Post: #1

Hey guys

just wondering, do you own the place where you live?
in these times that property prices are skyrocketing everywhere(unless you live in a shithole dumpster),
i have seen that in europe most of the people rent their whole lives, (unless they inherit some property from family), and it seems
its quite the same in America ( unless you go for the banks credits, still a form of rent, paying for years something that maybe you could lose).
is rent/mortgage slaving the new way of life?

Post: #2

All the property I own is rented out at a strong positive cash flow. I've been buying small condos (under 500 square feet) for almost 20 years, and the extra monthly cash isn't exciting, but it's there.

All the property I live in (except the one in Poland) I rent from someone at below market rates.

My current main pad in Chicago is a live/work space, over 3000 square feet, two floors, on a busy and really popular street. The rent payment is about 80% off market value.

There is always property to find below market if you'e willing to build it out yourself. I can't see myself living in a place I own unless I really can't find something via the rent-cheap mechanisms I use.

The flip side is this: if you are OK with a roommate, then buying can make a lot of sense. My second small condo was 550 sq.ft, two bedrooms. I bought it in 1994 or so for $21,000 and rented the second bedroom out to a local (older) student who paid me $275 a month for it. I paid it off in 3 years or so and it's been cash flow positive every year since ($725 a month rent now).

Most people overbuy, or don't capitalize on extra space. Hell, in my current Chicago property, I have a ton of unfinished storage that I sublet to friends for all their useless shit. $400 a month in free money = $5000 a year.

Post: #3

(11-09-2012 09:48 AM)ABDada Wrote:  All the property I own is rented out at a strong positive cash flow. I've been buying small condos (under 500 square feet) for almost 20 years, and the extra monthly cash isn't exciting, but it's there.

All the property I live in (except the one in Poland) I rent from someone at below market rates.

My current main pad in Chicago is a live/work space, over 3000 square feet, two floors, on a busy and really popular street. The rent payment is about 80% off market value.

There is always property to find below market if you'e willing to build it out yourself. I can't see myself living in a place I own unless I really can't find something via the rent-cheap mechanisms I use.

The flip side is this: if you are OK with a roommate, then buying can make a lot of sense. My second small condo was 550 sq.ft, two bedrooms. I bought it in 1994 or so for $21,000 and rented the second bedroom out to a local (older) student who paid me $275 a month for it. I paid it off in 3 years or so and it's been cash flow positive every year since ($725 a month rent now).

Most people overbuy, or don't capitalize on extra space. Hell, in my current Chicago property, I have a ton of unfinished storage that I sublet to friends for all their useless shit. $400 a month in free money = $5000 a year.

Well your case is different, i'm assuming the needs of a person starting from scratch(no family to inherit from or being wealthy).This person just needs a place to live,
and has a normal wage. Under this scenario i think his/her possibilities of owning a place
are nil.....

Post: #4

I owned two houses and sold them both a long time ago. I have no desire for a house even though I could buy one with cash. I like renting and being able to pick up and go when I want. I lived in Netherlands for a few years. In the Netherlands, renting is more common for most people. When you rent a place, there usually is just a concrete floor and you have to put in a flooring that you like – for example carpet or click laminate. You can change it the way you want as long as you return it to its original condition. An inspector writes down everything before you move in. Americans have been brainwashed into believing that owning a house is a highly desirable thing or even necessary. But it just hooks a lot of people into slavery. It also caused the last financial crisis.

Post: #5

(11-09-2012 09:55 AM)Scarecr0w Wrote:  Well your case is different, i'm assuming the needs of a person starting from scratch(no family to inherit from or being wealthy).This person just needs a place to live,
and has a normal wage. Under this scenario i think his/her possibilities of owning a place
are nil.....

I started from scratch myself.

If you're 20 years old with excellent credit, it can't hurt to pick up a tiny 2 bedroom condo that's 15 minute max walk from a hot area. Even in Chicago there are 2 flat condos for under $90,000.

Rent the second bedroom out for 70% of you mortgage+assessment+association+insurance and pay that bitch off in 5 years.

Then you've got solid income at 25 to build more properties.

It can be done, but most morons are buying/leasing expensive cars.

Post: #6

(11-09-2012 12:44 PM)ABDada Wrote:  If you're 20 years old with excellent credit, it can't hurt to pick up a tiny 2 bedroom condo that's 15 minute max walk from a hot area. Even in Chicago there are 2 flat condos for under $90,000.

I thought this was crazy for a second, but then I had a look in DC, and you can indeed find cheap properties not far from good areas. Check this one out:

http://www.trulia.com/property/308765374...n-DC-20009

Post: #7

Careful with that one -- if it's a true co-op like they do them in Chicago, you don't actually own them, and the monthly "association" type fee might be ridiculous. I think in that building, your monthly co-op fee will be $1100 because the building probably has an underlying mortgage to pay off.

I know it's near impossible to do in NYC (of course) and LA, but there are a ton of urban areas where I've helped friends track down ridiculous deals.

If you're serious, get with a local major bank and get on their foreclosure announcement list for when they liquidate off-market foreclosures.

I don't know DC that well, but from my friends who live out there, ownership is impossible due to the massive amount of lobbyist-type incomes that destroy one's ability to own outside of a hot area. In Chicago proper, there are 12 neighborhoods that are "upper blighted" where I'm finding deals that are just incredible. Developer walk-away buildings and such.

Post: #8

(11-09-2012 01:10 PM)ABDada Wrote:  Careful with that one -- if it's a true co-op like they do them in Chicago, you don't actually own them, and the monthly "association" type fee might be ridiculous. I think in that building, your monthly co-op fee will be $1100 because the building probably has an underlying mortgage to pay off.

I know it's near impossible to do in NYC (of course) and LA, but there are a ton of urban areas where I've helped friends track down ridiculous deals.

If you're serious, get with a local major bank and get on their foreclosure announcement list for when they liquidate off-market foreclosures.

I don't know DC that well, but from my friends who live out there, ownership is impossible due to the massive amount of lobbyist-type incomes that destroy one's ability to own outside of a hot area. In Chicago proper, there are 12 neighborhoods that are "upper blighted" where I'm finding deals that are just incredible. Developer walk-away buildings and such.

is it really that cheap in USA??? in South America a loft apartment, 35-40 square meters of area constructed in a good location(near the beach for example), can cost you 90000 dollars.... and dont even bother with the mortgage banks, interest rates that increase all the time...

Post: #9

(11-09-2012 01:27 PM)Scarecr0w Wrote:  

(11-09-2012 01:10 PM)ABDada Wrote:  Careful with that one -- if it's a true co-op like they do them in Chicago, you don't actually own them, and the monthly "association" type fee might be ridiculous. I think in that building, your monthly co-op fee will be $1100 because the building probably has an underlying mortgage to pay off.

I know it's near impossible to do in NYC (of course) and LA, but there are a ton of urban areas where I've helped friends track down ridiculous deals.

If you're serious, get with a local major bank and get on their foreclosure announcement list for when they liquidate off-market foreclosures.

I don't know DC that well, but from my friends who live out there, ownership is impossible due to the massive amount of lobbyist-type incomes that destroy one's ability to own outside of a hot area. In Chicago proper, there are 12 neighborhoods that are "upper blighted" where I'm finding deals that are just incredible. Developer walk-away buildings and such.

is it really that cheap in USA??? in South America a loft apartment, 35-40 square meters of area constructed in a good location(near the beach for example), can cost you 90000 dollars.... and dont even bother with the mortgage banks, interest rates that increase all the time...

I forgot, for our american friends, 35-40 square meters are like 370-430 square feet

Post: #10

(11-09-2012 09:48 AM)ABDada Wrote:  All the property I own is rented out at a strong positive cash flow. I've been buying small condos (under 500 square feet) for almost 20 years, and the extra monthly cash isn't exciting, but it's there.

All the property I live in (except the one in Poland) I rent from someone at below market rates.

My current main pad in Chicago is a live/work space, over 3000 square feet, two floors, on a busy and really popular street. The rent payment is about 80% off market value.

There is always property to find below market if you'e willing to build it out yourself. I can't see myself living in a place I own unless I really can't find something via the rent-cheap mechanisms I use.

The flip side is this: if you are OK with a roommate, then buying can make a lot of sense. My second small condo was 550 sq.ft, two bedrooms. I bought it in 1994 or so for $21,000 and rented the second bedroom out to a local (older) student who paid me $275 a month for it. I paid it off in 3 years or so and it's been cash flow positive every year since ($725 a month rent now).

Most people overbuy, or don't capitalize on extra space. Hell, in my current Chicago property, I have a ton of unfinished storage that I sublet to friends for all their useless shit. $400 a month in free money = $5000 a year.

How much are you paying for your live-work space? And how'd you get it to go 80% off?

The issue with getting a big raw space, building it out, and renting it is that eventually, they may jack up the rent, sell it, or terminate your lease right?

Post: #11

(11-09-2012 01:10 PM)ABDada Wrote:  Careful with that one -- if it's a true co-op like they do them in Chicago, you don't actually own them, and the monthly "association" type fee might be ridiculous. I think in that building, your monthly co-op fee will be $1100 because the building probably has an underlying mortgage to pay off.

Good points. I'm not considering that one or anyone right now, but just the idea that such places might be available in DC is kind of crazy.

Post: #12

I have a sister of a buddy who is a realtor in the DC area. I'll ask her what she's seen and PM you if she gets back to me.

I do know that DC is ridiculously priced because of political money. Would make way more sense to buy in a 2 bedroom with a bunch of friends and have a rule: whoever notches first gets it for the night.

Post: #13

i own a apartment in the states and rent it out.

i could buy in mexico but its cheap to rent plus i dont plan on living in this country forever and selling and renting properties here could prove dificult.

from a business standpoint the taxes on rental income is only 15% while capital gains and dividends are going up to 40%. since more americans are avoiding buying places this makes the market for landlords attractive as there more possible tenants then before.

Post: #14

nope. I' m renting my hut

Post: #15

One of the biggest mistake of my life was when I purchased 2 houses. If I had to do it over again, I would use the money I have to invest in something with bigger ROI like my currant business.

Post: #16

(11-09-2012 06:07 PM)bacon Wrote:  i own a apartment in the states and rent it out.

i could buy in mexico but its cheap to rent plus i dont plan on living in this country forever and selling and renting properties here could prove dificult.

from a business standpoint the taxes on rental income is only 15% while capital gains and dividends are going up to 40%. since more americans are avoiding buying places this makes the market for landlords attractive as there more possible tenants then before.

How do you guys cope with rent increasing prices? where i live rent prices increase each year
because on inflation. (if inflation by the end of the year is 8%, rent prices are adjusted by 8%).
Also if you make a new rent contract you have to pay 1 month worth of rent to the realestate agent, and contracts are only made with a span of 1 year or 2 years max.
How is this done in America or Europe?

Post: #17

(11-09-2012 09:48 AM)ABDada Wrote:  There is always property to find below market if you'e willing to build it out yourself. I can't see myself living in a place I own unless I really can't find something via the rent-cheap mechanisms I use.

Would you be able to go into the rent-cheap mechanisms? Sounds very interesting.

Also, whereabouts are you renting in Poland?

Post: #18

I have a flat in Gdańsk-Oliwa about a half block away from the Zielony Rynek (flea market). It's not close to the beach, but everything is an easy walk.

Most of my mechanisms revolve around landlords who are having financial issues with their mortgages. It isn't that hard (in Illinois, at least) to see who is late on a payment, and then go and offer to catch them up in exchange for reduced rent.

In one of my live-work lofts, the landlord was 2 months behind on his mortgage (about $8000). The going rate for a street-level loft was about $4500 a month triple net. I offered him $12000 up front cash and a reduce rate of $2500 a month gross (instead of triple net). The $12,000 would cover the security deposit and the first month rent plus the last 2 months rent.

He accepted, and once the lease was done (3 year period) I offered to extend it 5 more years at the same rate by paying the last 4 months rent to him upon resigning.

At the moment, he has close to $15,000 of my cash covering the last 6 months rent. It's a risk, but I monitor his mortgage situation closely. The thing is, that $15,000 isn't much at all if you consider I am saving over $2500 a month over market. Over the 8 years of the lease, that's a savings of nearly 1/4 million.

I've been burned once (lost about $5000 in lease-end deposits), but I still had saved close to $30,000 in costs before the bank foreclosed on that property.

If you search, you'll find. Chicago is more lax on enforcing zoning laws if you "take care of those who visit". I prefer live/work spaces with a small retail front and a large home back -- I can open a small business, hire someone to run it, and the business profits pay for my housing costs.

Next week I'll be jetting down to Miami to look for a loft space to do the same thing.

Post: #19

Own.

Post: #20

I own two (well, the bank does- but they let me pretend that they're mine). I rent one out and I wouldn't recommend land-lording to anyone. It's a pain in the ass and most renters don't care about your property at all. I have some nightmare stories.

Post: #21

Oh yeah, nightmares are part of owning any business.

One thing I've always done is shift the maintenance burden the longer I own property -- remove carpet and laminate flooring and replace with (cheap) stone tile; get rid of the large hot water tank and install an instant-on tank, replace fuse boxes with circuit breakers and slowly change out 15A circuits and wiring to 20A ones, etc.

I also do offer incentives to good tenants. My first condo I purchased ever has had the same tenant for something like 7 years.

Landlording is NOT for everyone, certainly. If you're young and can fix things, it CAN be a great way to create supplemental income that can be eventually used to expand your empire -- and eventually just hire a maintenance guy.

Post: #22

That's the real downside to owning - you have to do all the maintenance. The upside to maintenance work, besides increasing the value of the property, is of course you learn a lot of practical stuff.

I threw myself into ownership which has had way more in start-up costs than I estimated at first, but I'm slowly crawling out of that hole. I've been really stretched for a year now, but I rent out a room and that has done wonders.

First off, I rent out at the beginning of the college year (I live in a big college town), so I can charge a high rate as everyone is looking around 1 September. The rent covers about 54% of my after-tax costs (that includes a buffer). Another thing about property is that in big towns that are basically always run by progressives, there's a plethora of rules and regulations that generally favor tenants. This can offer advantages if you know how to circumvent the disadvantages while maximizing the benefit from the tenant-friendly regulations. It's specific to where you live, but as an example, where I live I rent out my place to students who will pay a market-rate that is above the regulated rate, while I have the option of finding a place to rent at the regulated rate.

I'm not quite in the mood to make that jump yet since I have many other projects, but as ABDada suggest, I'm going to continue sub-letting a room at least until the mortgage is paid off. That's over $9,000 a year that the tax-authorities don't know about (hopefully never). Over 5 years that's about $41,400 in real terms @ 3% inflation, or put more simply: $45,000 less debt. And it's always easy to find new tenants if one of them pisses you off.

Post: #23

I am still Young and haven't found the places where I want to create my

Homebase so I Rent for myself but consider owning Property for Investment and Casflow reasons starting With my First One next Year.

I think that people have misconceptions about maintanance and ongoing costs. If you do it with the right people it's a no brainer in my opinion: You Need a Good Property Manager, accountant, lawyer, and a few other people who can help you Set everything up and Provide the right legal structure that you don't have you're Name on the Propertys.

Choosing Property it is about what you're looking for:
Some People just want Capital Gains, I Look for Casflow anything with arround 15% Return per anum. And at arround 50.000 Dollar cost. Per Property. I will Need much more Capital to create the Same Income I have True my Trading and to other Source but it's Worth it to me to use some of my Profits to Own Real Assets that Hase always been my Dream and the Most important thing when it Comes to Finances. For me it's about opm and Property is a Great Way to leverage that.

Renting is always a Smart Idea since you are more flexible and can use you're Cash for other Investments and since all my work is Cash related I Need to be liquid

The only Time I will think about buying is when I know I am going to live in this Country, City for a few years and than I would Personaly Look at the High End Market and Pay Cash. In Order do that I will Look at Having between 4 and 5 Times amount of Capital Invested before I Buy so my Risk is realy low of me Having to sell it.

I Don't Need to Impress any customers or Business Partners so I can live how I feel like living without the Need for a Ferrari mansion ect this thinks are great and I will have them in my Life but not for my current Level now it's more about making, Saving and investing instead of spending. If I want to have does things I Need to Buy the Assets that Pay them of.

I think there are certain levels where it is Easy to Rent and sell you're Property since you're dealing with highly Solvent People and the Most desirable places People always Love to Upgrade so there will always be demand for certain places making it a more low Risk Lifestyle Investment.

But for now here in Germany and soon in Brazil I choose to Rent since with Rent I have Control to Upgrade or Down grad Ase I want.