What if people start saving instead of adding to the existing and profound debt load?
BBT and all banks greatest nightmare.
It just makes good sense to not be a debt slave. Question is do Americans have any sense?
Who out there wants less than he needs?
Remember, the driving force for taking out a loan is having a job. No job, no loan. Give a man a job/income, he will always want to buy more than he can afford today. This philosophy calls for a loan.
For the economy to grow we need jobs in the private sector. Three areas: mfg, commodities and food. Gov't jobs do not produce income. Gov't jobs just spend tax money.
Cleary you are incapable of reading and comprehending what is posted. I CLEARLY stated that in the past 3 years housing prices had gotten over valued and rental prioperty made no sense based on prices and that BB&T being conserative realized this.
I also STATED that it wouild take 12-18 months before I expected prices to come down enough to make this a potential area of investment.
Since you ignore what is posted - I will waste no more time responding to you. You clearly are incapable of understanding what is posted.
You sir - choose to remain ignorant and I feel no responsibility to try and educate you.
Can you give the name of a bank that will make a loan on an investment condo? BB&T has stated it is the highest risk loan they have on their books. They are currently not lending on investment condos. Why? Because they consider it as BAD DEBT!! There is so much BAD DEBT on the books of our nation's banking system the whole country is teetering on depression. And you say Dave Ramsey is a simpleton with a big ego. Sir, you need a close, self inspection in the mirror.
Having invested in the past in investment (rental) real estate I know a bit about it. You do not buy at prices where the rent will not service the debt and the costs at least. It has nothing to do with it going up/down in price. Appreciation is the bonus.
A bank will use 80-90% of the expected rental income to evaluate the worthiness of the loan (they do not assume rented 100% of the time).
The past 3 years in this area there have been few if any properties that made sense as rentals, because the rental income did not justify the prices being asked. That is when you knew there was a real estate bubble.
Now if a simple country boy like myself can figure that out a well run bank like BB&T can figure it out. That is why they have such a low per cent of loans defaulting - they figured it out.
After allowances for maintenance, mortgage, insurance, taxes, 80% rented, you should show a positive cash flow and a loss for tax purposes. This is before any appreciation. My 2% appreciation was very very conserative long term as real estate will normallly appreciate at least as much as inflation. This does not mean an increase in the real estate in value but maintaining its value in constant $s.
You may not know it, but I do because I am monitoring the situation, but real estate is gradually adjusting back to its rental value. Within 12-18 months investing in rental property (and borrowing to do so) will again make sense.
If you remain so closed minded you will learn nothing. Accept that others may have a clue and listen and you may learn a lot more than what a "one note" know-it-all like Dave Ramsey has to offer.
I know he isn't takling to me - which is why I don't listen to him. You hear the same tales if you watch Susie Orman on CNBC. I admit his advice is maybe OK for these types, but it is simplistic and only covers part of the truth.
The other part of the truth is why credit is necessary and good. The small businessman who can borrow $200k to expand and increase sales $500k and make an addition $50k a year is another good use of credit.
Ramsey tries to make it sound as if credit was ALWAYS bad, and it isn't.
Well, it is a pleasure to disagree on the subject of Dave Ramsey. You promote the idea of "good debt" and it would be better to make money with the bank's money if it always worked that way. In your hypothetical the condo costs 100 thousand and it appreciates because in your world realestate always goes up in value. We were all taught that lie but there are a lot of people out there who bought that condo with little or nothing down, the realestate bubble burst and their tennate moved out. They can't sell it because nobody is buying and now they are making the payments, until they can't anymore, and the bank forecloses. Do you live in a cave? This is happening all over the US. This "good debt" you describe has left us in a 2 year recession that may well evolve into a depression. You call this "good debt?" Well there an't nothing "good" about it. You need to do a little more than a Google search on Dave Ramsey before calling him names and you need to get your head out of the sand and look at these "good debt" forclosures that have melted our banking system. This "good debt" wolf is camped squarely in the door breathing its nasty debt breath right into BBT. The There are a lot of holes in your boat of logic there boater. It's January, sir, hope you've got an inflated dingy.
Boatman, I dont believe Ramsey is talking about folks like you. I dont watch him on a regular basis, but if you do and listen to what his callers say, you would sometimes be speechless. One day this guy called in, had a good job as did his wife, and they had 8 credit cards with huge balances. I look around and see couples with big homes, two new vehicles, boat on the side, 2 kids and no $$ in the bank, living for today with no thought of the future. Over 50% of voters voted for Obama, I dont know what that tells you but I know what it tells me. The dumbing down of America has taken place
Ramsey's thesis is everyone is too stupid to manage their finances which includes debt. The guy is a moron in that many of us do understand financial principles and how to profit from debt.
Get over it - Ramsey is no god.