Am I all alone here? People in my area can make $50/hour. Now, if we extrapolate from this, 50/hr x 40 hours/week = $100,000. Many of the people are dual income families. So a couple makes $200,000 per year. How low can real estate possibly go when a couple can make $200,000 per year? The Case-Shiller home price index, the “inflation adjusted” home price index, blah blah blah….All of these diagrams and graphs only stand to indicate that real estate had a long needed inflationary period during 2000-2006. Now, gasoline costs twice what it did 10 years ago, food costs twice what it did 10 years ago, but, if REAL ESTATE costs twice what it did 10 years ago… we’re having a bubble, and all of the experts are going to come out and draw a bunch of dumb graphs to prove the point. Now is the time to buy real estate; if you don’t, you will deeply regret it in 10 years. Come on, people, wake up and smell what you are shoveling.

There are plenty of buyers out there. There are also many on this board that want to get investing NOW. However, the loan products pipeline to make buying possible are drying up. People ask me what they should do to get in on RE these days. I tell them to cash out their annuities and 401Ks and put 20-30% down on a rental and ride out the next 3-6 years. Of course, when I stuff like that, they just stare at me with that “are you kidding?!?!?” look and quickly change the subject.

Let’s look at this for a moment…Making that kind of money DOES NOT mean you have ANY common sense!!!

That $100,000 a year job probably comes with about $50K to $100K in Students loans. Let’s start there shall we???

Once these people graduate college…They start paying on those student loans, a lot of them also buy their first home, they rack up their credit cards to the MAX filling that home with furniture. They also need 2 cars to GET them to their $100K a year jobs. They work hard so they take expensive VACATIONS that they pay for right out of their meager savings or credit cards, even easier…take out an EQUITY LOAN on that house. They pay off those credit cards and then just START OVER!!! Where have I heard this story???

Gee…I wonder if the NEGATIVE .06 annual SAVINGS rate has ANYTHING to do with why people aren’t buying homes like they were in 2005???

I wonder if having THE HIGHEST consumer debt levels in this countries HISTORY has anything to do with it???

I wonder if the fact that we are currently living through what has been described by Warren Buffet, George Soros, and Jimmy Rogers as “THE MOST SEVERE FINANCIAL CRISIS SINCE WWII” has anything to do with people NOT buying homes???

I wonder if the fact that all that debt, falling homes prices, failing banks, and a world wide credit crisis might just explain where those graphs go NEXT???

It’s NOT the graphs that created this…it’s the PEOPLE those graphs represent that are SOLELY responsible for this entire mess.

I NEVER got a interest only loan.

I never bought a pre-construction Florida Condo.

I never had an ARM mortgage.




I sold all of my residential rental properties in 2004 and 2005. Was the TIMING shear genius??? NOT EVEN CLOSE…

I had a motorcyle for sale. I pounded a sign into the ground and parked the bike next to it at one of my rental properties on a main road. It started to rain so I moved the bike into the garage, but forgot the sign…after receiving 48 phones calls on “THE HOUSE FOR SALE” and getting 25 increasingly HIGHER offers for it!!! I decided right then and there that something was happening I couldn’t explain. I had seen
this same movie in 1988, I KNEW how that ended (BADLY)…Sold it ALL by 2005.
I would NOT want to be the people who now own those properties considering what they paid for them… I didn’t pull out a SINGLE graph when they purchased those homes. I didn’t say they couldn’t INSPECT them… THEY DIDN’T EVEN ASK TO…(didn’t want ot lose out!!)

It’s GREED Folks…On Wall St. On Main St…Pure, Old fashioned… GREED!!!

We’re NOT EVEN CLOSE to the bottom in this cycle. Just wait and see what a MAJOR RECESSION does during a real estate correction!!! Been there, Done that, bought the T-shirt!!!

STUDY those CHARTS…Thats the FUTURE…

Why do you use so much CAPITALIZATION?

Would you prefer this:



He called it a year ago…definately helped me realign.


fdjake, you gotta chill out buddy. You’re the most pessimistic, negative, person I have ever heard in my life. How in the world do you run a business with your constant negativity stemming from your rants about the collapse of the world financial system. It’s not that bad everywhere. I walked into a BB&T (big regional bank) on Wednesday and showed them a deal I had for a parking lot, I needed $127,000. That deal will close on Wednesday of this week coming up. And I’m not even a customer of theirs, first time I’ve ever dealt with them. Do you think if it was all gloom and doom as you profess that banks would still loan money out like this, even for great deals?! Come on, we’re not asking you to see the world through rose colored glasses just calm down a little and breathe.


I’ve re-read your posts. VERY INTERESTING!!!

Is this the same “VACANT LOT YOU CAME ACROSS” deal that you posted a Question on about a week ago (MARCH 23rd)???
Funny…last week it’s a VACANT LOT that you were “THINKING about CONVERTING to a parking lot” and NOW… 6 DAYS LATER…we have a PARKING LOT FULLY FINACED and ready to close!!! I’m not even going to get into how you managed to get all the surveys done for the City, or the curb cuts that need to be laid out and approved,
I’m sure you “just walk into” City Hall and get the same level of service that the “Big regional banks” give you… We all know how EASY it is to get approvals AND PERMITS for projects THAT CURRENTLY DON’T EXSIST!!! ALL IN 6 DAYS!!! (and I’m counting this weekend!!!)

JUST WAIT till you get quotes on your liabily INSURANCE for this little GEM!!! (we’ll see later in this post that apparently you don’t worry about INSURANCE)

Sorry, I hope that’s not too negative for you.

I could CARE LESS what you think of my personality. I’ve been doing this for 20+ years and have made my money.

Your THE only guy who consistantly busts my chops. I get a lot of emails asking for advice and a bunch of people I have helped can attest to my credibility.

Do me a HUGE favor…

JUST DON’T READ MY POSTS ANYMORE!!! And if you do…PLEASE don’t insult my intelligence by posting BS scenerios about your “investments.” Right now you have about ZERO credibilty here. 6 days ago you were asking people if anyone here even KNEW if parking lot’s made money??? You were also WARNED that insurance rates were SKY HIGH and PERMITS are VERY DIFFICULT to get. NOW…6 days later…Your bank that has approved a LOAN for a parking lot that DOESN’T EXSIST…


In the REAL world banks LIKE TO KNOW that a property is actually BUILDABLE (ie PERMITS & APPROVALS) BEFORE they cut a check. ESPECIALLY if that property (a parking lot) DOES NOT CURRENTLY EXSIST. EVER hear of ZONING!!

But WAIT… there’s MORE…

My ALL TIME FAVORITE Baldwin POST…March 8, 2008

" Now I don’t know about you other REI investors but I think it would be GOOD TO HAVE HEALTH INSURANCE…I called my insurance broker last week about HEALTH CARE INSURANCE for my fiancee and my new baby, he said it would be $900/month, ARE YOU KIDDING ME???

That says it better than I EVER could. This guy’s buying PARKING LOT’S but DOESN’T HAVE HEALTH INSURANCE!!! Yea, OK…

Then to top it ALL off… YOU question how I "manage to run to a business???

Now why would a guy with the VAST real estate assets and BANK CONNECTIONS you CLAIM to have, NOT HAVE $900/month HEALTH INSURANCE??? UNLESS??..It was all :bs

You picked the WRONG guy to BS buddy!!

Cripes, now I just feel sorry for you.

I’ve developed a pretty acute BS sensor over the years. Right now it’s SCREAMING!!! :bs :bs :bs

Here’s my advice…I noticed in a previous post you said you’re in your 20’s. Instead of sitting at your computer writing REAL ESTATE FICTION, go down to HOME DEPOT and get a PART TIME JOB so you can AFFORD the $900/month health insurance for your new family. And I’m dead serious, the game’s over Pal…Now it’s time to grow up.


Why are you attacking fdjake? He did not start this thread and simply answered with his thoughts on the subject. The fact that he is negative about the economy does not mean that he is a negative person. It simply means that he understands the economy and believes that then economy is in real trouble. With the 5th largest investment bank failing; the Fed in panic mode; and a liquidity crisis - I’d say he’s right. In fact, as he correctly pointed out, if Bear Stearns would have been allowed to fail, we would probably already be in a 1929 type of depression (that’s why the Fed has been throwing around HUNDREDS OF BILLIONS OF DOLLARS like it was candy at a parade).

I judge a person’s credibility by the accuracy of their posts. Fdjake hasn’t ever posted anything that was blatantly inaccurate, but you have. It seems to me that you posted a bunch of nonsense about operating expenses including (if my memory is correct) that your maintenance expenses were $2.33 per month. That strains credibility for me!

Here’s one of your posts about a 3 unit apartment building:

Here are the real numbers:

Gross Rents: $1,750
Operating Expenses: $200-$250
NOI: $1550-$1500
Mortgage ($135K, 30 yr, 5.99%)-I’m smart enough to do these deals on the residential side because of lower rates=$808
Monthly Cash Flow: $650 to the good side (GREAT!)

REALLY? Operating expenses only 11%? The point is that you shouldn’t be attacking someone that is a successful investor when you don’t even understand the basics!

If you don’t like what fdjake says, just don’t read his posts - EASY! But don’t attack him - that’s unnecessary.


What a bunch of wimps we have on here! “Personal attacks” now come from someone saying to just try and see things a little more positive and not be so down and out all the time. An example of a personal attack would be the last post that fdjake made, now that’s coming after someone, and is in stark contrast to what I was suggesting.

A few things I need to point out, and I think this stems from the fact that fjdake is obviously a little older, and probably bitter about that to begin with. You seem to have a problem with actually reading what people are saying here, you just went through this with another member. You only pick out certain phrases and/or words and twist them around to help satisfy some story you have made up in your head. Maybe this is the old age again, you DO type HALF of EVERYTHING in all CAPS. Let’s point out a few examples in your latest rant.

  1. Did I say this was an “UP AND RUNNING BUSINESS”? No, reread what I said. The deal is closing Wednesday, how on Earth could I have it up and running. Made up story #1.

  2. You have a real problem with projecting what is true in your market to the entire country and that’s not how it works. How could you possibly know the permit process in my areas? Again, the deal is closing in 6 days, work will begin about a month later. My city is in dire need of more parking, when I approached them with the idea they said no problem and rushed me through the permit process. Even with all your 20+ yrs. of RE knowledge apparently you haven’t mastered this yet.

  3. “OH and JUST WAIT till you get quotes on your liabily INSURANCE for this little GEM!!!” Got it on Friday. An annual liability policy is $834. It’s clear you have never owned/operated a lot before, it you had you would know that rates on these things are based on the income they generate not the value of the home or mortgage like a home. You clearly have no clue what you are talking about! Made up story #2.

  4. “Now why would a guy with the VAST real estate assets and BANK CONNECTIONS you CLAIM to have, NOT HAVE $900/month” Did I say I couldn’t afford this? Negative again. I’m saying it is expensive, project that over a year and that’s $10,800, for health insurance. My comment was made to make the case that I believe the gov’t should provide health insurance. I would definitely rather pay $100/mth than $900/mth. I haven’t got to where I am by just throwing money away. Made up story #3.

  5. “I’ve developed a pretty acute BS sensor over the years.” Let me tell you what I’ve developed a pretty acute sensor for. OLD DUDES WHO ARE BITTER AT THE WORLD AND HAVE NOTHING POSITIVE TO SAY ABOUT ANYONE OR ANTHING! And that’s what we have here. A pissed off old dude who likes to pick and choose certain phrases or words from other posts and turn them around into some fantasy story of his in an attempt to make him sound smart, but it doesn’t work with me, I’m smarter than you.

  6. And here is my advice to you - I noticed in every single one of your posts that you state you have over 20 yrs of RE experience and you’ve sold this and that and you have your money. Ok, so you’re older and you have money, what are YOU doing sitting in front of the computer. And you accuse me of writing real estate fiction. Every single post you make about the slumping economy is built on speculation. Speculation in certainly not truth or fact. So while you accuse me of real estate fiction, I accuse you of real estate speculation. And if I could borrow one more quote from you, “…the game’s over Pal…” No, actually you’ve done this for over 20 yrs, you’re the old one, the game’s just about over for you. Correct, I am 28, so in reality the ‘game’ is just starting for me. You should probably just stop with that last comment, I’m going to start making you look real bad.

propertymanager - come on, haven’t we had this discussion enough, I think you’re smart and know what you’re talking about but fdjake is starting to show signs or wear on you. As I have stated time and time again, when I stated that my expenses were $2.33/mth I was just giving an example that my expenses were not 50% for that month. It may have not been dictated that way but I have said over and over again that was my intent of that comment and here you are again throwing it in my face. If you look back at any of the recent posts I have made about analyzing deals I always use the 50% rule. You’re nitpicking certain words or phrases just like fdjake. I expect that out of fdjake based on his recent posts, but you’re better than him!


Where should I start…First off I’m 42…I guess that might seem old to a kid who had his first beer a few years ago and now has built a REAL ESTATE EMPIRE, and did it all with…

NO HEALTH INSURANCE!!! Now THAT’S what I call SMART!!! Can’t argue with that logic.

The City is “RUSHING you through the approval process and they SAID you were all set.” WHO??? The JANITOR you talked with at CITY HALL???

Did you even go back and read your own post??? You asked for cap rates on PARKING LOTs on MARCH 23rd. You said you came across this land. So that’s last SUNDAY. So in just 5 BUSINESS DAYS the lot has been surveyed, you submitted a COMPLETE application to City Hall with attached survey, received your approvals, arranged financing, AND set a closing date for exactly 8 business days since you laid eyes on this land. And it’s all being FINANCED!!!

There’s someone here who doesn’t know what their talking about, but it isn’t me or MIKE.

I’m sure the “BANKS you’ve NEVER dealt with” just took your word for ALL this!!! And I’m SURE all the OTHER VETERAN COMMERCIAL real estate investors ALL walked right by this diamond in the rough for years and NEVER even thought about buying it!!!

LIABILTY insurance for a PARKING LOT…$834 PER YEAR!!! You should see if this guy can write your HEALTH INSURANCE TOO!!! I bet he could bring that in for about $100/ year.

My FAVORITE…I’m SMARTER THAN YOU!!! Let’s let the MEMBERS of this forum decide that shall we??? NO INSURANCE, 6 day RUSH approval from City HALL due to an EMERGENCY PARKING SHORTAGE!!! Bank approval on a NON PERMITTED and NON APPROVED project!!!

SCAN and POST the PERMIT for your parking lot!!! You said you’ve ALREADY been RUSHED through the approval PROCESS. I’ll even HOST the picture if you need it!!!

Better Yet, Just tell us what City your in… Building permits are PUBLIC INFORMATION. I’ll call down there tommorow and confirm everything. Builders do this ALL THE TIME, it’s how they find out WHAT is about to be built so they can BID on those projects.
So let’s have it???

JBaldwin quote…“So while you accuse me of real estate fiction, I accuse you of real estate speculaton.”


KID…Really…quit while your ahead…This is pathetic.

The thing that bothers me the most about you is your passing yourself off to people as an EXPERT!!

I apologise to OTHER members of this forum for picking this joker apart but the SCARY thing is… If this WASN’T POINTED out someone here could listen to him and actually take advice from a fiction writer PRETENDING to be a real estate investor.

OK, I’m putting my Moderator hat back on. LET’S MOVE ON!

Now, what were we talking about before we got off track? Bubble - WHAT BUBBLE?


You’re right, no more comments from myself :angel

Thank you!

Agreed :biggrin

You mean the fight’s over? DAMN! :crying :biggrin

I’m sure that the panic and fear that is currently lurking in every news paper, every television station and at every kitchen table could have us all standing in our underwear with nowhere to live and nothing to eat in 10 years. That’s precisely the reason for the angry tone of this post.
Consumer sentiment is a leading economic indicator. I should preface this next part by saying that I am not a futures trader, but I tried to collect this data as accurately as I could:

Commodity Time period Change in cost

Copper 2001-2007 UP 388%
Steel 2001-2007 UP 238%
Asphalt Cement 2001-2007 UP 143%
Cement 2001-2007 UP 92%
Gasoline 2001-2007 UP 96%
US electricity prices 2001-2007 UP 118%

US Median Household
Income 2001-2007 UP 70%

US Median Price of a
Single family home 2001-2007 UP 37%

Lumber and plywood were fairly flat during this time frame. Otherwise, the cost of nearly all materials and labor have increased commensurate with, or more than, the median price of a single family home.

California’s population is expected to double by the year 2035, and new single family building permits are at a 50 year low?

I’m not buying for appreciation right now. I would not take an adjustable rate mortgage, I believe that would be VERY dangerous right now.

Pete, you mentioned itulip a while back and it showed the Kapow theory. Doesn’t it seem plausable that real estate might be one of the few safe bets if that type of scenario plays out?

I do know this, I’m going to need some convincing before I think that Karl Case and Robert Shiller are bravado geniuses.

This is a late entry: 4/7/08:

Once again, I tried to collect this information as carefully as possible. Upon further review, I was mistaken with regard to household income. The sources and percentages are listed below.

For 2000 household income


For 2007 household income


So, up 15%

per capita money income went up 22% from 2000 to 2006:

The bureau of economic analysis stated that personal income grew 25% in the last four years:

I agree. History shows us over and over that BUYING what no one else wants, at the time THEY DON’T want it… is VERY profitable!! I think your theory on Real Estate at this point in the cycle is going to reward you handsomely in years to come.

Guy’s, I know I sound pessimistic, but you should live where I do (RI) when your state makes a newspaper in the U.K. about a DEPRESSION in the U.S. Economy you can’t ignore it. I guess you could, but the bankruptcy courts are littered with businesses that chose not to heed the way of the economic winds. I’M NOT GOING TO BE ONE OF THEM.

Here’s my world (RI)…In 2001 a 3 bed ranch house cost $90,000. IN 2005 that home cost $285,000. This happened In California, Florida, Arizona, Nevada, Massachusetts, New York (remember the Brownstones in Harlem that sold for $100K in 2001 and are now worth $2,000,000!!) Homes in Florida that sold for $65,000 in 2001 by 2005 were $300,000 HOMES!!! I purchased a VACANT lot in 2000 in Orlando for $19,000!!! I sold it in 2004 for $125,000!!! THAT’S INSANE!!! DUMPS in SOUTH CENTRAL L.A. with bars on every window and door suddenly became HALF A MILLION DOLLAR HOMES!! Everyone of your numbers is correct except that housing number.

The median home price is a BS statistic… Did you know the median income in the U.S. is $46,000??? Anyone here LIVING on $46,000/ year, that’s $884/week GROSS??? It’s BS because it’s an AVERAGE!! LOOK at the POPULATION CENTERS real estate numbers, THEY SUCK. That’s where the ECONOMIC IMPACT IS. It’s not in Jerk Water, Wyoming.

This WILL and HAS trickled down to landlords in some areas. It DEFINITELY has here in Rhode Island. As I’m sure is the case with most landlords, a good percentage of your tenants are on Goverment assistance. As prices for Food, Fuel and everything else spiral up due to interest rate cuts, money left to pay rent is smaller and smaller. I’ve said this before here. We’re actually seeing rents FALLING in RI as our over built Condo market is converted to apartments. Homes that won’t sell are now being rented, and landlords with property they paid WAY to much for are desparate to get a warm body in that rental. It is widely known here that tenenats can now just NAME THEIR PRICE. If they have decent credit and a stabile JOB. They have THOUSANDS of properties available to rent.

Propertymanager, you would NOT believe what these people paid for real estate during the boom. Mike, how’s a 3 decker/ 3 bed/floor, in South Providence (war zone) for $295,000 sound? Oh, it rents for $900/ floor, taxes are $3000/year and insurance is $1500/ yr!!! Talk about negative cash flow!!! You can’t GIVE one of these homes away in todays market. These neighborhoods are LITTERED with empty homes that have had every ounce of copper, every furnace, every tub, sink and WIRE stolen and sold for scrap.
The Providence Housing Authority estimates that there are 800 to 1200 homes like this in the city!!

What we must remember is the effects of this credit, real estate, dollar crisis take TIME to trickle through the economy. This started in real estate but it won’t end there. My friend manages a HOME DEPOT. His is seeing boat loads of EX- realtors, mortgage brokers, carpenters, electricians, plumbers, ect applying for $12/ hour jobs. A buddy of mine just pulled his permits for a new home he’s building for himself. Within 1 week he had received over 38 letters from local contractors asking to bid on some aspect of that project. We’re talking about a 2400 Sq. ft. Colonial here!!! These guy’s are DIEING up here.
THAT IS MY REALITY FOLKS. Some of these people made well over $100,000/ year just a 18 months ago. It’s not just happening here. My brother lives in California. Except for the fact that the numbers are bigger out there, it’s the EXACT same story. Florida…WOW!! Talk about TEXT BOOK bubble theory!!

We won’t see the full affect of this in our economy until LATE in 2008. My guess is by then there won’t be much debate left on this forum about how bad things are. A lot of us will be SEEING it, not reading it.

I post this for no other reason than to get investors here to look over their shoulders a little. Is it going to hurt anyone here to keep this information in the back of their head?? Watch the DATA, NOT THE NEWS!! Those unemplyment numbers have been moving up every month. Keep this in mind …the Mortgage Brokers, the carpenters, the realtors, electricians, plumbers, ect. who made $100,000 and now work at lower paying jobs, or just have LESS work, will NOT be in those stats. BUT…The AFFECT of this new reality will certainly be in our economy.

I have to say this with every post now. I understand that these insane run ups did not occur everywhere in the U.S. I would expect that you folks will not be affected to anywhere NEAR the extent I will and investors in population centers will. That’s great news for you. Unfortunately, the population centers in this country ARE population centers because of the economic activity that takes place there. THAT will have an effect on our economy AND HOUSING!

I will attest to FDjake’s point about the economy affecting people like realtors and mortgage brokers.

I know alot of mortgage loan officers (brokers) who were making $100k + a year in 2006 and even into part of 2007. Many of these people are taking part time jobs now. Personally, I have seen a rough 6-8 months and have my fill. I just took a job with Home Depot (how’s that jake?) as a territory sales rep. The manager had 6 openings for 6 stores in my region. He recieved 200 applications for those 6 spots. I’ll be doing loans still, but only on a part-time basis, because I can’t count on the company I work for to be there for me and my family. I have a new one being born possibly today, and a 1yr old at home and my primary concern is them. Plus, I can’t continue on with no health coverage.

I’m not making this stuff up…as you can see it’s happening to guy’s right here.

Steve, Good Luck with everything. You’re a smart guy. I know some folks who just refuse to take the step you took. They’re going to be in deep water soon. The guy’s like you (the smart ones) who have already adapted to the changing economic landscape will weather this storm and come out the other side stronger and more knowledgeable than before.

How do you guy’s think I LEARNED these lessons???

Been there…they never last forever…this one won’t either.

Hang in there!!


Well I’ve managed to scrape by closing just a few loans. But I never got into all the cars and 400k homes either - I have a basic Saturn at 0% financing, and a $150k 3bed 1.5bath home. I’ve recently built a new short term plan to cover the next 3-4 years while my new job covers my bills and living expenses. A little diversion in my plans, yes - but it will probably be a welcomed change.

The people that are getting hit bad are the one’s who bought all their $100k lifestyles could afford - Mercedes and a luxury home and now they have got to be dying.