Post: #26

You can buy a new concrete poured home in Mexico for 10 to 20,000 (what I'm currently looking into)
You can buy a house in China in the countryside for 5,000. (5 Bedroom) (Chengdu/Hubei - Mainland in the cheaper provinces)
You can deck anything out to look really nice at IKEA.

You can rent a decent apartment in China for 200 dollars a month (2 bedroom)
You can rent a town house in Mexico for 250 dollars a month (2 bedroom)

You could live in Mexico or China for 2 years without working or only working when you want to. I did it on 3,000 at six month intervals for a few years during my 20s.

Contrast that to: you can make a down payment on a house in Canada that is old/ugly or has problems.

Post: #27

Maybe someone can explain the "mortgages are for suckers" statement a little better? I've seen it before and always wondered if that's true, especially with the current very low interest rates. I bought a large but beat up house in a good neighborhood for a steal right before the bottom fell out on the mortgage industry and the economy collapsed. I felt like a sucker then for sure, it happened a few months after I moved in.

The house was a nightmare, hadn't been taken care of for about 30 years and was a lot bigger than I thought it was. I would be at my job all day and come home to work on the house until midnight or one in the morning. The place was totally disgusting, which I didn't know until the day I moved in, it stunk like animals. I had to rip out rugs, clean and paint, fix walls and ceilings, tear shit out, redo the bathroom and kitchen, put in floors. I was a regular at Home Depot, sometimes 3 times a day. It took about 10 months of daily work for me to go through the whole house and get it so I could come home and not have to work on something every single day if I didn't want to. Then there were the water issues and plumbing leaks in the basement, the leaky gutters and the roof is still an issue but I've got the house very comfortable after 4 years.

When I rented it was $800 per month. My mortgage, with insurance and taxes included is just under $700. Without the taxes and insurance it's about $400. I plan on paying big chunks of the principal off as I get the funds now that I don't have to spend a ton fixing stuff. Above the mortgage I've spent about $13,000 fixing it up and $5000 of that was for a new fireplace and chimney repairs. Most of the projects I've done myself and I like doing home maintenance stuff but some people may not want to or be able to deal with all that, especially with a fixer upper when you have a day job.

I won't lie, some days it really sucked, but having the house has been a big character builder, like maintaining a car times 1000. It forced me out of being lazy and I realized I had the ability to work even harder and get much more done in a day than I thought I could. I've learned a ton of skills and built on others I had (plumbing, landscaping, carpentry, painting, electrical, flooring, roofing, drywall, etc). I suffered and toiled but I wake up every day in my own "castle". When I rented I didn't have to lift a finger, went out all the time, drank a shitload, went on cool vacations, ate out a ton and occasionally dragged bar whores home with zero game. Now It's dialed back a ton, I do projects and have a few beers but it's down from 100% of my time to about 15%.

The positive is that when I sell this place I will make a ton of money. I've lived here very cheap, it looks good on my credit, and I've learned skills and done projects like you wouldn't believe. I have a fuzzy idea of getting myself into a position of being location independent, selling the house and all my assets here and buying a sailboat or a condo somewhere in the Caribbean.

Without a mortgage I wouldn't have been able to do any of this. I'd still be paying someone else's mortgage off for them with no asset and wasting a lot of time and money with nothing to show for it.

Post: #28

(02-09-2013 02:52 PM)BIGINJAPAN Wrote:  

Quote:-my final advice is that you should wait to buy it in cash, as mortages are for suckers. that way if you decide to go spend 12 months in country x you could just rent it out and make a handsome profit.

Are you an investor ? Ever heard of OPM ? That statement makes me think you are giving advice and do not invest yourself.

Why would I put down my own money if I can use all of the banks money? I get to own the property and collect the cash flow. I have a property I bought last year that I financed 100% of it from a bank loan yet it NETS me $1500 a month.

With record low rates essentially making money free why on earth at this point in time would you use your own money ?

i indicated in my first comment my advice was for personal home buying. personally i paid cash for my home. i lived in it for a couple years but when i decided to relocated abroad i just rented it out, so i make a nice profit now. if i ever wanted to return to the US its there waiting for me, but i picked it because its a place i could live in forever. i didnt see it as an investment, rather a place that i loved because of its location, design, view, etc. if your buying investment properties you have a different mindset, your only concern is profit. home buying for yourself is different

@painter the reason i said mortages are for suckers is because in the case of buying personal property to live in you end up paying with interest often twice the actual cost of the home. renting a home is actually pretty afordable when you factor in the true cost of owing a home; insurance, taxes, hoa, repairs, maintaince, mortgage. also there are much better investments than a personal home. for most home owning americans their one property ends up consituting most of their portfolios net worth, which is very poor diversification. in fact homes to live in are one of the worst returns on investment out there and in fact often underperforms most every other type of investment in percentage gains (see excert below) and its also not liquid.

"Yale professor Robert Shiller, in his book "Irrational Exuberance," argued that home buyers may also be influenced by comparing simple returns on infrequent real estate transactions. Assume that a home in 2005 sold for 10 times the price it sold for in 1945. While that produces a simple return of 900 percent, the real (inflation-adjusted) annualized return was less than 1 percent. Another likely error made by homebuyers was that the simple rate of return ignores all of the costs of residential real estate -- including significant transactions costs, closing costs, property taxes, maintenance, and improvement costs. An assumption of 1 percent for maintenance costs would yield a real return of below zero. "

However owning property for the purposes of renting it out CAN be profitable IF you know what your doing and buy unvalued properties, do renovations, etc, so sure mortgages in those cases are justified." -

http://www.cbsnews.com/8301-505123_162-5...nvestment/

Post: #29

Well that all makes sense but this thread is about INVESTING. Not personal use.

Post: #30

How many of you are renters and how many are home owners

i have a feeling most are renters traveling staying one place to anotherwhile a house ties you down.

Post: #31

(02-11-2013 03:56 AM)east and west Wrote:  How many of you are renters and how many are home owners

i have a feeling most are renters traveling staying one place to anotherwhile a house ties you down.

Renter here. I will never purchase real estate for myself to live in. Thankfully I've had a great landlord for the last six years. I live in a 4-unit apartment building, every apartment is the same - living room, bedroom, bathroom, and kitchen. I only pay $300 per month - normal rent is $350 per month but I get a $50 discount for taking the trash cans to the curb every week.

Post: #32

Have owned since 2003 and do not regret it one bit.

If I want to rent it out at some point I'll get way more than the mortgage is on it.

Another thing to remember is the cost of everything goes up over the years.

Except your mortgage.

Unless of course you get an ARM, which is nuts in my opinion. Especially with the cost of money the past 10 years or so.

Post: #33

Hotwheels, how often are you home? From a lot of your posts I get the impression that you travel for work and sleep in hotels more often than not.

Post: #34

I've been home for most of the past month but the last 6 months or so of last year it was rare for me to be home. I wasn't on the road nearly as much when I bought it, yet I still have zero regrets.

I put it on Airbnb for a month just to test the market and if I rent it that way I should average 3x or more the mortgage over the summer months. One must remember I live in a tourist area however.

If I'm on the road a lot this summer, which I expect to be, I'll probably do that. Currently upgrading a few things in the house to both pull more rental income and make it more how I want it.

Post: #35

I'm thinking about building a new house next to my house slowly and moving into it and renting my other place out. In the end if I wanted to leave I could rent both of them out and travel. You're not going to make passive retirement income when you leave your rental after 20 years.

Post: #36

(02-11-2013 12:52 PM)el mechanico Wrote:  I'm thinking about building a new house next to my house slowly and moving into it and renting my other place out. In the end if I wanted to leave I could rent both of them out and travel. You're not going to make passive retirement income when you leave your rental after 20 years.

My buddy did this. He actually put a trailer on his property and lived in the trailer while he renting out both houses.

Post: #37

(02-10-2013 10:30 AM)bacon Wrote:  @painter the reason i said mortages are for suckers is because in the case of buying personal property to live in you end up paying with interest often twice the actual cost of the home. renting a home is actually pretty afordable when you factor in the true cost of owing a home; insurance, taxes, hoa, repairs, maintaince, mortgage. also there are much better investments than a personal home. for most home owning americans their one property ends up consituting most of their portfolios net worth, which is very poor diversification. in fact homes to live in are one of the worst returns on investment out there and in fact often underperforms most every other type of investment in percentage gains (see excert below) and its also not liquid.

Do you think the landlord is losing money renting it out to you? Think about it.

When renting you are paying more than if you owned when comparing comparable properties.

Of course if you compare renting a one bedroom apartment to owning a three bedroom house the rent will be less. Compare apples to apples and owning wins.

Edit-You mention HOA's. I'd NEVER buy a home subject to a fucking HOA.

Post: #38

(02-10-2013 07:42 AM)BadWolf Wrote:  You can buy a new concrete poured home in Mexico for 10 to 20,000 (what I'm currently looking into)
You can buy a house in China in the countryside for 5,000. (5 Bedroom) (Chengdu/Hubei - Mainland in the cheaper provinces)
You can deck anything out to look really nice at IKEA.

You can rent a decent apartment in China for 200 dollars a month (2 bedroom)
You can rent a town house in Mexico for 250 dollars a month (2 bedroom)

You could live in Mexico or China for 2 years without working or only working when you want to. I did it on 3,000 at six month intervals for a few years during my 20s.

Contrast that to: you can make a down payment on a house in Canada that is old/ugly or has problems.

I'm interested in both of the options you've brought up--both Mexico and China (or Asian countries where you can own property/condos in general)

Has anyone invested in rental property abroad? If so, which countries? What are some of the considerations to take into account or some pointers that you can give?

I've been thinking about high rise condos in BKK for a while now. Also interested in Chile/Argentina/Uruguay.

Post: #39

what is arm?

i think rental properties abroad are not as good as in the states

Post: #40

would you prefer a fixed rate mortgage or varianle rate.

Post: #41

Landlording is not really a passive income strategy. You can make it passive but that means scaling up your rentals to offset hiring other people to manage it.

I wouldn't trust management companies. They have ways of sucking money out of your pockets.

As an investment, I would pass Ali. I don't think it is conducive to your lifestyle.

Me, I am looking at equity lending. Something like Hard Money that I can charge a high interest rate and points. I think Atlanta would be killer for that since the foreclosure time frame is only 21 days.

Post: #42

(02-12-2013 03:11 AM)east and west Wrote:  what is arm?

i think rental properties abroad are not as good as in the states

ARM = Adjustable Rate Mortgage

It means you have an initial interest rate on your mortgage, but after a set period of time (say 3 years) the rate changes, based on another factor like the LIBOR.

Post: #43

why is arm bad most rates are variable nowadays

Post: #44

ARM or even interest only mortgages were useful strategies if you knew what you were doing and the market was going up. ARM's have low teaser rates that adjust upward once the fixed low interest term has passed. People were not prepared to make the higher payments as a result. None of these mortgage products are "bad" per se, provided you know exactly how they work and why you are using them, which unfortunately rules out many if not most people.

Post: #45

usuAlly arm has Lock in period eg 2 years where the rate is low. but after this period you are free to switch to another mortgage.

Post: #46

(02-10-2013 09:22 AM)painter Wrote:  Maybe someone can explain the "mortgages are for suckers" statement a little better? I've seen it before and always wondered if that's true, especially with the current very low interest rates. I bought a large but beat up house in a good neighborhood for a steal right before the bottom fell out on the mortgage industry and the economy collapsed. I felt like a sucker then for sure, it happened a few months after I moved in.

The house was a nightmare, hadn't been taken care of for about 30 years and was a lot bigger than I thought it was. I would be at my job all day and come home to work on the house until midnight or one in the morning. The place was totally disgusting, which I didn't know until the day I moved in, it stunk like animals. I had to rip out rugs, clean and paint, fix walls and ceilings, tear shit out, redo the bathroom and kitchen, put in floors. I was a regular at Home Depot, sometimes 3 times a day. It took about 10 months of daily work for me to go through the whole house and get it so I could come home and not have to work on something every single day if I didn't want to. Then there were the water issues and plumbing leaks in the basement, the leaky gutters and the roof is still an issue but I've got the house very comfortable after 4 years.

When I rented it was $800 per month. My mortgage, with insurance and taxes included is just under $700. Without the taxes and insurance it's about $400. I plan on paying big chunks of the principal off as I get the funds now that I don't have to spend a ton fixing stuff. Above the mortgage I've spent about $13,000 fixing it up and $5000 of that was for a new fireplace and chimney repairs. Most of the projects I've done myself and I like doing home maintenance stuff but some people may not want to or be able to deal with all that, especially with a fixer upper when you have a day job.

I won't lie, some days it really sucked, but having the house has been a big character builder, like maintaining a car times 1000. It forced me out of being lazy and I realized I had the ability to work even harder and get much more done in a day than I thought I could. I've learned a ton of skills and built on others I had (plumbing, landscaping, carpentry, painting, electrical, flooring, roofing, drywall, etc). I suffered and toiled but I wake up every day in my own "castle". When I rented I didn't have to lift a finger, went out all the time, drank a shitload, went on cool vacations, ate out a ton and occasionally dragged bar whores home with zero game. Now It's dialed back a ton, I do projects and have a few beers but it's down from 100% of my time to about 15%.

The positive is that when I sell this place I will make a ton of money. I've lived here very cheap, it looks good on my credit, and I've learned skills and done projects like you wouldn't believe. I have a fuzzy idea of getting myself into a position of being location independent, selling the house and all my assets here and buying a sailboat or a condo somewhere in the Caribbean.

Without a mortgage I wouldn't have been able to do any of this. I'd still be paying someone else's mortgage off for them with no asset and wasting a lot of time and money with nothing to show for it.

Painter, how many hours have you spent doing this work? How much do you estimate the house has appreciated as a result of your money and time invested? What's your return? You have a lot of smart posts so I probably don't need to tell you this, but how much is your implied per-hour salary / opportunity cost? Lots of people who go into flipping houses forget about the opportunity costs of their time.

Post: #47

(02-11-2013 01:27 PM)Hotwheels Wrote:  Edit-You mention HOA's. I'd NEVER buy a home subject to a fucking HOA.

True, the HOA are a pain in the ass that you pay every month so they can bitch at you.

(02-12-2013 08:42 AM)worldwidetraveler Wrote:  I wouldn't trust management companies. They have ways of sucking money out of your pockets.

This is true too, many are setup to get kick backs from contractors, plumbers, repairmen, collection agents, and more. But if you could find a really good one then it wouldn't be too bad. Just be careful.