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Esque

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Posts posted by Esque

  1. 2 hours ago, UTPhil2006 said:

    I was told there would be no math 

    sad cotton candy GIF

    Racoon = MF syndicator GP

    Cotton Candy = Their investors' money

     

    Goofballs like this are just the tip of the iceberg: https://www.wsj.com/articles/a-housing-bust-comes-for-thousands-of-small-time-investors-3934beb3

    1. Purchased $300M of Houston B/C MF last year with $75M of equity.  And... it's gone.

    2. Raised $12M for a deal and put it all down as EM.  And... it's gone.

    • Hook 'Em 3
  2. 3 hours ago, Incredulity said:

    When will the mainstream media and John Q Public findout?  Give it 6 months.

    CRE bag holders are finding out NOW.

    It all comes down to i) the lenders and ii) the government.  For the lenders, it is all game theory.  The more everyone can work out loans and kick the can, the better for all - until one person can't, they sell loans at a loss, and they effectively force a mark to market of everyone's loan books and you see more calling of lines of credits and loans from lenders.  I've been watching a few key assets for 24 months now and many of them have been able to roll and extend for 12 months, much to my surprise.  But many of these deals are dead - equity is for sure wiped out and debt may be sitting on 85/100, but marked 100/100.

    This is all to say, you still have another 12 months or so.  The defaults in office are not going to surprise anyone.  The defaults in MF will and that is what will catch a lot of people offsides.  But will be a good time to pick up blue chip public REITs as NAV gets punished by short term market volatility - or so I guess.  In many ways the public markets have already front run the private markets.

  3. 6 hours ago, bluto said:

    Between office market turmoil and multi family speculative purchases on floating rates the last 18 months, commercial RE is about to get lit the f up. Shit tons of apartments underwritten with debt service that has ballooned 4x since purchase along with outrageous insurance premium bumps, and rental rates plateaued due to general inflationary pressures/job losses on renters. 

    You have no idea.  Seeing some of these deals under "rescue capital" terms and even with super attractive terms wouldn't touch them with a 10 foot pole.  Some of these fools are still underwriting low 4% cap rates on deals when trying to raise capital to save deals.  It's going to be a mess.

  4. 14 hours ago, Neonmoon said:

    580-619 = FHA = 7.25% with 0.5 points 

    620-660 = First Time Homebuyer  = 6.875%

    620-660 = 7.875% (edit: just saw the HPML warning next to this rate. You have to pay 2 points and get 6.875%)

     

     

    Interesting.  Is pulling the lever on fees versus points due to HPML risks?  So staying within that spread to APOR by adjusting fees as well?  Is there a limit to these fees to remain a QM?  So basically playing with two main levels - points and rate?

  5. Curious -

    What's the general rate spread between say a sub-prime (<620), near-prime (620 = 660), prime (660-720) and super-prime (720+) borrower?  If the national average 7.00% is for the prime borrower, does it stack up something like this?

    • Sub-Prime: 8.00%+
    • Near-Prime: 7.40%
    • Prime: 7.00%
    • Super Prime: 6.40% - 6.60%

    How high are rates for some of these first time buyers using FHA with 580 credit, which I think is minimum credit score required with 3.5% down for FHA?

  6. On 5/22/2023 at 5:37 AM, 52-80 said:

    jaysus people, the us treasury is not defaulting on its debt.  its just a game of political brinksmanship. 

     

    Yeah, really don't get what all the panic is about.  We've known we're going down this road for over a year now.  Nothing about this is surprising nor will it surprise me when they reach a deal at the 11th hour and kick the can down the road AGAIN instead of addressing fundamental financial issues we have.

    • Hook 'Em 3
  7. How are you mortgage brokers competing against the homebuilders in submarkets where homebuilders are active?  Looks like they're buying down rates anywhere from 1.50% - 2.00% plus other incentives.  So if market today is circa 6.50% they can get down to let's say 4.50% - 4.75%.  How in the world does the buyers down the street compete with that if they want to sell?  Or they could potentially be screwed for years until the builder is done and out of their community?  Or take a huge equity cut to get the sales price down enough to compensate for rate differential?  Seems like a fubar situation.

  8. I'm not struggling to find the article, but there were some statistics released of percent of total mortgages under 3% and under 4%, which were eye catching.  Given the environment, if you're locked into one of these mortgages - why would you EVER sell?  Would just hire a property management company and rent it out.  Free money given cost of capital.  At the bare minimum wait for a few years since carrying costs is so low and you'll get solid rent in the meantime.

    This is one of my biggest concerns.  We had so much activity in new home sales and refinancing that there's zero reason to move if you're locked into a good rate.  This artificially restricts supply and encourages current owners to rent before they consider a sale.  Will only sell if they absolutely have to, and even then why would you sell then buy into a market at 6.50% interest rates?  The knock on your monthly payment is huge.  Better off to sit still and improve your current home to make it work for a few years.

    • Hook 'Em 1
  9. George's Coffee and Provisions in Old Town Coppell for coffee

    Ramen Hakata off E Round Grove Rd for Ramen

    Hard Eight BBQ in Old Town Coppell for BBQ

    Parma Pizza & Pasta off E Round Grove Rd for Italian

    Anamia's off Denton Tap for Tex-Mex

    Siam Thai Cuisine off MacArthur for Thai

    Victor's Wood Grill off Denton Tap for American Fine

    J Macklin's Grill off Denton Tap for American Casual

    Coppell Deli in Old Town Coppell for Diner food

    • Like 1
  10. @HRSchenker

    I get the frustration and friction, but this is largely out of municipalities' hands.  This is a matter of administrative law and has to do with the laws and rules of Texas occupation code.  The power bequeathed to municipalities largely revolves around land use and which improvements can be constructed upon said land.  The operational use of said improvements comes down to occupations code.

    What needs to be regulated is too difficult to regulate and that's the rub.  Technology has enabled a unique occupation model in which the same improvement can reasonably be used for long term occupation and short term occupation interchangeably.  Whereas historically there was more of a distinction between the two.  I don't know what code or regulation is reasonably going to manage this without creating some administratively nightmare, which is not what we need.  For example, you could use the fire department to limit all residential  dwellings to a capacity of one person per bedroom to mitigate STR impact.  However, you'd also be fucking over a lot of student housing, family housing, and so forth.  It just doesn't make sense.

    Municipalities have tried, but they're grossly overstepping their authority.  And have been called out on it a few times.

  11. Let's assume Fed announces 50 bps today and $50 - $75 Bn b/s run off on a go forward basis.  Most, or at least a lot, of b/s run off is going to be MBS.  So rates jump from let's say 5.35% to what?  6.50%?  How bad does Fed selling (which also means stop buying) in the MBS market whack spreads?

    How and when does this translate to pricing in residential?  Seems crazy that we're still seeing price increases.  Something has to give?

  12. 21 hours ago, Wulaw Horn said:

    That’s a problem it’s an existential threat to the America that always was. 

    Completely agree with this.

    Part of this, unfortunately, is simple economics.  The home building industry has consolidated over the last several decades and thus is more of an enterprise endeavor these days.  You'd still be shocked at how inefficient it is, but is is all on a relative basis in that it is more efficient than it once was.  Over time, the largest home builders ("nationals", "publics") have figured out the obvious, which is incremental square feet via an office, dining room, and/or fourth bedroom is accretive to the bottom line because the fit-out of these spaces is limited, i.e. just more lumber and dry wall.  So the house that used to be a 3 bedroom, 2 bathroom, 1,500 sq. ft. home is now 4 bedroom, 2 bathroom, 2,600 sq. ft.  This has made the median house less affordable to the median household income.  But is accretive to the home builders.

    Another part of this is competition on the home building side.  The Global Financial Crisis wiped out a lot of the local and regional home builders who didn't have the balance sheets to weather the storm.  Yes, the nationals and publics got hammered, but they had the balance sheet to weather the storm.  So an even larger percentage of overall production is through a fewer number of builders who increasingly control the market, especially on the land side.

    Capital markets has also accelerated this trend during covid-19 as office and retail, which have been favored for capital allocators due to cheque size, are obviously much more risky and are out of favor.  Thus, more capital than every is flooding into multifamily, industrial, and residential.  Capital allocators are buying up houses in lots from home builders and renting them out.  Thus, the number of homes available to end users is that much less and thus competition is driven up.  Would guess somewhere between 1 out of 4 or 5 homes today are purchased by investors.  I don't see this trend reversing anytime soon unless we completely roll back time and everyone is back in the office full time - unlikely.

    Without going on too much longer, let's never forget the increase on soft costs and politics of dealing with the city.  This is a newer phenomenon and is getting worse and worse.  But will leave that alone for now beyond stating the obvious, that is limits new supply.

    As a result of this, and many other considerations, you will have more and more households renting.  It is just a reality.  And completely agree it is bad for society.

     

    • Hook 'Em 4
    • Like 1
  13. The Good: We finally found a home after searching for 18 months and putting in just shy of 15 offers.

    The Bad: The husband refused to fully execute the contract last second, stating that he just couldn't sell the house they raised their family in.

    The Ugly: I laughed hysterically when we got the call because our search has been such a shit show, of course this would happen.  The wife cried and was upset all night.

    On to the next one.  The great news is there were only five offers on the home, whereas prior homes have had anywhere from 25 - 50 offers.  So seems to be cooling down quite a bit. 

    2 hours ago, Wulaw Horn said:

    Good news is mortgage backed securities are up 50 points today (up is good in MBS) which should lower rates about 1/8 of a point from previous close.  Hopefully this is the ceiling and it's all down hill from here. .

    I'm curious, what do you think happens to rates as Fed begins QT in the open market and floods it with the MBS they purchased over the last two years?  Presumably this is already priced in?  Or not necessarily?

    • Rage+1 2
  14. On 1/31/2022 at 12:09 PM, Dbeasy said:

    I am a tech guy with a real estate license who is heavily in tune with the value propositions of the tech companies trying to change the real estate game, but also the value proposition of realtors.

    The answer to your question depends specifically on the situation of the purchase or sale you are anticipating. In some cases, bypassing the realtor world might make sense, or at least engaging it differently under specific financial conditions. If you want to share a scenario we can comment on it. 

    This is a mess of a story and hard to relay.  In short, saw a house on a Friday and made an offer Saturday morning.  Offers were due Saturday night.  Later in the morning found out we knew two others who also made an offer on the house.  In the afternoon, we began receiving calls from our respective Buyer's brokers pushing us to increase our offers.  The Seller's agent was sharing other offer details and then falsifying other offers to get everyone to increase their respective offers.  We all spoke in the afternoon and agreed to disclose each other's offers to each other but also agreed we weren't going to undercut each other.  Found out we were second, but were not too far off.  So all three declined to play the game and we just sat at our offers.  Pissed the Seller's agent off and they voiced significant displeasure.  Somehow even though we were the highest bids, another offer won.  Buyers' agents could not explain what happened.  Pretty sure Seller's agent had grown accustomed to squeezing out Buyers and was upset it didn't occur, so miss represented offers.  It is all sort of a mess and Seller's agent already has a local reputation for doing similar things, so while I was frustrated and disappointed, am not surprised.  Pretty sure there's some code of ethics violations on all fronts, but good luck trying to prove it or bother wasting your time on this.  You just move on.

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