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.
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.
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.
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.
Good idea, because you're losing...badly. When the "16%" is based on faulty assumptions and incomplete analysis, THAT should be your red flag. Not the 16%. You clearly missed the point of the statement, but that isn't surprising after seeing your "analysis" above.
WTF are you talking about? Rents don't decline with property values. Contrary to what Maxiep has reiterated a few times now.
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.
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.
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.
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.
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.
