Real estate thread

The Beast1

Peacock
Orthodox Inquirer
Gold Member
This is good advice thanks! We are working on the down payment right now. Can I ask why they talked you down to 10k? Do you have exceptional credit?
They were matching it to what we were paying in rent and I asked if we could get a higher loan to pay for home improvements. Answer was no, that's a separate loan so they instead said it would be better to lower the down payment and use the amount we didn't use to rip up the carpet.

Our credit rating was about 720 at the time but we had at least $15k in credit card debt at the time and another 9k in a car loan. We cleared the loan before our first kid popped out which blasted our credit to the dirt. I think at the height before our health sharing ministry topped out, we had about 35k in credit card debt.

Mind you, the health sharing ministry was going to pay off the child birth fees. We just needed a short term place to park it. Once we closed, our credit rating dropped to 640. I just checked now and it's at 700.

I really wouldn't worry about any of this. See how much you can get approved for right now with the deposit you have and then go shopping. Loandepot was stellar and were very helpful going through the process.

Closing costs beat our credit union and got us a mystically low APR on a 30 year fixed at 2.85% or 2.79%. I dont remember what it was, I'd have to log into the account to check.

Just start the mortgage approval process. Avoid adjustable rate mortgages like the plague and see what fixed 30 year you can get. Do your best to match the monthly mortgage, hoa dues(if applicable) and insurance costs to what you pay presently in rent.

We bought in September 2020 during the pandemic which was the best time to buy. That was the dip in prices.

AAA by the way gave us the most affordable home insurance we could find.

F**k landlords who deserve a Mao treatment. I'll pay the bank any day and with cash down payment services I can move out as quickly as a regular ease without dealing with realtor costs.

Good luck!
 
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grenade001

Woodpecker
Catholic
Rates on a 30 year mortgage have ticked up from around 2.75% to about 3.75% - 3.875% over the last year or so.

Home prices are up 20%-40% in the last year or two, and the rise in rates hasn't reduced prices (although it may have temporarily slowed the price incresaes).

Rents were lagging home prices but now are up around 30%, which makes sense because they are a function of home prices.

The beautiful thing about real estate as an investment is there is a one-way option on rates. If rates go down, say from 3.875 to 2.75, you can refinance and lower your monthly payment (while the rent you charge stays the same, the savigns goes into your pocket every month). If rates go up, it doesn't affect you because your rate on the mortgage is fixed.

Rents are typically more likely to be strongly correlated to wages; and demand for the area.

In markets where homeowners continually experience high capital growth, the rental yield would decrease as a percentage of property value. This would apply to predominately metro areas with exceptions being mining/tourist towns. Usually occurs with older properties where the land value is the main driver, or your knockdown/rebuild grade stock. You see this regularly in major cities, a property valued at $1.1 million being rented out for $500/week.

The only time that the average house price for a metro area would have an impact on the potential rent is in markets where there isn't any foreseeable capital gain in the short to medium term.

Usually landlords utilise an investment strategy that lies somewhere on a spectrum being "low capital growth/high rental yields"; or "high capital growth/low rental yields". This relies upon the quality of the property, and if the landlord is after a stable income stream.

In saying that though, in my city rents have increased by around 30% over the last year. The City I live in has experienced a lot of interstate migration, and rental vacancies have decreased from 2% to 0.2-0.8% over the last three years. I have had to do multiple rental references for some of my staff for the first time last year. In the previous five or so years in my current role, I had never been asked to make such references.

As for house prices in my city, I would estimate that gains of 50-60% from 2019 levels have been experienced so far across the board. Properties in more desirable settings with beach or canal frontage (no 'gators in canals in AUS) have exceeded that growth figure as well.
 

cosine

Woodpecker
Personally I am a fan of small down payments, 5-10%, instead of the traditional 20%. I'd rather do what @The Beast1 has done and save it for improvements, stocks, bitcoin, or just have more cash in case of emergencies.

The downside is you'll pay PMI, private mortgage insurance. A credit score of 740 is the magic number for PMI; if you have 740 you'll pay less, if you have lower credit you'll pay more.
 

septuigintlemen

Pigeon
Orthodox
I assume you have a budget?
Yeah we are really strict, just keep having things happen, which of course I understand God has reasons for. Just seems like a bad time for buying
They were matching it to what we were paying in rent and I asked if we could get a higher loan to pay for home improvements. Answer was no, that's a separate loan so they instead said it would be better to lower the down payment and use the amount we didn't use to rip up the carpet.

Our credit rating was about 720 at the time but we had at least $15k in credit card debt at the time and another 9k in a car loan. We cleared the loan before our first kid popped out which blasted our credit to the dirt. I think at the height before our health sharing ministry topped out, we had about 35k in credit card debt.

Mind you, the health sharing ministry was going to pay off the child birth fees. We just needed a short term place to park it. Once we closed, our credit rating dropped to 640. I just checked now and it's at 700.

I really wouldn't worry about any of this. See how much you can get approved for right now with the deposit you have and then go shopping. Loandepot was stellar and were very helpful going through the process.

Closing costs beat our credit union and got us a mystically low APR on a 30 year fixed at 2.85% or 2.79%. I dont remember what it was, I'd have to log into the account to check.

Just start the mortgage approval process. Avoid adjustable rate mortgages like the plague and see what fixed 30 year you can get. Do your best to match the monthly mortgage, hoa dues(if applicable) and insurance costs to what you pay presently in rent.

We bought in September 2020 during the pandemic which was the best time to buy. That was the dip in prices.

AAA by the way gave us the most affordable home insurance we could find.

F**k landlords who deserve a Mao treatment. I'll pay the bank any day and with cash down payment services I can move out as quickly as a regular ease without dealing with realtor costs.

Good luck!
Tha k you for the encouragement! This was very inspiring Thank you!
 

The Beast1

Peacock
Orthodox Inquirer
Gold Member
Personally I am a fan of small down payments, 5-10%, instead of the traditional 20%. I'd rather do what @The Beast1 has done and save it for improvements, stocks, bitcoin, or just have more cash in case of emergencies.

The downside is you'll pay PMI, private mortgage insurance. A credit score of 740 is the magic number for PMI; if you have 740 you'll pay less, if you have lower credit you'll pay more.
If more people knew you didn't need 20% down for a fixed 30 year, more people would be buying. PMI laughably low and not a big expense at all.
 

cosine

Woodpecker
If more people knew you didn't need 20% down for a fixed 30 year, more people would be buying. PMI laughably low and not a big expense at all.
My credit actually ran at 738, and I went 5% down, so I pay extra-high PMI and it's still only $220/month on a $532k loan. Saved me from an additional $84k of down payment. With raging home prices I'll be out of it in no time.

I also recommend shopping around for lenders. When I did my last refi, I found some stupid low rate online and got my normal lender(a loyal friend) to get his company to match it.
 

Hypno

Crow
Rents are typically more likely to be strongly correlated to wages; and demand for the area.

You may be right but that's not what is happening now.

I read an article a few weeks ago that claimed rents were up 30% in 10 majory cities over the past year. That's pretty close to the appreciation in property prices. I don't know many people who got more than a 3% raise, if that.
 

The Beast1

Peacock
Orthodox Inquirer
Gold Member
20% down is the general rule, but there are special programs for first time home buyers, veterans, etc.
No, this is not true at all anymore and needs to stop being parroted. Maybe in preclown world days, when homes were still cheap.

The standard nowadays in anywhere from 3-15%. Even big banks like Chase allow for 3% down.

20% down is the threshold to avoid PMI which isn't a big deal at all.

Debunking the 20 percent down payment myth
You may have heard that 20 percent is the required minimum, but that’s not the case. Twenty percent is simply how much you need in order to avoid having to pay extra for mortgage insurance. The insurance is to protect the lender — since you’re borrowing more money with less down, you pose a bigger risk.

The reality is that as home prices continue to rise, many homebuyers can’t afford to put down 20 percent. In fact, 49 percent of all buyers put down less than 20 percent, according to the most recent data from the National Association of Realtors.

If so many are buying homes with smaller down payments, where did the 20 percent down payment myth come from? It’s most likely based on Fannie Mae and Freddie Mac guidelines. To qualify for a guarantee from either of these entities, a borrower needs to either put 20 percent down or pay mortgage insurance.



The 20% myth needs to die.
 
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BasedBaker

Robin
Trad Catholic
I need a little advice on what is my best course of action.

I am moving from California to Florida later this year. I'm acquiring an existing business and will have an SBA loan of ~$350k. I own my home in California in a rather affluent college town and will net $150k if sold today.

Should I look to buy a home rather quickly or wait? Part of me wants to buy while interest rates are low, but the other part of me wants to hold off not knowing what sort of pricetag on a home I will be stuck with on a home if the market tanks. The idea of paying rent and paying off a business loan doesn't seem appealing.
 

The Beast1

Peacock
Orthodox Inquirer
Gold Member
I need a little advice on what is my best course of action.

I am moving from California to Florida later this year. I'm acquiring an existing business and will have an SBA loan of ~$350k. I own my home in California in a rather affluent college town and will net $150k if sold today.

Should I look to buy a home rather quickly or wait? Part of me wants to buy while interest rates are low, but the other part of me wants to hold off not knowing what sort of pricetag on a home I will be stuck with on a home if the market tanks. The idea of paying rent and paying off a business loan doesn't seem appealing.
Right now, foreign 3rd world hot money is flooding into markets like California and Florida. The FED wants this to make current debt go away.

I'm morally against land lording, but in this case the financially clever option is to take out $75k in equity on your Cali house (depending on if you can rent it out), use the $75k to buy a house or condo in Florida, and let inflation destroy what is left of your loans.

Inflation will make your loans cheaper. I'd be impressed if the Fed actually raises rates to the point of impacting housing which has become many boomers only retirement accounts.

So long as you can service the loans, you'll be fine. I see a stagflationary future which is going to stink. The position you're in is the best to be in.
 

BasedBaker

Robin
Trad Catholic
Right now, foreign 3rd world hot money is flooding into markets like California and Florida. The FED wants this to make current debt go away.

I'm morally against land lording, but in this case the financially clever option is to take out $75k in equity on your Cali house (depending on if you can rent it out), use the $75k to buy a house or condo in Florida, and let inflation destroy what is left of your loans.

Inflation will make your loans cheaper. I'd be impressed if the Fed actually raises rates to the point of impacting housing which has become many boomers only retirement accounts.

So long as you can service the loans, you'll be fine. I see a stagflationary future which is going to stink. The position you're in is the best to be in.
Thankfully I'm in a college town with less than 1% vacancy. Granted, I do live in the most residential area of the town and not a spot students would want to live, but we sublet our duplex in less than a month when we bought in 2019 and it's very close proximity.

I believe we could service all three loans, just worried that a major issue may arise with either home and the business that could hit us hard. We are stacked with cash and have a child. But, it does seem like a very interesting idea.
 

The Beast1

Peacock
Orthodox Inquirer
Gold Member
How is constructing and providing housing not valuable?
I see this posted a lot and there needs to be a distinction.

Real estate developers construct and provide housing. They may or may not become landlords if they lease out their new builds. Most landlords (as in nearly all of them) don't build anything

Landlords buy up available stock and think they provide a service. Taking care of a home and paying property tax isn't a "service" and is laughably easy for anybody to do. They're an extra element competing for limited resources.

Some developers become landlords by actually building new housing and when they do it's always in the high value luxury segment (chasing yield).

The retort then to this is, "if cities didn't have building codes, we could provide more affordable housing."
Which can be translated to, "we just want to provide quick and dirty favelas."

Another common retort: "Housing can be cheaper if the city zoned more units."
This is true depending on where you are. I'm talking about California. In California, cities do not have a vested interest in increasing available housing stock. Why? Prop 13. By denying and slowing growth, they can collect their paltry property tax percentages on million plus properties. NIMBYs exacerbate this further.

A third: "Buying/selling a house is hard, leasing is faster." Prior to the pandemic, there are now services which offer cash to sell your house. I can sell my condo and move out on a prescribed date when I want to. Think of it as a, "real estate market maker". Their fees for doing this are half of what doing it the traditional way. Even if I get a lower cash offer, I still win out because the fee is less than going through an agent.

All of these ignore the most egregious problem of people buying real estate and then leaving them empty just as a place to park cash.

Any low-IQ mouth breather can become rich landlording in the right environment. It's not a service. Cities that have eliminated landlording make more affordable housing by 1. eliminating investor competition from real home owners and 2. Getting developers to only sell new builds. Sure it eliminates a specific class of people looking to get yield for their investment, but that's simply the cost of evening the playing field.

I'll trigger some people and get some clown and alien emoticons, but there are cities out there who have eliminated landlording entirely to great effect. In LA county, the ratio of owners to renters has flipped to renters. It only takes one clever commie to make landlording expensive or impossible.

I think the next big revolution for cities will be rezoning commercial to mixed residential/commercial since businesses have been downsizing.

You're welcome to disagree with my opinion. Thanks to the pandemic, landlording has become very risky not only for mom and pops but corporates that aren't diversified as well.
 
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inthefade

Woodpecker
Orthodox Inquirer
I see this posted a lot and there needs to be a distinction.

Real estate developers construct and provide housing. They may or may not become landlords if they lease out their new builds. Most landlords (as in nearly all of them) don't build anything

Landlords buy up available stock and think they provide a service. Taking care of a home and paying property tax isn't a "service" and is laughably easy for anybody to do. They're an extra element competing for limited resources.

Some developers become landlords by actually building new housing and when they do it's always in the high value luxury segment (chasing yield).

The retort then to this is, "if cities didn't have building codes, we could provide more affordable housing."
Which can be translated to, "we just want to provide quick and dirty favelas."

Another common retort: "Housing can be cheaper if the city zoned more units."
This is true depending on where you are. I'm talking about California. In California, cities do not have a vested interest in increasing available housing stock. Why? Prop 13. By denying and slowing growth, they can collect their paltry property tax percentages on million plus properties. NIMBYs exacerbate this further.

A third: "Buying/selling a house is hard, leasing is faster." Prior to the pandemic, there are now services which offer cash to sell your house. I can sell my condo and move out on a prescribed date when I want to. Think of it as a, "real estate market maker". Their fees for doing this are half of what doing it the traditional way. Even if I get a lower cash offer, I still win out because the fee is less than going through an agent.

All of these ignore the most egregious problem of people buying real estate and then leaving them empty just as a place to park cash.

Any low-IQ mouth breather can become rich landlording in the right environment. It's not a service. Cities that have eliminated landlording make more affordable housing by 1. eliminating investor competition from real home owners and 2. Getting developers to only sell new builds. Sure it eliminates a specific class of people looking to get yield for their investment, but that's simply the cost of evening the playing field.

I'll trigger some people and get some clown and alien emoticons, but there are cities out there who have eliminated landlording entirely to great effect. In LA county, the ratio of owners to renters has flipped to renters. It only takes one clever commie to make landlording expensive or impossible.

I think the next big revolution for cities will be rezoning commercial to mixed residential/commercial since businesses have been downsizing.

You're welcome to disagree with my opinion. Thanks to the pandemic, landlording has become very risky not only for mom and pops but corporates that aren't diversified as well.
Did you have a landlord hurt you or something?

Well, crap. Never really thought about it in that way. I agree just sitting on property is bad, but I don't see how that extends to landlording in general. Or maybe I'm a very amoral person. Need to think on it.
 
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The Beast1

Peacock
Orthodox Inquirer
Gold Member
Did you have a landlord hurt you or something?

Well, crap. Never really thought about it in that way. I agree just sitting on property is bad, but I don't see how that extends to landlording in general. Or maybe I'm a very amoral person. Need to think on it.
You're not amoral anymore than an antebellum south slave owner was(hyperboliciously extreme lol). I prefer a hate the game not the player mentality. Even if I am against it morally I still suggested it as a solution to basedbaker

To answer your question, no. I haven't had issues with landlords beyond the regular security deposit screwed . In fact, I'm the ideal tenant. Decent credit, pay my bills on time, and I don't trash units.

Think of it this way, you have savvy investors (wall street, foreign hot money, and people who read rich dad/poor dad) going up against unsavvy investors. The unsavvy investors don't get the luxury of free money from the Fed or 3rd world poverty wage arbitrage selling goods to the west. And to top it all off their wages haven't kept up with inflation.

So now heritage Americans are getting priced out of their own real estate thanks to 3rd world hot money with foreigners and wall street.

Do the unsavvy people of America deserve to own a home?

No, but in a not so distant past it was easier for the less savvy to get onto the property bandwagon because there was less to non existent competition from the investor class. For the renter class, they had surprisingly affordable rents compared to their income.

It would be nice if we could limit how many units an investor can own in places where development is limited for geographical and political reasons. Unfortunately that's impossible to do legally since there are a million ways to hide who owns what so not really feasible.

Rent control doesn't work either for other reasons.

This is a multifaceted problem unfortunately. Some places have sane property taxation rules where the price of property is keep in check by taxes and non limited development(Texas) whereas others have a development, property tax, and NIMBY problem (California).

Sound monetary policy helps from a central bank helps but ultimately you will end up with a landed gentry problem after several generations.

I prefer local solutions for local problems.
 
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Hypno

Crow
I need a little advice on what is my best course of action.

I am moving from California to Florida later this year. I'm acquiring an existing business and will have an SBA loan of ~$350k. I own my home in California in a rather affluent college town and will net $150k if sold today.

Should I look to buy a home rather quickly or wait? Part of me wants to buy while interest rates are low, but the other part of me wants to hold off not knowing what sort of pricetag on a home I will be stuck with on a home if the market tanks. The idea of paying rent and paying off a business loan doesn't seem appealing.

California - personally I would simplify my life and sell your property there. The fact that it rents easily means you should be able to sell it easily. Student leases typically commence in August so now is the time to prepare it for sale/ list it. If you keep it, how are you going to manage repairs/turn over renters/clean, etc.? Those things get a lot more difficult when you are 3,000 miles away.

Florida - I would buy eventually but I think its OK to go slow. First, some markets in Florida are fairly overheated, espeically south florida. Second, interest rates are up more than a full point in the last year; they could rise further but more likely to fall or stay the same. I would rent for a few months and use that time to see what is available in your area, get an idea of prices, etc. I wouldn't feel like I need to rush to buy something. I would wait for something I really liked at a good price that really met my needs. This is in contrast to the situation a year ago when properties were selling very quickly. Two things you can do to monitor this situation: First, look for houses on Zillow. If you seem some you like, save them as favorites. You'll get an update when they sell. Take note of how long it took to sell (days on market) and the sale price relative to the listing price. Are they selling for a premium or discount? Second, search for "interest rates" in google. narrow your search to news/last 24 hours. Then save this search. You'll get a daily email of what the rates are doing. Of course, these are national averages, but you will get the idea of of the market and trends.

Before you go to buy a house, I would do two things. First, open an account with a credit union. They often have good rates on mortgages. Second, use a mortgage broker. Realtors often can recommend someone. The broker will shop your loan with many different lenders and usually will beat the banks and credit unions. The last house I bought I put 10% down and borrowed the other 10% from an out of state credit union as a HELOC that closed simultaneous with my purchase.

A word about credit unions - their services, fees, and rates vary widely. Shop around. Same thing with insurance. Always check State Farm for homeowners' insurance because they have the largest market share by a mile and often will have the best price, espeically if you have other insurance with them like your car.
 
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