Yes, I sensing a theme here.

CR, where can I find a link to the aforementioned report on MSA rentals?

as I said in a previous post I'm a small landlord in Indiana, my question is how does the bank aseess such properties? is it 5.5 times yearly cash flow?

From Last Thread -

Popeye writes:
Think first -this is a crux game we play..... frills are for fools.

This was my thought on reading the previous post. The investors might have bought intending to hold it for its cash flow, but what happens when the example guy can't rent it for $950? Does he make money at $750?

If house prices are going to continue to fall, why not wait a couple years to buy your investment?

I think the first wave of investors buying in Calif and Fla over the last year are going to get burned some and that will cause others to think twice.

So all those "investors" from the previous article will try to make their properties cashflow at the same time, in a period in which the occupancy/bedroom is likely to increase dramatically.

Hmm.

its a great time to rent a bunker

as I said in a previous post I'm a small landlord in Indiana, my question is how does the bank aseess such properties? is it 5.5 times yearly cash flow?

Duke of Con Dao | 01.08.09 - 2:28 pm | #

Maybe Shnaps can tell us.

My landlording partner said when he inquired about re-fi rates they said 75 percent of appraisal and discounted the rents at 50 percent,...so the property had to have about 60 per cent equity.  I apologize for the rough numbers, but we were laughing so hard it's difficult to remember the actual numbers.

popeye, why riddle? If you have a theory, post it.

One of the best indicators that we were in a bubble was the price to rent ratio getting out of whack, the other was the price to income ratio getting out of whack. Ok, so now we have rents falling, and with higher unenployment incomes also falling, or at least not poised to rise anytime soon. CR has done some excellent graphs on both ratios in the past. We are still not down to historically levels on those 2 ratios, and if both rents and incomes go down, makes it that much harder to get there. Thus housing prices have even further to fall, meaning more loss of wealth, more underwater mortgages, more foreclosures/walkaways, more pressure on bank balance sheets. This thing is far from over.

Why squat when you can lay down?

Why lay down when you can walk away?

Those who doubt Prof. Shiller are sure to lose. Read just part of one of his books and you'll know more than anyone you meet. His idea for a national exchange for homes would have saved us all, but everyone continued to believe that all real-estate pricing is local. He's way ahead of his time, and rarely wrong on any pronouncement he makes publicly.

This is consistent with what my friend at a rather large apartment complex has been saying. Much of their competition is single family homes for rent.

Interestingly, what I view as stupid rules have been getting relaxed. Way more places taking pets.

One of her other observations was few people who have been foreclosed on are applying to rent. Either they are moving back with mom and dad, renting a house, or renting at the much smaller apartment houses.

From my drives through the areas where a number of recent and/or illegal immigrants live, things are much quieter. With fewer jobs, fewer illegal immigrants | csmonitor.com

Comrade Kristina writes:
popeye, why riddle?

Kristina,
As much as I would like to be the source of the answer, I assure you; I am only doing my best to understand the question.

When I find the keystone, I will e-mail the answer to all those who have paid me an advance fee.

Kristina,
Do we understand each other ?

Basel Too,

Interesting.

I guess we'll have to generate the top 10 short-list, for you know, people who will off themselves.

o.k. that's a little dark...

Those brave new landlords buying up all these properties for cash flow had better hope that state/local governments don't resort to increases in property taxes in order to fund their shortfalls...
ShortCourage | 01.08.09 - 2:46 pm | #

In California, isn't that a fairly safe bet?

Barley,

Thanks for posting the Lyondell creditor info. Yesterday's Houston Chronicle article did not have it - one reason why I didn't post the article to the CR comments section.

Best,

Basel Too - You are right and they have just threw in another chunk of money to keep some operations going.

It has never a better time to negotiate rents

popeye - I think you need to open a window or something.

I've named my stakes. I've said my peace. Beat me if you can.

and the landlord can't get $2,300 for it.
Danny | 01.08.09 - 2:52 pm | #

This great saying applies to landlords now:

The market can stay irrational longer than you can stay solvent.

Shnaps writes: trade well.

Heh.... I think OPRA's fubar.

Both my NxCore and my Interactive Broker datafeeds are showing FUBAR'd quotes on options.

At least I don't have to weep for prices I can't see.

Eric, kinda like a guy I knew that just couldn't pass up a roulette wheel. He needed to gamble constantly so he bet half his money on black and half on red, landed on green of course There's a lesson in there somewhere; I'm sure. I didn't really think you would do that BTW...

Shnaps.
As you watch the cookies crumble;

carefully counting all the crumbs,

The baker is busy baking;

making new plans for new kingdoms.

Will the yeast build even faster

than it ever has in the past ?

• or will the amount of flour spilt

become your very last repast?

trade well my friend, think about how long wealth has been distributed along which streams - choose my friend - the time is now.

sorry, sometimes, I get lost.

There's a lesson in there somewhere
Comrade Kristina | Homepage | 01.08.09 - 3:04 pm | #

If you're doing that with black or purple chips, you'll get good comps.

i think CSC may have sold some product to popeye

Q: why the economy is stuck in neutral or more likely contracting right now ?

A: there's no new bubble to invest in

The US economy has become totally dependent on Bubbles.

The US economy has become totally dependent on Bubbles.
km4 | 01.08.09 - 3:08 pm | #

Great article on bubbles at Common Sense Forecaster....

The great thing about a laboratory experiment is that you can control the environment. Wall Street securities carry uncertainties—more, lately, than many people expected—but this experimental security is a sure thing. “The fundamental value is unambiguously defined," says the economist Charles Noussair, a professor at Tilburg University, in the Netherlands, who has run many of these experiments. “It's the expected value of the future dividend stream at any given time": 15 times 24 cents, or $3.60 at the end of the first round; 14 times 24 cents, or $3.36 at the end of the second; $3.12 at the end of the third; and so on down to zero. Participants don't even have to do the math. They can see the total expected dividends on their computer screens.
Here, finally, is a security with security—no doubt about its true value, no hidden risks, no crazy ups and downs, no bubbles and panics. The trading price should stick close to the expected value.

At least that's what economists would have thought before Vernon Smith, who won a 2002 Nobel Prize for developing experimental economics, first ran the test in the mid-1980s. But that's not what happens. Again and again, in experiment after experiment, the trading price runs up way above fundamental value. Then, as the 15th round nears, it crashes. The problem doesn't seem to be that participants are bored and fooling around. The difference between a good trading performance and a bad one is about $80 for a three-hour session, enough to motivate cash-strapped students to do their best. Besides, Noussair emphasizes, “you don't just get random noise. You get bubbles and crashes." Ninety percent of the time.

And, to make matters even scarier, economist David Henderson points out that recent research from economists Christina and David Romer (it's worth noting that Christina Romer is Obama's choice to chair the Council of Economic Advisers) suggests that gov't fiscal policy in an attempt to modify business cycles doesn't work. In other words, things are going to be pretty messy in the economy for a while, unless we can come up with a productive and useful bubble quickly.

OT:  Madoff Exposure Spreads to Labor Union Pension Funds

CNBC has learned that one union, the Carpenters local in Syracuse, N.Y., has lost the majority of the $100 million to $150 million it had in pension money because of its dealings with Madoff, people close to the matter said. The union's money manager, J.P. Jeanneret Associates of Syracuse, didn't return a telephone call for comment.
------
A collective hammer-to-thumb effect for that union's pension fund...

popeye,
please post something relevant!
cd | 01.08.09 - 3:12 pm | #

There's an easy fix  to this problem......

Eric writes:
popeye,
please post something relevant!

It is my honest belief that you are smarter than I am. In my humble opinion, that is relevant.

FED has started buying 10.2B of MBS.
It has begun.
Anonymous | 01.08.09 - 3:17 pm | #

That's nothing! Canada bought $50B of MBS in the last 3 months.

When do I get my pony?

they stopped production on the engine plant for the Volt...

Seriously? Bush had a made a stink that the bailout was unnecessary because Congress had allocated "green" development funds. Last month's bailout didn't have the green-tech mandate. Interesting...

Eric,
One question. If I eat your lunch, who is on first ?

Alas CR companion is not behaving well with flash (64 bit alpha2).
squeezed | 01.08.09 - 3:23 pm | #

Flash? What's the behavior look like?

Priuses? or Priusi?

hopefully it's not up to the taxpayers to make up for these pension losses and union members have to bear the consequences

That's funny. The big problem will probably be the city/state pension funds, because they're typically defined benefits.

julia writes:
hopefully it's not up to the taxpayers to make up for these pension losses and union members have to bear the consequences

Kind of a sick thing to hope for isn't it? Somehow or other I have a hard time hoping for others despair...

Basel Too  writes:
That's funny. The big problem will probably be the city/state pension funds, because they're typically defined benefits.
Basel Too | 01.08.09 - 3:32 pm | #
-----
ding, ding  We have a winner!

If "private" pensions have lost tons of USDs due to bad investing, fraud, then how do you think the "public" pensions are doing?  I definitely think there will be some taxpayer skin in this fix, and I'm not too sure how much money manager "skin" will there to offset our part...

I was thinking December should not be as bad. If it is, despite Christmas, then there is no hope. We will need to gather in small groups and lament, carve CR in our skin, and tear our hair out.

By Shobhana Chandra

Jan. 8 (Bloomberg) -- U.S. consumer borrowing dropped a record $7.9 billion in November as consumers retrenched and credit markets seized up.

Here's an IndyMac REO in Lee County, FL (hi, Cobradriver!)
I guess it's not a downturn until we 'roll back' prices thirty years....

$117,000 mortgage - taken out 11/7/05

This mortgage was foreclosed.

Lee County assessed property at $95,000 - as of 1/1/08

IndyMac's current asking price $22,500 - Today

Originally sold brand-new on 2/1/1977 for $21,700 (see sales/transaction history)

Are swords a viable home defense weapon?

I was thinking December should not be as bad. If it is, despite Christmas, then there is no hope.

My home state (SC) just announced today that another 7% cut in the budget will probably be necessary, after announcing 7% in late November; this will bring it to about 20% total. I'm sure they peeked at the December numbers and concluded it was FUGLY.

Speed Racer writes:
Yes, if the invader has a less potent weapon. Not so much against a firearm.
Speed Racer | 01.08.09 - 3:43 pm | #
-----
Open Field:  Probably Not.
Close Quarters:  It all depends on building layout and tactics.

world will end but rents will never fall in mumbai.never everin my lifetime unless mumbai is nuked.Still there will war among vultures to find best spot( i dont thin this will be different either in USA,England or france).impossible to extreme.
tha examples you cite are amorphous with no real substance.Rents are NOT going to decrease to any appreciable amount.period.these are just news