The housing Market (and a comment on this forum)

[Mikenhe]

The housing market locally is on the move. I live near Tampa and the amount of investment in this area is incredible. anything that will produce an easy 10% a year return is being bought sight unseen. There are very few houses lasting on the market that are valued under 180K.

 

I was talking to a realtor yesterday (I',m renting and the landlord is being foreclosed on) and he was saying that previously banks were happy to have a house on the market for 120 to 180 days to give it time to generate interest. Now they are being snapped up. People trying to get on the market are having a tough time as there are so many cash buyers out there.

 

I'm assuming that this may lead to a soft rental market but I've been looking at that and so far I don't see rents dropping. I have no idea where first time buyers are going to go to get on the housing ladder if they intend to stay in the area long term.

 

add to that the banks are making it really tough to get money.

 

The higher priced houses seem to be churning over nicely. nothing spectacular happening there.

 

Also new builds are happening again - in an area that hasn't seem much new housing in years. Its all 3/4 bed plus single family homes. nothing for starters.

 

I also have friends in the Phoenix and vegas areas and they are reporting that  the prices are heating up there as well. I'm not sure I'm ready to buy shares in the building industry yet but it seems to be turning.

 

Another personal view.. how nut are the banks? I moved from NH to FL last year. Due to the downturn in the housing market in NH (even though it never got too hot in the first place) my house was worth a lot less than I paid for it. The banks were so slow to react to the sale - and the purchase that I lost a couple of buyers and ended up short saling the house. This has dinged my credit record but luckily for me I've always put most of my savings into Retirement plans - including one that I control myself.

So now BOA have access to most of my financial records and can see what I'm actually worth and (thanks to this board) its not unreasonable. I earn good money for FL. I have a very good net worth. so BOA cancel one of my credit cards.... ummmm.

I go and talk to them about obtaining a mortgage - for less than 50% of the property I want to buy. and they turn me down flat because of the short sale.

 

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

 

 

and my comment re the forum - I looked back for a housing post and couldn't see one... but I did note that the last month has generated over 150 new threads. and the vast majority are well worth reading.

 

Nice work folks - a bit busier that when I first joined!!!! this is an excellent place to be involved it.. Lets keep it that way!!

[ERICOPOLY]

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

Two years ago, with a net worth of more than $5m, I couldn't get a loan for $100k.  I was trying to purchase a $200k property in Sacramento, a 4-plex with $32,000 gross rental income.  The property was fully occupied, the rents were below market.

 

Wells Fargo and Bank of America, plus other local banks.  None would bite.

 

They wouldn't loan me under 2% of my net worth!  On a property where I was putting 50% cash down in a market that was already crushed in valuation!  The loan amount was roughly 3x the gross rent!

 

And then John Stumpf (Wells Fargo CEO) would get on TV and claim they wanted to make loans but there were no creditworthy opportunities.  What an unbelievable statement.

 

Their chief excuse was that I didn't have experience as a landlord.  I lived a thousand miles away in Seattle and, as I told them, was going to hire a property manager (with experience).

 

 

[Guest wellmont]

The housing market locally is on the move. I live near Tampa and the amount of investment in this area is incredible. anything that will produce an easy 10% a year return is being bought sight unseen. There are very few houses lasting on the market that are valued under 180K.

 

I was talking to a realtor yesterday (I',m renting and the landlord is being foreclosed on) and he was saying that previously banks were happy to have a house on the market for 120 to 180 days to give it time to generate interest. Now they are being snapped up. People trying to get on the market are having a tough time as there are so many cash buyers out there.

 

I'm assuming that this may lead to a soft rental market but I've been looking at that and so far I don't see rents dropping. I have no idea where first time buyers are going to go to get on the housing ladder if they intend to stay in the area long term.

 

add to that the banks are making it really tough to get money.

 

The higher priced houses seem to be churning over nicely. nothing spectacular happening there.

 

Also new builds are happening again - in an area that hasn't seem much new housing in years. Its all 3/4 bed plus single family homes. nothing for starters.

 

I also have friends in the Phoenix and vegas areas and they are reporting that  the prices are heating up there as well. I'm not sure I'm ready to buy shares in the building industry yet but it seems to be turning.

 

Another personal view.. how nut are the banks? I moved from NH to FL last year. Due to the downturn in the housing market in NH (even though it never got too hot in the first place) my house was worth a lot less than I paid for it. The banks were so slow to react to the sale - and the purchase that I lost a couple of buyers and ended up short saling the house. This has dinged my credit record but luckily for me I've always put most of my savings into Retirement plans - including one that I control myself.

So now BOA have access to most of my financial records and can see what I'm actually worth and (thanks to this board) its not unreasonable. I earn good money for FL. I have a very good net worth. so BOA cancel one of my credit cards.... ummmm.

I go and talk to them about obtaining a mortgage - for less than 50% of the property I want to buy. and they turn me down flat because of the short sale.

 

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

 

 

and my comment re the forum - I looked back for a housing post and couldn't see one... but I did note that the last month has generated over 150 new threads. and the vast majority are well worth reading.

 

Nice work folks - a bit busier that when I first joined!!!! this is an excellent place to be involved it.. Lets keep it that way!!

 

I believe certain areas of SF bay area in CA are above 2006/07 peaks.

[yseric]

Yes, the South Bay/Silicon Valley house prices are definitely above previous high... Many parts of the Bay Area are near previous high or not that far from previous high...

 

[muscleman]

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

Two years ago, with a net worth of more than $5m, I couldn't get a loan for $100k.  I was trying to purchase a $200k property in Sacramento, a 4-plex with $32,000 gross rental income.  The property was fully occupied, the rents were below market.

 

Wells Fargo and Bank of America, plus other local banks.  None would bite.

 

They wouldn't loan me under 2% of my net worth!  On a property where I was putting 50% cash down in a market that was already crushed in valuation!  The loan amount was roughly 3x the gross rent!

 

And then John Stumpf (Wells Fargo CEO) would get on TV and claim they wanted to make loans but there were no creditworthy opportunities.  What an unbelievable statement.

 

Their chief excuse was that I didn't have experience as a landlord.  I lived a thousand miles away in Seattle and, as I told them, was going to hire a property manager (with experience).

 

So how did you pay for your current home in CA? Did you pay cash?

[ERICOPOLY]

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

Two years ago, with a net worth of more than $5m, I couldn't get a loan for $100k.  I was trying to purchase a $200k property in Sacramento, a 4-plex with $32,000 gross rental income.  The property was fully occupied, the rents were below market.

 

Wells Fargo and Bank of America, plus other local banks.  None would bite.

 

They wouldn't loan me under 2% of my net worth!  On a property where I was putting 50% cash down in a market that was already crushed in valuation!  The loan amount was roughly 3x the gross rent!

 

And then John Stumpf (Wells Fargo CEO) would get on TV and claim they wanted to make loans but there were no creditworthy opportunities.  What an unbelievable statement.

 

Their chief excuse was that I didn't have experience as a landlord.  I lived a thousand miles away in Seattle and, as I told them, was going to hire a property manager (with experience).

 

So how did you pay for your current home in CA? Did you pay cash?

 

I leased for the past year, and two weeks ago I signed a purchase option expiring in late July 2016.  Thus far, I've paid cash for 10% of the negotiated final sale price.

 

[rjstc]

Yes, the South Bay/Silicon Valley house prices are definitely above previous high... Many parts of the Bay Area are near previous high or not that far from previous high...

 

I live about 90 miles south of San Francisco. Santa Cruz on the north end of Monterey Bay. I don't know about the rental market but single family home prices are back to where they were before the collapse with multiple offers. This cycle happens every 10-15 years here with prices falling 25-40%. Then they come back like now. Just like the stock market I've bought houses every time and waited for prices to recover. For instance a single family 3/2 home that was selling for $850,000-1,000,000.00 dropped to about $625,000.00 $725,000.00. Now back to $825,000.00+.

[Mikenhe]

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

Two years ago, with a net worth of more than $5m, I couldn't get a loan for $100k.  I was trying to purchase a $200k property in Sacramento, a 4-plex with $32,000 gross rental income.  The property was fully occupied, the rents were below market.

 

Wells Fargo and Bank of America, plus other local banks.  None would bite.

 

They wouldn't loan me under 2% of my net worth!  On a property where I was putting 50% cash down in a market that was already crushed in valuation!  The loan amount was roughly 3x the gross rent!

 

And then John Stumpf (Wells Fargo CEO) would get on TV and claim they wanted to make loans but there were no creditworthy opportunities.  What an unbelievable statement.

 

Their chief excuse was that I didn't have experience as a landlord.  I lived a thousand miles away in Seattle and, as I told them, was going to hire a property manager (with experience).

 

Idiocy at its best.. and yet the banks have turned it around and we are buying shares in them?

 

I wonder who is crazy!!!  maybe I should be getting rid of my shares in BOA....

[rjstc]

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

Two years ago, with a net worth of more than $5m, I couldn't get a loan for $100k.  I was trying to purchase a $200k property in Sacramento, a 4-plex with $32,000 gross rental income.  The property was fully occupied, the rents were below market.

 

Wells Fargo and Bank of America, plus other local banks.  None would bite.

 

They wouldn't loan me under 2% of my net worth!  On a property where I was putting 50% cash down in a market that was already crushed in valuation!  The loan amount was roughly 3x the gross rent!

 

And then John Stumpf (Wells Fargo CEO) would get on TV and claim they wanted to make loans but there were no creditworthy opportunities.  What an unbelievable statement.

 

Their chief excuse was that I didn't have experience as a landlord.  I lived a thousand miles away in Seattle and, as I told them, was going to hire a property manager (with experience).

 

Idiocy at its best.. and yet the banks have turned it around and we are buying shares in them?

 

I wonder who is crazy!!!  maybe I should be getting rid of my shares in BOA....

 

Would you loan me lots of money at these rates fixed for 30 years. Or would you rather borrow from the fed at practically nothing and loan it out short term for a better spread? It seems to me that as a shareholder  longer term they are doing what is best for me. Plus what gets them to better profits now. When rate go up I can see them starting to loosen.

[ERICOPOLY]

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

Two years ago, with a net worth of more than $5m, I couldn't get a loan for $100k.  I was trying to purchase a $200k property in Sacramento, a 4-plex with $32,000 gross rental income.  The property was fully occupied, the rents were below market.

 

Wells Fargo and Bank of America, plus other local banks.  None would bite.

 

They wouldn't loan me under 2% of my net worth!  On a property where I was putting 50% cash down in a market that was already crushed in valuation!  The loan amount was roughly 3x the gross rent!

 

And then John Stumpf (Wells Fargo CEO) would get on TV and claim they wanted to make loans but there were no creditworthy opportunities.  What an unbelievable statement.

 

Their chief excuse was that I didn't have experience as a landlord.  I lived a thousand miles away in Seattle and, as I told them, was going to hire a property manager (with experience).

 

Idiocy at its best.. and yet the banks have turned it around and we are buying shares in them?

 

I wonder who is crazy!!!  maybe I should be getting rid of my shares in BOA....

 

Would you loan me lots of money at these rates fixed for 30 years. Or would you rather borrow from the fed at practically nothing and loan it out short term for a better spread? It seems to me that as a shareholder  longer term they are doing what is best for me. Plus what gets them to better profits now. When rate go up I can see them starting to loosen.

 

I wasn't looking for anything that long term.  I would have been happy with a 25% down, 3 yr fixed at 7% rate.  The gross rental yield was just so fat it was ridiculous.

 

Anyways, you probably heard stories about how it was all cash buyers bottom fishing in markets like that.  From my point of view and experience it had nothing to do with a lack of creditworthy borrowers.  Rather, just banks that wouldn't lend.

 

On a rental, cap rates in the teens with a big down payment should be credit enough.  The cash flow and risk comes from the property itself. 

 

$100k loan, $32k in gross rents... 50% downpayment...  that's not a creditworthy situation Mr. Stumpf?

[TwoCitiesCapital]

as do all the other banks and a couple of credit unions. how mad is this - our income is on the high side for FL. we want to buy a house and get a loan that secured against a house that I'm putting more than a 50% deposit on and yet.... no dice.

Don't they want to make money - they can't fail to get their cash back even in the worst case scenario!! 

Its driving me nuts.

 

 

anyway that my eyes on the ground report about florida and the (non) money lending practices of the banks at the moment.

 

Two years ago, with a net worth of more than $5m, I couldn't get a loan for $100k.  I was trying to purchase a $200k property in Sacramento, a 4-plex with $32,000 gross rental income.  The property was fully occupied, the rents were below market.

 

Wells Fargo and Bank of America, plus other local banks.  None would bite.

 

They wouldn't loan me under 2% of my net worth!  On a property where I was putting 50% cash down in a market that was already crushed in valuation!  The loan amount was roughly 3x the gross rent!

 

And then John Stumpf (Wells Fargo CEO) would get on TV and claim they wanted to make loans but there were no creditworthy opportunities.  What an unbelievable statement.

 

Their chief excuse was that I didn't have experience as a landlord.  I lived a thousand miles away in Seattle and, as I told them, was going to hire a property manager (with experience).

 

I had this issue too. In 2011 a friend and I were looking at buying a triple-net lease in small town Mississippi (about an hour from where we both went to college). The building was occupied by a Dollar General with 5 years left on the lease and option to extend for a few more years. There was one other dollar store within 30 miles and no Walmart within 30 miles and the Dollar General had grown sales from 700k a year back in 2000 to over 2M a year in 2011. There was also a % of sales over 1M option that kicked in at the end of each year that was a great supplement to the annual rent :) . The DG was already negotiating signing a new 10 year lease if the current owner would drop the option. In other words, they're weren't going anywhere anytime in the near future.

 

The yield on the property, including the option, was 12-15% after expected expenses/taxes and before any leverage from a loan. It was a motivated seller who needed cash to cover mortgages on unoccupied condo developments in Denver.

 

We were going to put 30% down. Both my roommate and I have ample savings, no debt, great credit scores, and individually had incomes that could easily cover the mortgage bill without any monthly income from the DG....and yet, no banks would bite. They all lead us on for weeks through loan application processes before telling us ''no'' for some bullsh*t reason ("you have no experience", "we don't lend for out of state properties", "we don't lend to out of state principals", "we'll give you a SBA loan with an amortization of 7 years but then it's uneconomical", etc. etc. etc).

 

I've hated the big banks ever since. Between that and the "goodwill" they created with me during the crisis, I hope that I can build a business that will fund itself and will never have to give them 1 cent of my hard earned money again - they clearly don't do anything to deserve it.

[CorpRaider]

Yeah, Eric that's just stupid on WFC's part.  Sometimes you can find an actual banker at some of the smaller community and regional banks.  Sometimes I think it may not be worth it to stop off at a money center bank for anything that can't be underwritten by a high school graduate and a standard program.

[fareastwarriors]

I have a positive experience to share.

 

I bought a triplex back in October 2012. I had no experience, been at my first job out of college for about a year and quarter, my 20% down payment was a gift from my brother, and somehow I got the mortgage to buy a 300k property.

 

I think the difference was I worked with a mortgage broker. She got me the loan at fairly resonable rate. The mortgage is with US Bank.

 

Had I gotten loan  back in 2010/11, it might have been a different story...

[jay21]

 

Anyways, you probably heard stories about how it was all cash buyers bottom fishing in markets like that.  From my point of view and experience it had nothing to do with a lack of creditworthy borrowers.  Rather, just banks that wouldn't lend.

 

 

There's been some shadow debt popping up again over the last year or two because banks are tight and some other lenders/fixed income investors are a little looser because of low yields.

 

There might be some other avenues you can tap, but it will probably be more expensive.