All Forum Posts by: Patrick Philip

Hello BP community-

Does anyone have experience borrowing money from their parents to get their foot in the door with real estate? How did it go for you?

Let me explain my situation. I am going to be a sophomore in college this fall, and living in a very expensive market. However, I also am hoping to begin house-hacking sooner than later, and would like to do this in the next few years. At this point, waiting tables over the summer I just about break even with college tuition and expenses (I live relatively frugally) and likely would not have enough money for a 3.5% down payment. My parents, however, have offered to lend me money towards a down payment if I am able to find a place that meets my criteria for a good house-hacking investment. Has anyone else borrowed money from their parents to get started?

 Yep, and they'll continue to rise, even after the bottom falls out.  I'm not saying it will, but the real estate market shifting is like turning around a cruise ship.  They start turning the wheel and the passengers cant feel it moving in the other direction for a few minutes.  And the time it takes to actually turn all the way around is hours.  Its seems like the rising prices are slowing to a stop, then maybe they'll start going in the other direction, maybe they wont, I think theyll stay stready for some time.

WASHINGTON (AP) — U.S. home prices rose at their slowest pace in more than six years in January, as higher mortgage rates last year weighed on sales.

The S&P CoreLogic Case-Shiller 20-city home price index increased 3.6 percent in January from a year earlier. That’s down from a 4.1 percent pace the previous month.

The slowdown in price appreciation has helped make homes more affordable. Mortgage rates have also fallen since January. Cheaper homes and lower rates appear to be reversing last year’s sales slump. Sales of existing homes soared in February, though they remain slightly below where they were a year ago.

Some red-hot markets have cooled off. Home prices in Seattle rose just 4.1 percent in January from a year ago, compared with a 12.8 percent gain in January 2018.

And in San Francisco, where the typical home costs well over $1 million, the annual price increase was 1.8 percent in January, down from a 10.2 percent increase a year earlier.

Las Vegas reported the sharpest increase in January from a year ago at 10.5 percent, followed by Phoenix with 7.5 percent and Minneapolis at 5.1 percent.

Home prices are now rising at roughly the same pace as incomes, a remarkable shift after six years of increases that far outpaced wages. Average hourly earnings rose 3.4 percent in February from a year ago.

Mortgage rates jumped roughly a full percentage point last year, peaking at nearly 5 percent in November. That throttled home sales, which fell 3.1 percent in 2018.

But rates have since slipped to 4.28 percent for an average 30-year fixed rate mortgage. Rates will likely fall further as the Federal Reserve has signaled it may not raise short-term rates at all this year.

Lower rates haven’t yet turned around home construction, which is being held back by higher prices for labor and land. The number of new homes under construction plunged 8.7 percent in February, the government said Tuesday.

I started in RE in 75  so don't recall 73 but in CA houses did go down in all those recessions or stagnated.. 91 in the bay area there was 50% price decline in the higher end.. I was loaning money then.. so had a front row seat to that one..  2000 was very short lived with minor adjustments.. 07 08 we all know about..   I think this was regional as well  just like it always is 

@Shane H.  A major 'crisis' and/ or a 'recession,' or worse??? Only five, recently. (1973, 1986, 1991, 2000 & 2008, in the US.)

Has anyone seen a crash other than that 1? My understanding is there's been 1 in like 100 years... I sometimes wonder if people spread the crash theory to keep others out of the market. Lol

It's here. The shift is upon us. Whether a crash is to follow, I am not sure, but the rising tide that we have all been riding for the last 9 nears to reaching it's tipping point. I seriously have no more time to write a post because I have to head out the door to tour 5 properties my buyer wants to see today. Here's what I know. We have been scouring the market for buy and hold and fix and flip since his last project closed about 6 months ago. Sure, we have seen the base hit here, and maybe another single over there. But nothing we were seeing was a solid, double, or triple, let alone the thought of a homerun. For a little perspective, he likes to NET about $40-50k on flips, assuming about $200-250k total investment. Buy and holds he looks for 15% COC, and or about $400/door depending on the project, cash needed, etc etc. Right now he has 5, count them FIVE deals on the table to choose from. All ranging from a 'double' to 'home runs'. Flips looking to net around 40k would be a double, 100k a home run. AND, to make matters worse, we have 5 more to look at today, which all look like solid deals on paper and in photos. So we went from not being able to find a single property that would NET more than $15-20k on a flip, and in the matter of WEEKS at least 5 screaming deals have hit the market, still have not sold, and more seem to be hitting the market daily as we can't even get into them all fast enough to run the reno budgets.

Sure, this is  just my anecdotal evidence.  I promise to bring more facts to the discussion to support me claim, I just don't have the time right now with all this opportunity.  I find it extremely hard to believe all the investors in my market, the greater Philadelphia area, have just pick up and quit buying up deals for the month and left them all behind for us.  I think the shift is here.   The question now becomes, do prices level off and allow buyers to catch up that have been struggling to find a place, or does it swing all the way in the other direction and we see prices actually start to drop.

I welcome those that agree, but even moreso those that disagree.  Please change my mind please try to find some signs that are not pointing to a complete meltdown.   I'm going to leave everyone with one fact that will solidify my case.  Jumbo Mortgages are down 12% by volume compared to last year.  That's a huge drop.  And anyone that has seen this before, the top of the market starts to slow first, and it trickles it way all the way down the the $30k single family homes in Detrioit.  I wish everyone the best.  This is going to be an extremely exciting time for those that have been preparing for it. 

@William C. Well, for those who subscribe to the yield curve inversion theory, it's official here:

https://www.nytimes.com/2019/03/22/business/yield-curve-inverted-recession.html