is our defense budget and following is what it does to the dollar and your ability to buy houses.

https://usdebtclock.org/  Click to see National Debt and a bunch of other things that impact your real estate investing

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Well @Carlos Ptriawan, it's now looking like the "doomsday" scenario I mentioned, is actually possibly happening. Saudis have reached out to S.A. and expressed interest in joining BRICS, and Ramaphosa indicated this could be something happening and decided within next 12 mnths. 

This is a MAJOR shift. It would put BRICS in control of the vast majority of world energy market. And now imagine pressing ALL oil exchanges in Rubel, all Saudi oil sales in Ruble..... Yeah, this is a legitimate threat to USD position as world reserve currency. 

 Sure you wanna sit on the dollar now?    No thanks, this presses the immediate NEED to get all leveraged into assets ASAP. Clock is now ticking on this now. 

For those who don't comprehend, when a currency is in threat of being debased, or just going worthless, assets skyrocket and provide the only protection because if USD goes to nothing, assets like housing will hold a value, regardless of the payment means, be it dollars or cows and chickens. BUT having bonds, that say you get repaid in dollars, yeah, NO THANKS. I just dumped all bond positions with this development. 

All it takes is Saudis and then 1 or 2 OPEC and forcing transactions in Ruble and it's done, the USD will be dethroned and over as world reserve. It won't happen gradually or slowly, once it's a real threat of it leaving that placement, ALL will dump it, making it a self fulfilling prophecy. The last thing you want is to be into the USD in any way shape or form anywhere when that event starts happening. 

@James Hamling:  Your comment: "It would put BRICS in control of the vast majority of world energy market. And now imagine pressing ALL oil exchanges in Rubel, all Saudi oil sales in Ruble..... Yeah, this is a legitimate threat to USD position as world reserve currency."

Yes, it would challenge the USAs world reserve currency position but that's a good thing. 

We have entered wars and started numerous other wars to preserve that status.  We have been profligate with that status. We have amassed debt the world has never seen before because of that status and the arrogance that goes with it. We are in our current precarious position because of that status.  Our grandchildren will still be paying interest on our debt because of that status.

We are oil independent when allowed to be by the administration and have no need for the petro dollar, other than to stick our nose into other people's business.

Housing prices go up and interest rates go down, life becomes more affordable when we lose that status. 

You will own more properties when we lose that status and it will be more profitable for you.

Currently it's like continually hitting your thumb with a hammer and someone asks why are you doing that, with your answer being "because it feels so good when I stop".

 This comment is more philosophy then anything else. And know what, yeah, a lot of truth to it, there is, the U.S. Empire is built upon a heck of a pile of ashes.     But here is the thing, your leaving out any mention of the alternative. I can tell you have never traveled outside the U.S. because only total ignorance of the rest of the world could lend to such a thought direction.     For all the faults and all the misdeeds of the U.S., the good is so monumental that yes, it is worth it. It is. Every lie, war, destruction, worth it. 

 I know people, closely, who lived in the USSR, it was every horror ever said and more. In China they slaughtered tens of millions for the crime of being of a different political opinion, or just simply a relative of such person.     I have been to 2nd and 3rd world nations, you can't imagine what a day in the life is like there. For every fault and failing, the worst of the U.S. is better then the best day for many in these places.     For every horror the U.S. has undertook 1,000 horrors have been prevented or ended. 

The world is not so simple as good guys on one side and bad guys on the other, and all follow rules of the game. It's just not that simple. Yes, sometimes only evil can stop evil, that is reality.     And the end of the U.S. will usher in an evil the likes of which yourself and people like you are not capable of even comprehending. I have seen things that would make your toes curl, and in those areas it was just a normal happening. 

Your so convinced the U.S. is so bad and the world would be better off without it, ok, prove it, GO to those areas now without it, see how "great" it is now. Africa is full of these places, pick any. 

I can make $ in any environment, I am not such a narcissist as to watch the world burn and clap my hands at all the $ I can make off the ashes. 

That quite a leap from my bashing war mongering to accusing me of hating the USA. ;-) 
Actually, I've travelled the Soviet Block including Russia and I have friends in Moscow and Eastern Europe and Mexico for that matter.

Anyway, the point is, as I'm sure you already know, the idea behind the petrol dollar was to provide us with a steady flow of oil, cheaply. It backfired and anyone who doesn't see the connection needs to follow the money.

If we wanted to we could help Haiti who is next door, crawl out of the abyss but they don't have oil, so we don't.

We could help Chicago, which is worse off than Haiti, we could help Detorit, we could help St. Louis, we could help Memphis, we could help New Orleans and so on.
Below is where those taxes you pay go. Are we building these to protect Staten Island or something? When will you say we should balance our budget back to encouraging home buying for people in the USA ?

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Well @Carlos Ptriawan, it's now looking like the "doomsday" scenario I mentioned, is actually possibly happening. Saudis have reached out to S.A. and expressed interest in joining BRICS, and Ramaphosa indicated this could be something happening and decided within next 12 mnths. 

Hell yeah, this is James Bond territory obviously, beyond my pay grade LOL

I bet US diplomatic missions in many countries already visited the Ministerial office, threatening not to buy Russian oil.

Oh btw, Rubble is now pegged to Gold; so my deep suspicion this is pre-planned by Russia is making more sense.

 Beyond doubt 100% strategized planned actions by Rus, and they are winning at it big time. And yes, U.S. has made significant attempts at reaching out to Saudis, the responses have been nothing short of a big F-U to the U.S.. 

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@Greg R. 

And Philly metro will be slow. Philly metro hasn’t grown much last few years even (fishtown and some of those areas). So not surprising. Philly suburbs thought have quite a few active builders with Toll to THP to Pulte. Suburbs are selling quite well 

 Zillow prediction for the next 12 months is out, it's pretty much flat line or 1% growth til Sep 2023 nationwide. This is the most accurate and realistic view that I've seen. Philly is growing like 1% for 2023. 

So no market crash --per Zillow.

If it would be a flat line til Q3 2023 then Opendoor is right,market would re-accelerate from early 2024.

Since when is Zillow the know-all? I must have seen hundreds of examples that have shown Zillow projections to be way off. I need a little more to convince me otherwise - at least in my local area. In different localities, sure. In DWF area & Austin prices are dropping quick. Everything is more expensive than ever (including mortgage rates). 

For me Zillow is the semi-God for real estate statistics. I'm pretty much follow this guy calculation every now and then.

Look, every city would react-differently. The problem with Dallas,Austin,San Jose is all the same : in 2020 2021 2022 , there're are 3 sigma melting up deviation , , so it's prudent to say for a balanced market to happen, all these overbid market has to "revert to the mean" by having price going down 1 or 2 sigma deviation. Back to its long term appreciation growth.

It's not a crash, it's just moving to the long term appreciation line. Like I said San Jose is best example, it melted up $300k without reason within two years and now reduced $100k. 

The problem with Austin and DFW is your median price is $630K. If you follow 7% appreciation like, the fair market value would be around $550k, or price around Q2 2021. Expect to drop 80k, the faster the better, if your market can do it like us here in SJC, things will settle quick LOL

 Ummm Austin is doing fairly well. Don't believe the noise. In the latest stats released yesterday from the Austin Board of Realtors there is still nice appreciation overall with some zip codes such as 78741 increasing at a 22% yoy clip. If one drives in that area one will see all the massive construction trying to keep up with the demand. That is just one example. There are some submarkets that didn't do as comparatively well but its not at all an indication of the overall market. Know your market. 

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Agree with what you say here. 20-30 percent drop I’ve been calling for isn’t a “crash”, I’ve always said we will be back to 2019 prices and everything will be fine (except most buyers in 2021-2022)

my whole point in all of this, is that contrary to realtor 101 “now is not the time to buy” it hasn’t been for a few months. Momentum has shifted and a buyer will not be worse off waiting a year to buy. Very high probability if they wait they will be better off. This is the first time in a decade where this is true, but it is now. 

 If Fed already said 30YRFRM would be 4-5% in 2024 and Opendoor is saying they will make record revenue in 2024 , why do we need to buy now right. Just wait until everything is settled. We don't need to rush. The risk that we face is actually if we see unexpected event to happen like another Lehman moment or China invasion, things like that.... but if things stay normal it's prudent to revisit the real estate market in 2023/2024.

5-10 years from now, nobody is going to say “oh I wish I bought when rates went parabolic to 7 percent, missed out on opportunity of a lifetime”…….it will be more like this “I’m glad I waited 12-18 months to let the dust settle from the parabolic rates..I scored a great deal and refinanced a year later and now I’m sitting on massive fed induced equity”  

Btw, 10 year t-bill is over 4.10 percent now today….equity markets going to finally notice?

 I couldn't disagree more strongly. 

For last 2 years I have heard a constant chorus of people saying "oh man, I was waiting for this collapse and stupid me, I SHOULD HAVE JUMPED ON BUYING but I thought things were too hot and I listened to stupid YT's saying it was all gonna crash".      

Because here is the thing; when you go to buy a home to live in it, it's value is priced on comp method right. BUT when it's for business purposes, for investment, it's on a FINANCIAL method. With that, higher rents, higher NOI = HIGHER prices to buy. Did rents go up these last months, heck yeah! And what happened, no people crying about how they can't find any multi-deals right. How everything is "too tight". But if they bought just 18 months ago let's say, when things were scorching hot, they said same thing then BUT that sold price then today = great performance, because rents-went-up.

And guess what this inflation and lower volume does, rents will go UP. Up up up until only incomes caps them. As incomes go up so will those rent caps. 

So yeah, in years to come YES 100% people will say "oh man, I SHOULDA BOUGHT back when" because the cost of entry will keep going up. 

If you think rents going up, vacancy going down, supply going down, equals price of an investment property going down, lol, well I am sorry your just dead flat wrong in an epic manner. 

EVERY DAY is a GREAT day to buy! The only things that change is what, where and how! 

High interest rates, LOVING it! I love love LOVE less competition in my buys, your gonna tease me with being alone in the candy store, come on bro! because I know how to do C4D purchases! "Sure Mr/Mrs seller I'd LOVE to acquire your property at 5.25% lock, thank you!". 

If your stopped dead in your tracks by 1 single little thing in Real Estate, your NOT an investor, your a hobbyist! 

I love buying on C4D almost as much as I love selling on C4D!    Please, feel free to sit the sidelines and leave all the opportunity to me. 

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This inflation thing is NOT going away any time soon. This is the beginning. And at the pace of things U.S. is going to probably be on some form of war footing very soon. That means a war-time production economy, which is inflationary itself. If we cut certain international imports, meeting such demand domestically, again inflationary actions. We have a tight labor market, more labor demand means wage inflation not to mention more $ in worker class which leads to more consumer spending and round n round this fun ride goes. 

Nah, it was not that bad. There're more independent analyses showing CPI going to be under 5% within 6-8 months.
I think by now I understand what's going on. The data that Fed uses is so lagging. 

Inflation already peaked. PPI decreasing. Food items as of today already increasing.

Carlos, I really don't know where this data is coming from, but in real-life I'm in grocery stores 2x a week, prices are not decreasing at all. At least not in Dallas, and according to my parents, not in SD either. 

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Agree with what you say here. 20-30 percent drop I’ve been calling for isn’t a “crash”, I’ve always said we will be back to 2019 prices and everything will be fine (except most buyers in 2021-2022)

my whole point in all of this, is that contrary to realtor 101 “now is not the time to buy” it hasn’t been for a few months. Momentum has shifted and a buyer will not be worse off waiting a year to buy. Very high probability if they wait they will be better off. This is the first time in a decade where this is true, but it is now. 

 If Fed already said 30YRFRM would be 4-5% in 2024 and Opendoor is saying they will make record revenue in 2024 , why do we need to buy now right. Just wait until everything is settled. We don't need to rush. The risk that we face is actually if we see unexpected event to happen like another Lehman moment or China invasion, things like that.... but if things stay normal it's prudent to revisit the real estate market in 2023/2024.

@John Carbone where can I find the Lennar Earnings report? I'd love to see that! 

Haven't chimed in here in a while. I operate in 4 markets. Austin, Minneapolis-Saint Paul, Louisville and San Antonio.

In Austin and Minneapolis we mostly broker although I do personally buy in Austin.

In Louisville and San Antonio we buy and hold. 

In the prior 2 markets I've seen a significant softening, more pronounced in Austin than MSP. I believe that's because of the median price points of both. Austin is more severely affected by expensive debt.

In the latter I have only seen a minor slow down, if any at all. My father is still a Realtor in Louisville also and has recently sold a few listings at what I think are ridiculous prices for the homes. It seems as if these markets haven't felt too much of anything yet. The hard part is that these are what people would traditionally refer to as "cashflow" markets. With the rising debt costs and prices holding firm cashflow is harder and harder to find. It was already extremely difficult.

IMO we will see the more expensive, speculative markets take the biggest decreases. The middle markets I don't think will see anywhere near that. Most sellers don't have to sell and have extremely cheap mortgages, it's important to remember that. Because of that I don't believe we'll see the flood of inventory needed to spur a massive drop in prices. In Austin we're still having homes sell and close to list price at that, it's just taking a lot longer than everyone wants. Even if we end up 20-30% off peak prices in most every market that puts us back at 2019 prices. Can you call that a crash?