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Oh god, I’d wager you just described 1000 different real real estate newsletters:P My biggest pet peeve is these “real estate investors” who don’t understand

Oh god, I’d wager you just described 1000 different real real estate newsletters:P My biggest pet peeve is these “real estate investors” who don’t understand investing in any serious way and so falsely misrepresent renting out a property as “passive income” (how laughable) and list their “investment returns” without any noting of the massive leverage it took to get those returns. If you buy a house with 5% down and the housing market goes up 50% in 5 years you’re not an investment genius, you just took a risky highly leveraged bet and it paid off (and housing bets at least in America do tend to pay off thanks to the insanity of central-bank-attributable rock bottom interest rates as well as the essentially propagandistic way that Americans are taught to think about real estate) So not sure if I have a coherent point here but I wish people would (a) actually adjust for inflation when telling their “I bought at X and sold at the 1.5x 4 years later” stories and (b) would also show some awareness of how insanely leveraged people often are on their houses.

toast0 6y ago
> If you buy a house with 5% down and the housing market goes up 50% in 5 years you’re not an investment genius, you just took a risky highly leveraged bet and it paid off (and housing bets at least in America do tend to pay off thanks to the insanity of central-bank-attributable rock bottom interest rates as well as the essentially propagandistic way that Americans are taught to think about real estate) I agree with most of what you're saying, but if your mortgage is non-recorse (which is the case for purchase first-mortgages in CA at least), I wouldn't say it's a risky bet. If it goes poorly, you can walk away and the bank gets your house (and you get imputed income maybe). You only lose your down payment and any equity, which at 5% down is probably less than the loss the PMI took. It's not the same riskyness as say buying stocks on margin, or selling short or writing uncovered options.
- scubbo 6y ago
  Having just bought a house in California - what is this "5% down" you speak of?
  - astura 6y ago
    FHA loans have a down payment requirement that can be as low as 3.5% https://www.hud.gov/buying/loans https://www.hud.gov/buying/loans Also, VA loans let you buy a house with no down payment. (For veterans)
  - IncRnd 6y ago
    NOW, in my much-anticipated newsletter I will reveal all the tips and game-winning strategies I've discovered over the course of my high-powered investment career. If you act today, I will include the secrets of how to get a 5%-down mortgage without any PMI!! This is a hidden method used exclusively by the super-rich to get even richer. Once you learn what I will teach, you will live worry-free, regardless of what pitfalls you encounter in life. BONUS! The government doesn't want you to know this secret method to get a 15% piggyback loan, but I will show you this super-simple almost "devious" extra double-tranche, rolling mortgage financial instrument - and even more. Why wait to order, when you could make them all wait on you?
  - toast0 6y ago
    The credit union I borrowed from says their first time [1] home buyer program will do 95% LTV to $1.5M. Depending on where you are in california, that's likely enough (97% LTV to $850,000, but that doesn't get you much in the Bay Area). Of course, if you just bought your house, I don't think you'd be able to cash out refi down to 5%, and certainly not under a first time homebuyers program. Cash out refis may not be non-recourse in California either; I'm not sure. [1] I can't see the requirements, but usually it doesn't actually mean first-time, just that you haven't been a homeowner recently.
- __blockcipher__ 6y ago
  Yes this is a great point, you can wipe out your "gains so far" but you can't really get deeply into the negative. Thanks for that nuance

toast0 6y ago

> If you buy a house with 5% down and the housing market goes up 50% in 5 years you’re not an investment genius, you just took a risky highly leveraged bet and it paid off (and housing bets at least in America do tend to pay off thanks to the insanity of central-bank-attributable rock bottom interest rates as well as the essentially propagandistic way that Americans are taught to think about real estate) I agree with most of what you're saying, but if your mortgage is non-recorse (which is the case for purchase first-mortgages in CA at least), I wouldn't say it's a risky bet. If it goes poorly, you can walk away and the bank gets your house (and you get imputed income maybe). You only lose your down payment and any equity, which at 5% down is probably less than the loss the PMI took. It's not the same riskyness as say buying stocks on margin, or selling short or writing uncovered options.

scubbo 6y ago
Having just bought a house in California - what is this "5% down" you speak of?
- astura 6y ago
  FHA loans have a down payment requirement that can be as low as 3.5% https://www.hud.gov/buying/loans https://www.hud.gov/buying/loans Also, VA loans let you buy a house with no down payment. (For veterans)
- IncRnd 6y ago
  NOW, in my much-anticipated newsletter I will reveal all the tips and game-winning strategies I've discovered over the course of my high-powered investment career. If you act today, I will include the secrets of how to get a 5%-down mortgage without any PMI!! This is a hidden method used exclusively by the super-rich to get even richer. Once you learn what I will teach, you will live worry-free, regardless of what pitfalls you encounter in life. BONUS! The government doesn't want you to know this secret method to get a 15% piggyback loan, but I will show you this super-simple almost "devious" extra double-tranche, rolling mortgage financial instrument - and even more. Why wait to order, when you could make them all wait on you?
- toast0 6y ago
  The credit union I borrowed from says their first time [1] home buyer program will do 95% LTV to $1.5M. Depending on where you are in california, that's likely enough (97% LTV to $850,000, but that doesn't get you much in the Bay Area). Of course, if you just bought your house, I don't think you'd be able to cash out refi down to 5%, and certainly not under a first time homebuyers program. Cash out refis may not be non-recourse in California either; I'm not sure. [1] I can't see the requirements, but usually it doesn't actually mean first-time, just that you haven't been a homeowner recently.
__blockcipher__ 6y ago
Yes this is a great point, you can wipe out your "gains so far" but you can't really get deeply into the negative. Thanks for that nuance