All Forum Posts by: Vaughn K.

Originally posted by @Account Closed:

Originally posted by @Vaughn K.:

I only read the first 2 pages then skipped to the last page... But I feel like there are 2 categories of people that describe 90% of the population:

Those that are freaking out too much. Probably 10% right now.

Those that are not taking it seriously enough. Probably 80% right now.

Then there are maybe 10% being realistic about how bad it may be, but without freaking out about it. I'm in this category myself. Maybe it helps that I have many months worth of food, a very good water filtration system, and a ton of medical supplies and other kit handy :) I could not leave my house for months and be fine even if it does go full apocalyptic! But it won't anyway. 

The truth is this has a high probability of killing a couple million people just in the USA, and many, many more globally. They'll mostly be old and sickly, but that's an awful lot of grandmas dying and upper level (read middle aged and older) management at big companies going the way of the dodo in a short span of time. It WILL NOT be the end of the world, but it could be a major disruption. Even if it stays more mild and kills only a couple hundred thousand, it's still going to freak people out, and cause a lot of problems. 

Bottom line is it's too late to contain it. Everybody in the world needed to blacklist all travel out of China in late December/early January to do that. It's too late. Trying to contain it now is straight up whack a mole. You can stop one cluster, but another three will just pop up elsewhere. 

So that means it's probably going to sweep most of the population globally. The real death rate is likely far lower than reported since mostly only serious cases are getting tested and used to do the math on the death rates. It's DEFINITELY not 3.4% in 1st world countries, or probably even 3rd world ones. Maybe it's 1%, maybe even lower. I doubt it's 2% for the same reason 3.4% is bunk. But 1% is still 3.4 million in the USA if everybody gets it. If 50% get it it's 1.7 million, and you can do the math on different scenarios. For every person that dies though there are several that require heavy duty care in the hospital. Our medical system could get VERY strained. 

I think it's going to get bad, and then chill out when warm weather comes. Then everybody who is dumb will think it's over... When in reality it will probably come roaring back next fall 10x worse. Same thing Spanish Flu and most things tend to do, especially if they hit late in the season like this did for their first year. After next winter it'll probably become a non issue, or at least a manageable one people don't freak out about anymore.

The real question is are we going to try to do hardcore stuff that wrecks the economy to try to keep the infected rate lower (maybe 25% or 30%!), or are we going to throw in the towel and only have modest measures like "Avoid big events, but still go to work, and it's cool to visit your sister half way across the country," and risk 50-70%+ of the population catching it. Time will tell. I think the containment measures are useless at this point as it's just too late.

Anyway, moral of the story: It's not the end of the world as we know it... But make sure you call grandma before she dies... Because she very well may die by next winter from this stuff. It could be pretty hairy, and the financial markets may be a total mess, but we'll bounce back fairly quickly once we've really ascertained how bad things are after next fall/winter. All things considered, this is highly likely to at least kick off the long overdue (hopefully) modest recession that we've all been waiting for. I'm just hoping my personal situation isn't impacted much (it shouldn't be) that that I can take advantage of the chaos.

 OMG!!

Covid 19

SARS

MERS

Swine Flu

Avian Flu

HIV

Ebola

Earthquakes

Tsunamis

Hurricanes

Tornadoes

Cold War

Nuclear annihilation

Chicago Cubs won the world series

It's definitely "End of Days" folks.
Sell all of your properties and catch a flight with Elon Musk to Mars before it's too late!.

And when, pray tell, did I say it was the end of the world? Nowhere. I specifically said it IS NOT the end of the world. But to ignore a pandemic that is VERY likely to kill millions worldwide is silly too. If we get something like a worst case scenario in the USA (and elsewhere) we could see millions of deaths just here. Again they'll mostly be old or sickly... But in the USA almost every one of those people will be put into an ICU, or at least hospital, crowding out room for everybody else with health problems.

This stuff is not insignificant. The death rate is just high enough to be not awesome, but also not end of the world stuff. The knock on effects will certainly cause major disruptions. The problems for people with other serious ailments due to lack of ICU beds, delivery problems, supply chain problems, massive drop in business at restaurants, hotels, airlines, etc. A server who doesn't make money at work will not spend money on other things, which means the person at those businesses will see declines too, on and on.

Even if this remains mild I do think this will be the catalyst for at least a minor recession, since we've been overdue anyway. I suspect that all of you people who think this will be a nothing burger will be eating your words a year from now. Especially if it isn't bad this fall/winter and only really kicks off next fall. Time will tell!

Just because some of us know how to read exponential growth charts, which is what is happening with these covid 19 cases, and realize it could be a semi major thing DOES NOT mean we think it's the END OF THE WORLD. There's a lot of stuff between nothing burger and end of the world. This is somewhere in between... We just don't know which side of that scale it's going to be closer to yet.

I only read the first 2 pages then skipped to the last page... But I feel like there are 2 categories of people that describe 90% of the population:

Those that are freaking out too much. Probably 10% right now.

Those that are not taking it seriously enough. Probably 80% right now.

Then there are maybe 10% being realistic about how bad it may be, but without freaking out about it. I'm in this category myself. Maybe it helps that I have many months worth of food, a very good water filtration system, and a ton of medical supplies and other kit handy :) I could not leave my house for months and be fine even if it does go full apocalyptic! But it won't anyway. 

The truth is this has a high probability of killing a couple million people just in the USA, and many, many more globally. They'll mostly be old and sickly, but that's an awful lot of grandmas dying and upper level (read middle aged and older) management at big companies going the way of the dodo in a short span of time. It WILL NOT be the end of the world, but it could be a major disruption. Even if it stays more mild and kills only a couple hundred thousand, it's still going to freak people out, and cause a lot of problems. 

Bottom line is it's too late to contain it. Everybody in the world needed to blacklist all travel out of China in late December/early January to do that. It's too late. Trying to contain it now is straight up whack a mole. You can stop one cluster, but another three will just pop up elsewhere. 

So that means it's probably going to sweep most of the population globally. The real death rate is likely far lower than reported since mostly only serious cases are getting tested and used to do the math on the death rates. It's DEFINITELY not 3.4% in 1st world countries, or probably even 3rd world ones. Maybe it's 1%, maybe even lower. I doubt it's 2% for the same reason 3.4% is bunk. But 1% is still 3.4 million in the USA if everybody gets it. If 50% get it it's 1.7 million, and you can do the math on different scenarios. For every person that dies though there are several that require heavy duty care in the hospital. Our medical system could get VERY strained. 

I think it's going to get bad, and then chill out when warm weather comes. Then everybody who is dumb will think it's over... When in reality it will probably come roaring back next fall 10x worse. Same thing Spanish Flu and most things tend to do, especially if they hit late in the season like this did for their first year. After next winter it'll probably become a non issue, or at least a manageable one people don't freak out about anymore.

The real question is are we going to try to do hardcore stuff that wrecks the economy to try to keep the infected rate lower (maybe 25% or 30%!), or are we going to throw in the towel and only have modest measures like "Avoid big events, but still go to work, and it's cool to visit your sister half way across the country," and risk 50-70%+ of the population catching it. Time will tell. I think the containment measures are useless at this point as it's just too late.

Anyway, moral of the story: It's not the end of the world as we know it... But make sure you call grandma before she dies... Because she very well may die by next winter from this stuff. It could be pretty hairy, and the financial markets may be a total mess, but we'll bounce back fairly quickly once we've really ascertained how bad things are after next fall/winter. All things considered, this is highly likely to at least kick off the long overdue (hopefully) modest recession that we've all been waiting for. I'm just hoping my personal situation isn't impacted much (it shouldn't be) that that I can take advantage of the chaos.

What the guy above said makes sense... That said, I don't even know how you'd end up being able to find a $750K 7 bedroom in Spokane! That would be sky high for the area, even if pretty high square footage in a great area.

What you need to be looking at is a 4 to 6 bedroom in a middlin' (AKA so-so, but not horrible) to nice neighborhood, not a literal borderline mansion in the fanciest sub area of the nicest neighborhood in town. You can find 4-5 bedrooms for a small fraction of what you propose, especially if they need minor sprucing up. Find something like that, maybe convert a basement to add an extra bedroom, etc. You could probably cash flow like crazy with a 4-5 bedroom in a middle of the road neighborhood if you're doing it by the room.

With the types of questions you're asking, it sounds like you need to do A LOT more reading on the basics before you think about pulling the trigger on anything though. All the stuff the guy above and I said is pretty standard stuff one should know before leaping into things. So read a bunch more and you'll probably answer all the questions you have, and all the questions you didn't even know you needed to ask!

Hi Jesse. Glad that got the wheels turning in your head. If you toss in the duplex income, and can find a very modest duplex to buy, and get that income partially factored, it in MAY be juuust enough to squeak you in to get a proper bank loan. So hopefully that helps.

If not, seller financing is a great option. There is a lot of info out there about creative financing options, read a ton of it! It mostly comes down to finding somebody in the right situation where it appeals to them (Read NOT somebody who needs all the cash in their hand that minute), and being able to sell the benefits to them. For a flip you would only need to convince them of doing a short term loan, maybe 2-3 years, which makes it easier. You can tell them how they have no downside, because they'll be making interest income, AND you'll be actively fixing the house up... So even though you WON'T default, IF you did they'll be getting a house in better condition than they have now anyway! There are a lot of angles to work there. Read up on it.

With respect to the "nice neighborhood" thing... I suppose everybody would love to be doing remodels in Beverly Hills too... But if your budget lets you swing doing something on the edges of West Central near Kendall Yards, or Garland, etc that isn't super ritzy... But the math works... Don't write that off as being completely unworthy of doing.

Remember, you're not going to be living there forever, so what do you care? If it makes you money it makes you money. IMO many of the smartest real estate investors I've ever seen tend to make most of their money in mediocre neighborhoods, because a lot of the time the math works out better there. That's more for buy and holds, but is still somewhat true for flips in that you can get in for a lower cost and do more deals. Just think over WHY you really want it to be South Hill... Is it for the ego stroke, personal preference, or because the math is better? If it's the ego or personal preference, can you set that aside for 24 or 36 months to make some money? 

I'm gonna throw out a couple comment/ideas...

One, the bank should be counting the income from your duplex, right? Is that included in the $22.5K? Depending on what the mortgage is, you should be showing a tidy net on that monthly. If that still isn't enough to swing things fine, but make sure that's being counted properly.

Another option is would you consider buying a live in flip duplex or triplex? If such a building is already rented out at the time of purchase, I believe they can count up to 75% of that rental income as being income that can be considered for loan purposes. That's a little known nugget of wisdom a lot of people aren't aware of. Perhaps finding a really modest duplex could help you in that regard.

Finally, owner finance! If you already own a rental, and find the right situation, I can imagine it being relatively easy to convince an owner to do a shortish term couple year owner finance loan with a balloon payment after a couple years. You can show you already know real estate somewhat with your current rental... Presumably you have handy man skills you can mention, which makes the remodel viable... And to a guy, saying that you just went to school to improve future earnings can carry some weight and they may be more understanding than a bank. In other words you have a reasonable "story" to sell, you don't just seem like some bum off the street who doesn't make any money or have any life skills or ambition. If a seller has a property that isn't financeable with a conventional loan because it needs repairs, you could appear to be a decent option. With a few bucks down you could probably swing something.

I would also add that in Spokane, why go for a $150-200K property? There are areas there where you could buy in at FAR more modest prices than that, especially if one is looking to buy in a condition that will benefit from being remodeled. Prices have gone up a lot recently, but I still see sub $100K houses that need repairs popping up in my saved searches.

It should go without saying, but if you are tight on cash due to not being fully employed, make SURE you have the funds to even buy materials for the remodel. If you get a 2 year balloon on owner financing or something and can't get it repaired and saleable in that period, you could find yourself in a bad spot. You could always consider getting a 2nd part time job, even if outside the new industry you want to work in, in order to bump up your income as well. If whatever you were doing before going to school pays okay and you have experience there, perhaps doing a bit of that part time wouldn't be a bad idea. Hope this post gives you some ideas!

Every time I see an article like this it drives me mad! This is no better than an outright lie. The reality is there are some situations where renting is better... But not a lot. If you think you will move it can be. In an extremely overpriced city where owners run negative cash flow it may be, at least in the short to mid term. But this doesn't describe most of the country or most peoples situations.

If you want to keep it obscenely simple think about it like this. Long term inflation has averaged 2-3%. Mortgage rates are 4ish right now. So inflation mostly negates your interest in the first few years, and principle pay down even in early years covers most of the rest... So you're almost a wash right from the get go. BUT where the magic happens is in COMPOUNDING on the inflation side. See that 4% loan stays 4%, and the principle pay down keeps going up ever faster... That inflation rate however COMPOUNDS on itself. At 3% inflation $100K house after 10 years is $134.39K. This already has over $4K in that compounding on itself coming into effect. $180.61K after 20 years, this is now $20K over what non compounding math would show. $242.72K after 30 years, AKA $52K over non compounding math would produce. Because of the compounding the inflation alone ends up being MORE than the interest rate after awhile, let alone principle pay down. That's with no "real" appreciation above inflation at all, which does happen in many areas. If you have real increases above inflation you can be looking a LOT better than this.

Throw principle pay down in there and you're golden. Not to mention getting to the point of having zero payments vs rent payments due, at which point the "return" becomes even better. The mistake people make in calculating this stuff is they ignore that you'll ALWAYS have to pay rent. This rent will always be going up.

Even if you want to talk in terms of opportunity loss vs investing in stocks or something, you can't just throw in the entire mortgage payment, because you have rent to pay! If you "save" $200 a month by renting, you can only include THAT amount as an opportunity cost... The funny thing is after a few years, you actually end up with the opportunity cost flipping, because your mortgage payment will become lower than rent after some amount of years. God forbid if you live in an area where mortgage payments are lower than rent right off the bat! The above situation mostly only applies in a few overpriced cities, and even there it does flip after a few years.

The bottom line is there is ZERO way to make renting pencil out as better than buying... Other than if you're only going to be in a place for a few years. No matter how you want to factor things, including opportunity costs etc, you're going to come out ahead buying over the long haul. This is of course why people invest in RE! 

Hi Chris,

Glad I could be of some help! With a little more info, I'd say this area isn't a horrible idea for 5-8 years, especially outside of Seattle proper and King County. The thing that's so messed up is that this area is that it IS still pretty decent for now. We have had several ultra bad laws passed in the last few years (minimum wage laws, gun laws, business regulation of various sorts, etc), but they're limited in scope, and if they don't effect you personally it's easy for the overall situation to be pretty great still. Most laws are still really good by national standards, but almost everything that makes the state laws awesome is specifically being called out as a problem by Democrats. As I said above, it's mostly long term future prospects that are the problem. As long as you know what you're getting into a decade long stay here isn't too bad an idea, because the area is gorgeous and has a lot of nice things about it. Honestly, I'm kind of angsty about it all, because I really don't WANT to leave the area since I've lived here most of my life... But it's just becoming untenable.

As for where I am heading... I've been thinking about it for years. I was initially really drawn to Texas or the Southwest... Unfortunately, being the long term thinker I am, and not wanting to move somewhere where I will have to move away from again anytime soon, there are a few things I didn't like about that area. Texas and the rest of the SW are in the same boat as Washington in a way. They're great now, but if you look at trends they're turning purple, and soon to be going solid blue, unless something massive changes in terms of trajectory. I used to think Rs and Ds were equally horrible, but on different items... But the way the Democratic party has gone the last few years, I really just can't abide by almost anything they have at the top of their priority list. They still have a few virtues hidden away here and there, but they're not things they're actively pushing for too much. The things the GOP is bad on mostly just annoy me on principle, but don't directly mess up my life. Also, the SW and Texas have massive looming water problems that nobody seems to be seriously willing to address. 

So after more thought, I think I decided I liked this general part of the country, so will move somewhere better in the NW. In all honesty there are a ton of places in the Midwest and South that check enough boxes to be decent too... But having lived here most of my life, and there being places comparably good here, I figured I might as well stay here. Plus the natural beauty is a little better here than in most of the Midwest, although the South has places that can give it a run for its money in different ways than here.

Boise and the Spokane/Coeur d'Alene area where where I landed on. IMO they're both big enough to give you a lot that is nice about living in a decent sized city, but avoid many of the annoyances of being in a proper big city. I wish they were both a touch bigger for some of the amenities that brings, but they're both growing so I'll probably get my wish in 10 years. Boise has been booming, and as a result of that I have crossed it off my list. LOL It's still pretty awesome, but I'm just sick and tired of insane pace of growth, and the changes that will bring. So at this point I'm 98% sure it's the Spokane area for me.

I see a lot of long term potential there. It's a pretty area. The economy is decent, and getting better. RE is still quite cheap, although it has shot up a lot the last few years. Weather is surprisingly mild for this far north. Spokane is on the WA side, and I will probably live there initially... But all I have to do is move 15 minutes down the road to be in ID once WA becomes too unbearable. I can do that without completely upending my life, making new friends, etc. The way I see it is if ID ever becomes unbearable to live in... The entire country will be done by then. If things ever start swing back in the direction of sanity, I can always move back somewhere else on the coast or whatever. I'm also within driving distance of western WA where I have tons of friends etc.

If you don't need a big, big city, it's a pretty decent area. And so is Boise, depending on what you're looking for. Boise is just a little further along on the "that ship has sailed" scale. If you're not as tied to the NW as I am, there are a ton of places in the Midwest and South that are worth looking into though... In terms of the cities themselves, I wish some places like they have in the MW were in Idaho instead! There are good sized, ultra affordable cities with plenty of stuff to do all over the place. But I think I will be a very happy there.

Well, since everybody else is giving you a rosy picture, I will take it upon myself to throw out some downsides! :) To give you some background, I've lived in Western Washington most of my life, and Seattle proper for 14 or so years. So I know this whole region pretty well.

First. Long haul, IMO Tacoma will continue to get more expensive and gentrified as long as the Seattle area continues to grow quickly. It has some stable employment and whatnot of its own as well, but really it's recent success is mostly tied to overflow from Seattle. It is getting nicer, fancier, and more expensive at a pretty steady rate for now, and as long as the boom in Seattle continues there is no reason this won't continue. The same is true for all the burbs in the area. If you want decent sized city, not such a small burb, that isn't south of Seattle, I think Everett has some long term potential too! Anyway, that doesn't sound so bad right?

Well, after living in this area for a long time... I'm gettin' the heck out! Why? Well, everybody has different reasons for wanting to move to an area, or move away, so your mileage may vary... But I'm getting out because Washington is going from being a sane, centrist state, to trying to play catch up in terms of crazy with California, New York, New Jersey, etc. As a matter of fact, we've been leading the way on some ridiculous ideas the last few years. 

I'm a business owner... And it is becoming VERY anti business. In the past this kind of stuff was just in King County, and even there wasn't that bad 10-15 years ago. The problem is state level politics has now shifted into what will likely be one party Democratic rule from here on out. AKA tax and regulate everything to death, and nanny state harass everybody about their day to day activities with a ZEAL! 

I actually hold a mix of conservative and liberal views on different subjects... But if the Bay Area and the way that place is ran isn't your cup of tea, you're not really getting away from it much in this area. Tacoma is better than Seattle, but for how long? Think it's awesome to escape California to a state that doesn't have a state income tax? That probably won't last too long. The Democrats have always wanted one, and electoral reality puts them closer and closer every year. We won't get one next year... But 8-10 years from now, I bet we'll have one on the books. Straw bans (as a proxy for that kind of thing) will probably be getting exported from Seattle to the rest of the state before too long. Etc etc etc. 

If you're an employee, a lot of the economic stuff won't hit you as hard as business owners... But it does potentially put a damper on overall economic growth potential for this area. I mean Amazon is probably mostly doing future expansion outside of this area because of the long term threat this stuff proposed. The former Microsoft CEO Steve Ballmer years back (last time they were pushing hard trying to get one) wrote about how adding an income tax to all the other already high taxes would kill business growth here, etc. And they're both very liberal, but sane, businessmen. Due to Washington being a very good business environment until the last few years, we still have a rather varied economy that includes a lot of middle-middle class jobs... At least for now. We will be trending more like California in the years to come, AKA a few really high end industries, and then a bunch of garbage service jobs to service those people. I'm not a big fan of that kind of thing for a variety of reasons.

Now, back to the good for a minute. If you're coming from the Bay Area (where I'm originally from!), this area is a LOT saner for now. It's cheaper, taxes are lower, it's slightly less crazy and dysfunctional too. But for how long? The simplest way of putting it is that you missed the boat! My family moved up here about 20 years ago, and Washington was AMAZING back then. In ALL ways, there were almost no cons on the pros and cons list... Other than rain of course ;) Cost of living was low, taxes were low, personal freedom was high, I really liked the culture that used to exist here too before pretentious yuppie corporate culture completely took over. But that just ain't the case anymore. 

Moving to Seattle (or Puget Sound) now is like moving to the Bay Area in 2005 or something. Give it a decade and it will probably be just as nuts here. Now, if you're okay with that because you're one of those people who plans to move about a lot for work, then maybe that doesn't matter. But I'm more the settled type, and that's why I'm throwing in the towel on the area. If I thought it was going to stay the way it is now, I'd stick around, but the direction it is heading is somewhere I don't like. Maybe you DO actually like all that stuff, but just wish you'd bought in when you could have afforded it... In that case this is a great area for you! Haha. 

Finally, remember I said as long as the Seattle boom lasts above? Well, Seattle is definitely in a real estate bubble. I believe in fundamentals, and we're way out of whack in that respect. When it corrects, I suspect surrounding areas will get hit too, but probably not as hard as they don't have as far to fall. 5 years from now I'd bet my life it will be lower, even though employment will probably be strong still. In 20 years RE will probably be more pricey than it is now though. I think the overall area economy is strong going into the future, and long term this area will pull through, but turn more into a SF/NYC/Boston type place, which it historically was not. So if you're in it for the long haul, I'd think about the pros and cons I listed above. Taxes will go up, more nanny state stuff will happen, the middle class will probably be driven out of the area (they already are really)... But it will probably survive and become more of a hyper expensive upper class only area. 

My personal calculus is I want to get the heck out... But if you work in tech and want an alternative to SF, and don't mind the fact that you're merely buying 5-10 years before it's just like that here... It might not be a bad option. 

If you DON'T like all that stuff, I'd consider other places. If you value personal freedom or low taxes, this is not a good long term place to be. If you work in tech, look to smaller tech centers like Austin, SLC, or even Boise. If you don't work in tech, there are a million more good options depending on your industry. I like to think I'm realistic about this stuff, recognizing both pros and cons, but feel free to disagree if ya like! As I said, this is based on my personal preferences, and some of the stuff above many not bother you.

As others have said, the correct answer is: It depends!

I work with my father currently, and have for a long time. It has its pros and cons to be sure. He has personality traits that annoy me, but nobody gets along perfectly with another person 100% of the time, and overall it works better than anything I've ever done with other people.

You need to know your quirks, his quirks, and lay out exactly what is what up front. Figure out what he actually wants, and if you are okay with that level of participation. 

Some people have said they're extra afraid of having things go wrong with a family member... To me it's the exact opposite.

When stuff has gone wrong for me, there is nobody in the entire world I would rather have my back than my dad. Family can work out problems that would explode relationships permanently with other unrelated people IMO. You can forgive each others flaws more than some random guy you do a deal with. On a fairly straight forward RE deal there probably shouldn't be a ton that can go wrong to begin with, but if anything does, why would you and your father fall out over lower than expected returns or losing a couple grand? Heck, me and my pops both have made mistakes worth probably hundreds of thousands of dollars now and again, and we still don't hate each other.

It sounds like you have a good relationship with your dad, and he brings some skills to the table. Talk out what both of you would want to achieve and how you'd like the whole thing structured, and if it all jives give it a go!