If You KNEW Housing Was Gonna Crash, How Long Before You Stopped Investing?
I see housing going down. Prices dropped, prices dropped, prices dropped… on RedZil, but still there are pundits saying that the housing market is just fine. Mostly because the only thing selling is high priced housing. And so, the numbers are still up. While real estate agents are finding other work.
However, every real metric, especially demographics show that suburban housing is going to zero.
But, but, many people still believe in rental income.
How long until they abandon that notion?
Rental property is a good investment…
In The US, rental properties are a good investment because:
- You can take so much off your taxes. The interest payments, the depreciation, any maintenance, including driving past your properties.
- You can gamble with the banks money. There are methods to get all your properties 100% financed. All your money pulled out, leaving only bank money invested.
- You can set things up to where, if things go south, 2008 happens all over, all the bank gets is all the houses back. You are free from any debt. Putting the houses in an LLC and getting loans that state the bank only gets the property.
- Renting houses is quite easy. There are many on-line listing sites. Everything is set up so you have to do minimal work to get tenants into your place.
- You get money every month. Many assets do not pay in cash, but rentals do.
And if you are good at finding good houses at deals, you can get set up in a positive cash flow, even in this housing market.
Of course REITs do not have enough efficiency to stay afloat in this market, however, an individual who finds deals, can get them fixed up and rented quickly can.
Rental properties are in serious danger of…
Not only are rental properties in danger of a massive price crash, but many Dumbocrap govern-cements are enacting rent controls. And removing problem tenants is already really hard, and about to become worse.
California has passed a law stating, in a round-a-bout way, that cities can impose rent controls, if they so wish. With rent controls, landlords cannot keep up with the rising costs of maintenance. Especially insurance which is skyrocketing
If you can't keep your properties insured, then you are just looking at a ticking time-bomb. At some point, something will happen, and you will lose it all. One of your tenants "mistakenly" sets your house on fire. And now, you have to pay to rebuild, or just lose all of that investment. Disgruntled tenants leave destroying the kitchen counters, cabinets, floors and walls. It will costs tens of thousands to repair before you can ever get a new tenant in.
This kind of thing is so bad that Section 8 landlords plan to live on just the govern-cement subsidies and never be able to kick out the tenant. They plan to do major repairs when the house is finally vacated. It is all a plan, a scheme for renting out cheap houses.
And, if cities get as bad as i am predicting, there will be no way to keep and rent out a suburban home when no one honors property rights.
Real estate moves slowly
When will the housing market actually crash? How much time do we got left?
Boomers will soon be dumping all their houses, 25% of the market, and will be moving out, or moving on. That is a serious hit to any market, and this one doesn't have anyone besides Black Rock to buy up that inventory.
If anything else hits the market:
- such as small banks going bust, so no easy mortgages
- wide unemployment so no one to even get a mortgage
- food riots and lawlessness
- people continuing to move away from the cities
- any type of pandemic or unCivil war killing a percentage of the population
Any of that, and suburban houses will just be left vacant.
And when too many houses are vacant, people will just move in. And then, people just start to assume the housing market is finders/keepers.
Suburban housing is going to zero… but, how soon.
If you already know house renting, do you continue? There are still deals to be found.
Or do you try to get out as fast as you can? Taking large hits, because you have to really lower the price if you are going to attract actual buyers. Or do your ride this one in to the scene of the crash?
If everything is already in an LLC, and you have pulled out most of the equity, than there isn't much to be gained by getting out. Just steel yourself that the crash is inevitable.
It is really difficult to give advice during this time of change. Some cities, and communities therein, are just a tossed match away from being a fiery hotbed of chaos. While others will seemingly continue on as if nothing is happening.
You could have one year of rental income left, or ten years.
Further, EVERYTHING can crash. Sure you don't have any rental income, but also the banks have all died, and you have no one to pay mortgages to, and even if they were, FRNs are worthless after the monetary collapse, so you can gather millions of those pieces of paper and take a wheel barrow to the bank to pay off the loan.
And, if everything is going to collapse, would getting out of real estate help? Or would it just be wasting time, like moving deck chairs around on the Titanic.
The only move i can highly recommend is moving out of the city onto a homestead and growing your own food.