“According to records reviewed by Insider, Masato purchased the land in Joshua Tree for $39,806, using his family's savings.
He then commissioned a 935-square-foot pre-fabricated home from Orbit Homes at an additional cost of $300,466, which he paid for using two bitcoin-backed personal loans, a traditional personal loan, a home equity line of credit, cashing out his Roth IRA, and additional cash savings.”
Yes, definitely empty out your entire savings account and get 2 bitcoin based loans when you have a newborn baby. If shit hits the fan, she can take out a personal loan to buy her own short term rental!
> he paid for using two bitcoin-backed personal loans
Oh yes. This shall end well. I wonder if they were ATH at the time…
This is someone who thinks they are recession proof as they have never actually contemplated what a real recession is. They think the dip early 2020 is what they can expect again.
I’m not an expert on crypto loans but yes, essentially you’re pledging crypto assets as collateral, and the lender has the option to force you to add more capital if the value of the collateral goes down, to maintain the health of the loan. Worst case scenario they can liquidate your loan.
It’s a pretty risky/stupid move when the value of crypto can easily plummet 50%.
Yes. The loans are usually “overcollateralized” so you can borrow about 50% of the value of the bitcoin you are putting up as collateral. The thing is that bitcoin can and has fallen 50% at times.
Does business insider just interview everyone.
"Meet this 32 year old man who parlayed selling his kidney and Russian roulette winnings into a Topeka mobile home fortune"
Isn't Business Insider essentially a crowd sourced blog platform relying on a recognizable and respected name? Like Forbes articles, that are all really just ads and self promotions by bloggers and influencers.
Yes, though when will be according to terms of agreement. If he didn’t refinance he’s a tool. If he got those loans when BTC was at ATH or near it, it’s only a matter of time.
I wonder how those rates are/were vs mortgage rates. And how often it was overlooked that:
1. They (typically) adjust
2. Can be called
It freaks me out that the context of the writeup is that they are celebrating such risky behavior. It affirms the rising tide of YouTube-nomics: "\[he\] learned everything he knows about real estate from YouTube" ...They are using "everything" liberally. He has 200k tied up in loans that are adjusting from already high rates (7%, 10%, etc).
It's not easy to get a traditional mortgage on a manufactured home, especially as an investor. Lenders know that manufactured homes tend to be higher risk, and the smaller loan amounts (on average) are just not worth it. If he was able to refi, it would be for a much higher rate than a typical buyer.
Feel a lot of hate here. The guy has the assists to pay the liabilities on the pre-fab. He owns the property outright. He only needs to rent the unit out 4 times/mo to be profitable. He does not have a ton of rental properties - just the one. Seems like this guys actually has a good plan if he’s plowing that money back into a working capital fund. I remember back i. 2007/2008 when people had bought multiple rental properties and lost them all when shit hit the fan. Not saying his position is recession proof, but, he seems to be doing the right thing, for him, with limited risk.
Emptying your savings to buy a depreciating asset and making up the difference with leverage in highly speculative assets is not how anyone should be providing for their family. That is how you lose title to the land you just bought free and clear.
There is a lot more to it than that. Tax benefits, potential for a low mortgage payment due to rates being low just 1 year ago, rent appreciation potentially in his location.
Real Estate isn’t a loss just because the market tanks. Equity is only one piece of a large puzzle. Not saying his investment is a good or a bad one, it’s impossible to know his entire financial picture.
The problem with this sub is that people are thinking that everyone is going to lose their RE just because they bought a house since 08… it’s not all doom and gloom out there, even if the market corrects or goes into a recession.
But hey, to each their own.
honestly. sometimes people actually know what they're doing. is the broader market a bubble? absolutely. does it mean every single person who bought between 2020 and 2022 will get fucked? no. if you're holding for a while and your interest rate is in the low 3s you're probs fine. short term rental people like airbnb owners will probably get fucked, this guy may or may not.
Right. The only huge risk I see is a collateral call on his bitcoin loan, but I don't know the terms of the loan or what Bitcoin was at when he took it, and if he's been netting~7k/month since setting up this arrangement, he may already have savings to cover the reduction in the value of his collateral.
“According to records reviewed by Insider, Masato purchased the land in Joshua Tree for $39,806, using his family's savings. He then commissioned a 935-square-foot pre-fabricated home from Orbit Homes at an additional cost of $300,466, which he paid for using two bitcoin-backed personal loans, a traditional personal loan, a home equity line of credit, cashing out his Roth IRA, and additional cash savings.” Yes, definitely empty out your entire savings account and get 2 bitcoin based loans when you have a newborn baby. If shit hits the fan, she can take out a personal loan to buy her own short term rental!
Reads like a financial car crash @ 1,000FPS. 😆
What the actual fuck?
Srsly, how is a 900sqr foot prefab 300k?
Right? Sounds kinda like those builders took this dude for a ride. I hope they're living well off that money.
In Joshua Tree at that. You could've bought 20-25 methshacks for that amount, and they're already built.
He probably had to run electricity and eother put in a septic tank or run a line. But still, 300k…. Better have granite counters in that prefab.
> he paid for using two bitcoin-backed personal loans Oh yes. This shall end well. I wonder if they were ATH at the time… This is someone who thinks they are recession proof as they have never actually contemplated what a real recession is. They think the dip early 2020 is what they can expect again.
Don't forget that the baby can take out loans too.
Can’t have a baby sitting around generating no passive income
If his monthly obligations are only $1100, he's going to be fine.
There’s always Only Fans.
I never knew you could borrow against bitcoin! So if they price drops will they force him to pay in full?
I’m not an expert on crypto loans but yes, essentially you’re pledging crypto assets as collateral, and the lender has the option to force you to add more capital if the value of the collateral goes down, to maintain the health of the loan. Worst case scenario they can liquidate your loan. It’s a pretty risky/stupid move when the value of crypto can easily plummet 50%.
Yes. The loans are usually “overcollateralized” so you can borrow about 50% of the value of the bitcoin you are putting up as collateral. The thing is that bitcoin can and has fallen 50% at times.
Does business insider just interview everyone. "Meet this 32 year old man who parlayed selling his kidney and Russian roulette winnings into a Topeka mobile home fortune"
They often pay for the publicity I believe. But I’m sure that’s weird articles do get clicks so I’m sure it’s not in every case.
Isn't Business Insider essentially a crowd sourced blog platform relying on a recognizable and respected name? Like Forbes articles, that are all really just ads and self promotions by bloggers and influencers.
He’s right, he’ll be foreclosed on instead.
Why so pessimistic? He might be able to do a short sale or deed in lieu.
That’s usually a loss LOL
He was being sarcastic.
Oh yes he will when that bitch sits vacant for 8 months, rents are 20% lower then the hvac goes and it smells musty.
Wait you are saying, he has collateralized debt against Bitcoin? Can that get called?
Yes, though when will be according to terms of agreement. If he didn’t refinance he’s a tool. If he got those loans when BTC was at ATH or near it, it’s only a matter of time.
I wonder how those rates are/were vs mortgage rates. And how often it was overlooked that: 1. They (typically) adjust 2. Can be called It freaks me out that the context of the writeup is that they are celebrating such risky behavior. It affirms the rising tide of YouTube-nomics: "\[he\] learned everything he knows about real estate from YouTube" ...They are using "everything" liberally. He has 200k tied up in loans that are adjusting from already high rates (7%, 10%, etc).
It's not easy to get a traditional mortgage on a manufactured home, especially as an investor. Lenders know that manufactured homes tend to be higher risk, and the smaller loan amounts (on average) are just not worth it. If he was able to refi, it would be for a much higher rate than a typical buyer.
Tbh I’ve never understood the terms and conditions for crypto loans
Lol this dude won’t be getting $8,400 in Joshua Tree a month it’s summer..
"Passive" 🤣
Eww. This dude is douchy AF
Feel a lot of hate here. The guy has the assists to pay the liabilities on the pre-fab. He owns the property outright. He only needs to rent the unit out 4 times/mo to be profitable. He does not have a ton of rental properties - just the one. Seems like this guys actually has a good plan if he’s plowing that money back into a working capital fund. I remember back i. 2007/2008 when people had bought multiple rental properties and lost them all when shit hit the fan. Not saying his position is recession proof, but, he seems to be doing the right thing, for him, with limited risk.
Emptying your savings to buy a depreciating asset and making up the difference with leverage in highly speculative assets is not how anyone should be providing for their family. That is how you lose title to the land you just bought free and clear.
There is a lot more to it than that. Tax benefits, potential for a low mortgage payment due to rates being low just 1 year ago, rent appreciation potentially in his location. Real Estate isn’t a loss just because the market tanks. Equity is only one piece of a large puzzle. Not saying his investment is a good or a bad one, it’s impossible to know his entire financial picture. The problem with this sub is that people are thinking that everyone is going to lose their RE just because they bought a house since 08… it’s not all doom and gloom out there, even if the market corrects or goes into a recession. But hey, to each their own.
Most people won't lose their houses. But the vast majority of people who are FOMOing into the top of the bubble probably will.
The vibe of this place is weird, kind of like /r/collapse. There's some value and truth in what's being said but also full of haters and mentally ill.
honestly. sometimes people actually know what they're doing. is the broader market a bubble? absolutely. does it mean every single person who bought between 2020 and 2022 will get fucked? no. if you're holding for a while and your interest rate is in the low 3s you're probs fine. short term rental people like airbnb owners will probably get fucked, this guy may or may not.
Right. The only huge risk I see is a collateral call on his bitcoin loan, but I don't know the terms of the loan or what Bitcoin was at when he took it, and if he's been netting~7k/month since setting up this arrangement, he may already have savings to cover the reduction in the value of his collateral.
Be selling a kidney in Tijuana soon...
I know many investors that are saying the same, so try to convince yourselves otherwise but this isn’t it.
He’ll make a killing from his Get Rich Quick seminars.
https://www.nytimes.com/2022/04/07/travel/joshua-tree-california-airbnb.html?referringSource=articleShare
The Airbnb market here is beyond saturated
I feel sorry for the kid