Economic "recovery" only for the rich

[Denny Crane]

Terrific. Now go find a few thousand more like it. Then you can tell me that market exists.

Modesto. Home of a $6B privately held corporation, EJ Gallo. (Jobs, jobs, jobs)

http://www.zillow.com/homedetails/3316-Sherwood-Ave-APT-41-Modesto-CA-95350/16026503_zpid/

Price $44,900
Rent estimate $729/mo
Taxes $46 (1.25% of purchase price in CA)
Insurance $78

($729-$46-$79)/$44900 = 16%

You go find thousands more like it.

 

[blazerboy30]

Modesto. Home of a $6B privately held corporation, EJ Gallo. (Jobs, jobs, jobs)

http://www.zillow.com/homedetails/3316-Sherwood-Ave-APT-41-Modesto-CA-95350/16026503_zpid/

Price $44,900
Rent estimate $729/mo
Taxes $46 (1.25% of purchase price in CA)
Insurance $78

($729-$46-$79)/$44900 = 16%

You go find thousands more like it.

That is a terrible analysis.

 

[Denny Crane]

That is a terrible analysis.

No, it's not.

It's the first step in figuring out if the home is even worth looking at. And we did look at every one we bought (and others we didn't) in person.

 

[blazerboy30]

No, it's not.

Yes, it is.

 

[maxiep]

Yes, it is.

He just doesn't understand why. Frankly, I think Denny is in a mood today where he's being willfully ignorant just to amuse himself.

 

[blazerboy30]

He just doesn't understand why. Frankly, I think Denny is in a mood today where he's being willfully ignorant just to amuse himself.

Agreed. And to increase page views.

 

[Denny Crane]

Yes, it is.

This isn't an argument, it's contradiction!

I'm not playing.

I'm not going to request the utility bills, court records, and all the other documentation I looked at for the properties the group purchased for this property.

The 16% is enough of an indication not to red flag the property in the first place.

"AGNC (reit) pays a 18% dividend. "

Your REIT doesn't own actual real estate. They deal in deeds of trust.

 

[Denny Crane]

He just doesn't understand why. Frankly, I think Denny is in a mood today where he's being willfully ignorant just to amuse himself.

Now you're being silly.

 

[Denny Crane]

 

[blazerboy30]

This isn't an argument, it's contradiction!

I'm not playing.

Good idea, because you're losing...badly.

I'm not going to request the utility bills, court records, and all the other documentation I looked at for the properties the group purchased for this property.

The 16% is enough of an indication not to red flag the property in the first place.

When the "16%" is based on faulty assumptions and incomplete analysis, THAT should be your red flag. Not the 16%.

"AGNC (reit) pays a 18% dividend. "

Your REIT doesn't own actual real estate. They deal in deeds of trust.

You clearly missed the point of the statement, but that isn't surprising after seeing your "analysis" above.

 

[blazerboy30]

Cool story bro.

If you cut off the chart at 2006, the "buy" plot would look pretty amazing too.

 

[Denny Crane]

Cool story bro.

If you cut off the chart at 2006, the "buy" plot would look pretty amazing too.

WTF are you talking about?

Rents don't decline with property values.

Contrary to what Maxiep has reiterated a few times now.

 

[blazerboy30]

WTF are you talking about?

I'll spell it out for you, since you are clearly confused:

Past performance is not indicative of future performance.

Mindsets like yours on this topic sound exactly like the idiotic mindsets before the crash. REAL ESTATE VALUES DON'T GO DOWN, OUR MBSs ARE SAFE!

 

[Denny Crane]

I'll spell it out for you, since you are clearly confused:

Past performance is not indicative of future performance.

Mindsets like yours on this topic sound exactly like the idiotic mindsets before the crash. REAL ESTATE VALUES DON'T GO DOWN, OUR MBSs ARE SAFE!

I'm looking for any past performance that jibes with "rent goes down when real estate prices do." Otherwise assuming that rent will go down is just pulling a wild guess out of one's ass.

But cool story yourself, bro.

 

[blazerboy30]

I'm looking for any past performance that jibes with "rent goes down when real estate prices do." Otherwise assuming that rent will go down is just pulling a wild guess out of one's ass.

But cool story yourself, bro.

Was there past performance, before Black Monday in 1987, that said the market would crash by 22% in a single day? People would have said "that's just pulling a wild guess out of one's ass" back then too.

Your handling and acknowledgement of risk is laughable.

 

[Denny Crane]

Was there past performance, before Black Monday in 1987, that said the market would crash by 22% in a single day? People would have said "that's just pulling a wild guess out of one's ass" back then too.

Your handling and acknowledgement of risk is laughable.

You are fixated on the equity side of things. The properties' equity can go to ZERO. That's a 100% crash in a single day, if you like.

And then if rents drop 90%, you're still breaking even on the taxes and insurance and other expenses.

There is no such thing as a risk free investment. I don't see this as being a very high one though.

 

[blazerboy30]

You are fixated on the equity side of things.

No, I'm absolutely not. You just can't understand the real issue. I'm saying it is silly to assume rents will never go down.

The properties' equity can go to ZERO. That's a 100% crash in a single day, if you like.

And then if rents drop 90%, you're still breaking even on the taxes and insurance and other expenses.

Yes, this is like buying dividend-paying stocks and saying that you don't care if the stock goes to zero as long as they still pay the dividend.

That is idiotic.

There is no such thing as a risk free investment. I don't see this as being a very high one though.

And I said your handling and acknowledgement of risk is laughable.

 

[Denny Crane]

The Black Monday reference is actually kind of funny for you to bring up.

If people had borrowed (it's called margin) to reduce their CoC to buy stocks before Black Monday, they'd have gotten margin calls and been forced to sell and quite possibly lose everything.

On the other hand, those who could hold their positions long term saw the DJIA go from ~1750 the day of the crash to over 15000 today. Or the S&P 500 from 245 to over 1600, if you prefer.

 

[Denny Crane]

No, I'm absolutely not. You just can't understand the real issue. I'm saying it is silly to assume rents will never go down.



Yes, this is like buying dividend-paying stocks and saying that you don't care if the stock goes to zero as long as they still pay the dividend.

That is idiotic.



And I said your handling and acknowledgement of risk is laughable.

There you go with the bad analogies.

If a stock goes to $0, you own a worthless piece of paper.

If a property goes to $0, you own a plot of land, a structure, etc. You'd almost certainly be able to sell some part of it as scrap in the worst case.

I'm actually laughing at you now.

You are pulling the "rent will go to $0" thing out of your ass.

 

[maxiep]

Um, do you have any idea what that graph is really telling you? I don't think you do.

 

[Denny Crane]

Um, do you have any idea what that graph is really telling you? I don't think you do.

I know I do.

Rent adjusted for inflation steadily increases regardless of the wild swings in EQUITY prices of real estate.

Rents are tied to the income of the potential renters and the supply of similar or acceptable properties.

 

[magnifier661]

Um, do you have any idea what that graph is really telling you? I don't think you do.

That people during that big curve was able to buy houses when they couldn't afford it.

 

[MARIS61]

If the value of properties fall, so do rents.

Rent has little to do with property value. It has to do with supply and demand. With tens of millions of families kicked out of their homes, and the banks still sitting on about 60% of those homes (keeping them off the sales and rental markets) the demand greatly outstrips the supply of rentals. Rent prices never took a hit at all in places people want to live. They actually went up in Bend. People with decent jobs have been living in motels and campgrounds for the last few years.

 

[blazerboy30]

There you go with the bad analogies.

If a stock goes to $0, you own a worthless piece of paper.


If a property goes to $0, you own a plot of land, a structure, etc. You'd almost certainly be able to sell some part of it as scrap in the worst case.

I'm actually laughing at you now.

You are pulling the "rent will go to $0" thing out of your ass.

Wow. Just wow.

Link to where I said "rent will go to $0" or STFU.

Your strawmen are getting worse and worse these days, Denny. It's actually pretty pathetic.

 

[Denny Crane]

Wow. Just wow.

Link to where I said "rent will go to $0" or STFU.

Your strawmen are getting worse and worse these days, Denny. It's actually pretty pathetic.

That's the risk. If you don't get $0 rents, you are making some % on the original investment.

 

[blazerboy30]

That's the risk. If you don't get $0 rents, you are making some % on the original investment.

Link to where I said "rent will go to $0" or STFU.

 

[Denny Crane]

Link to where I said "rent will go to $0" or STFU.

Quit bitching about my responses to your question about risk then.

Or grab yourself a tissue, bro.

 

[blazerboy30]

Quit bitching about my responses to your question about risk then.

Or grab yourself a tissue, bro.

I didn't ask you a question about risk. I stated that your handling and acknowledgement of risk is laughable.

You can't have an intelligent conversation without creating strawmen.

 

[MarAzul]

I'm not talking about what happened, when The Fed began to monetize our debt, artificially keeping interest rates low. I'm talking about what happens when we can no longer monetize our debt. You're old enough to remember the Carter era and the recession of 81. To wring inflation out of the system, Volcker let interest rates rise, which caused a deep and painful recession. However, it also got us the boom of the mid-80s through the dot.com bust. We're going to have to do it again, as there's no way around the math.

The good old days! The top Federal tax rate was 70% and the interest rates hit 22%. But it was more than just interest rate control, Banks kept very precise record of money available and reported it to the Federal Reserve daily. When x amount of money was available in the combined member banks, the Fed would not loan the banks any more money at any rate. That dam was not needed long though, not many wanted to borrow money to cause the banks to barrow from the Fed at rates >20%. It didn't take long to put inflation in a box with those tactics. It must have stayed in the box for nearly a generation.

I think Max is right, we are not far away in time from needing to return to those tactics. The problem is, the Banking system is entirely different today, I don't know if the same machinery is in place to implement such control.

Maybe Max has some insight about that question. For instance, Banks were not interstate back then, nor were they combined investment and commercial banks. Heck back then, B of A (one of my Beta test sites) was the largest bank in the World in assets but only did business in California. Today it is a World wide Bank HQed in North Carolina.

 

[BLAZINGGIANTS]

Woohoo. Recovery only for the rich? I must be rich. We put in an offer on a house at the coast, scheduled to have a very expensive deck installed into our home back yard, and have 2-3 other projects going on.

First time ever I've felt the media said I am rich! Booya!! I'm rich biiiaaattcchhh!

Oh wait. I'm not.