All Forum Posts by: Robert Steele

I didnt read Tom Goans post as a debt versus no-debt debate, or as a crusade or condemnation against those who use debt.

I read it as a simple truism.

When you pay interest on the mortgage you are working for the holder of the note.

Ali Boone doesn't think she is working for her bank but she is. She found the property, put together the deal, maybe also fixed it up. She keeps up with the maintenance (I hope) and maybe manages the tenants.

What is the bank doing? Nothing - just collecting the fruits of her labor. They didn't even loan her the money. The money was created out of thin air when she signed the deed of trust. In fact she created the money by the act of borrowing it. Weird I know but money is debt in a fractional reserve system. Anyway I am getting off topic.

The bottom line is even if we pay off all our debt we are still working for someone. The taxman.

That was an extreme example just to exemplify the point.

Oh, and NINJA loans are No Income, No Job or Assets. These loans did exist during the last housing bubble.

Just for the record I did hear stories of people on $30K income qualifying for $600K loans. Easy to do when you don't need to prove income to qualify for the mortgage.

What has that got to do with anything?

I'd invest it in GOOG! Hey, you didn't specify it had to be in RE.

Jon Holdman and William Brace that was probably because inflation in the early 80% was as high as 15%!! So the real rate on your 80's mortgage was 0%! :p

Today inflation is around 2% so that 4.5% mortgage is a real rate of 2.5%.

This has been my thinking too. I imagine that some first time home buyers will be thinking "Last chance to buy a house before rates go up and you are locked out forever"

Wow. You and all the other seers could have made millions by shorting bonds!

@Jason Tinder My view is that house price appreciation is between 2-4% a year here in Dallas TX. Last year we saw 8-10%. So either prices go nowhere for a few years or they gravitate downwards once builder supply comes online. I don't know. What I do know is that Texas is still an affordable place to live with affordable housing and the possibility to make money from renting.

Yeah that was pretty much my thinking too. I'm glad we're all on the same page. The tenant has agreed to $1425 and offered to sign a 2 year lease. I'll take it and a 1 year lease for reasons that have been covered here in other threads.

I think I already know the answer to this but I just wanted to throw it out there to see what others think.

Assume you have a rental making $1400. Rents have increased over the past year and you could now rent it out for $1500. The current tenant has been there 1 year and has always paid on time. They have maintained the property and kept it in good condition. You hear very little from them. They want to stay several more years.

Do you kick them out and put it on the market for $1500 or do you sign a 1, maybe 2 year extension?