Post: #176

(02-25-2018 10:23 PM)beta_plus Wrote:  It's important to realize that the housing crises that plague much of the west is because women are given the vote.

For some reason, while they can be absolute idiots about the most basic parts of economics and finance, they really get rent seeking. They love passing laws that restrict the construction of residential housing and blocking transportation improvements to more affordable housing.

What's happening now in Oz and Canada they did to DC and other US metro areas starting back in 1999.

Even if you get rid of the immigrants, women will figure out new ways to do this. I wouldn't put it past them to start having housing units torn down because of "muh environment" or "muh global warming" or some other such nonsense.

I don't think it's just the fault of women, there's a lot of men in the same shit too.

Actually it's more because women joined the workforce, depressing wages. in the 1970s, the average man could buy a house and support a wife and kids on a single salary. That's not possible nowadays. You also had a shit ton of immigrants who are also taking up limited housing stock and depressing salaries.

Since the 1980s, the UK government stopped building housing for people on welfare, so they were forced to go into the private market..however the government still has to cover their rent, so the private landlords who rent to them have seen their property portfolios grow huge, whilst being funded by the government. In additions there's been a few million eastern Europeans move into the UK, with not enough new housing built.

In Los Angeles, if I had bought say a 2 bedroom apartment 12 years ago for around $300K, it would be worth $700 to $800K now.

Rent is burning money...Here's an example - I have a now deceased uncle who used to own a lot of real estate in northern California. He told me the same guy rented one of his properties for 11 years. He said one day he collected the rent cheque and said to guy, "Hey thanks for paying for the house". The guy had paid enough in rent to pay off the mortgage.

I know another guy in UK, who bought a 2 bed apartment in the 90s for GBP 58K, he rented one of the rooms out and only paid 40 per month towards the mortgage. His father helped him buy the place. He lived there for about 5 years, sold it for 200K, then bought another pace for 280K and sold it for 450K. He's manage to move his way up the property ladder and he now lives in place that he bought for 900K, spent 100K fixing up, and is now worth 1.6M. He told me he's thinking of selling it and buying a place outside of London for 1M, which he will get mortgage free. This guy makes way less than I do, but he got the upside of the London real estate.

I simply can't afford to buy in LA, even though I make over 6 figures. If I want to move to say NYC or SF, they're even more expensive than LA. I've never had any family money to fall back on, this is all off my own back. I used to work alongside somebody who was given $200K by her parents to help her buy a house. She now owns 6 properties, all on rent.

I think in the long run owning property is the best. There's a ton of rich Indian, Jew, Chinese, Persian, Armenian, Russian etc in Los Angeles with real estate investments - are they dumb?

Post: #177

(02-25-2018 06:55 PM)Suits Wrote:  

(02-25-2018 12:24 PM)treypound Wrote:  No matter what generation you are from, homeownership is part of the path to wealth. Much like any investment, you don't want your entire investment portfolio just in single family homes, but renting your entire life is like leasing a car your entire life. You spend thousands, and in the end own nothing.

I'll give you a partial pass, as your day job guarantees that you work in an echo chamber where homeownership is the greatest thing ever, but this is one of the most ridiculous set of statements I've ever read.

Home ownership is not the path to wealth. The path to wealth is achieving an income the significantly exceeds your expenses.

You can achieve that with or without home ownership.

Depending on the local market, home ownership might leave you with a worse balance sheet after 30 years than renting (even if you end up having full ownership of the property in the end). There are a number of different reasons for this.

(1) (a) Just about no one pays cash. If you're paying cash for a house, you're already wealthy and this conversation is irrelevant.
(1) (b) If you're not paying cash, you're taking on debt, upon which you're paying interest. Over 10-30 years of interest payments will be a significant sum, so even with including the value of the home in the balance sheet after 30 years, renting may have produced more wealth because you weren't paying the interest payments.

Here's what a 30 year mortgage looks like:



For the first 19 years, you're actually spending more money into interest payments than against the principle.

In fact for the first 8 years, the interest payment is 3/4 or more of the total payment.

In some housing markets, when you account for the interest payments (and perhaps even some markets where you don't), if you'd simply rented instead of having the bank buy you a home and charging you a massive amount of interest on in over a 30 year period, you could have simply rented, spent far less money on housing each month, pocketed the difference and ended up with a bank account after 30 years with more money than the value of the house that you would have ended up owning if you'd taken on debt to "own" a house.

...

Your model has two major flaws, it doesn't take into account rent inflation. In SF for example, an apartment that rented out for $1,000 in 1993 now goes for $5,500.



If you're in an active urban market, you will find yourself already breaking even 5 to 10 years into your mortgage, as your mortgage is locked in and rents keep rising. So whatever money you're spending in interest paying up your mortgage, you would have spent even more in rising rental prices.

The other missing factor in your model is that it doesn't take into consideration the fact that you're also gaining equity with the increase of your house price. A friend in the Bay Area is nearly covering the mortgage on his 5-BDR house he bought 10-15 years ago just by renting out a guest suite, and the house price has already doubled.

One way to look at buying is as a hedge against housing inflation. If you're in a market like coastal CA or say NYC, Boston, housing will outstrip inflation. Less so in markets like Atlanta or Houston, where there is more space and less anti-growth regulation, and the Case-Shiller model will apply.

In an environment of relatively high housing inflation and historically low interest rates, it makes sense to buy.

Post: #178

(02-25-2018 10:56 PM)WalterBlack Wrote:  

(02-25-2018 10:23 PM)beta_plus Wrote:  It's important to realize that the housing crises that plague much of the west is because women are given the vote.

For some reason, while they can be absolute idiots about the most basic parts of economics and finance, they really get rent seeking. They love passing laws that restrict the construction of residential housing and blocking transportation improvements to more affordable housing.

What's happening now in Oz and Canada they did to DC and other US metro areas starting back in 1999.

Even if you get rid of the immigrants, women will figure out new ways to do this. I wouldn't put it past them to start having housing units torn down because of "muh environment" or "muh global warming" or some other such nonsense.

I don't think it's just the fault of women, there's a lot of men in the same shit too.

Actually it's more because women joined the workforce, depressing wages. in the 1970s, the average man could buy a house and support a wife and kids on a single salary. That's not possible nowadays. You also had a shit ton of immigrants who are also taking up limited housing stock and depressing salaries.

Since the 1980s, the UK government stopped building housing for people on welfare, so they were forced to go into the private market..however the government still has to cover their rent, so the private landlords who rent to them have seen their property portfolios grow huge, whilst being funded by the government. In additions there's been a few million eastern Europeans move into the UK, with not enough new housing built.

In Los Angeles, if I had bought say a 2 bedroom apartment 12 years ago for around $300K, it would be worth $700 to $800K now.

Rent is burning money...Here's an example - I have a now deceased uncle who used to own a lot of real estate in northern California. He told me the same guy rented one of his properties for 11 years. He said one day he collected the rent cheque and said to guy, "Hey thanks for paying for the house". The guy had paid enough in rent to pay off the mortgage.

I know another guy in UK, who bought a 2 bed apartment in the 90s for GBP 58K, he rented one of the rooms out and only paid 40 per month towards the mortgage. His father helped him buy the place. He lived there for about 5 years, sold it for 200K, then bought another pace for 280K and sold it for 450K. He's manage to move his way up the property ladder and he now lives in place that he bought for 900K, spent 100K fixing up, and is now worth 1.6M. He told me he's thinking of selling it and buying a place outside of London for 1M, which he will get mortgage free. This guy makes way less than I do, but he got the upside of the London real estate.

I simply can't afford to buy in LA, even though I make over 6 figures. If I want to move to say NYC or SF, they're even more expensive than LA. I've never had any family money to fall back on, this is all off my own back. I used to work alongside somebody who was given $200K by her parents to help her buy a house. She now owns 6 properties, all on rent.

I think in the long run owning property is the best. There's a ton of rich Indian, Jew, Chinese, Persian, Armenian, Russian etc in Los Angeles with real estate investments - are they dumb?

They people you mention are just symptoms taking advantage of the situation. They are not the problem.

While massive escalation of real estate prices is somewhat understandable in places like the NA West Coast due to lack of land, there is no such justification in DC, which is just as bad. For DC, the ocean is 1 hour to the east, the much less steep east coast mountains are 3 hours to the west, and there is a massive coastal plane that begins around DC and goes all the way to Florida.

In places like DC, they zone everything to the point where almost nothing can be built and then block any attempt to improve infrastructure. It took half a century to even begin a second beltway (the ICC) and after decades they still have not completed the rail line to Dulles Airport, where they even blocked having the train stop at the terminal "to save money". The people whocause this are not immigrants or big evil developers. They're greedy cat ladies in tennis shoes. They just like immigrants because it gets them the votes to pull this BS and bribing the "evil developers" with higher profits to support them.

Post: #179

(02-25-2018 01:07 PM)Genghis Khan Wrote:  

(02-25-2018 11:13 AM)Thot Leader Wrote:  There is a kernel of truth here. The Boomers aren't wrong when they point out Millennials piss money away on things Boomers wouldn't have dreamed of splurging on when they were around the same age (say 25-35, when most were buying their first homes and starting families). Vacations twice a year, expensive clothing and electronics, eating out constantly. It definitely adds up. Still, it might not make a difference how much Millennials spend on avocados and iPhones when houses cost a million bucks.

Yeah, Boomers are the epitome of frugal spending. That's why federal US debt stands at about $20 trillion.

$20 fucking trillion...what the fuck did the older generations spend 20 trillion dollars on?

If only Boomers spent their own money on avocados and iPhones instead of borrowing from and bankrupting their progeny...

The US national debt has very little to do with the spending patterns of Boomers. Nearly half of the $20 trillion US debt is due to the Obama-Geithner bailout of the Great Recession, which was the greatest wealth transfer in the history of mankind (nearly $9 trillion siphoned off from US taxpayers to the banksters). Most of the rest (about $6 Trillion) was blown on mideast wars over the last two decades.

The general political discourse is about creating divides, creating cultural and political wedges that pit constituencies against each other and divert the public's attention away from the 0.01%, the generational framework (Boomers vs Xers vs Millennials) and the right-left divide keep people on an emotional plane that prevents them from addressing the real problems.

It's true however that Boomers are responsible for the cultural decline that took place in the 1960s, but even then, they were merely pawns of the social engineers and more their malleable victims than willful cultural saboteurs.

Post: #180

(02-25-2018 11:08 PM)911 Wrote:  

(02-25-2018 06:55 PM)Suits Wrote:  

(02-25-2018 12:24 PM)treypound Wrote:  No matter what generation you are from, homeownership is part of the path to wealth. Much like any investment, you don't want your entire investment portfolio just in single family homes, but renting your entire life is like leasing a car your entire life. You spend thousands, and in the end own nothing.

I'll give you a partial pass, as your day job guarantees that you work in an echo chamber where homeownership is the greatest thing ever, but this is one of the most ridiculous set of statements I've ever read.

Home ownership is not the path to wealth. The path to wealth is achieving an income the significantly exceeds your expenses.

You can achieve that with or without home ownership.

Depending on the local market, home ownership might leave you with a worse balance sheet after 30 years than renting (even if you end up having full ownership of the property in the end). There are a number of different reasons for this.

(1) (a) Just about no one pays cash. If you're paying cash for a house, you're already wealthy and this conversation is irrelevant.
(1) (b) If you're not paying cash, you're taking on debt, upon which you're paying interest. Over 10-30 years of interest payments will be a significant sum, so even with including the value of the home in the balance sheet after 30 years, renting may have produced more wealth because you weren't paying the interest payments.

Here's what a 30 year mortgage looks like:



For the first 19 years, you're actually spending more money into interest payments than against the principle.

In fact for the first 8 years, the interest payment is 3/4 or more of the total payment.

In some housing markets, when you account for the interest payments (and perhaps even some markets where you don't), if you'd simply rented instead of having the bank buy you a home and charging you a massive amount of interest on in over a 30 year period, you could have simply rented, spent far less money on housing each month, pocketed the difference and ended up with a bank account after 30 years with more money than the value of the house that you would have ended up owning if you'd taken on debt to "own" a house.

...

Your model has two major flaws, it doesn't take into account rent inflation. In SF for example, an apartment that rented out for $1,000 in 1993 now goes for $5,500.



If you're in an active urban market, you will find yourself already breaking even 5 to 10 years into your mortgage, as your mortgage is locked in and rents keep rising. So whatever money you're spending in interest paying up your mortgage, you would have spent even more in rising rental prices.

The other missing factor in your model is that it doesn't take into consideration the fact that you're also gaining equity with the increase of your house price. A friend in the Bay Area is nearly covering the mortgage on his 5-BDR house he bought 10-15 years ago just by renting out a guest suite, and the house price has already doubled.

One way to look at buying is as a hedge against housing inflation. If you're in a market like coastal CA or say NYC, Boston, housing will outstrip inflation. Less so in markets like Atlanta or Houston, where there is more space and less anti-growth regulation, and the Case-Shiller model will apply.

In an environment of relatively high housing inflation and historically low interest rates, it makes sense to buy.

You can't possibly use the most distorted housing market in North America as the base to back up your argument. SF is the most fucked up market around with granola hippies and rich assholes holding as fiefdom to block development that has skyrocketed prices.

Interesting fact

San Francisco and Paris are the same size but SF holds 864,816 versus Paris at 2.5 million, the city is under built deliberately and has exploded living costs into space.



The city of SF is laughably under-built and remember Paris proper has no skyscrapers so the whiny picket fences people who complain about buildings making shadows can't complain. SF prices is what happens when the supply is literally blocked from growing and prices shoot up to the moon.

Please, use a more middle of the road market like a Charlotte, NC or Kansas City and you see your assertion start to turn into dust.

On average housing does not appreciate more than 1% per year. Once you take into account taxes, maintenance, closing costs, etc that all will eat away at your equity when you do the magic math many barley get above inflation when it is all said and done.

Plus, the reality is that most don't cash out and run from housing they spin it into new more expensive housing the next round.

I'll never for the life of me understand people who pimp out the faulty logic that rent is "throwing your money away"

Hey, is buying food a waste of money? ... You literally shit out your groceries after you buy them. What a waste.

There are basics that every humans needs to maintain a basic level of sustenance

Shelter
Food
Clothing
Water
Heat

Putting money and resources towards those things is non-negotiable and it is silly to attempt to extrapolate all those into speculative instruments where you gamble your future and place your self into debt simply to attain items you need to survive.

Who says its smart to go into debt to buy a chipboard house in suburban Salt Late City? Who says that shack will always go up in value? The Bank? Talking heads whom all profit from it on CNBC? Real Estate agents? (all have an agenda to let you think this is the case. RE agents only know how to hustle sales, few even understand the complexities of why and what does into the valuation of house and plot of land) The land might but the structure that is intrinsically tied to that land is not a true appreciating asset as some may have you think.

If you need any more proof that housing is a scam when you buy, go look at what wealthy people do. Unless they can spin a property for tax savings into any of their various corporations they will all largely rent their primary residences. Housing purchase was created as a scam by the baking industry to ensure every american was saddled with multi-decade debt. In the years prior to widespread mortgages housing could be paid off with a few years of your income. Or, you simply attained a plot of land and built a shelter on it.

Now, because of speculative mortgages the Western model has cooked the debt into the land value and now it is nearly impossible to attain land with the simple goal of building a home. The land should be a large portion of the value but the structure that sits on it is a rotting depreciating asset.

You will always be ahead taking money and putting into the best performing assets you can that can pay you income. In some cases, this may be a house, but if it isn't then you are wise not to push it. A house should only be used a way to build history with debt products so you can leverage the debt to attain higher quality income producing assets. That is leveraging the game for what it is to your advantage but to hustle just to plop down money on a flop house or some concrete condo cube is not wise and is a outdated model that has no long term viability. Most houses only average 1% appreciating per year when it is all said and done, you get more money investing in stocks (remember, real inflation is around 5.5% as real GOVT index is cooked to under report. This is why wealthy men in this environment won't get out of bet for less than 6-7% return ROI as they know the real deal on the numbers).

With the growth of technology and blockchian why the hell would I dump money into a jail sentence of debt called a mortgage when I can invest in companies, get income, invest in other assets, or leverage and get multi-units that pay for my own shelter costs. OR with blockchain I can simply buy a portion of an income producing rental and get the income it produces plus a cut of the equity. The real estate hustle is going to get royally fucked once blockchain rolls around.

I can;t get preferred investor products but I can, today, use my phone to invest in block chain instruments that put money in various funds that will pay me income, all I need is a $150 min. and a smartphone and I can get 6% returns. Also, these investments pay income each money on the debt. Why not just do what the banks do on a smaller scale? Fuck a bank.

People think I am crazy when I tell them I don't want to buy a house. I want to buy a small multi-unit so I can get income from it. I don't care if it is a duplex in the ghetto, if I can get the debt to purchase it and get income form it then I can use that as leverage to scale up.

@911, we can agree on this. I do agree with you that in a low interest environment it is wise to take on debt. But, why not go into it with the long term goal of gathering assets that will provide for you income. I ain't getting into the housing game unless I can take on multiples that can pay me and essentially pay for my living costs.

Housing does not go up forever but people always need a place to live. Old school wealth is built in multi-family or multi-units. Your house does not pay you income, you put money into it with a price on that money that the bank gets. If you have to put in money towards providing you a basic need, of shelter, then why give the bank a cut? Fuck the bank. Rent and invest your money into better assets that give income.

Post: #181

^^^^^


That's exactly how I currently think. Collect income producing assets and continue to leverage those into even more income producing assets. Just like Monopoly.

Post: #182

(02-25-2018 11:32 PM)kosko Wrote:  You can't possibly use the most distorted housing market in North America as the base to back up your argument. SF is the most fucked up market around with granola hippies and rich assholes holding as fiefdom to block development that has skyrocketed prices.

Interesting fact

San Francisco and Paris are the same size but SF holds 864,816 versus Paris at 2.5 million, the city is under built deliberately and has exploded living costs into space.



The city of SF is laughably under-built and remember Paris proper has no skyscrapers so the whiny picket fences people who complain about buildings making shadows can't complain. SF prices is what happens when the supply is literally blocked from growing and prices shoot up to the moon.

Please, use a more middle of the road market like a Charlotte, NC or Kansas City and you see your assertion start to turn into dust.

On average housing does not appreciate more than 1% per year. Once you take into account taxes, maintenance, closing costs, etc that all will eat away at your equity when you do the magic math many barley get above inflation when it is all said and done.

SF/Oakland/San Jose is not unlike LA, San Diego Seattle, Boston, NYC, Austin or DC. Or Toronto, Vancouver, Montreal, Paris, London, Barcelona, Madrid etc. I did mention that markets like Atlanta or Charlotte do have a different dynamic, with housing supply growing in concert with demand.

As to SF vs Paris, that graphic is a bit deceiving because the whole inner Bay Area is highly urbanized, from Richmond down to Oakland on to SJ and back up the Peninsula to SF, whereas in Paris there are still farmland and forest only 5-10 miles out in every direction. Paris and its immediate belt are very dense, much denser than the London core, but the area around that, not so much.





http://cache3.asset-cache.net/gc/1547261...OvOQ%3d%3d

Quote:I'll never for the life of me understand people who pimp out the faulty logic that rent is "throwing your money away"

Hey, is buying food a waste of money? ... You literally shit out your groceries after you buy them. What a waste.

Quote:Who says its smart to go into debt to buy a chipboard house in suburban Salt Late City? Who says that shack will always go up in value? The Bank? Talking heads whom all profit from it on CNBC? Real Estate agents? (all have an agenda to let you think this is the case. RE agents only know how to hustle sales, few even understand the complexities of why and what does into the valuation of house and plot of land) The land might but the structure that is intrinsically tied to that land is not a true appreciating asset as some may have you think.

If you need any more proof that housing is a scam when you buy, go look at what wealthy people do. Unless they can spin a property for tax savings into any of their various corporations they will all largely rent their primary residences. Housing purchase was created as a scam by the baking industry to ensure every american was saddled with multi-decade debt. In the years prior to widespread mortgages housing could be paid off with a few years of your income. Or, you simply attained a plot of land and built a shelter on it.

Now, because of speculative mortgages the Western model has cooked the debt into the land value and now it is nearly impossible to attain land with the simple goal of building a home. The land should be a large portion of the value but the structure that sits on it is a rotting depreciating asset.

You will always be ahead taking money and putting into the best performing assets you can that can pay you income. In some cases, this may be a house, but if it isn't then you are wise not to push it. A house should only be used a way to build history with debt products so you can leverage the debt to attain higher quality income producing assets. That is leveraging the game for what it is to your advantage but to hustle just to plop down money on a flop house or some concrete condo cube is not wise and is a outdated model that has no long term viability. Most houses only average 1% appreciating per year when it is all said and done, you get more money investing in stocks (remember, real inflation is around 5.5% as real GOVT index is cooked to under report. This is why wealthy men in this environment won't get out of bet for less than 6-7% return ROI as they know the real deal on the numbers).

With the growth of technology and blockchian why the hell would I dump money into a jail sentence of debt called a mortgage when I can invest in companies, get income, invest in other assets, or leverage and get multi-units that pay for my own shelter costs. OR with blockchain I can simply buy a portion of an income producing rental and get the income it produces plus a cut of the equity. The real estate hustle is going to get royally fucked once blockchain rolls around.

I can;t get preferred investor products but I can, today, use my phone to invest in block chain instruments that put money in various funds that will pay me income, all I need is a $150 min. and a smartphone and I can get 6% returns. Also, these investments pay income each money on the debt. Why not just do what the banks do on a smaller scale? Fuck a bank.

People think I am crazy when I tell them I don't want to buy a house. I want to buy a small multi-unit so I can get income from it. I don't care if it is a duplex in the ghetto, if I can get the debt to purchase it and get income form it then I can use that as leverage to scale up.

@911, we can agree on this. I do agree with you that in a low interest environment it is wise to take on debt. But, why not go into it with the long term goal of gathering assets that will provide for you income. I ain't getting into the housing game unless I can take on multiples that can pay me and essentially pay for my living costs.

Housing does not go up forever but people always need a place to live. Old school wealth is built in multi-family or multi-units. Your house does not pay you income, you put money into it with a price on that money that the bank gets. If you have to put in money towards providing you a basic need, of shelter, then why give the bank a cut? Fuck the bank. Rent and invest your money into better assets that give income.

-Buying in the ghetto is a good approach. Neighborhoods most likely to appreciate are those that are currently less desirable, that are centrally located, and that have a decent housing stock (architecture, built). Haarlem in the 90s, Oakland, eastside Paris, etc.

-The current monetary environment is unique, with a very loose, expansionary monetary policy and low interest rates, so getting into the housing market is about protecting yourself from future inflation (note that this doesn't apply to Canada where the spread between long term fixed mortgages and variable mtgg is very high, much higher than in the US or Europe.)[/quote]

Post: #183

The graphic compared city proper land area, not metro. I agree that Bay Area has lots of farm land and a fucking mountain in the middle of it but this graphic is purely comparing city proper areas of both cities (anything that is going to have SF or Paris property tax collection). I believe for Paris this would be the central city districts aka arrondissements. Both are identical in size, but took a different approach to how they fit people into it. San Francisco should be double it's size population wise at minimum.

Post: #184

Having had the unfortunate experience of once "owning" a Mcmansion and having to sell it during my divorce, I am very hesitant to buy a single family home or condo again. I did the math to see how I would have done renting a house for the 7 years that I owned my house and after taking into account the ever increasing property taxes, the surprisingly large maintenance bills (house was a new construction but always had shit breaking down) and the crashing of the housing market wiping out any appreciation ( i made a net of 7K post sale on this house in a desirable suburb), I estimated that I would have come out ahead by about 100K if I had rented all those years. If I had invested that 100K in stocks or a REIT, it would obviously had been even more that I'd have had. Buying a house or condo that's reasonably priced that costs the same or less than renting in your area is fine. I agree its a hedge against rental inflation, but most people overextend themselves to get the biggest home that they can afford and they end up fucking themselves. Renting is nice in that you can move when ever you want if you get sick of the place or the area that you live in, you don't have to pay for any maintenance and you can put that 20% down payment in to a higher yielding investment or keep it liquid.

Now owning an investment property where you live in one of the units and rent the others out is a smart move because if you do it right, you're living for free or just for a minimal monthly payment. Your down payment is now actually invested and the property is generating an income. The unit could appreciate at a minimal 1% amount annually but so what, you're actively making money on the rent and not by just some nebulous increase in the paper value. After all, the property is only worth what someone will pay for it, not what some appraiser says it's worth. My house appraised for far more than I actually got for it. Multi units are how most people get wealthy from real estate, not from owning a single family home. Some people luck out and buy a house at the start of a major boom but that way of making money in real estate is similar to winning the lottery.

Kosko is right in that for regular guys and gals with smaller amounts of money on hand, real estate crowdsourcing like RealtyShares and Fundrise are the way of the future for real estate investment. Blockchain tech will also revolutionize a whole lot of stuff including real estate investment.

Post: #185

(02-25-2018 08:31 PM)kosko Wrote:  Take a look much closer....

That part of town is sleepy, because there is little attraction built into it. But there is a huge green area right behind that block of high-rises. Most of the high-rises by the way are office buildings - only the ones to the back are apartments. This is a picture from winter and the side of the street where the business centers are located.

There is another reason why this area does not develop that much - proximity to lower working class people in that district who frequent the area, but it's busy enough in summer and the city is making it more attractive.

Besides - this is academic anyway and the reason for this is because it is a 10minute ride away from the bustling beautiful city center. But you do see plenty of couples taking walks with their little children and having a high quality of life.

And that is what I meant - massive high-rises with at best small cafes and small shops in the vicinity - all very close by fast transit to the truly attractive parts of town. And the park would not have to be that big.

Build a cluster of 5 skyscrapers surrounded by a park with some minor amenities below. But then have fast connection to the real city center. Such cities would be much better than sprawling blocks of concrete.

Imagine it more like a bustling city center and connected centrally to high-rises surrounded by green areas each. You could fit millions into such a city while giving everyone a very high standard of living.

Post: #186

(05-16-2017 12:33 AM)lukewarmchillin Wrote:  When it comes to buying houses, well, all the people I know who are hovering just above 'check-to-check' level are trying to figure out how to buy a home. People I know who did secure good positions (nurses, engineers, etc.) immediately buy a home shortly after landing a good job. It's as if these people, most of whom finally have their heads above water for the first time, can't wait to drown themselves in mortgage debt. All of a sudden, as soon as they gain a little leverage, paying $XXX to the mortgage lender is seen as a much better option than paying $XXX to some landlord who has suddenly become "evil." Never mind the hundreds of thousands of dollars of mortgage debt, "I own this, man."

I agree with what others have said -- the people at the top have only tried to widen the gap in the last 50 years, but people in my generation are doing everything in their power to ensure they stay down here by not exhibiting one iota of foresight, restraint, or control.

The most important lesson I've learned from all of this is that nobody's gonna save you but yourself. Not mom, dad, friends, colleagues, your priest. Only you. And when you're in the process of trying to save yourself, people around you aren't gonna understand the process.

Here in my city, an apartment would cost you EUR 1500-1700 a month. Mortgage interest including paying off is closer to EUR 900-1000.

Should a young worker with a job (who can't wait to drown themselves in mortgage debt) take the mortgage option, the renting option, or live with flatmates? The latter lowers the rent to EUR 600-700 a month. These people think, better to pay 900-1000 for a mortgage for a complete apartment then to pay 600-700 for a room.

Post: #187

(02-25-2018 11:32 PM)kosko Wrote:  People think I am crazy when I tell them I don't want to buy a house. I want to buy a small multi-unit so I can get income from it. I don't care if it is a duplex in the ghetto, if I can get the debt to purchase it and get income form it then I can use that as leverage to scale up.

@911, we can agree on this. I do agree with you that in a low interest environment it is wise to take on debt. But, why not go into it with the long term goal of gathering assets that will provide for you income. I ain't getting into the housing game unless I can take on multiples that can pay me and essentially pay for my living costs.

Housing does not go up forever but people always need a place to live. Old school wealth is built in multi-family or multi-units. Your house does not pay you income, you put money into it with a price on that money that the bank gets. If you have to put in money towards providing you a basic need, of shelter, then why give the bank a cut? Fuck the bank. Rent and invest your money into better assets that give income.

That is exactly what many real estate millionaires do - they prefer to buy 10 small rental condos for their mortgage. Then they simply rent a luxury place with the additional income that the units generate.

Most often a house is a big cost and nothing more. It seldom pays as an investment. This flipping of houses after renovation is a specific form of business model and is not to be confused with self-used properties. One guy who is worth some 50 mio. $ in mostly rental properties said that he might consider buying a house after 100 mio. $+ in assets as a form of luxury, because he can squander money then.

Post: #188

(02-25-2018 11:32 PM)kosko Wrote:  I'll never for the life of me understand people who pimp out the faulty logic that rent is "throwing your money away"

Hey, is buying food a waste of money? ... You literally shit out your groceries after you buy them. What a waste.

There are basics that every humans needs to maintain a basic level of sustenance

Shelter
Food
Clothing
Water
Heat

Putting money and resources towards those things is non-negotiable and it is silly to attempt to extrapolate all those into speculative instruments where you gamble your future and place your self into debt simply to attain items you need to survive.

It drives me nuts when people who have never done the research, something as simple as back of the napkin calculations of simple compound interest mortgage say "You're just throwing your money away by renting!"

No. You are paying for the value of having a roof over your head, a place to keep you warm when it's cold, cool when it's hot, a place to sleep, relax, and have privacy. That is value provided and you are paying for that with your money. If you don't want to "throw your money away," where are you going to live?

I'm not against buying but it's not an automatic. A mortgage is just a shit ton of debt. If you have 100k net worth with an 80k salary and you buy a 200k house on 30 year mortgage, you have just taken on debt that's TWICE your net worth.

Post: #189

With that kind of profile, you would take a 20-yr mortgage or maybe even 15 years. You're taking on debt, but that debt is locked at around 3%, which represents a real (inflation-adjusted) interest rate of about 0% or even less. Debt is a dirty word, but at those rates, and considering the alternative of inflation-driven rents, it's a great (and safe) avenue for leverage.

(02-26-2018 04:10 AM)Zelcorpion Wrote:  That is exactly what many real estate millionaires do - they prefer to buy 10 small rental condos for their mortgage. Then they simply rent a luxury place with the additional income that the units generate.

Most often a house is a big cost and nothing more. It seldom pays as an investment. This flipping of houses after renovation is a specific form of business model and is not to be confused with self-used properties. One guy who is worth some 50 mio. $ in mostly rental properties said that he might consider buying a house after 100 mio. $+ in assets as a form of luxury, because he can squander money then.

The overwhelmiing majority of real estate millionaires are people who bought their house a couple of decades ago, often with very modest incomes. For someone who is getting started in real estate in North America, the house is the better investment, provided it's not too far from the city center, because you're buying the land it sits on, a very scarce resource. The supply of land is finite, while that of condos and apartment buildings is nearly limitless, as developers can always wedge a highrise project into a parking lot or a tear-down. Condos and rental units have a smaller upside. If you're a bigger investor though or want to build a larger portfolio, they are indeed easier to rent out and maintain.

Post: #190

(02-26-2018 04:07 AM)Lime Wrote:  

(05-16-2017 12:33 AM)lukewarmchillin Wrote:  When it comes to buying houses, well, all the people I know who are hovering just above 'check-to-check' level are trying to figure out how to buy a home. People I know who did secure good positions (nurses, engineers, etc.) immediately buy a home shortly after landing a good job. It's as if these people, most of whom finally have their heads above water for the first time, can't wait to drown themselves in mortgage debt. All of a sudden, as soon as they gain a little leverage, paying $XXX to the mortgage lender is seen as a much better option than paying $XXX to some landlord who has suddenly become "evil." Never mind the hundreds of thousands of dollars of mortgage debt, "I own this, man."

I agree with what others have said -- the people at the top have only tried to widen the gap in the last 50 years, but people in my generation are doing everything in their power to ensure they stay down here by not exhibiting one iota of foresight, restraint, or control.

The most important lesson I've learned from all of this is that nobody's gonna save you but yourself. Not mom, dad, friends, colleagues, your priest. Only you. And when you're in the process of trying to save yourself, people around you aren't gonna understand the process.

Here in my city, an apartment would cost you EUR 1500-1700 a month. Mortgage interest including paying off is closer to EUR 900-1000.

Should a young worker with a job (who can't wait to drown themselves in mortgage debt) take the mortgage option, the renting option, or live with flatmates? The latter lowers the rent to EUR 600-700 a month. These people think, better to pay 900-1000 for a mortgage for a complete apartment then to pay 600-700 for a room.

The right answer is, you buy the place and lock in a low mortgage rate for 20 years, and rent out a room for 600€-700€, which pays off a good chunk of your mortgage right off the bat, and nearly all of it within a decade, as the rent will keep rising while your mortgage is locked.

Post: #191

(02-26-2018 04:07 AM)Lime Wrote:  

(05-16-2017 12:33 AM)lukewarmchillin Wrote:  When it comes to buying houses, well, all the people I know who are hovering just above 'check-to-check' level are trying to figure out how to buy a home. People I know who did secure good positions (nurses, engineers, etc.) immediately buy a home shortly after landing a good job. It's as if these people, most of whom finally have their heads above water for the first time, can't wait to drown themselves in mortgage debt. All of a sudden, as soon as they gain a little leverage, paying $XXX to the mortgage lender is seen as a much better option than paying $XXX to some landlord who has suddenly become "evil." Never mind the hundreds of thousands of dollars of mortgage debt, "I own this, man."

I agree with what others have said -- the people at the top have only tried to widen the gap in the last 50 years, but people in my generation are doing everything in their power to ensure they stay down here by not exhibiting one iota of foresight, restraint, or control.

The most important lesson I've learned from all of this is that nobody's gonna save you but yourself. Not mom, dad, friends, colleagues, your priest. Only you. And when you're in the process of trying to save yourself, people around you aren't gonna understand the process.

Here in my city, an apartment would cost you EUR 1500-1700 a month. Mortgage interest including paying off is closer to EUR 900-1000.

Should a young worker with a job (who can't wait to drown themselves in mortgage debt) take the mortgage option, the renting option, or live with flatmates? The latter lowers the rent to EUR 600-700 a month. These people think, better to pay 900-1000 for a mortgage for a complete apartment then to pay 600-700 for a room.

That depends on a few things. First, how much is the person making? The banks in the US use a benchmark of the the mortgage, taxes, and insurance (PITI) being 30% of your gross income. I'd say that's too high and the PITI really should be 25-30% of your net with 25% being better. You also have the issue of the 10-20% down payment for buying the apartment so when you factor that along with the apartment assessment fees and maintenance ( a big one that most people do not factor in) there's not much difference between renting and buying. Yet another factor is the increasing interest rates which if you have an adjustable rate mortgage as most people do, your payments will go up over time. However, if he has a good job which in his income will increase and the apartment is in a good location which can be sold easily if he gets into trouble then it could be worth it. It's not as simple as comparing the monthly rate of renting vs the mortgage payment though, lot of other factors need consideration.

Post: #192

(02-26-2018 10:59 AM)911 Wrote:  With that kind of profile, you would take a 20-yr mortgage or maybe even 15 years. You're taking on debt, but that debt is locked at around 3%, which represents a real (inflation-adjusted) interest rate of about 0% or even less. Debt is a dirty word, but at those rates, and considering the alternative of inflation-driven rents, it's a great (and safe) avenue for leverage.

(02-26-2018 04:10 AM)Zelcorpion Wrote:  That is exactly what many real estate millionaires do - they prefer to buy 10 small rental condos for their mortgage. Then they simply rent a luxury place with the additional income that the units generate.

Most often a house is a big cost and nothing more. It seldom pays as an investment. This flipping of houses after renovation is a specific form of business model and is not to be confused with self-used properties. One guy who is worth some 50 mio. $ in mostly rental properties said that he might consider buying a house after 100 mio. $+ in assets as a form of luxury, because he can squander money then.

The overwhelmiing majority of real estate millionaires are people who bought their house a couple of decades ago, often with very modest incomes. For someone who is getting started in real estate in North America, the house is the better investment, provided it's not too far from the city center, because you're buying the land it sits on, a very scarce resource. The supply of land is finite, while that of condos and apartment buildings is nearly limitless, as developers can always wedge a highrise project into a parking lot or a tear-down. Condos and rental units have a smaller upside. If you're a bigger investor though or want to build a larger portfolio, they are indeed easier to rent out and maintain.

I think that in order to see the type of appreciation in house value that many people who bought 20-30 years ago did, you'd have to buy in a smaller city which could potentially see a lot of growth and demand for housing. Like I said, I had a beautiful house in a very good suburb in a major metro area and I took a bath on it when I had to sell it plus it took me a year to sell it. I was very close to having to do a short sale on it which I was prepared to because I needed to get rid of it.

Another big problem with depending upon appreciation of your house is that many people aren't having kids anymore so they don't need multi-room homes. I'd say that was a big factor as to why I had trouble selling my house and the market up here is slow in general, has been for a few years now. There just won't be the same demand to drive up the prices and most markets have way overpriced housing compared to income levels. I don't see how someone with and 80K salary which is a good salary can justify spending 400K on a house which is what you're looking at in many places, more even. My experience convinced me that if an asset isn't generating income, then you have to think twice before buying it. I do like the idea of renting to roommates but you can only have roommates for so long, especially if you get hitched and start having kids. Living with other people gets tiresome as you get older.

Post: #193

(02-26-2018 01:48 AM)doc holliday Wrote:  I estimated that I would have come out ahead by about 100K if I had rented all those years. If I had invested that 100K in stocks or a REIT, it would obviously had been even more that I'd have had. Buying a house or condo that's reasonably priced that costs the same or less than renting in your area is fine.

Based on what I'm spending now I'm very sure I would have saved the same amount as you in the 10 years I owned. I've quit kicking myself in the ass about it now because things are looking up now that I ditched that anchor.

I rented for a little while after selling my home, but then I found a group of well-built good condition older condo units in my city that sell for less than 40k (less than 30k if you buy a repo from a dead lady), which makes my all-in living costs with HOA and mortgage even less than rent. We're talking around $500 a month here, in a nice part of town.

Now I'm on the lookout for investments that I can dump my money into, REITs?

Post: #194

You add on property tax to that $900-1100 mortgage, and it comes in comparison with rent costs. If you say, property tax on average will hit you $5000 per year that is an extra $415 a month you gotta shell out for the price of ownership. This does not include bills and other maintenance costs your house will take. You spread it all out and you are paying the same if not more.

Also, why not you do what both my friend and I both did. Landlords just give a shit if the place is rented. You find a landlord who is not hovering around his units and rent a 2-bedroom that maybe needs a little work. Negotiate a rent discount to take on the repairs yourself and then rent one bedroom at a discount. Or, what I did was just find a well-priced apartment and do the same thing. I was able to rent out a bedroom for $750 in a $950 apartment and I did this for a school year and lived in the apartment for next to nothing. I had no overhead, utilities, or taxes to worry about and I got the summer months with the apartment to myself. There are lots of deals in neighbourhoods that are up and coming that you can find deals on.

Also, rental escalations spook is misguided. Unless you live in a broken rental market rent will only rise to a level that can be tied to incomes. There is no added debt step to raise rents like they do property costs artificially. Your landlord in Kansas City can't get away with charging 10k a month for rent; he can only charge the maximum he can to get his unit filled.

Most markets rental rates never increase past the rate of true inflation, again as mentioned about 5-6% per year.

Also, in very tight markets rental rates are rising in tandem with housing prices. There can be an inverse where housing prices drop while rents rise but that sucks for you if you own, but then gives you the ability to easily jump in to try and grab the down in the market.

Unless you live in shit-show cities such as Boston, NYC, SF, Toronto, Vancouver renting is going to be a pain in the ass. These cities also make buying prohibitively expensive, also, so it is a catch 22. You have to pay money for shelter so what are you going to do? As I mentioned paying for housing is non-negotiable, so no point was crying about how you attain a roof over your head IMO.

Post: #195

(02-26-2018 10:59 AM)911 Wrote:  

(02-26-2018 04:10 AM)Zelcorpion Wrote:  That is exactly what many real estate millionaires do - they prefer to buy 10 small rental condos for their mortgage. Then they simply rent a luxury place with the additional income that the units generate.

Most often a house is a big cost and nothing more. It seldom pays as an investment. This flipping of houses after renovation is a specific form of business model and is not to be confused with self-used properties. One guy who is worth some 50 mio. $ in mostly rental properties said that he might consider buying a house after 100 mio. $+ in assets as a form of luxury, because he can squander money then.

The overwhelmiing majority of real estate millionaires are people who bought their house a couple of decades ago, often with very modest incomes. For someone who is getting started in real estate in North America, the house is the better investment, provided it's not too far from the city center, because you're buying the land it sits on, a very scarce resource. The supply of land is finite, while that of condos and apartment buildings is nearly limitless, as developers can always wedge a highrise project into a parking lot or a tear-down. Condos and rental units have a smaller upside. If you're a bigger investor though or want to build a larger portfolio, they are indeed easier to rent out and maintain.

That is a thing that is true as well - it is partly an argument made for life insurances as a form of savings. Though to be fair - life insurances are far worse than real estate in terms of wealth accumulation.

But - the truth of the matter is that most people would NOT save up and invest the money elsewhere if they rented a property. They would not buy rental real estate or put their funds into even an index fund that outperforms a life insurance. Most people would simply spend their disposable income on other things.

So that is why buying their own house on debt that they can repay well enough or going into a punitive insurance contract helps them actually accumulate some equity.

Still - the things mentioned here are valid too - some of the worst investments you can have is McMansions in the suburbs (unless the suburbs become some kind of central areas in the future decades down the line). The same could be said about life insurance policies for investment - super- bad for the customers, super-good for the corporation (the pure insurance aspect is fine, but the investment part is terribly bad). But here again - without some salesman convincing them to do it, then many folk would not have any savings.

Post: #196

(02-26-2018 12:00 PM)kosko Wrote:  You add on property tax to that $900-1100 mortgage, and it comes in comparison with rent costs. If you say, property tax on average will hit you $5000 per year that is an extra $415 a month you gotta shell out for the price of ownership. This does not include bills and other maintenance costs your house will take. You spread it all out and you are paying the same if not more.

In the states, Property tax up to 10 grand and interest upto loans of 1 million are deductable. The first years of mortage you are paying mostly interest, it takes 5-7 years before your principal > interest for you monthly payment. If you have a high income and pay over 30k of federal tax(which you pretty much have to, to able to afford homes in america's big cities) buying house is not bad idea. You can take the tax refund every year and invest it in a fund, until right before your fixed rate is up(lets say a/r5 or 7), in which case you can use it to pay down the principal. Besides all this, you get to live in a house instead of some shitty apartment.

I have done the math and am so glad i invested in real-estate.

Post: #197

(02-26-2018 12:50 PM)8ball Wrote:  

(02-26-2018 12:00 PM)kosko Wrote:  You add on property tax to that $900-1100 mortgage, and it comes in comparison with rent costs. If you say, property tax on average will hit you $5000 per year that is an extra $415 a month you gotta shell out for the price of ownership. This does not include bills and other maintenance costs your house will take. You spread it all out and you are paying the same if not more.

In the states, Property tax up to 10 grand and interest upto loans of 1 million are deductable. The first years of mortage you are paying mostly interest, it takes 5-7 years before your principal > interest for you monthly payment. If you have a high income and pay over 30k of federal tax(which you pretty much have to, to able to afford homes in america's big cities) buying house is not bad idea. You can take the tax refund every year and invest it in a fund, until right before your fixed rate is up(lets say a/r5 or 7), in which case you can use it to pay down the principal. Besides all this, you get to live in a house instead of some shitty apartment.

I have done the math and am so glad i invested in real-estate.

It is definitely more advantageous in the states. FHA/203k HUD loans, for example, don't have an equivalent here in Canada (you can get rehab loans here in Canada but I don't believe the banks give you cash upfront for it you almost get a 'rebate' back). Also, in communist Canada, they tax you much more.

Post: #198

You'll really be jealous of my deal now then (not really, kansas is shitty and cold and flat), property taxes in "flyover" states are cheap. I paid mine on the condo, about $400 for the year.

Post: #199

Trumps tax cuts make renting a more reasonable option than it was before. Taking the standard deduction instead of itemizing mortgage interest will make more sense for alot of people including of me, so the idea that mortgage interest can be written off doesn't hold as much weight as it used to. Unless if I am completely misunderstanding the implications of the changes.

Post: #200

(02-26-2018 02:04 PM)Repo Wrote:  Trumps tax cuts make renting a more reasonable option than it was before. Taking the standard deduction instead of itemizing mortgage interest will make more sense for alot of people including of me, so the idea that mortgage interest can be written off doesn't hold as much weight as it used to. Unless if I am completely misunderstanding the implications of the changes.

Nope, most that itemize will continue to do so especially in states with high house prices.