Bubble Panel

Bubble Panel

Speakers:

Carmine Zamarro - Carmine

Nelson Zide – Nelson

Douglas Quattrochi – Doug

Moderator:

Richard Merlino - Rich

[Start 0:00:00]

Carmine: Hi! My name is Carmine Zamarro. I’ve been in the real estate business for about 40 years. I’m with the six people that say the bubble is come and go at any time. I feel that I’ve seen it in 1980. I’ve seen it in…

Rich: We’re not there yet. Just tell them why you’re an expert.

Carmine: I’m not an expert.

Rich: Come on!

Carmine: I’m just lucky.

Audience: [laughter]

Carmine: I’m just lucky, not as lucky as Mike. I know about the programs he’s been involved with, and it’s really tough what he does. As you all know, as landlords, you got to really toe the line with people with what happens – dogs, this, that, the other thing. This organization here, I was asked to come to speak about my feelings on the bubble. That is as six people say we’re at a peak. I’ve seen it back in the ‘80s where three-deckers were $15,000, $20,000 and then they come up.

Rich: Yes, you’re not an expert.

Carmine: I’m not an expert.

Rich: You’re modest.

Carmine: I’m modest.

Rich: But you’ve been in the real estate business for 40 years.

Carmine: Forty years.

Rich: That’s longer than some of the people in the room have been alive, so that’s a really, really long time. I’m going to say you’re an expert but you’re modest about it. Please, let’s have a hand for Carmine Zamarro.

Audience: [applause]

Rich: Please, Nelson, come on up. Our next speaker is Nelson Zide. You’re not going anywhere.

Carmine: I’m not going.

Rich: You’re not done yet. This is just an introduction. What we’re going to do is you guys, you’re going to start arguing with each other, and we’re hoping that somebody gets angry enough that like do they pick up a chair and hits somebody with it.

Audience: [laughter]

Rich: Yes, Nelson, please tell—

Nelson: I don’t run that fast to pick up a chair.

Rich: Easy target, right here. Carmine. Please tell everybody who you are.

Nelson: Okay, my name is Nelson Zide, and I have been in the real estate business like Carmine over 40 years, and I’ve lived through all the—

Rich: See the competition already. Over 40 years.

Nelson: Over 40 years, and I have lived through the recessions, the recoveries, the recessions, and recoveries, but my perspective on this is that we will have some crash some point later, but certainly not in the immediate future. Real estate, by the way, always goes up and it will always go down. It will always go up and it will always go down. Our ups are always bigger than the downs, and right now we’re still in an up and there is no indication whatsoever that we’re going to have a down in the immediate future. Ask me 15 years from now, I may change my tune, but not now and not for the next probably five to seven years, we are not going to have a bubble.

Rich: All right. Those are our speakers’ positions. Carmine and I are taking a position that we’re with the six people that say there’s a bubble happening right now. Nelson and Doug, who are wrong—

Nelson: [laughter]

Rich: Are taking the opposing position.

Nelson: You take this from him that says you’re wrong?

Rich: I take it from him because he doesn’t have a microphone yet.

Doug: Yes.

Rich: He is much more eloquent than I am, so I have to try to get my cheap shots in. Carmine, if you’d like to have a seat. Do you guys want to drink water? I’m going to be the waitress for a minute. Anybody need anything? All right, I do. Up here. thank you. All right, so Doug, why don’t you?

Doug: I don’t want to start with an opening position. I want to start with a question for our guest speakers. How do you justify buying a three-decker based on the rents when someone is asking for, in one case, we saw a three-decker in the north part of the city for $600,000 was the asking price, three-decker? Does that make sense?

Nelson: No.

Audience: [laughter]

Male Audience 1: Why?

Nelson: Rental property is all based upon cash flow. Ever since I have been doing real estate, it will always be with cash flow, no matter what the marketplace is. You may want to get $600,000. You want to get $600,000 for your three-decker, but if the cash flow analysis that you do does not justify that price, it doesn’t mean we have a bubble. It just means you have overpriced your house. It’s worth what the cash flow will say. If you’re under rented and you want to get a higher rent, that’s fine, but it’s only worth what the house is worth, and that’s been that way ever since I’ve been in the real estate business. It’s not worth more, I won’t say that.

In the 1980s, it could be worth more because I did a seminar in San Francisco in front of 600 realtors that say you can make a profit on real estate and have a negative cash flow. Well, you could because the tax breaks allow you to. Then they changed the tax laws in 1986 and they at the seminar right down the drain because now it’s all based upon cash flow. It has been since 1986.

[0:05:11]

Doug: Carmine?

Carmine: Well, when I started back more than 40 years, back in ’77, you could buy a three-decker for $15,000. Like Nelson said, it’s all about cash flow. Recently last month, I sold five multifamily houses, and most of these people are looking for what the cash flow is and they’re looking to a rate of about 10 times what the income will justify would be the selling price of the house.

I have some serious investors looking at properties. They look at the cash flow, the rent every month. They deduct a couple of months and then they do a calculation, this one particular person like seven times what the income is and they based the value of the property on looking at the property. That $600,000 three-decker, that sounds absolutely crazy in Worcester, but in Boston, it’s a totally different story. It is cheap.

Rich: Cheap.

Nelson: Cheap.

Carmine: It is cheap. You have properties out in Boston, three-deckers selling $700,000 to $800,000. They condo them. I was condo-ing three-deckers back in the ‘90s and we used to sell a floor for maybe $125,000. The problem today is you buy these houses, it cost you all kinds of money to go into rehab, sheet rock. The rules like Mike said in his conversation, the rules, the permitting, the requirements, it’s totally ridiculous. It’s very hard to make a lot of money. When I say money, I’m not saying $300 or $400 a month to manage a three-decker. If I don’t make 20 percent on the bottom-line, then I don’t want it.

A lot of money are buying these things. They were able to get into these things because they can put in as little as 3 percent down. There’s a lot of government subsidy programs, which allow people to buy these houses. As long as the money is flowing freely, then that’s why I think the prices are [unintelligible 0:07:45] inflated.

Nelson: Did you want me to…

Carmine: Yes. What do you think?

Nelson: Well, prices are inflated, but that’s the marketplace, but you are absolutely 100 percent right in the sense that every property is all based upon a cash flow analysis independent upon what your cash flow analysis is for your investor. When I’m talking to investors, I have to have a cash flow analysis of a minimum of 10 percent, so it’s real simple. If you take all your rent minus all your expenses or the other way around—the rent minus the expenses, and I have 10 percent return on my money for what I put in, that’s a property to consider. If I don’t, it’s overpriced or the rents are too low, or you don’t want to consider it.

It’s a simple analysis, and there are enough properties in Worcester. I’m over the Framingham market that it can be done. There was one three-decker just around the market for $445,000 and every apartment needed to be redo. They had 29 offers; it was sold in a day close to $500,000.

Male Audience 2: In Worcester?

Nelson: Framingham.

Rich: Did the numbers make sense on that one? Would you buy that property?

Nelson: Well, you have to put in about $60,000 worth of work.

Rich: I don't have to put in anything because I didn’t buy it.

Nelson: I know, but whoever would.

Rich: Would you buy that property?

Nelson: No, because I don’t put money into it like that. Real simple.

Rich: Right, so if—

Nelson: But I will tell you there were investors who will have the cash flow and the property offered, all fixed up, was a four-bedroom, a three-bedroom, and a two-bedroom. It would be worth in Framingham all fixed up, with the rent that they would get probably close to $700,000 to $750,000. You’re going to have a positive cash flow and that’s why the broker underpriced it. I mean just simple.

Rich: The broker underpriced it.

Nelson: Underpriced it, no question. Not like Doug’s $600,000 three-decker, which is way overpriced in Worcester.

Doug: The thing about the Worcester three-decker for $600,000, which was priced based on cash flow and it’s probably illegal because we had a roommate situation and people are paying a lot more than they should have, the thing about it is in Boston, people are completely priced out like you can’t get a three-decker in Cambridge, Boston for less than maybe $1 million and if you want something that’s more turnkey, $2 million.

If people want to own or occupy, they’re looking around for somewhere with T-access. Worcester has MBTA rail access. You can still work at your Facebook or Google downtown. You can be a landlord in Worcester, and you can pay. It looks like a bargain. It looks like a half price compared to Boston or Cambridge, and some of our neighborhoods are really cool, and that’s part of what’s driving the price appreciation in Worcester, my two cents.

[0:10:28]

Nelson: What’s also driving is you have a marketplace that has no inventory. When was the last time being built in Worcester? I’m not sure, right? Very few, is that correct?

Rich: Like 1910.

Nelson: 1910, okay. Framingham is 1950, so you’re better than us, but if you can’t build it, you have a limited supply, and any type of economic market with limited supply, your prices are going to continue to increase. Now there will be a time when they can’t increase anymore, but they will continue to increase and that’s why it’s probably not going to have a bubble in the next 5 to 7 years. Carmine?

Carmine: How many people do we have here in Worcester?

Audience: What?

Doug: Worcester.

Carmine: Okay, so probably half the people. The way I look at Worcester, and I’m speaking Worcester. I mean you can go outside Worcester, you can go out to California. I mean in two places out there that are a lot more. I mean there’s fundamental things like cash flow and so forth, but I’m talking about values in Worcester. This is my market. When I go to list or to sell a property to a client, because it’s been as crazy as it has, I tell them, “Look, this one over here sold for this. This one over here sold for that. We looked at the numbers. What do you want?”

Well, this property is worth $400,000. Okay, we’ll go fishing. We’ll put it out at $450,000 and see what happens. Like I sold last month five houses, boom, gone! I just feel that inside me says it’s not going to continue in Worcester. In Worcester, you have the courthouse conversion. You have the vote conversion. I work all over Worcester, Worcester County, but predominantly I work in the Highland Street, Elm Street, Cedar Street areas.

I see the market for rentals is somewhat drying up and what’s going to happen when Mass College of Pharmacy, all the students, I mean it’s students. The students in Boston are going to pay the rent because they’re getting their money from the government to go school, and it’s more expensive to live in the dorms, so they pile together. Then as a Worcester landlord, you have restrictions as far as how many people you can pack into a building. It’s all about cash flow.

I rent around like I say an office over by the courthouse. My father bought the building back in 1960, paid $25,000 and I get $100,000 a year out of the building, and it’s a lot easier to do that than to do what Mike does. Mike does a tough racket. Anybody thinks they can make money out of rooming houses, yes it’s wonderful. You help people by giving them room, but on the same token, and you make money, but it’s a lot of hours, a lot of hard work. Framingham, Boston, I sold one in Boston a couple of years ago, $550,000. It just resold for $700,000 and without really much of an improvement.

Rich: What was the timeframe?

Carmine: Timeframe was two years.

Rich: Two years.

Carmine: Two years, two years, and I sold four, five houses three years ago in the Highland Street area. Three-decker was $250,000. That one now is $450,000. That’s in three years. I mean yes, how does can say—I mean we had Google, we had Amazon. All these stocks went up crazy percentagewise. We can talk about how to make money. Three-deckers is a good way to get started. I started in 1983 with a three-decker up at Park Av. I paid $50,000 for it in ’83. I just turned down $425,000.

Nelson: [unintelligible 0:14:30] $475,000 make a profit.

Carmine: [laughter] I bought a two-family about two months ago. I thought it was going to make a lot of money because everybody is caught up in the spiral are things are going up, up, and up. It’s a two-family, brings in $2,500 a month. I paid $140,000. I worked through the winter; I rehabbed it. It cost me another $80,000. I’m lucky if I sell it, I’m going to get $250,000 for it even with the numbers working, I mean any amount of sweat that you have to do to make things work.

[0:15:08]

Rich: Can I add something?

Carmine: Go ahead.

Rich: At this point, it’s obvious that Carmine and I are just wiping the floor with Nelson and Doug.

Audience: [laughter]

Nelson: See, that’s in his opinion.

Audience: It’s his opinion.

Nelson: Not mine.

Male Audience 2: What makes you guys think there’s a bubble? What do you base that on?

Rich: I’m going to make the case that our system is increasing in instability on an exponential basis.

Nelson: Big words.

Rich: I looked those up before I came in.

Nelson: [laughter]

Rich: Everybody is talking about housing prices and we’re going to talk about supply and demand. I think we’re all in agreement that housing prices are high and that there’s not a lot of inventory. The laws of supply and demand say that there’s not going to be a bubble. However, that’s looking at the housing market in a vacuum and that’s not where it exists. It exists in the world, and in the world, the system is engineered to be completely unstable.

The problem with the housing crisis that happened in 2008 was not because there was anything inherent. It had nothing to do with supply and demand that caused the bubble to pop, so it’s not a factor. The reason that the bubble popped, the reason there was one, and history has proven this to be the case, is that banks were writing bad loans. They were doing a lot of subprime lending—

Nelson: Which they are not doing these days and they haven’t been for a while.

Rich: The historical percentage of mortgages in the United States that is considered subprime, subprime meaning these are risky prospects. These are loans that are more likely to fail than others. The historical percentage is about 8 percent of mortgages in the United States. From 2004 to 2006, it jumped up to 20 percent. That’s a big jump, right? It’s 25 percent right now.

Audience: [crosstalk 0:17:33]

Rich: Okay, subprime loans are at an all-time high in the United States of America right now. They’re 5 percent higher than they were before the bubble.

Male Audience 3: [inaudible 0:17:46]

Rich: Which probably is a good point, what are they in the region. But the fact is when the economy has a correction, whatever it is that you want to call it, we’ll probably going to be fine because during the last bubble, Boston was barely affected and Worcester rebounded as well. What I’m talking about it that there are a lot of factors that don’t have anything to do supply and demand. We’re going to talk about supply and demand and it’s not relevant.

The other thing, the reason that the subprime loans were written so much because is everybody familiar with the collateralized debt obligations that the banks are being sold? What that means is that these loans are getting packaged up, and they’re getting sold on the stock market, so they get bundled together. The people writing the loans are not going to have the loans when they go south. Is everybody familiar with that concept because they’re going to sell it? They don't have a vested interest in the long-term performance of this loan.

My question would be, well, I’m sure we’re not doing that anymore, right? If collateralized debt obligation is being sold on Wall Street, Wall Street is based on subprime loans. If that’s what caused it last time, and there are more subprime loans now, I’m sure at least we’re not packaging them up and selling them on Wall Street, right? There’s more of it now than there was then. At the time, there was about $3 trillion of it, and the bubble popped and about half of that was bad, not because half of them were bad loans but because of the domino effect that happened. There’s more than $1 trillion of it in there now.

Male Audience 4: Is that housing or is that everything because like for example…

Rich: No, no. Great question. I’m not…

Male Audience 4: What exactly?

Rich: Yes, yes. I’m not talking about other asset-backed securities. I’m only talking about mortgages because there are a lot of other asset-backed securities that you could lump in there, make the statistics sound like $11 trillion because the number is actually much higher if you include everything. I’m going to let these guys jump in with their own facts in a second, and then we’re going to go around the room.

[0:20:08]

Nelson: Doug.

Doug: All right. We’re in business, and I think it’s important to recognize supply and demand, and I think it’s an outrageous claim that supply and demand doesn’t matter. The Metropolitan Area Planning Council, which looks at all the areas accessible by T, says we need by 2030 another 450,000 units of housing just to meet the demand, just to keep the vacancy rate at the same as it is now, 450,000 units of housing is what we need.

We’re permitting at a rate of 150,000 over the next 30 years. We’re permitting so slowly compared to what demand is; not only are we going to fail to keep vacancy rate where it is; it’s going to go down even further because people who want to work here, especially for these tech companies, hospitals, and educational institutions, which are stable employment, they cannot get housing and they’re looking further and further afield and Worcester is it. We’ve been in the paper several times. We are able to provide some of that housing that’s not getting built in Boston for sure.

Rich: There’s no dispute about that. What happened when unemployment reaches the level it was during the last bubble and 10 percent of those people can’t pay their rent?

Nelson: We’re not close to that. We have the lowest unemployment rate probably in the whole country, which is less than 2 percent. That is like we have a 98 percent employment rate. That’s what we have. There are more people working right now than there have been in a long time and they’re going to continue that rate and more and more people work. Again, more and more jobs coming into Worcester community as well as the greater Boston community. Unemployment is low, employment is very, very high. If people have jobs, they have a place to live. If they have a place to live, we’re not going to have a bubble because we’re not building enough and that goes back to the supply and demand factor that we just don't have.

Will we have a bubble later? As I said, when I started; real estate market has always gone up and always gone down. Great statistics for you, since the Great Crash of 1929, on average real estate has gone up 5 percent a year throughout every single year with all our ups and downs since 1929.

Now, will it continue to go up? Yes! Will it go down? Yes. Will it go down tomorrow? Not in your life. It’s going to continue and as long as people or not everybody is smart enough to be buying as Carmine does buying on cash flow. He’s a very smart man and his clients are very smart people, everybody is buying rental property all based upon cash flows. If they aren’t, they’re fooling, they deserve to lose it. I mean all of us deserve to lose it, or if you’re buying them on cash flow, then you know you’re going to be fine and you got other factors, too, but that’s what you got to look at.

Doug: Is there a question or comment from Peter back there?

Peter: Yes, I’ll tell you right now. I think you’re talking about bubbles as if they used to be like this, and I don't know if that’s going to be happening because there’s a lot of people out there making unbelievable money. They’re not in our category.

Rich: I’m glad you brought that up. Does anybody ever have banks that are [crosstalk 0:23:30] family?

Peter: [crosstalk 0:23:30] making money. On average, they’re making a lot of money, and so they’re trying to put it in different places, so I think it depends upon…

Rich: There is a [unintelligible 0:23:42] in front of the camera. Do you want to come up, Peter?

Doug: Yes.

Peter: I bought…

Rich: Okay.

Audience: [laughter]

Peter: I bought [crosstalk 0:23:52] the bubble, a two-family in a great area. I can get $500,000 for that now. It’s not because it’s a two-family and now it’s [unintelligible 0:24:00]. It’s in [unintelligible 0:24:03]. You try to find a two-family in [unintelligible 0:24:06] Street area. There’s a lot of specifics going along, more often than they used to be, and so I think the bubble is a little okay and I agree with the gentleman next to you it’s not going to happen overnight. In a different market, there’s a lot of money out there, so with the bubble look like this, it will probably go like this.

Doug: Can I get Carmine’s input on this actually? Do you think someone who buys a three-decker losing money on it is going to keep losing money on it for the appreciation or they’re going to have to bail out and sell? Is that what’s driving the crash, people are overpaying for these rentals?

Carmine: Well, like what this fellow said, I’m going to count him, too. I’ve seen people making a lot of money. I mean, policemen, firemen, everyone is making a l lot of money. You’ve got to put your money some place. Real estate has been and will be an investment. It’s not an investment. One day as a kid back in the ‘70s, I walked into Gary Studs office down the Cape, and I saw a sign over the door, and it said, “Real estate, not a place to get rich fast.” It’s a slow process.

[0:25:18]

Just like the stock market, you got to be able to weather the storm, the ups and the downs. I mean we had the crash in ’29; we had a crash back in 2008. If you watched the stock market and see how it does and as long as all the political things are in place, things going over in Korea, in Mexico, and everything else, real estate is a safer investment than the market. How long is going to continue, I’m just amazed that the percentage of increase over the last 5 years has just gone crazy?

People buy real estate. Everybody needs a place to live. They get in. there’s government subsidies. I was also in the mortgage business for 10 years, and I did subprime lending, and the banks would look at, you go to a bank today to try to get a loan. Even though you’re in a good position, they’ll scrutinize the loans. As long as the supply of money is there, fine. I mean, where do you put your money? In the mattress or you put it in real estate, you put in stocks? Whatever.

Doug: Was there a question or comment front up here?

Brian: Yes. I’ll go right down the line. You guys are in agreement on some points; you guys are in disagreement on some points. What would you say are some of the indicators on the horizon that would flag a bubble is about to happen?

Rich: What Bryan is asking is what are some indicators that a bubble would happen if it were to take place?

Brian: Twenty years, 40 years? Between you, you’ve got 200 years of experience.

Audience: [laughter]

Nelson: Well, I mean as…

Rich: Rich.

Nelson: Rich said, you have to be really careful what the banks are doing. Every time I read in the real estate periodicals that they are lowering the credit scores for people to buy anything, investment or own occupied, I cringe. They didn’t learn; they haven’t learned. In all my lifetime and Carmine’s lifetime, they haven’t learned. You cannot lower credit scores because it’s not how you make money.

If you see that, that’s one thing you want to fight all the time. No one said you wanted to fight as little as subprime loans as you possibly can, and you want to fight the rent control issues that are coming up because that’s only going to kill the housing industry, and they’re not in my backyard has to be wiped out as much as possible. I mean you just rip out everything and you build tons and tons of apartments.

I hate to say it, at Framingham right now is building over 3,000 apartments in downtown Framingham. They’re all going to rent between $1,800 minimum to $3,000, and they’re hoping that they’re going to get businesses of people from Boston as they are going to come out to Framingham, they’re going to come out to Worcester. Three thousand more people in downtown Framingham. I can’t drive my car through there now, never mind in a year and a half.

You got to look at these things that they’re building, but you have to take a broader view, and you have to look at things that will create more and more housing for any type of community. If you have a two-family, what would it take to make a three? Make it easier possibly. If you have a three, would it be a little bit easier to make it a four because you could probably get an apartment and rent it out at reasonable amounts of money?

I mean you got to look at it’s not one thing. It’s a whole ton of things and this gentleman at the back, who knows? Bubbles, who knows? Crashes, who knows? Anyone who lived through a stock market that went way up in the last couple of years, went way down, went way up? That’s our economy.

Rich: Brian, to answer your question, one of the things that you get right before a bubble is a bunch of people who say there’s no bubble [laughter]. Everything has been great. This is the lowest unemployment ever. There’s no reason that anything could ever go wrong.

Nelson: I didn’t say that.

Rich: No, no. I didn’t say that you did, but that is the mood. Everybody gets excited when unemployment is low and the stock market is doing well and housing prices are going up. Those are the things that happen before every single crash. The housing prices are going up every single quarter since 2009 and has never happened in our country’s history. This is the second longest period of time in US history that it’s gone without a recession, so that’s fantastic. That’s all great news.

[0:30:08]

It is foolish to assume that is going to continue that way. I am not great at predicting the future. I am way better at predicting the past, but there is a lot of instability in our system, talking about subprime loans and writing bad loans and these things causing problems. Not only are we at record highs with that stuff, but the banks have been shown time and time again that there is no accountability. There is no reason for them to do things that make financial sense.

In 2007, Wells Fargo’s capitalization was $87 billion. It is now $207 billion. That’s a big jump, right? That’s more than double. That’s like two and a half times. Bank of America was $200 billion, now it’s $268 billion. That far outpaces inflation. JP Morgan & Chase, the last one, I’ll tell you, $128 billion back before the bubble; it’s now $359 billion. If the banks were too big to fail then and now they’re now two and a half times bigger, do you think they care about making our system unstable? Do you think they care about taking financial risks with our market?

Doug: I’m going to chime in, and I think give Carmine the last answer to your question. Warren Buffett was taught by this guy, Ben Graham, who wrote this book, Security Analysis, which looks at valuing stocks and bonds over time. What is pretty clear is as the government has shown since the Crash of ’29, a greater and greater willingness to intervene to stabilize the market, the required earnings you need for certain investment to come set your risk have gone down because the risk has actually gone down.

When the government bailed out a lot of banks in 2008, they showed unprecedented involvement. If the government were to step back all of a sudden and say, “You know what, we’re not going to intervene in banks or anything and we’re going to let the market forces as they are?” that would be time for concern, I think. But right now, we’ve got this tradition of “We’ll step in and do anything to avoid serious collapse as much as we can.” I think that’s what I would look for. Carmine?

Carmine: [unintelligible 0:32:15]

Doug: Yes.

Rich: I’ll just repeat that for everybody. Bill was pointing out that a lot of people who are grown, who are making a lot of money, who are still mooching off of their parents, and at some points, they’re going to move out and enter the market and increase demand. Good point. There’s no question that demand is going up and supply is not going up to keep up with it. I think we’re all in agreement about that. Carmine, did you want to chime in?

Carmine: Yes. We have a question over here.

Female Audience 1: I think [unintelligible 0:32:44] people are going in and taking these two or three-family houses and there are literally, I want to say millions, but it’s probably not millions. I mean like the roofs alone, if you look at the roofs on these house like I’m talking top of the line roof sidings, doors, lighting, I mean landscaping companies coming in. I just can’t imagine that where is all money the coming from? Where is this? I mean I own a three-family. I mean I can’t afford to spend $20,000 to have the house painted. It’s making me nervous when I listen to you because I’m wondering where is this money coming from?

Carmine: Okay, can I answer that question? I have several—

Rich: Can you repeat the question?

Carmine: The question was, she has property in the WPI area, and she’s seeing all this developing going on, people fixing and putting on new roofs, siding, and windows, and all of this stuff. Well, most of that money in that area, I sell that to Gold area. That’s where people coming in. I got second-generation parents who are coming to buying homes for their kids to live in, in that area. I sold a condo last week over at Dayton Street. For a three-decker, I wouldn’t have paid for what they paid for a one-bedroom condo.

Probably the houses she was referring to, I sold about six houses in that area in the last two years. Either they’re getting it from the bank, I know one particular group of people of investors who are getting it from the bank or they’re getting it from family, and how the rents and so forth –go ahead.

Male Audience 5: Spend money out their pocket [unintelligible 0:34:48]

Carmine: I know what you’re talking. What street?

Female Audience 1: I think it’s 199 Highland Street or…

Carmine: 199 Highland, I can tell you about that property.

Nelson: [laughter]

Carmine: 199 Highland was a fire, and someone bought it. I lived in that house when I was divorced.

[0:35:05]

Audience: [laughter]

Carmine: That was a rooming house. I had 50 apartments at the time, and I didn’t have a vacancy, and I ended up going over there and lived. I lived there for 6 months. I also lived in the basement with all the apartments, but that’s another story. But as far as I’m saying, I say that’s for rent for retail, apartments. I’m doing one right now, two streets over in Schussler Road. We can get into renovations, but we’re going to watch the Bruins pretty soon.

Doug: Yes, it’s Bruins time, pretty much.

Brian: What is your answer to that question?

Rich: We’re out of time. We’ll have to catch them later.

Carmine: Next time, I’ll tell them whatever.

Doug: Well, any last words or thoughts about what would be a sign to watch for in a bubble if it were to come?

Rich: In a word, what would it be?

Female Audience 2: Recession.

Female Audience 3: Higher interest.

Rich: Higher interest rates.

Nelson: More subprime loans?

Rich: As interest rates go up, adjusted rate mortgages increase dramatically.

Nelson: Yes. I agree. I agree.

Rich: All right, we’re all doomed.

Nelson: We’re all doomed.

Rich: No, that’s not sure. In Massachusetts, we’re all going to be just fine. I was hoping that one of the other debaters would have mentioned it, but we run out of time, there’s actually no correlation between unemployment and the eviction rate. I don't know why.

Doug: Just make sure you don’t overpay for your properties. We’re off this summer. Fill out all the other feedback cards. Thank you very much for coming and have a great night.

Audience: [applause]

Male Audience 6: Go Bruins!

Nelson: Thank you. Go Bruins.

[End 0:36:47]

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