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Platinum Super Contributor
buyinghouse
Posts: 5,879
Registered: ‎04-23-2011
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Re: Still waiting for prices to go down? Right or wrong?

  We are all different, aren't we?

 

  So, being fair here, one can say I don't like to rent and other can say the opposite. Either one deserves respect for what they wish or what they want.

 

   Question here is if whoever is against ownership, he or she will say "no" to a good deal owning a home.  Will you say no to buy a $150K property which is appraised to $650K in today's market?  You would, wouldn't you? It's money you might be earning what we are talking about.

 

   I think the debate between renting and owning is of a decision that implies many responsibilities that the "I don't want to own" doesn't want to face. For some renters, it's easier to pay $100 a month more and perhaps another $100 next year than as a home owner find out the property you bought needs $2,000 in repairs. Either way, money goes out of your pocket but, the results are yet to be seen, who will be getting his money back or who will be more pleased with paying that money?

Silver Trusted Contributor
nj2bayarea
Posts: 839
Registered: ‎05-11-2009

Re: Still waiting for prices to go down? Right or wrong?


OneTreeHill wrote:

Marcus76 wrote:

For someone that allegedly doesn't see any benefit in ownership, you sure do complain a lot about the cost of ownership.  


There is a benefit to owning if it costs you half as much to own as to rent, as it does in some other parts of the country.  That's why I complain about the cost of ownership in the Bay Area.  It's completely a financial decison for me.  I really don't understand the concept of "pride of ownership", especially when you can rent the same exact property that you can buy, like I do.  Where I live now, it would cost me twice as much to buy it as to rent it, thus making it an easy decison to rent.


 

Sounds like you have a clear thought on this matter. Congrats! Now save time and get off a Real Estate message board!!

Silver Contributor
Neptune__
Posts: 453
Registered: ‎11-01-2011
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Re: Still waiting for prices to go down? Right or wrong?


elt1 wrote:

OTH,

How do landlords stay in business? How do REITS often do better than other stocks?... What are your plans now that your show is off the air?



They stay in business because they bought at the right time and are willing to accept mediocre ROI.  I PERSONALLY know 3 people who bought investment properties during the mania and 2 of them got foreclosed.  I haven't kept in touch with the 3rd person but I know she was cash-flow negative. It's a tremendous financial burden every month. I wouldn't be surprised if she strategically defaults.

 

REITs sometimes do better than non REITs because they invest in commercial.  I don't know any REIT that invests in SFH's and beats the market.  I own 2 REITs and they're both commercial

 

 

Silver Super Contributor
OneTreeHill
Posts: 1,129
Registered: ‎01-19-2010
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Re: Still waiting for prices to go down? Right or wrong?


elt1 wrote:

These guys started buying in Antioch in 2009... They started with $500k... They now own over 1000 houses in the East Bay..All positive cash flow with an 8% Cash on Cash return or greater... That is a thousand potential homeowners, displaced by choice(they even have the opportunity for a lease option) because they were listening to Mike, OTH and the rest of the bears.. These home buying syndicates are making millions.

 

http://www.washingtonpost.com/business/2012/03/31/gIQAVOgDoS_story.html

 

Don't you watch?     http://en.wikipedia.org/wiki/One_Tree_Hill_%28TV_series%29


Antioch?  That's not exactly the RBA, is it?  How many REITs have made money buying houses in Palo Alto or just about anywhere else on the peninsula?

 

I've never seen that TV show and I've barely even ever heard of it.  I guess you're not a fan of rock music.  :smileywink:

Platinum Regular Contributor
elt1
Posts: 4,809
Registered: ‎01-04-2010
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Re: Still waiting for prices to go down? Right or wrong?

[ Edited ]

Neptune__ wrote:

elt1 wrote:

OTH,

How do landlords stay in business? How do REITS often do better than other stocks?... What are your plans now that your show is off the air?



They stay in business because they bought at the right time and are willing to accept mediocre ROI.  I PERSONALLY know 3 people who bought investment properties during the mania and 2 of them got foreclosed.  I haven't kept in touch with the 3rd person but I know she was cash-flow negative. It's a tremendous financial burden every month. I wouldn't be surprised if she strategically defaults.

 

REITs sometimes do better than non REITs because they invest in commercial.  I don't know any REIT that invests in SFH's and beats the market.  I own 2 REITs and they're both commercial

 

 


You are saying that landlords subsidize renters with rents that don't pay a positive cash flow... I'm saying that is not sustainable...Most have already been foreclosed...The days of cheap rent(relative to mortgages) is over.. Rents are up over 10% a year.

The renters that have been subsidized(prop. 13 is a rental subsidy, BTW) are soon going to face much higher rents.

Regular Contributor
delectron
Posts: 69
Registered: ‎02-01-2011
0

Re: Still waiting for prices to go down? Right or wrong?

[ Edited ]

OneTreeHill wrote:

delectron wrote:

 

Rent on the house we bought in Sept 2010 would be about $3000 per month and we're all in at just under $2900, plus $700 of that is principal, plus the tax benefit of about $600, for a sub total of $1600 per month plus my down payment at 8% ($650) minus taxes at 15% ($550) equals?

 

$2150 per month to own vs $3000 to rent the same house.

 

Saving $850 per month vs renting + money invested in the market over here. Deal with it.


First of all, your numbers don't seem to add up.  Second of all, what was your down payment?  Are you saying that you would have earned only 8% on your down payment and that you would pay 15% capital gains tax on the earnings?  If so, your figures don't add up.  Besides, the market has gone up much more than just 8% since Sept. 2010, more like 25%.

 

Also, how can a mortgage of around $2,000/month be $700/month of principle within the first 2 years?  What kind of mortgage is this?  Are you sure you have that right?  Most mortgages are usually almost all interest for at least the first 10 years.

 

Did you also factor in maintenance?  How much money have you spent on your house since you bought it?  You need to add that in, too.  And how about future maintenance and upgrades?  And also higher utilities bills.

 

BTW, you do know that the mortgage interest tax deduction is eventually going away, right?




 

I guess it's a good thing you aren't planning on buying since you don't seem to understand jack about it.

 

My down payment was $650 x 12 x (100 / 8 = 12.5) = $97500.

 

I would be earning an average of 8% on the qualified dividends of the stocks / bonds / funds I would own (like I do right now!) on the above.

 

I am not interested in how much the market has gone up since X given that I can't account for Y, risk, to compare that with housing, which in my case has also gone up (no **bleep**, paricularly since I bought an REO at about $80k under market).

 

Really low interest rates (think 3.25%) produce an amortization table at about 2/3 interest 1/3 principal to start.

 

I do all of the maintenance myself. When I need it.  I don't have to wait 2 days for a plumber or electrician.

 

Why the heck would my utility bills be higher than renting? Mine are lower because as an owner I can install energy efficient appliances and lighting. DUH.

 

Money I've spent on the house, about $30000. Only stuff that was totally jacked like my 20 year old fridge and destroyed carpet, the missing washer / dryer, etc. Even if my ROI was only 80% the hard cost is only $6000.

 

... and even if I did lose the tax deduction I'd still be paying less than a rental.

 

Silver Contributor
Neptune__
Posts: 453
Registered: ‎11-01-2011
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Re: Still waiting for prices to go down? Right or wrong?

Financially it makes more sense to rent.  The exception is if you bought a home immediately before a massive bubble and sold it at the right time. 

 

The benefits of buying are purely NON-FINANCIAL:  You can't be evicted; you can do whatever you want to the house; you can feel a sense of pride.  Etc.  But from a dollars & cents point of view, renting is better the overwhelming majority of the time.


The only reason I own is because of the non-financial reasons.  If any of you want to buy my home and rent it back to me with a 30 year lease at market value that I can break at any time, I would take you up on that.  I can easily get a better ROI elsewhere.  SFH's make poor investments

 

 

 

 

Silver Super Contributor
OneTreeHill
Posts: 1,129
Registered: ‎01-19-2010
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Re: Still waiting for prices to go down? Right or wrong?


nj2bayarea wrote:

 

Sounds like you have a clear thought on this matter. Congrats! Now save time and get off a Real Estate message board!!



Why?  The "Big One" could hit tomorrow and then it will become cheaper to buy than to rent in the Bay Area.  :smileysurprised:

 

Besides, there are many parts of the country where it's cheaper to buy real estae than to rent it, so why not be on a real estate board?  :smileyhappy:

Platinum Regular Contributor
elt1
Posts: 4,809
Registered: ‎01-04-2010
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Re: Still waiting for prices to go down? Right or wrong?


OneTreeHill wrote:

nj2bayarea wrote:

 

Sounds like you have a clear thought on this matter. Congrats! Now save time and get off a Real Estate message board!!



Why?  The "Big One" could hit tomorrow and then it will become cheaper to buy than to rent in the Bay Area.  :smileysurprised:

 

Besides, there are many parts of the country where it's cheaper to buy real estae than to rent it, so why not be on a real estate board?  :smileyhappy:


OTH,

If you want to be taken seriously, change your name from that of a silly TV show, to who you really are...Lex Luther in the Superman movie where he created an earthquake to make money:smileyvery-happy:   http://www.imdb.com/title/tt0078346/plotsummary

Silver Super Contributor
OneTreeHill
Posts: 1,129
Registered: ‎01-19-2010
0

Re: Still waiting for prices to go down? Right or wrong?

[ Edited ]

elt1 wrote:

 


You are saying that landlords subsidize renters with rents that don't pay a positive cash flow... I'm saying that is not sustainable...Most have already been foreclosed...The days of cheap rent(relative to mortgages) is over.. Rents are up over 10% a year.

The renters that have been subsidized(prop. 13 is a rental subsidy, BTW) are soon going to face much higher rents.



What if the landlord doesn't have a mortgage?  If the rent covers all of his other expenses (property tax, insurance, HOA, etc.), it is sustainable forever.

 

Rents are up now, but so are housing prices, even in the not so particularly desirable areas.

 

For example, I looked at this house.  It's old, tiny, not so great, and not in a particularly great neighborhood.  Yet, it still sold for 10% over asking and over 100% more than it did in 1998.  It's not even in Palo Alto nor Menlo Park, but in San Jose:

http://www.redfin.com/CA/San-Jose/1802-Duvall-Dr-95130/home/1243055

 

Meanwhile, rents today are still lower than they were in 1999-2001, during the dot-com bubble.