Speculation In Many Cities ‘Not Plausible’
A real estate columnist answers questions about renting and owning a home. “Q: My husband and I have thought about investing in rental real estate for added income, though we realize it would take time before we would have positive cash flow. Across the street from our house, an old townhouse has been rehabbed into several appealing ‘luxury’ condos, and prices in our area seem to be at a peak. Are there any rules of thumb for timing real estate investments of this kind?”
“A: No. In order to ‘time’ a market you would have to know about future pricing, something no one knows.”
“As an example, imagine that homes in your area sell in the $450,000 range and rent for $2,500 a month. This rental rate is insufficient to cover monthly ownership costs even with 20 percent down. Imagine that you put down $50,000 and borrow $400,000 at 6.5 percent over 30 years. The monthly cost for principal and interest is $2,528. There would also be costs for taxes and insurance, plus you would have repairs and vacancies. Lastly, that $50,000 down payment is not earning interest.”
“Is this property a good investment candidate? If you can afford the negative cash flow in the first years of ownership, perhaps. If you can’t afford the negative cash flow, then no, it’s not plausible.”
“Q: How do you decide when it’s a good time to change from a renter to an owner? A: According to the National Association of Realtors about 40 percent of all homebuyers are first-timers, so more than three million people look at this issue each year and decide to buy. In addition, there are no doubt others who consider the issue and prefer to rent.”
And a website takes a look at the equation for various US cities. “California and NYC region have biggest house price ‘bubbles’: new list ranks US Cities with most inflated house prices. A house price ‘bubble’ is said to exist where the cost of buying a home is unduly high compared to the cost of renting the same property.”
“A new reference book..has published a list of cities with the largest disparities between owning and renting. It is based on a database compiled by the US Department of Housing and Urban Development that includes 71 thousand households. The top nine cities in the list are all in California or the New York City commuter area. The list below shows a dollar amount for each city indicating how much more expensive it is to buy a home rather than rent.”
1 San Diego, CA - $1,442 per month
2 Anaheim Santa Ana (Orange County), CA- $1,376 per month
3 San Jose, CA - $1,340 per month
4 San Francisco, CA - $1,308 per month
5 Los Angeles Long Beach, CA - $1,211 per month
6 New York City, NY - $1,118 per month
7 Northern New Jersey Areas - $1,030 per month
8 Newark, NJ - $1,017 per month
9 Nassau Suffolk, NY - $991 per month
10 Boston, MA - $981 per month
Those numbers (rent-ownership disparity) are informative, but not on target because they ignore the risk of falling prices.
They are also far too crude. On the one side they ignore tax deductions for interest and they include principal payments; on the other side they ignore property taxes, insurance and maintenance. Looking at the figure for SF, it significantly understates the difference, imo.
Risk of falling prices is as irrelevant as the reward of rising prices. You’re talking about cashflow to pay off the mortgage on your investment.
The other costs/deductions are important when considering cashflow.
Right on Feep.
You’re right that is the one risk not one talks about. Everyone assumes prices only go up. My tax preparer told me to buy a house for the tax break and gave me the same old reasons to buy real estate (build equity, tax deductions). However, he admitted in the first 5 years no one builds equity through paying down principal - its all appreciation. So what happens when the appreciation stops or prices go down?
My accountant told me not to buy because the price-rent relationship is too out of whack.
Yeah…I was kind of annoyed at being pressured but housing is the only real tax break I qualify for and he is a tax person not a investment advisor. However, making decisions for purely tax reasons is the cart driving the horse.
Why pay $100 to the bank just to get $40 back from Uncle Sam?
If you pay me $100, I will give you $50 back.
Property taxes and association fees are usually just about as large as the tax deduction. The benefit of the tax deduction is really imaginary.
If you’re thinking of a mortgage as a tax break, that means you’re not paying AMT.
And if your’re not paying AMT, you have NO RIGHT to complain about taxes! if you’re not paying AMT, your’re getting a good tax deal already
Not complaining about taxes. However, if I can get a tax brake I will take it.
People stop buying, then prices go down some more.
Word! Prices will only stay high as long as stupid people are willing to pay those high prices. Stop buying and force sellers to crack a little…or a lot!
One thing that realtors won’t tell you is that the tax benefit is discounted by the standard deduction. For example, if your itemized deduction is 20,000 and non-real estate deductions are 15,000 then assuming your filing status is Married Filing Joint then the tax benefit is 20,000-10,000 (standard deduction) 10,000 x marginal tax rate = taxable benefit. Then this become more complicated with AMT.
I have no problem with rent-price comparisons that do not consider the possibility of falling prices. I just cannot stand those who take exceptional appreciation as given and granted.
I’m surprised that LA/OC number isn’t higher. Sure seems like it when looking at housing prices around here.
In Venice that number is clearly way out of line. The house I live in is valued at $1 million. The open market rent for this place is about $2500 or less ( I pay $1180). Using the #s the paper used, the payments would be $5688/month, plus $1000 taxes, plus insurance (? maybe $100/month) plus upkeep (averageing $150/month in recent years, as a vague guess, and a very cheap one in the long term, so let’s guess more like $250), making a guesstimate of $6948, for a net subsidy to renters of $4448/month, or of $5768 to me. That’s more accurate.
Veniceguy,
How in the heck did you score that deal?? A $1M house anywhere near me in SM would rent for about $4K/month. Is your landlord a friend…or just not a very savy business person? If it’s the 2nd one, do they have more houses for rent? I could stay here for years at that price.
I have been here for 10 years. Remember, 5 years ago Venice was still a ‘hood. I was in school so didn’t mind. Actually, it was never really bad in reality. I am friendly with my landlord, but that’s been developed over time, not originally. I used to pay $1000/ and I have been the one raising rent. A lot of people have rents like this who have stayed put for a long time, and there are a lot of people like that. She’s a good woman and I appreciate it greatly. I have found $750 and even less further inland on singles. There are even some $750 rents around the Westside and Venice. Not fancy places, but they are there. Everything about this market is insane and doen’t make any sense at all.
5 years ago?? Didn’t someone just get shot and killed there the other day in a carjacking incident??
I’m in a 2BR and looking to upgrade, but the only part of Venice I would live in with a family coming is the Peninsula or Canals. Totally different story if you are single, though…it’s just with the gangs and all that the beach attracts, it is not anywhere I could live.
My father in law seldom if ever raised rents for good tenants. Current “value” isn’t much concern when the property is mortgage free and purchased years ago. It’s way better to have a tenant who won’t trash the place and who will stay a while.
That’s part of what makes these prices imcomprehendible. Venice is not, overall, a highly desireable neighborhood for people with money. It is wonderful if you are a creative type with no family- it is a fount of creativity and inspiration or many. Why in the world should my house be valued at $1 million? The valuation itself is therefore double incorrect in camparison to other places. If you had children here and that kind of $ you would need to pay for a private school (and also for afterschool programs to keep them out of trouble in some parts of the neighborhood). Some parts of Venice are very safe, most of the time. As per Loren, I am one of those tenants. I do most of the small maintenance myself, and the realtionship with the landlord is almost family by now, except more polite and I never hit her up for money or blame her for my life’s problems. I think she likes that! I visit with her every month when I pay the rent and we talk about her grandchildren and our lives. I even bring friends with me to visit sometimes, which she likes. It’s strange to think about, but underneath all of the world’s profiteering there are still some old-fashioned normal relationships between human beings going on.
My only problem with this, if you live In Orange County most palces here are nice and that figure for Anahiem/ Santa Ana $1,376 for rent. Well you would also need to bullet proof your windows and walls. And your kids will go to schools that have lots of Mexican and Asian gangs. This area is close to Disneyland, so your also going to see alot of prositution or girls of the night walking around. I rent but not in these areas so your rent’s going to be higher then 1,376 a month unless you can handle living In the hard area’s?
Mike, those numbers are not rents, they are the gap between renting and owning.
right on got it!!!
Here is your data…
Listed as - Difference/House Price/Mortgage Payment/Rent Payment
I think it underestimates both the rental payment and the mortgage payment… so in the end they kind of wash each other out and the difference is still valid
2 Anaheim Santa Ana (Orange County), CA 1,376 458,998 2,721 1,345
Trully Iv’e learned more here then listing to friends or friends of friends. Thanks Ben and all the other fella’s who I think give some good free advise and numbers you stand by. I hope your all here when im’ ready to buy!
Socal guy I would do bussiness with you, you sound like your on the consumer side, for a realitor!!!
I grew up around Disneyland in the 70’s and I don’t recall prostitutes hanging around there. They must have added Hookerland after I left. Sounds like an “E” Ticket though.
I wonder is association fees and local taxes are included in the comparisons. In NOVA both of those expenses are what make owning more expensive.
I’ve been telling my fellow renter friends here in San Diego that our landlords are effectively subsidizing our low rents, and not to worry about getting “priced out of the market,” which the local news channels were actually saying on the air last summer (you know the two giggling bimbos on channel 8). Now I can show them the data - Thanks for the post!
Subsidizing is quite an understatement; my rent comes with access to the Poway Schools for my kids, rec club membership, home warranty to cover maintenance, and a gardener to take care of the lawn and garden. Figure out how much it would cost to pay all that out of pocket, and you will see how subsidized my rent is. Even the pecuniary cost is only 2/3 of the most recent comp price, and since last summer, no home in my neighborhood has sold at those levels.
And you get to watch the 4s Ranch price drops from the front line
There have been some substantial ones lately!
Yes but you’re missing out on all that wonderful price risk!
Here is the link to the data almanac site :
http://www.thedataalmanac.com/housing.htm
This has the target house price and other assumptions.
Another thing to note is that this survey was based on data collected in 2003!
I am sure things have changed dramatically in 2004 and 2005 and this numbers would then be the low-end estimate (as many have already suspected).
Just updated on couple of flipper’s tales on my site: Bubble Markets Inventory Tracking
oc - incredible stuff. talk about a spanking.
Those numbers are wrong. The average price of a house in Washington DC metro area is not $319k. In fact, that’s lower than the 25th percentile — the median is $459,900 as of yesterday.
As one reader pointed out, the government data the writer uses is from 2003.
Redone for DC metro:
rent ~$1800
Mortage - $2600 (assumes 20% down and 1% property tax)
Difference: $800
(3Br townhouse in Fairfax area)
In my case, we pay $1910 in a good area of North Coastal San Diego. The sales price of these units is $510K
If I am not mistaken, assuming no down on a 30 year fixed monthly payments 3,187 + $100 ins + $500 PT + $300 Assoc fee = 4087 mo assuming NO maintenance and no points / fees. This minus a likley $500 tax saving is still almost twice our current rent.
My wife and I figured we would draw a line in the sand at $275K, which in reality is all we can afford anyway…
I agree with others. Those numbers are overly optimistic. In my area, half million dollar homes are renting for around 2200-2500 . Unless you have 20% down, I cannot see how you can come close to that with a mortgage payment. Then we are talking about opportunity costs and $100,000 at risk.
I don’t like how the author says that maybe if you can afford negative cash flow “for a few years,” then it still might be a good investment to buy a rental property. You need to be cash flow positive from the first month to be successful in real estate investing. Otherwise you are a speculator and not an investor.
Lots of people are cashflow positive with I/O loans until they adjust.
I would prefer a little negative cashflow in the early stages so my deductions are higher to balance the late stage properties that are throwing off cash.
But obviously there must be a financial plan in effect either way.
IN SF, I rented a 3 bdrm house on Russian Hill for $3500/month. That rent sounds high, but it was a large beautiful house in a hot neighborhood. The owner had bought the place for $1.3 m in 2003; a realtor said she thought it would go for $1.8 in Jan 2005 (and I agree it would have).
The landlord, a Stanford Professor who was planning on moving in at some point, told me that our rent was only reducing the carrying costs to him. He wasn’t specific but I got the impression that his all-in costs were more than 2x the rent I paid him.
In this market, right now, today, a renter can take massive subsidies from an owner. It is a huge wealth transfer that in future years we will all look back on and say, what the hell was going on? Owners are basically paying renters to live in their overpriced homes. When it is clear that price appreiciation is finished for the near to medium term, or worse, that prices are falling, owners are going to realize just how f*cked they are. This will probably make for extremely strained landlord/tenant relationships.
Renting is the smart money right now; both because it is a huge savings to the renter, and because the renter will have a historic buying opportunity at some point between now and 2010.
Finally, the New York Times did a story on exactly this point in summer 2005. Does anyone have the link? They concluded that the disparity was largest in San Francisco.
Caution to renters!!
I rented from a negetive cash flow investor/lawyer back in 1990. It was a nightmare that ended in forclosure/bankruptcy for him. He had no money for maintenance and repair, his low budget remodel started to fall apart on the first day. Don’t expect to get your deposit back from bankruptcy court!! I got mine back by not paying rent for two months, that was no fun.
Yea that is a downer that most don’t think about. At least you were able to recoup your deposit
That’s why I said a few days aga and I am holding to this, that I will not pay any large deposits to a landlord. I will pay the first month’s rent and a $500 damage deposit which I am willing to forfeit if I feel that I am getting a great deal on the rent, and not a penny more. If one guy doesn’t like that, there are 10 others looking for good tenants.
I have already recouped my deposit money through the cost discount of renting versus owning a comparable home. If I get my cash deposit back, that will be icing on the cake.
Ian, I am surprised others haven’t responded to your brilliant post. I totally agree w/you as I too am in a similar situation. I am currently renting a home for $3,200 which at first glance sounds high, but when you juxtapose it against the fact that landlord wouldn’t sell for less than $1.18 million, the rent effectively values the home at $650k assuming 1.2% property tax.
This is an historic moment for renters to recoup what they lost between 2000-2005 and have the opportunity to buy in by 2010 at discounted prices.
That’s one of the reasons I am leaving Dallas. I am renting in a mature neighborhood here and the rent is probably cash flowing the guy’s mortgage. I want a deal like yours.
“This will probably make for extremely strained landlord/tenant relationships.”
How will a f*cked landlord be able to share their pain with a tenant who pays the rent on time? If they proactively strain the relationship, the tenant will be able to find cheaper, better quality lodging elsewhere. There is clearly no shortage of housing these days…
“Finally, the New York Times did a story on exactly this point in summer 2005.”
I think Ben had a thread on that article (look at the archives).
Here is a link to a copy of the article:
http://www.kellogg.northwestern.edu/news/hits/050925nyt.htm
Re: NYT article
“Cheerleader” types around here tried to ignore it. For recent buyers, it plainly showed they had made a questionable decision… here’s a quote and a link below to the article:
“In the Bay Area of California, a typical family that buys a $1 million house - which is average in some towns - will spend about $5,000 a month to live there, according to the Times analysis. The family could rent a similar house for about $2,500, real estate records show, and could pay part of that bill with the interest earned by the money that was not used for a down payment.”
“Is It Better to Buy or Rent?”
By David Leonhardt
New York Times - September 25, 2005
http://tinyurl.com/dwwqo
Or:
http://www.nytimes.com/2005/09/25/realestate/25cov.html?ex=1143345600&en=de711efe83526259&ei=5087&excamp=GGREbuyingvsrenting
[I hope this isn't a double post]
NYT article:
“Is It Better to Buy or Rent?”
By David Leonhardt
New York Times - September 25, 2005
http://tinyurl.com/dwwqo
Or
http://www.nytimes.com/2005/09/25/realestate/25cov.html?ex=1
143345600&en=de711efe83526259&ei=5087&excamp=GGR
Ebuyingvsrenting
Out at the Peak,
it’s unreasonable to expect to have positive cash flow the first month. Not in rental business, unless you put a big down payment or ask for a ridiculous rent.
If you’re not cashflow positive right off the bat the person lending you the money is making a higher rate of return than you are.
If it’s not cash flow positive the minute it closes escrow you are the bigger fool
I agree. Unless you buy multi=unit slums and rent to Section 8. What a nightmare that would be.
There was a small window in the late 90’s where a 20% dp resulted in break-even or slight positive. No other time in 25yrs (even buying foreclosures) has this been possible in NoVA.
Are you kidding me??? I highly disagree Section 8 and multi-units are an investors best friend anywhere you are. Mismanagement makes slums not tenants.
A friend of mine is now a millionaire from buying junky condos in 1990 at 10-15K each and renting them out to Section 8 tenants.
Sleepless, if you can’t buy it for a postiive cash flow - interest + tax, then you are basically betting in future appreciation to bail out what was a bad investment decision.
Hedge- I agree that now is not the time to buy unless you have an inside track. But, long-term, residential investment property (or commercial, for that matter) can be a sound part of one’s investment portfolio. I can remember a time in the early 80’s when negative cash flow was at least as bad as today. I don’t see anyone here discussing depreciation deductions. We were phased-out until the advent of “Real Estate Professional” by the IRS.
I think you have to consider not only negative cash flow; but the fact that over the years your tenants are paying off the mortgage. If your ultimate plan is to have these properties paid for - the plan is solid. You must “buy right” which takes knowledge, intelligence and guts. This is what separates the winners from the losers.
I have had over 15 rentals. Most I sold this fall antisipating the downturn. Anyhow, EVERY ONE HAD POSITIVE CASH FLOW FROM DAY ONE. Some I even got into with no money down.
I buy them Wholesale.
I have properties that I bought this year that cashflow with 10% down (30yr fixed). Purchase price $160k rent $1200. This is about 40% below market value for this house.
All the deals I do are solid with or without appreciation. I still try to follow the trends because in my market (Central CA) it is boom/bust so timming is very important to me.
I plan on buying many rentals in a few years. I don’t really need the market to fall 40%, I just need it to fall a little and I can find deals 40% below market value.
It is VERY possible to have positive cash flow, especially with a 20% DP. I bought a house in 1998 in North SD County for $118K. My mortgage was around $630. Property tax was about $1200. It would have easily rented for $1,100 (at least). It **is** possible, and it should be an investor’s goal to buy positive cash-flow in almost all cases.
BTW, that house (for $118K) was a HUD rehab. It had to be brought up to code and had a new roof, paint, flooring, counters, sinks, refurbished bathtubs, etc. Also, since it was my primary residence, I qualified for a MCC (mortgage credit cert) which effectively gave me a tax credit of about $1,100/per year.
I highly recommend first-time buyers of a primary residence look into these MCCs (there are qualifying restrictions).
Washington Mutual Cutting 2500 Mortgage Jobs
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB56EAEC8%2D9221%2D4143%2D8186%2DBC8B842DD12E%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo
In addition, the news just came out 4 minutes ago……..YAAAAAAAAAAY!!! And Realtors say there is no slowdown.
Ooops Sorry.
Realtors response to the Washington Mutaul news is that there is not a national slowdown, but only a slowdown where Washington Mutual is……
i rent a million dollar home in pismo beach for 2k amonth,i play golf at public golf courses and send my kid to public school,and pay no property taxes.owner bought house for 580 k 3 years ago,so my rent pays his mtg a win win situation created by the real estate bubble,he would have sold this house if the appreciation was not so incredible,but he feels that he cant sale an appreciating asset…now that the massive run up has stopped he just may now sale….problem is theres no buyers left………and plenty of million dollar homes avail in this area,all sitting empty…….
Why should he sell if he is break-even and long-term? My experience with the last down cycle showed that rents did not decrease. My plan is to sit back, relax and let my tenants pay off all my mortgages. In 7 years all my properties will be paid for and I will have a considerable stream of income into perpetuity.
Yes, the net worth will take a hit for a number of years. That’s Life.
The last bust in S. California rents dropped in excess of 35% created a many sleepless nights and a lot of pain for some folks.
Hopefully you’ll have better luck
Didn’t happen in Northern Virginia - had about 10 properties (maybe 14) at the time. I tend to have tenants who stay for years. Some as long as 12 years.
Yea, here we had mass vacancies for every type of property imagineable, owners were running for the doors some made it a lot didn’t.
That’s why i’m in utter amazement it happened again.
I wonder why your region would be so different from mine? People have to live somewhere and rents are so cheap relative to owning. Where did these owners run to? Tent cities?
During that particular downturn we had massive industry loss, a huge earthquake and other economic disasters and people were either leaving the state or becoming renters and blood was flowing pretty thick in the streets.
This time we have already lost Nissan and whoever is making a living off their presence and most of the jobs that are being created are low paying service. So it will be interesting to see what this downturn brings.
I didn’t see rents dropping that badly here in San Diego. They sure as hell didn’t go up for a good ten years, but I think a 35% drop is completely off base.
My numbers are anecdotal though, where are you getting your data?
I’m a realtor I was selling R.E.O’s and non-performing paper for lenders and fdic at the time so my numbers are from my memory from talking to numerous owners of investment properties who were trying to get out.
If i’m not mistaken someone here has posted similliar information with newspaper articles
Also, in California selling an investment property with a lot of appreciation KILLS you in taxes.
I’d rather have a place I know the condition of, am intimiately familiar with it (down to the appliance hookups), and a solid tenant I have a good relationship with.
That is worth actual cash money and very few realize it.
Do a 1031 exchange to avoid the taxes.
What is worth actual cash money??
Absolutely right Feepness. It’s the turnover that kills you. People don’t factor in rent loss, commissions, paint, etc. when they lose a tenant. On a $1,600 rental (vacancy), I’ll list it for $1540 and offer a $500 bonus to the leasing agent. I can’t believe people will hold out for top dollar and have the place vacant for 3 or 4 months.
I’ll even go lower and have a pile of applications to choose from. I always take the ones who look like life-time renters. “we are just renting for a year while we look for a house” goes immediately into the circular file.
Mrincomestream - a good tenant is worth actual “cash money”. Your 1031 idea simply puts you into more real estate. This doesn’t help the person who wants out. One thing I have done in the past is to 1031 into a future retirement home with the plan to convert it (tax free) to personal use when the time comes.
Is that what he meant? Ok I agree with that.
The 1031 can be used if you want it out of real estate. It just takes timing technique and more than one transaction not for the faint of heart.
Tell me how a 1031 could possibly get you out of Real Estate ? Don’t worry, I can handle complex answers.
If you have owned it for more than a year you simply pay Capital gains (currently 15%). That is the same as any investment.
Plus CA’s cut which will probably be around 9%. And at least some of that state tax won’t be deductible as it’s likely to push you into AMT-land.
Quick and dirty answer. Buy a property in June complete exchange add commission plus other fees to price of property sell next calendar year. Commision and other fees tax deductible offsets any gain.
Invest in joint ventures and other real estate annuities. Technically real estate but without the actual management and day to day.
Your first paragraph makes no sense to me.
As for the second paragraph: real estate is real estate.
It is impossible to find properties in California that have positive rental cash flows unless you are putting around %50 cash down.
And then if you have a few million in cash hanging around there are much, much, much better investments currently then real estate to get a perpetual income stream.
For 1 to 4 units you could be right. Anything over that you should be ok with 20-30% down depending on the area. In Santa Monica or somewhere like that you’d damn near would have to pay cash for it too cash flow
Stop factoring in downpayment to determine “positive cash-flow”. Positive cash-flow is a function of no downpayment less interest tax benefit. There is an opportunity cost to your downpayment and if you don’t factor it in, then that’s just plain stupid.
Furthermore, if you think that property prices will appreciate and that the house/investment has a good probability of appreciating (which is 80% of the time when you deal with an inflation hedge like real-estate), then I suggest you leverage the hell out of it.
I’m looking forward to seeing if I find a condo conversion with all the units for sale and turning it back into a managed apartment complex!
2009, I’m looking at you baby…
Interesting. How would you do that?. What about buying empty condo projects and turning them into apartment complexes or what about buying a stalled project and completing it. How would that work.
Send me an MLS# of a California property in which I can put %20 down and then have renters coverage my mortgage plus ALL housing costs plus property taxes so that I am cash flow even and will put an offer in tommorrow.
Those properties no longer exist, hence a real estate bubble, and so it is much cheaper to rent unless you have a big wad of cash that you want to put into real estate in order to make the numbers work.
06-010333
Alex-
FYI, the better deals are never put into the MLS. Most realtors just push them to loyal clients. I just posted that too let you know they are out there.
BTW should I send you my phone and fax number since you’ll be making an offer tommorrow
I find deal better than that every month…but never on the MLS. I buy wholesale…you are looking retail.
I look for desperate sellers…you are looking at houses.
Here is my CA situation:
I pay $1375 a month for a home worth or was worth $480K
4/2 built in 2003 3 car garage huge yard three miles from the beach.
I live in north Santa Barbra County, should I buy?
LOL
Too bad you didn’t buy it in 2003; using proceeds from the sale of your previous house bought in 1998. With a 4/2, I imagine you are no longer in your 20’s. Your time will come. Just don’t LOL too much at those who sacrificed and took risks to buy in our early 20’s. Now, at 47 some of us are set.
No-one said RE was a bad investment period.
It’s a bad investment NOW that’s all - most sensible objective investors will be happy to buy RE once it represents a bargin again.
I agree completely. But some of these people who sat on the sidelines for 5 years or so and now think that they are soo smart are ridiculous. Any post that ends in LOL shows a lack of maturity. I doubt half these “renters” will have the guts to pull the trigger when the opportunity presents itself.
I took risks, made a killing during the tech bubble crash. Buying in 03 was an easy call it was cheaper then renting no real risk there. I have the cash but like the tech bubble I plan to buy late 2007 when the sellers are desperate. I predict a correction, big time and I have zero risk as the portfolio just grows. If you invested in communication stocks three months ago you would be up 50% right now, ATML SMDI etc. Smart Investors are dumping homes now. Should I buy or keep renting? A seven year old could answer that question.
Congrats on your stock success. I got killed in the tech crash so I stick with what I know. Real Estate.
Stock PGH, they pay an 11.6% dividend monthly. Is this better then the return on a home in CA? Real Estate had its run, people made money that is good, time to move on. Is there risk yes, but I can sell in 10 seconds. I am very happy renting, good luck on the Real Estate investments.
“Just don’t LOL too much at those who sacrificed and took risks to buy in our early 20’s. Now, at 47 some of us are set. ”
None of us LOL too much at those who listen to reason.
Those who don’t listen to reason, or who listen to Gary Watts, or David DiaLereah, or some local realtor…
…to those we say…
…LOL…
Quit bashing local realtors some of us are more in tune then you are LOL
The boasting on this and so many blogs is amazing. So many Real Estate millionaires and people with high six-figure and seven figure incomes. I highly doubt both. I would wager that most of the “investors” that post to this board are indebted homeowners/debt slaves that pretend to be moguls in the virtual universe since there is no way to validate claims.
This one truth I know is that most people in cyberspace grossly overstate their “assets” whether that be physical, financial, intellectual, etc.
Not me! Im a smalltimer, pure and simple: height, looks, intellect, bank account. Jes tryin’ to get a feel for the landscape here, y’all. Did sell this summer though, so I guess Im better off than most.
I am sure that some people do lie. I don’t understand why anyone would waste their time doing so. Low self-esteem perhaps. Anyway, my experience has been that the most suspicious people ARE the liars because they do it routinely. Truthful, honest people rarely question the veracity of others unless something is blatently unbelievable.
most married couple standard deduction is $10,000.00. in my case wife and i are over 65 and get a $12,000.00 deduction. so i would have to get a $1000.00 per month interest bill just to start getting a tax break for buying. so i never figure a tax break when buying a home. when the piti equals my $875.00 rent i will buy a home equal to the one i am renting. thats with a 20% down and 30 year fixed rate.
VA_investor, since your business is real estate, I am sure that lying is second nature to most of the people you deal with. Most RE people are about as honest as car salesman. Ten articles a day about the “honesty” of people in the real estate biz on this blog only go to prove my point.
Also, people with high levels of education do happen to be more skeptical, it is called critical reasoning, a skill sorely lacking in the majority of today’s population.