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billcoe

Time to buy real estate?

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All this talk of inflation (which is almost non-existent at this time per gov't statistic). Anyone else thinking that the time to get some real estate with long term fixed loans lined up and dialed in?

 

 

...any thoughts on this subject?

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I know I've been thinking about trading all my climbing gear for a piece of land big enough to permanently park my new shopping cart on...

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Anyone else thinking that the time to get some real estate with long term fixed loans lined up and dialed in?

 

Been there, done that.

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A good rule of thumb, only buy as big a piece as you're able to defend from a machine-gun nest...

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All this talk of inflation (which is almost non-existent at this time per gov't statistic). Anyone else thinking that the time to get some real estate with long term fixed loans lined up and dialed in?

 

 

...any thoughts on this subject?

 

Yes but getting financing is nearly impossible. As far as I can tell either your debt to income needs to be tiny (not likely if you're already in the real estate game) or you have enough cash to make it happen without financing.

 

Lots of great deals in PDX right now Bill... wanna lend me some $$$ :)

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Got Stocks?

Not as of last week as I detailed on another thread. All gone. It's primarily in a leveraged fund that shorts T-Bill yields on margin with the balance in commodities and TIPS (inflationary protected T-bills) funds. If interest rates, commodities and inflation goes up I'll do great. Interest rates drop and inflation stays low... :shock: I'll have to move into your basement. I don't recommend this high risk strategy for anyone else as my situation is unique.

 

Lots of great deals in PDX right now Bill... wanna lend me some $$$ smile

LOL. As I bet on inflation coming and the dollar dropping with almost every nickel I have, if I margin the rest into rental property and we see deflation or home values drop further.... :shock: eeek! Part of this craziness was caused by the exposure of both my wife and I having our retirements fully (ie, 100%) in the stock market, and my desire to try and achieve balance and response to the fear of the future I think I see approaching. As I know she won't rebalanced her stuff, I took mine off the table and overweighted it. If stocks go up (the Dow is @12400 now) from here, interest rates drop below the .25% currently and I get slammed, I'll be riding her coat tails. If I could get an additional income producing rental or 3 here or there to add to the 2 currently and inflation hits I'll be smoking big cigars and sipping expensive brandy. The reverse and house prices continue down ...ouch.

 

I rolled the dice and am holding my breath. Any thoughts on the macro-economic swirl we are all looking at? Where's this country heading and what do we do to brace for it?

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Where's this country heading and what do we do to brace for it?

Learn to speak and think in Mandarin.

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My investment strategy is heavily based on inflation. I hold alot of commodity backed stocks (forestry, mining, oil etc.) and real estate. The way governemtns are printing money, how can we not have inflation long term. I also think low interest rates are a good bet. Governments can't afford to bring down the house of cards built on cheap money (e.g. massive default on government backed mortgages), so rates will be kept low. Perhaps not record lows like we have now, but certainly not the double digit rates circa the 80's.

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As an example of my comments above, the Canadian government is attempting to reign in the real estate market not by raising interest rates, but by making it harder to qualify and harder to access your equity as a personal piggy bank. For example the have gotten rid of 30 year ammortizations, increased the down payment required, you now have to qualify based on the 5 year rate instead of the floating rate regardless of which you chose ...and more. Hopefully a soft landing for Canadian real estate, not a American style crash.

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BTW, our governments lie to us regarding inflation. Everything around me that matters is going up in price: gas, orange juice, rent...yet the government trots out some BS inflation figure. Perhaps they don't want to have to dole out more for inflation indexed benefits?

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On the original question and with the caveat that free advice is worth what you pay for it: I would still sit out the single-family housing and commercial RE markets. Multifamily offers some good opportunities IF you know the local market, have a thick skin and can deal with the bullshit.

 

One of the interesting developments over the past couple years is that plenty of small investors are facing a squeeze with multifamily (MF) properties. In some cases, they bought complexes with 25% down a few years ago with 5-year paper with a balloon (MF financing is like commercial - not standard single family terms). When some balloons have come up, investors have been told to come up with a lot more equity because lenders might not touch the property unless there's a 50% LTV ratio. Those owners might be forced to bail on the property, even though it's a good performing investment, just because they can't meet the new LTV requirements.

 

Another option is fixer MF's. If you have cash, you can buy some non-financeable properties and then turn them around, just like the old days with single-family. Avoid ghettos. My favorite is old [legally] divided houses in areas that have been downzoned to single family.

 

One thing to consider for retirement is cash flow. Having a stash of cash isn't enough if you are only able to reliably and safely crank 2-3% return out of it. MF should have a good return on investment, if you choose carefully.

 

YMMV

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