I’ll begin with what I think might win this year’s award for most used oxymoronic phrase. If it isn’t Jobless Recovery, I’d sure like to hear your nominations. Recession recoveries without jobs are like waffle cones without ice cream — what’s the point?
Fannie Mae (and the rest of the ill-named posse), have done pretty much everything possible to make a real estate recovery more difficult. Example, you prod? Not a problem.
First they put an artificial limit on how many investment loans we can have. First to 10, then, in a truly Draconian move, down to 4. That pretty much put the blade to the investor’s jugular, so they ‘relented’ (crummy attempt at humor) by setting new and higher hurdles for investors when acquiring properties 5-10. Lord Almighty, we already needed to be bullet proof credit wise, have enough cash reserves to buy the Coronado Bay Bridge outa petty cash, and a FICO score in the nosebleed section.
Think about it rationally. A very experienced investor has 6 properties and finds more he’d like to buy. He’s gonna put 25% down, pay more interest, have a Sominex Account that’d choke Secretariat, and to add insult to injury, pay more interest. Aren’t experienced investors who’re willing to put ‘skin in the game’ the exact profile of who we want buying real estate these days? Did I miss the memo or somethin’?
OK, takin’ a few deep breaths. There, that’s much better.
As I research the acquisition of real estate via self-directed Qualified Plans (An uppity way of sayin’ IRA’s & 401′s.), it’s amazing to me more lenders aren’t shouting from the mountaintops, making sure they get their share. Large down payments, high DCR’s (debt coverage ratios) i.e., solid cash flow from Day 1, higher points up front, and 1-1.5% higher interest rates. If I’m a real estate lender, I’m askin’ everybody where to sign up!
Was yakkin’ with a lender for whom I have maximum professional respect, asking him if the doofuses in charge of his bank have done anything to get themselves into Texas. They can now lend in over 40 states — but not the state showing the healthiest economy in the Union. Texas requires what’s known in the industry as ‘brick & mortar’ — ya gotta have an office in the state. Geez, is that too tough for a huge national operation to accomplish? Really? And they wonder how they got where they are today.
OK, I’m done. Would love to hear your random thoughts. Or, you can give me a call and we’ll figure out how to improve your status quo. I can be reached at 619 889-7100. Have a good one.
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About BawldGuy
Follow me here. We also offer $8,000 to people to buy first homes (many of which would have purchased anyway with or without the credit) to help artificially prop up a market of homes that would be of interest to real estate investors. Are not first time home buyers and real estate investors interested, at least to some degree, in the same segment of housing?
Then we put an artifical deadline on the $8,000 to make sure we pull buyers out of the market for the next six months.
Then for fun, we pass new credit card laws that instigate the credit card companies into doubling and tripling some people’s monthly payments helping to make sure that we use up whatever spare cash the American consumer has, anyway.
Jobless recovery? Go read politicalmath.com for some fun on the unemployment numbers.
Okay, I’m gonna back away from the keyboard now…
V shaped recovery.
Chris — First, how’re ya feeling after swine flu?
Whatever the gov’t has done to ‘stimulate’ recovery has been taken from FDR’s playbook, which, by the way, snatched the country out of the jaws of a recovery, sending us into an even deeper depression.
Your points are very well taken. It’s as if some folks don’t want a recovery.
Speaking of recovery, glad you’re feeling better.
Hey Robert — V shaped? Really? If it is, and it’s jobless, do you see any way it doesn’t morph into a W?
I am feeling much better, thank you.