John T. Reed’s news blog

“Does the Fed Have the Will to Fight Inflation?” is a WSJ op-ed today. . The author, Jason de Sena Trennert, uses the phrase “financial repression.” First time in a long time I have seen that phrase. I have said that is one of the five bad laws that hyperinflated governments pass. The others are capital controls, price controls, rationing, and anti-hoarding laws. . Financial repression means the government restricting to a low level how much interest can be paid on your money. We had it in 1975 and before. Banks were not allowed to pay interest on checking accounts....

Liquidity could be described as how long it takes you to convert an asset to cash (United States dollar—USD). Low score wins. Generally, real estate is considered illiquid. It is a hard asset. Everything that is not denominated in dollars is a hard asset. Many people are not aware of this, but there are such things as liquid hard assets. But how fast you can convert various types of real estate to USD varies. The worst is probably raw land. You are usually recommended to list it for six months with a Realtor® to sell it. It is hard to...

Let’s say you want to buy a duplex and make a $20K profit on rehab. What does that mean you have to do? You have to pay transaction costs when you buy. Valuepeguin-com says 3% to 5%. Call it 4%. You also have to pay the rehab costs. You also have to pay the selling transaction costs. Zillow says 8% to 10%. Call it 9%. If the property is vacant while you are doing the rehab, you also must pay the carrying costs—mortgage payments and operating expenses like taxes, insurance, etc. Finally, there is your profit which we already said...

WSJ article yesterday about tech companies buying home and flipping them. . They call these companies IBuyers. They include Zillow Group. Opendoor Technologies, and Offerpad. . I generally did not understand the article. But I only have 52 years in the business and have only written 21 books on real estate investment and thousands of articles about it. . One part I DID understand: “IBuyers have been clear that their businesses are built mostly to make money off ancillary services such as mortgage, title insurance, and escrow, rather than on home transactions themselves.” . When I recently wrote my principal...

The dominant way of thinking about real estate investing on the Reddit real estate investing subgroup is collecting duplexes and triplexes. The purpose is increasing your net worth. Some want to live solely off property cash flow, but that takes millions of equity, so it’s really just another way to say you are trying to increase your net worth. I used to think that. I was wrong. The correct way to achieve that goal is to buy your principal residence that you occupy as your home. When you can afford to buy a 20% or more valuable home, sell the first one and buy the...