Quote Originally Posted by Jeffski
I just wrote a long post and then deleted it because we're splitting hairs here. I agree with your advice to avoid debt, pay cash, and keep risk low. All good points. I just know I have personally benefited from the equity I've earned on more than one house so even though you should not treat it as an investment, it usually turns out to be a very good one.

Good debate.
Hi Jeff, Yes REI usually turns out very well. I bought my first property in Newport Beach, Calif. in the late '70's and all our properties have appreciated very well over the years.

However..... The people getting into "flipping" during the last couple of years are seeing massive returns in a very short time, so the temptation is to keep on buying and trying to flip. This is how the REI "boom" has driven up the prices so far, so fast.

People are quitting their day jobs to become "real estate investors", and that's the worrisome part. This is EXACTLY how the REI boom/bust cycle begins every time, except that THIS TIME, it's being enabled by the Fed raising the M2 money supply (originally to help prevent "Y2k" rifts) and resulting in the free money sloshing around in the form of easy-to-get, "no money down", qualify ANYONE,......CREDIT.

This is the game of "musical chairs" I was referring to, and I've thought seriously about liquidating all our REI assets in California, just for that reason.

Our basis cost is almost laughably low on some of these places, so I'm not afraid of getting hurt. But I do sense trouble in the making, and someone (just to get back on topic for the fun of it ) who's financing a pool with a second on their house BASED ON CURRENT HOUSING PRICES is underwater all ready, they just don't know it.

I usually don't have that much to say on these subjects, but there's several things about "this time around" that are very worrisome to me, and I hate to see people buying into the mania of everything going up all the time.

It doesn't. And one of the most notable examples of the "credit bubble" bursting was the 1929 crash and great depression.

Good discussion.....thanks