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SFB
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January 26th, 2011 at 2:24:51 PM permalink
Discflicker:

You stated this:
Quote: DF

If you haven't been here lately, please dont make assumptions and blind comments. I was born and raised here, lived here all my life.



I was born there, lived there till 1982, was back there three weeks ago.

The East Side is a warzone. The Washington Post in 1999 deemed the East Side of Detroit “Urban Prairie”. This was to describe how you can have streets, signs, fire plugs, and nothing but grass between them

I get it. Also the abandoned buildings (residential, commercial and industrial) spread out for miles. And the toxic waste is still to be cleaned up. EPA has 134 sites in Wayne County for its Superfund clean up (possible sites, cleaned up, and active ones) Here: http://cfpub2.epa.gov/supercpad/cursites/srchsites.cfm

However, your poem and point is that Detroit is dead. It isn’t. It ain’t what it used to be, and never will be, but in and of itself, its holding its own. The East Side of Detroit looks like The Bronx in the 60’s and 70’s, and much of Northern Industrialized New Jersey.

Then you mention this:
Quote: DF

If we were gonna try to re-build Detroit, we would first have to spend billions to clean up what's been abandoned and left to rot.

Now multiply that by a scale... for each Detroit City block that needs to be cleaned up, an entire Southwest US CITY will need to be cleaned up, starting with Vegas and working toward the Pacific Ocean.



Much of Detroit DOESN'T have to be cleaned up. The residential areas, can be rebuilt. They would need to be rezoned, and new property lines drawn. Instead of 30’ wide and 60’ to 100’ deep lots, they can be redone to 120’ wide, with the same depth. Instead of thirty houses on each side of the street and each block, you can have 10 to 14.

All the utilities are there already, just plug right in.

The industrial areas? Well, they need to be cleaned up/torn down, and rezoned as well. The Commercial properties will come back as the people come back. They will be redeveloped via bulldozer, or redone if quality buildings.

DF, your at a disadvantage here, cuz you don’t know me. I might not live in Detroit, or MI any longer, but I keep close tabs because it is close, even still to my heart.

I agree with you that the SW USA in is a world of hurt from the lack of water. Lake Mead is the Canary in the coal mine. And geologists studying the Colorado river, and wondering why the native population left 1000 years ago, determined that there is long cycle to the water in the SW. And the top of that cycle passed in the early 1900’s and the water level in LM is as high as it is ever going to get.

And the building of ALL of that was subsidized by the rest of the USA. And if they truly had to pay for the costs of building all that as USERS, then the price of water and electric in the SW would be considerably higher.
And for JF this line:
Quote: JF

I can't imagine someone wanting to live in Detroit when there are hundreds of other great places to live.



Well, we all live where we are comfortable. And making a change is tough for some. So, they continue to live in Detroit, or Cleveland, or even, Boston…

SFB
discflicker
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January 26th, 2011 at 4:57:42 PM permalink
SFB, Thanks for your time and insight.

I wrote that poem one day after playing hold-em all night, running up 100 flights of stairs, and then taking a long ride down Fort Street to the South bridge of Grosse ile, where I can see all the way to the NW shore of Lake Erie. Its such an awesome sight, a stright line between the islands...



On the way back, I stop at the S.W. D. Mexican places for the best breakfast this side of Vegas!

I do this all the time... why? Because, apparently, I must like the horror. I must like the angush, I must enjoy the destruction. Why else do I do it?

I drive around and around, and I just can't believe what I'm looking at!

I was thinking about better times, like when I used to work at the Ford Livonia Transmission plant and we actually used to say "Ahhh... I love the smell of transmission fluid in the morning... It smells... like victory."


I'M TELLING Y'ALL, SOMETHING HORRIBLE IS GOING ON HERE, BEYOND BELIEF, AND UNDER THE RADAR!!!

NOBODY IS COMMING BACK to Detroit any time sooner or later. You need to see it for yourself... it transends the statistics you keep quoting me. Those stats are all about multi-national corporations that haven't yet bothered changing the company address from 100 Jefferson or Rotunda drive. They dont exist here any more, that stuff is all on paper only!


I dont want to sound too nutty, so I won't dwell upon it any more.

If anyone wants to buy any of my 3 properties here in Detroit, please call me. I will gladly trade for a nice mountain veiw somewhere where I can't die of dehydration.


In the meanwhile, I just heard a report that the unemployment rate in Nevada is NOW the national high and the highest ever??? If you guys are waiting for Detroit to re-juvinate itself, make money and then spend it in Vegas, I would say, don't wait. If the money doesn't come from cities like D., then where from? And what then??

???
The difference between zero and the smallest possible number? It doesn't matter; once you cross that edge, it might as well be the difference between zero and 1. The difference between infinity and reality? They are mutually exclusive.
JIMMYFOCKER
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January 26th, 2011 at 5:12:56 PM permalink
Thank goodness for the Red Wings.
discflicker
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January 26th, 2011 at 5:16:33 PM permalink
Quite right, JF!

We got some decent coney island and Mid-eastern food, too.
The difference between zero and the smallest possible number? It doesn't matter; once you cross that edge, it might as well be the difference between zero and 1. The difference between infinity and reality? They are mutually exclusive.
discflicker
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January 26th, 2011 at 5:24:32 PM permalink
Who was that, AZ ?
The difference between zero and the smallest possible number? It doesn't matter; once you cross that edge, it might as well be the difference between zero and 1. The difference between infinity and reality? They are mutually exclusive.
JIMMYFOCKER
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January 26th, 2011 at 5:25:21 PM permalink
After reading this thread it becomes quite clear that Las Vegas is in for a financial boom in the very near future.
EvenBob
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January 26th, 2011 at 6:42:08 PM permalink
Quote: JIMMYFOCKER

I can't imagine someone wanting to live in Detroit when there are hundreds of other great places to live.



Ya know, the more you post the more you sound like somebody we all know. He posts a lot like you, knows Vegas and football like you, and has an opinion on everything, like you. Jerry? Is that you? (Is Singer right behind you?)
"It's not called gambling if the math is on your side."
aahigh
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January 26th, 2011 at 10:00:36 PM permalink
Quote: JIMMYFOCKER

After reading this thread it becomes quite clear that Las Vegas is in for a financial boom in the very near future.



I remember hearing someone flying back to California (where I lived at the time) from Vegas in 2005 talking about their sure-fire investment; they bought property on a whim based on a sales pitch while they were there. The exuberance then was no more rational than the fear is now. If you still have good credit, and can afford a 10k or more down payment, get in here. In general, if the banks will approve you for the loan, you should be buying here right now before everybody and their dog gets in line once the news gets out what you get for your money here. That being said, getting approved is now like it was in the old days. They read all your bank statements and ask a lot of questions about where your money came from and where it's going before they approve you. My place would have sold to someone else except they couldn't get approved for the loan (it's hard to get approved!)

Even if you don't want to move here, if you can get approved for an investment property, you can instantly have positive cash flow. The cap rates are ridiculously high at even 18% for some zip codes. That basically means you can clear $9,000 in profit every year from a place worth $50,000 in some zip codes. Granted, you wouldn't want to live there yourself more than likely, but that's ridiculous profit that only happens when everybody and their dog is underwater and without liquid cash as they are here in Las Vegas. California has had negative cap rates forever and any money you make investing there is strictly from price appreciation.

Values are so ridiculously low compared to rents, investors are buying places with cash left and right.

Here's a page from a document my real estate agent sent me today that summarizes how ridiculously high the cap rates are and where the sweet spots are in terms of home prices:

[/IMG]
mkl654321
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January 26th, 2011 at 10:05:48 PM permalink
Quote: JIMMYFOCKER

After reading this thread it becomes quite clear that Las Vegas is in for a financial boom in the very near future.



BOOM! (The sound that is made when yet another casino is imploded)
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
mkl654321
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January 26th, 2011 at 10:10:24 PM permalink
I wonder if anyone, even five years ago, would have anticipated that there would be a debate about which city is circling the drain faster, Detroit or Las Vegas.
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
aahigh
aahigh
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January 26th, 2011 at 11:01:48 PM permalink
You are witty.

Quote: mkl654321

BOOM! (The sound that is made when yet another casino is imploded)

EvenBob
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January 26th, 2011 at 11:05:45 PM permalink
Quote: aahigh



Values are so ridiculously low compared to rents, investors are buying places with cash left and right.



Buying rental property in a depression is OK if you're among the idle rich. If you can't find good renters, though, you're screwed. Notice I said 'good' renters. I have a friend who owns 20 properties and he spends several days a month in court trying to evict deadbeats who haven't paid rent in 6 months. No thanks.
"It's not called gambling if the math is on your side."
thecesspit
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January 26th, 2011 at 11:12:34 PM permalink
Quote: JIMMYFOCKER

Thank goodness for the Red Wings.



Only reason I'll visit Detroit is the Wings and the Lions. And possibly a trip out to the various Casinos. One of my bucket list things is a double header weekend of hockey and football at the Joe Louis and Ford Field.

Plus tickets are far cheaper than out on the Western Seaboard for both activities.
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
rxwine
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January 26th, 2011 at 11:14:00 PM permalink
Quote: mkl654321

I wonder if anyone, even five years ago, would have anticipated that there would be a debate about which city is circling the drain faster, Detroit or Las Vegas.



I don't feel like I personally contributed to either the Wall Street or real estate bust (not that I'm special or anything, but I just didn't), but it sort of feels like someone set the house we were all living in on fire which is frustrating. On the other hand, I haven't personally suffered at all (as yet). I guess I'm just annoyed that such a giant stupid thing has happened.
There's no secret. Just know what you're talking about before you open your mouth.
mkl654321
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January 26th, 2011 at 11:25:45 PM permalink
Quote: rxwine

I don't feel like I personally contributed to either the Wall Street or real estate bust (not that I'm special or anything, but I just didn't), but it sort of feels like someone set the house we were all living in on fire which is frustrating. On the other hand, I haven't personally suffered at all (as yet). I guess I'm just annoyed that such a giant stupid thing has happened.



I don't view it as a giant "stupid" thing, but rather, as a giant "natural" thing. Economic cycles are a natural part of a free economy. The magnitude of those cycles has been increased by the recent entry into the global game of potentially huge emergent economies such as India and China. In fact, I see a direct causal link between the full-throated entry of China into the world capitalist system and the global recession that followed it.

Because our political discourse is based almost exclusively on blame-fixing, backstabbing, and finger-pointing, there is this tremendous urge to find someone to blame for the recent fiscal meltdown. The real answer, which almost no one likes, is that nobody is to blame. But it's bad! Someone must have caused it! It's Bush's fault! It's Obama's fault! It's evil greedy bankers' fault! It's global warming's fault! It's my ex-wife's fault!
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
rxwine
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January 26th, 2011 at 11:40:08 PM permalink
But that would mean, it's okay for Wall Street to keep doing what they were doing, and people taking on loans on houses they can't afford. I don't believe it was all that natural.
There's no secret. Just know what you're talking about before you open your mouth.
discflicker
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January 27th, 2011 at 12:06:39 AM permalink
Its Regan's fault, according to Michael Moore.


BTW, a good renter is as hard to find as an honest lawyer. If you have one KEEP HIM!
The difference between zero and the smallest possible number? It doesn't matter; once you cross that edge, it might as well be the difference between zero and 1. The difference between infinity and reality? They are mutually exclusive.
mkl654321
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January 27th, 2011 at 1:36:52 AM permalink
Quote: rxwine

But that would mean, it's okay for Wall Street to keep doing what they were doing, and people taking on loans on houses they can't afford. I don't believe it was all that natural.



Yes, that's my point, it's PERFECTLY OKAY. We're all presumably adults. If we want a nanny state telling us what we should and shouldn't buy, what investments we should and shouldn't make, what money we should and shouldn't borrow, etc. etc., I guess we can have that. But why would we want it?

The banks were (and are) independent business entities, empowered to make their own decisions. With a few exceptions, they were publicly owned. If the management was "bad", it was the fault of the shareholders, because they elected that management. Businesses that make decisions that turn out badly should be allowed to fail. It would be a cure that is worse than the disease to take away their power to make decisions.

And as far as those individuals that took out loans on houses they "couldn't afford"---in most cases, that wasn't true at the time they took out those loans. They didn't anticipate losing their jobs--nor should they have. And given the low interest rates of the period, a mortgage payment could wind up costing considerably less than the rent payment for an equivalent dwelling--especially since the mortgage interest was tax deductible. Also, many people, thanks to the relaxed mortgage qualification rules (which were a consequence of low interest rates--the lenders needed more customers), were able to buy a house for the first time in their lives. Given all that, and lacking a crystal ball to see the future, for millions of people, it would have been a stupid decision to NOT buy a house. For a six-year period, a house was more affordable than it had ever been in US history. We look at that with the benefit of hindsight and say, "Yaaaaah, those evil greedy bankers lent all those foolish people money, it was so devious and scheming of those no-good swindling banks, and those morons didn't even read their loan papers but just signed their lives away." It's a liitle more complicated than that.
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
rxwine
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January 27th, 2011 at 2:47:05 AM permalink
Well, I guess I see these failures as more than someone's personal business. Maybe my neighbor decides to kill his spouse one night. So, he waits until she's in front of the window that looks over to my house and pulls the trigger. The bullet goes through her head, comes through my window, and hits Ryan Seacrest in the head on my TV screen while I'm waiting for American Idol to be over so I can watch the 10pm news. Well, I'm pissed now 'cause I can't watch the news.

These guys on Wall Street aren't acting in a vacuum either. It's more like a boiler room of the ship we're all on. If they're down there fucking things up, it's fucking things up for the rest of us. So, I guess I do want a nanny for them, and a nanny that beats their ass with regularity.
There's no secret. Just know what you're talking about before you open your mouth.
discflicker
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January 27th, 2011 at 3:38:48 AM permalink
Nice visual! The nanny, the steam, ...
The difference between zero and the smallest possible number? It doesn't matter; once you cross that edge, it might as well be the difference between zero and 1. The difference between infinity and reality? They are mutually exclusive.
JIMMYFOCKER
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January 27th, 2011 at 5:31:52 AM permalink
Let's all hope and pray that both Detroit and Las Vegas rebound in the not so distant future.
SFB
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January 27th, 2011 at 7:41:13 AM permalink
DF:

I have actually stood on the same spot with my Mom and Step-Dad before going to dinner...

My Mother moved from Detroit in 85 down to Southgate.

JF mentions quality of life. And the Qualify of Life in Detroit ain't what it was in the 30's, 40's and 50's. Never will be again. But it CAN be a better QOL then it has been. And is some areas, it wasn't so bad. I keep mentioning SW Detroit (my old hood) because it is a place that seems to be doing ok. Not terriffic, but not complete meltdown either.

The factories are all closed because they could no longer compete. You can blame wages, bad engineering, old equipment, obsolete use, high taxes, foreign competition, etc. In each individual factory, the combination of the above led to its individual doom. Or businesses elsewhere that used to buy it products closed..

It is ALOT cheaper to build a new house, commercial strip or industry, where none exists already..... Meaning, the corn fields will turn into houses long before the old, now vacant streets of Detroit are rebuilt with houses. Just like LV NOW has a serious over-supply of housing that is in great shape, Detroit (the city) has much sub-standard housing, and lots of area to put new housing, and a significant percentage of foreclosed homes in the burbs....

In 2007, I toured SW Detroit, and looked into the ownership and the opportunity to procure from the City/State anywhere from 50 to 150 empty lots. To build new homes on them. They would have been manufactured homes, but they would have been NEW. And it could have been done profitably. With the values of exisiting housing in SW Detroit at that time. But Detroit WILL NOT allow you to place a manufactured home in the city. Its a law from the 50's. When manufactured home were mobile homes. There are SO many different styles now.

What would you pay for a double lot, garaged, brand new, 1,200 to 1,500 square foot house in Detroit? Near to some of the best elementary, secondary and High Schools in Detroit? Something like that would be $200k in Taylor, or Southgate. It could have been done for $100k in SWD.

But, they won't change the law.

So, the world has changed, but Detroit will not in some very simple areas.....

SFB
boymimbo
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January 27th, 2011 at 10:03:52 AM permalink
The real estate bust and the Wall Street bust were both giant "unnatural" things. The real estate bust was caused by speculation and offering mortgage vehicles to those who couldn't afford them. Banks offered and qualified homeowners based on the sub-prime rate, not the rate over the full term of the loan. When the initial interest rate expired and the homeowners had to pay the higher rate, many could not afford the payment. They went to cheaper housing, declared bankruptcy, or tried to refinance. When they tried to refinance, the appraiser came by and said that their home was worth less than what they owed on it and would deny the application, forcing them to comply with the term of the original agreement. So they either sold and went to cheaper housing or went into foreclosure.

The unnatural event is the bank to have the right to offer someone a home based on a short-term interest rate, knowing full well that the interest rate would return to a much higher rate at the end of the term, and that there would be a substantial likelyhood that the homeowner would be forced into this difficult situation. This increased foreclosure rates, which decreased housing values, which decreased the demand, and so on and so forth... pop.

The stock market bust was similar. The unnatural event was the ability to trade derivatives and complex instruments without really understanding the concept. Most of these were made up of sub-prime mortgages and insurance policies. They imploded.

Proper regulation would have prevented both of these. It would also have slowed the rate of growth. It would have decreased the rate of increase of housing prices in desirable places (Vegas, the Bay Area, Seattle).
----- You want the truth! You can't handle the truth!
mkl654321
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January 27th, 2011 at 10:13:07 AM permalink
Quote: rxwine

Well, I guess I see these failures as more than someone's personal business. Maybe my neighbor decides to kill his spouse one night. So, he waits until she's in front of the window that looks over to my house and pulls the trigger. The bullet goes through her head, comes through my window, and hits Ryan Seacrest in the head on my TV screen while I'm waiting for American Idol to be over so I can watch the 10pm news. Well, I'm pissed now 'cause I can't watch the news.

These guys on Wall Street aren't acting in a vacuum either. It's more like a boiler room of the ship we're all on. If they're down there fucking things up, it's fucking things up for the rest of us. So, I guess I do want a nanny for them, and a nanny that beats their ass with regularity.



Well, the Soviet Union, one of the 20th century's great success stories, didn't allow any shenanigans in its financial markets. (Of course, its "financial markets" mostly consisted of, "Psst! Hey, mister, you want to change rubles?")
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
thecesspit
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January 27th, 2011 at 10:21:57 AM permalink
Actually, I don't think regulation would have helped, as it's all a game to escape the regulators.

What would have helped (and hurt a lot) is for their to be no bail out, and the banks told "you wanted a free market, complex financial instruments, you got it".

The bets made by the banks were one-way bets. It's like me placing a 250-1 on the Lions to win a superbowl, and then getting the bet back when they do so shockingly bad they score 0-16 that year.

No bookie would offer that, and I don't see why the government should either.
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
SFB
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January 27th, 2011 at 11:19:07 AM permalink
Quote: thecesspit

Actually, I don't think regulation would have helped, as it's all a game to escape the regulators.

What would have helped (and hurt a lot) is for their to be no bail out, and the banks told "you wanted a free market, complex financial instruments, you got it".



When they REMOVED the regulation is when the real problems started.

They started allowing Fannie and Freddie to buy sub-prime mortgages in 1999. Something that had never been allowed in thier over 110 years of combined history. This was to be a pool of 3-6 billion dollars to allow those with bad or no credit the chance to buy a house. Then, Congress looked at it, and said... Well, if we are helping 10,000 households, why not MORE? And they allowed Fannie and Freddie to buy all the sub-prime they wanted. And Sub-primes made serious dollars for Fannie and Freddie....

Since the BANKS were no longer responsible for collecting the debt, Fannie and Freddie were, they could orginate all day long and Fannie and Freddie were on the hook. Add to the mix the seriously low interest rates, and suddenly a $400k house was $1,200 a month... So prices shot up, and interest rates stayed low, and easy term financing got worse, becasue the banks were no longer the responsible party, the US Government was...

Regulations that had worked for 110 years, Fannie and Freddie NOT buying sub-primes, was eliminated. The test program would have created a problem, but only 1% of the size of the one that WAS created. Since the banks had a buyer for junk, why not sell... It wasn't thier bank at risk anymore.

And what happened next wasn't "un-natural" it was expected...

SFB
rxwine
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January 27th, 2011 at 12:37:31 PM permalink
Quote: mkl654321

Well, the Soviet Union, one of the 20th century's great success stories, didn't allow any shenanigans in its financial markets. (Of course, its "financial markets" mostly consisted of, "Psst! Hey, mister, you want to change rubles?")



Well, I believe in the playing field and the game. But not so much in the football game without rules or referees. I don't care if you make a billion dollars either. But if you expect to run the financial system on the honor system, it might work for awhile, but there's (apparently) too many people willing to take all the pie and the oven, and all the flour and say the hell with the rest of you, I got mine. Or worse yet they leave the gas on until the kitchen explodes.
There's no secret. Just know what you're talking about before you open your mouth.
JIMMYFOCKER
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January 27th, 2011 at 1:07:30 PM permalink
Anyone own property in the U.P. of Michigan?
discflicker
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January 28th, 2011 at 2:10:10 PM permalink
SFB: Boymimbo makes some great points about why it happened. He answered the question in the last line of my poem.

And so now, ...

Here we sit
broken hearted

We tried to sh.t
but only farted

We got greedy
and tried getting rich

On vapor
and pure bullshit

Now we and our homes
are parted!


$200 for a home in Trenton? I'll sell you my parents home in West Bloomfield for 1/2 of what it was worth only 5 years ago! Its right next to a forclosure they're selling for 20% of what it was worth 5 years ago. Whose gonna buy my home and who has any money any more at all anyway?

Oh yea... THE BANKS!!!
The difference between zero and the smallest possible number? It doesn't matter; once you cross that edge, it might as well be the difference between zero and 1. The difference between infinity and reality? They are mutually exclusive.
MathExtremist
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January 28th, 2011 at 3:22:53 PM permalink
Quote: mkl654321

Quote: rxwine

But that would mean, it's okay for Wall Street to keep doing what they were doing, and people taking on loans on houses they can't afford. I don't believe it was all that natural.



Yes, that's my point, it's PERFECTLY OKAY. We're all presumably adults. If we want a nanny state telling us what we should and shouldn't buy, what investments we should and shouldn't make, what money we should and shouldn't borrow, etc. etc., I guess we can have that. But why would we want it?

The banks were (and are) independent business entities, empowered to make their own decisions. With a few exceptions, they were publicly owned. If the management was "bad", it was the fault of the shareholders, because they elected that management. Businesses that make decisions that turn out badly should be allowed to fail. It would be a cure that is worse than the disease to take away their power to make decisions.



Sorry, but no. That's like arguing that Enron's book-cooking was okay, or that laws against usury should be repealed.
The banks did what in any other circumstance would have been prosecuted as criminal fraud. They took a bunch of bad paper, shuffled it together, chopped it up, and resold it as good paper. Then when they got caught, they said "oh well, you're right, the paper is bad. But I still have my commissions, hahaha." And the banks were able to cover it up even longer due to no mark-to-market and the whole "too big to fail" nonsense. This is the sort of thing you get with deregulation. Institutionalized corruption, compounding itself, until even the folks who played by the rules suffer for it. It's a hallmark of our society that cheaters get punished. That didn't happen here.

Government should be mitigating, not exacerbating, the sort of economic swings that would otherwise occur in a perfectly free market with no rules. To suggest otherwise is to suggest that people are perfectly rational economic agents, capable of immediate and optimal reaction to economic conditions, and we all know that's hooey. It takes people a long time to adjust to financial shocks and it's very inefficient to do so. Driving on the highway is a good analogy: you can drive steadily, observing the cars far ahead of you and adjusting your speed appropriately, or you can swerve, speed up, slam on the brakes, and otherwise drive like most pizza-delivery drivers. You ultimately cover the same distance. Driving like lunatic might get you there a tad faster, but at a vastly greater cost (brakes, gas, effects on cars around you) than if you drove smoothly. There's a reason reckless driving laws exist, because a safe roadway is a public good. Economic security is also a public good, but there can be no security without restrictions on insecure, lunatic economic behaviors.
"In my own case, when it seemed to me after a long illness that death was close at hand, I found no little solace in playing constantly at dice." -- Girolamo Cardano, 1563
JIMMYFOCKER
JIMMYFOCKER
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January 28th, 2011 at 4:22:16 PM permalink
Cash is king right now in Vegas, buy quickly.
teddys
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January 28th, 2011 at 4:25:37 PM permalink
Three trips ago (1 1/2 years?), I looked at properties in Vegas with a real estate agent, and on my own. The prices and rate of return were VERY attractive. I ended up not pulling the trigger because I am a pussy, and went to grad school instead :). There are properties available for almost every budget, and some real nice condos in good neighborhoods. The smart money in Vegas is not on sports betting or blackjack, it's on properties.

I hear Stanford Wong is doing it. He has a small empire of condos already.
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
JIMMYFOCKER
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January 28th, 2011 at 4:34:03 PM permalink
Quote: teddys

Three trips ago (1 1/2 years?), I looked at properties in Vegas with a real estate agent, and on my own. The prices and rate of return were VERY attractive. I ended up not pulling the trigger because I am a pussy, and went to grad school instead :). There are properties available for almost every budget, and some real nice condos in good neighborhoods. The smart money in Vegas is not on sports betting or blackjack, it's on properties.

I hear Stanford Wong is doing it. He has a small empire of condos already.




Cash is king, partner and me have financed close to 2 million in various properties and looking to add a few more.
EvenBob
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January 28th, 2011 at 4:55:32 PM permalink
Quote: teddys



I hear Stanford Wong is doing it. He has a small empire of condos already.



Thats all fine and dandy if the economy in Vegas picks up soon. If it doesn't, you're stuck with a bunch of rental property just sitting there. If you've got tons of disposable cash it doesn't matter, but that doesn't describe most of us.
"It's not called gambling if the math is on your side."
thecesspit
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January 28th, 2011 at 5:44:57 PM permalink
Even then, if you have bunches of disposal cash and turn that into properties that no-one wants, you end up with a lot less disposal cash (like the rest of us).
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
mkl654321
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January 28th, 2011 at 6:56:56 PM permalink
Quote: thecesspit

Even then, if you have bunches of disposal cash and turn that into properties that no-one wants, you end up with a lot less disposal cash (like the rest of us).



Several years ago, I told a friend that if I ever thought about buying a rental property again, would he please shoot me.

People are assessing these properties as if they could just walk in, flip on all the light switches, and the tenants would come flooding in. They are also assuming that the rental market will hold steady. But the only reason that market has not collapsed so far is the increased demand for rentals from people who owned homes that were foreclosed on. Also, many of the properties the speculators are buying were not part of the rental market before, but will be now--even as people acquire the means to flee Vegas for good.

So the speculators are taking on substantial financial burdens--upkeep, taxes, refurbishing, maintenance--in order to acquire properties that may never generate the cash flow they dream of. They'd be sure to tell you, "Yeah, but these houses are bargains." But you have to ask yourself--if those "bargains" were so attractive, would they have been sitting on the market for so long at fire-sale prices?

I think a house in Vegas would be a good purchase right now--IF YOU INTENDED TO USE IT AS A PERSONAL DWELLING. After all, that is a house's intrinsic value--and paying for more than that intrinsic value is what inflated the housing bubble in the first place, particularly in Las Vegas, where from 2000-2005, almost 60% of house purchases were by "investors".
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
boymimbo
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January 28th, 2011 at 8:39:09 PM permalink
Rental properties can be awful. Think about it. You can buy a very nice house (3BR, 2 bath) in a decent neighbourhood in Vegas for $150K. You put down 15K and your mortgage payment (30 year at 4 percent) is $713/month. Taxes in Summerlin are $3.2866/$100 of assessed value. The home is assessed at $64K (this number obtained from Clark County actual listings), meaning that you have taxes at $2,100/year or $175/month.

So, for $888/month, you own a house. You pay a groundskeeper $150/month to mow the lawn, tend the garden, and make sure the place doesn't fall apart.

Now, you have to rent it out. You hire a property management company who charges 15 percent to rent out your place. They will qualify the tenant based on being able to afford the rent that you will charge them. They will check the credit rating and make sure that the person is employed, and then you have a renter.

So, the question you ask yourself is: with interest rates at historical lows and the transient nature of Las Vegas residents and housing dirt cheap, what kind of quality renter are you going to get? If the person can afford to pay $800/month for renting a 3BR home, why don't they just buy a house? The chances in that market are too high that you will not find a good renter and that you'll be spending time evicting and cleaning (which has happened to us in my wife's Seattle and Beaverton houses, three times in a row... we decided to move back into the Seattle house because it was too risky to rent).
----- You want the truth! You can't handle the truth!
aahigh
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January 30th, 2011 at 3:46:25 PM permalink
If you buy in Summerlin, I would hope that you had roots there and/or a job nearby and you planned to enjoy the community yourself.

Honestly, the higher cap rates are in the lower priced neighborhoods. Summerlin is one of the most expensive areas for what you get of any place. Unless you have a personal reason to buy there and you plan to live there yourself, or unless you have kids and you are moving there because you want them to go to specific schools, there's really no reason for a investor to choose that location.

The higher cap rates are in the super depressed areas with the really low home values. Like the $50,000 to $70,000 range. So while you make a relatively solid argument with some real numbers, you have to realize that the financial opportunities just aren't as great in that area.

Re-crunch your numbers for somewhere near downtown and a property valued at $55,000, and let me know what you find out. And I think in that area, you can get away without having fantastic landscaping with $150 per month of upkeep.

Renters don't want to throw away the kind of money it takes to rent in upscale neighborhoods. They are parting with the least amount of money possible. Higher cap rates exist for lower cost homes.

Quote: boymimbo

Rental properties can be awful. Think about it. You can buy a very nice house (3BR, 2 bath) in a decent neighbourhood in Vegas for $150K. You put down 15K and your mortgage payment (30 year at 4 percent) is $713/month. Taxes in Summerlin are $3.2866/$100 of assessed value. The home is assessed at $64K (this number obtained from Clark County actual listings), meaning that you have taxes at $2,100/year or $175/month.

So, for $888/month, you own a house. You pay a groundskeeper $150/month to mow the lawn, tend the garden, and make sure the place doesn't fall apart.

Now, you have to rent it out. You hire a property management company who charges 15 percent to rent out your place. They will qualify the tenant based on being able to afford the rent that you will charge them. They will check the credit rating and make sure that the person is employed, and then you have a renter.

So, the question you ask yourself is: with interest rates at historical lows and the transient nature of Las Vegas residents and housing dirt cheap, what kind of quality renter are you going to get? If the person can afford to pay $800/month for renting a 3BR home, why don't they just buy a house? The chances in that market are too high that you will not find a good renter and that you'll be spending time evicting and cleaning (which has happened to us in my wife's Seattle and Beaverton houses, three times in a row... we decided to move back into the Seattle house because it was too risky to rent).

EvenBob
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January 31st, 2011 at 2:49:47 AM permalink
I've said it before, anybody who goes into the rental property business needs to have his head examined. You're far better off buying undeveloped property and sitting on it till it goes up.
"It's not called gambling if the math is on your side."
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