patrick.net

gameisrigged says

bubblesburst says

I really don't care what price Zillow says it's worth (although it's not a bad feeling to show the property worth over $130,000 from what we paid). But honestly I don't care what Zillow shows it's worth.

HA HA HA HA HA!!! Zillow. Oh, that's rich. Obviously you DO care, or you wouldn't have mentioned it. Har, I wouldn't bank on what Zillow says if I were you.

Honestly I don't care what price Zillow shows. That's the God's honest truth. It can be ridiculous both on the upside and also the downside. But I would equate it to a situation where you don't really care what someone you don't know says about you. Most people would rather be called beautiful vs. being called ugly. Or someone walking up to you and saying "your kid is really beautiful" vs. "boy your kid is ugly". In the end it's just a stranger's opinion but most people still would have something positive vs. something negative said about them. LOL. I look at Zillow the same way. :)

JodyChunder says

bubblesburst says

I know many, many, many people that have purchased in the past year and making excellent ROI on the properties they purchased.

all good and fair points here. but this last one especially. the only thing what bothers a guy about this is the old HERD mentality thing. i know ten more property investors for every one i knew five year back. we will see how tha t plays out. but i am still buying properties across the South West. nothing outisde of the states tho as that is over my head. going by what you put down here i think you got a good head for investment bubblebust. you will cont to do well.

Jody, definitely I understand the Herd mentality thing. Absolutely there are many more investors vs. 5 years back. But that all stems from the fact that real estate in many areas (not all) is starting to make sense from an ROI standpoint. Which clearly wasn't the case 5 years ago. Also, you have to factor in the fact that banks/CD's are paying almost nothing right now and won't for at least the next 2 years. So more people are more motivated to look for alternative investments that will spin off healthy cash flow. Real estate is certainly one of those ways which it sounds like you clearly know. I'm sure you, just as I do, enjoy getting those rental checks each and every month.

Definitely I'm NOT saying all areas are great to buy properties or especially investment properties. I was only talking about buying a principle home where you plan to live for the foreseeable future and only buying what you can comfortably afford. As far as investment properties go, I still don't see it as a GREAT investment in many areas. San Diego where I live is one of them. While property values have fallen 35% or more from peak.... I'm not buying investment properties here yet.

Most of the investors I know are buying properties in lower end less desirable cities like Sacramento. I have one friend that is buying tons of properties including multi-unit buildings in Sacramento and making a fortune.

GUAB says

I am in the process of purchasing a house in Scottsdale right now. As bubblesburst had experienced during their home buying process, we also saw a lot of crap on the market. The homes that were nice, sold in less than a month. People here are buying up the good homes, the crap is hanging around. We looked for the better part of 7-8 months before finding something we loved at the right price.

It'll be a good feeling having it free and clear in 10 years though which is the option we went with for the mortgage.

Yeah GUAB we looked for a long time and it wasn't easy to find a great property that was move in ready in the areas we were looking in. Some of the crappy listings from when we looked are STILL on the market mostly because there are still some sellers out there that are still in denial. We actually saw some listings where people were asking more than peak level prices. It was quite comical to see that sort of thing.

But it was a real struggle to find an excellent house at the same we were looking at (5 bedrooms) in a great school district. Again, everything we looked is gone.

Once sellers start getting realistic on the prices, they move fairly quick. An example here:

http://www.redfin.com/CA/San-Diego/8282-Top-O-The-Morning-Way-92127/home/6481654

On the other end of the spectrum you have crazy sellers that are in denial.

http://www.zillow.com/homedetails/13483-Ginger-Glen-Rd-San-Diego-CA-92130/69020328_zpid/

Zillow doesn't count REOs or short sales. So there's a chance once we get back to a normal market the estimate prices will be closer to reality..

ptiemann says

True in case of 'spending', but if he buys an asset, then his net worth should not have changed much at all.

I realized later that this was written without enough thought. Absolutely, you have the asset. So it gets down to the value of the asset which is the point dodgerfanjohn had been making.

I appreciate your point about "spending" though. If you pay cash for land/house, it's part of your net worth and will probably stay above zero in value.

Fantom says

By which I mean a process in which the engine is actually lifted from the engine bay so that the spark plugs and consumables can be changed.

A friend recently bought an '89 Testarossa. When i recounted this story to a friend who collects Corvettes, he said that type of engine service for a Ferrari is a "$100k" endeavor.

Tha Maranello is cool though!

Katy Perry says

your not dumb enough to believe you"ll be actually paying the price you Realturd told you over 30 years. look at the bottom of your loan paper work. Thats the price you really agreed to pay.

This is a really important part of real estate sales. NOBODY tells me, 'Hey I bought a house for price + interest!" But that's EXACTLY what they did. They fixate on the "price."

So, years later when they sell the place they subtract "price" from the sales price and claim that's how much they "made."

This is crazy, people! It's a strategy set out by people with lots of money to loan to make them even more money!

I'm amazed at how even I don't allow myself to enjoy my rental the way some people enjoy their loaned homes. I've been enjoying my rental more and more.

FunTime says

Fantom says

By which I mean a process in which the engine is actually lifted from the engine bay so that the spark plugs and consumables can be changed.

A friend recently bought an '89 Testarossa. When i recounted this story to a friend who collects Corvettes, he said that type of engine service for a Ferrari is a "$100k" endeavor.

Tha Maranello is cool though!

Wow wait a minute, why are you asking a Corvette guy for Ferrari advice? They naturally disdain each other and they might as well live on different planets.
engine service for a Testarossa is expensive, but its no where near $100k, even if its done at the Ferrari Stealership.

http://www.automobilemag.com/features/collectible_classic/1003_1984_1991_ferrari_testarossa/viewall.html
The engine needs to be removed every 30,000 miles (or five years) to change the timing belts and adjust the valves. While the twelve-cylinder is out, Garcia replaces all the seals, bearings, and wear parts. The procedure costs up to $8000. And then halfway between each major service is a minor one, which costs about half that much. That's hardly "minor."

bubblesburst says

Honestly I don't care what price Zillow shows. That's the God's honest truth. It can be ridiculous both on the upside and also the downside. But I would equate it to a situation where you don't really care what someone you don't know says about you. Most people would rather be called beautiful vs. being called ugly. Or someone walking up to you and saying "your kid is really beautiful" vs. "boy your kid is ugly". In the end it's just a stranger's opinion but most people still would have something positive vs. something negative said about them. LOL. I look at Zillow the same way. :)

Zillow is just a guess. Case in point: In a small suburbia, it thinks my parent's house is worth more than the neighbors, but it fails to acknowledge their fully finished basement in the sq. ft measurements, nor does it want to acknowledge their land is twice the size of my parents.

Zillow is crap, but it IS important when going to buy/sell a house since other people care about it. It's going to be that much harder to buy a house if Zillow appraises it too high, and harder to sell if Zillow considers it worthless.

Serpentor says

Wow wait a minute, why are you asking a Corvette guy for Ferrari advice? They naturally disdain each other and they might as well live on different planets.

I realize I'm now dragging this thread way off topic, but the Corvette guy just likes Corvettes in particular. He likes cars generally was an original DeLorean owner and owned a National Champion Top Alcohol race car.

I have no idea what type of engine work he thought was a hundred grand. Your estimate does sound really inexpensive though, considering another story my friend with the Testarossa told. He had the car delivered to the Bay Area and, in route, the delivery company broke the front windshield. My friend told me the replacement windshield was $9000! That's from the horses mouth. So I'm surprised even the belts in your scenario are less than the windshield. I know next to nothing about these subjects, so can neither defend or support what I heard. Both people own their own houses, so they might be exaggerating.

no engine maintenance work is worth a hundred grand unless you are talking about military jet engines.

Did you read my link? its not "MY estimate", its from a Ferrari specialist, in San Francisco of all places. Replacement parts cost money, especially large fragile parts on limited production cars. I'm not surprised the windshield was $9k, that seems like a fair price actually...but you can completely rebuild 2 Ferrari engines with $100k, not regular engine service.

SubOink says

Unlike the patrick.net predictions, I am not underwater, my house is not worthless or worth less and I am not hating life but loving it. Best decision ever. It feels good not to pay rent to somebody and making their retirement plan come true. This summer we did so many updates and improvements, would have never done that in a rental

Bravado when strong hastens decay.

SubOink says

People were predicting a year ago how screwed up I would be financially and how much I would regret having bought a house and how my house will have lost 20% in value etc etc etc ...well, the main posters from back then (like klarek and co) are nowhere to be found now. - THAT's the purpose of the post.

I never said anything of the sort. I ridiculed the lack of rationale you used on the biggest purchase of your live, and the pie-in-the-sky view you had on real estate. I also mocked you for your conspicuous consumption based on propaganda that had been spoon-fed to you by the pathetic weasels in the RE industry. I recall you seeking assurances and reinforcement from others for your thoughtless gamble, but I am not recalling any specific predictions about where you would be in one year, so I'm going to guess that's an arbitrary point for your self-congratulations.

If you want to attribute quotes to me or others, go for it. I for one do not recall anybody telling you that you'd be underwater within a year, but your jubilation at this moment is reminiscent of folks I know who bought in 2005 and were patting themselves on the back throughout 2006.

klarek says

I recall you seeking assurances and reinforcement from others for your thoughtless gamble

Please. "Thoughtless gamble?" He bought a house he wanted. How very thoughtless. Shame on him.

klarek says

I never said anything of the sort. I ridiculed the lack of rationale you used on the biggest purchase of your live, and the pie-in-the-sky view you had on real estate

the lack of rationale like....uh...wow, this house is twice the size than my rental in a better neighborhood and the mortgage is what I pay in rent in the dump. How ridiculous of a rational...

And how ironic that now a year later, that house is actually cheaper than my rental ever was due to the refi. Saving more money than ever.

But like you said, it was a ridiculous rational spoon fed by a realtor....ok, klarek. Glad to have you back in full swing - we'll be doing this until my house is paid off...lol

klarek says

If you want to attribute quotes to me or others, go for it. I for one do not recall anybody telling you that you'd be underwater within a year, but your jubilation at this moment is reminiscent of folks I know who bought in 2005 and were patting themselves on the back throughout 2006.

You're memory is very bad. And folks that bought in 2005 and 2006 did not have a mortgage that was cheaper than renting but a mortgage that was double the rent.

But here I go again with this ridiculous rational...:)

I really don't have time to go back and read thru all the crap just to find a quote to remind you of what was said from a bunch of doomers. It's not necessary.

by the way - HAPPY NEW YEAR!

SubOink says

I really don't have time to go back and read thru all the crap just to find a quote to remind you of what was said from a bunch of doomers. It's not necessary.

Here's one example:
bubblesitter says
Wait 12 more months and you will be underwater. You should have got another rental.
/?p=623908

tiny tina says

SubOink says

I really don't have time to go back and read thru all the crap just to find a quote to remind you of what was said from a bunch of doomers. It's not necessary.

Here's one example:

bubblesitter says

Wait 12 more months and you will be underwater. You should have got another rental.

/?p=623908

Nice work tiny Tina!!!

Bubble sitter will never admit that he was wrong. Very wrong! If I had listened to his advice I would be paying more now for a shitty rental.

Again, I would caution you. It ain't over yet, so don't count them chickens.

But I wish you luck!

SubOink says

the lack of rationale like....uh...wow, this house is twice the size than my rental in a better neighborhood and the mortgage is what I pay in rent in the dump. How ridiculous of a rational...
And how ironic that now a year later, that house is actually cheaper than my rental ever was due to the refi. Saving more money than ever.

This is likely impossible without one of a few caveats that you for some reason are failing to disclose:

-You put 20% or more down...and considering the prices in Encino, were talking a minimum of $80K to meet this requirement.
-You were paying a ridiculous sum in rent.
-You moved from a very high demand area like South Pasadena, Santa Monica, or the Westside.
-You moved from a great school district.

As a for instance, my rent in downtown LA for a loft is around $1600/mo. Thats right around the average for downtown LA overall, and on the low side for the portion I live in.

To have a comparable ownership cost, just on mortgage:

$420K@20% down ~1600/mo payment
$350K@3.5% down ~1600/mo payment

So to get into a house at less than I pay in rent, I'd need to purchase a house in those price ranges.

Since my rental is stainless mcgranite, and I'll already be sacrificing commute(I live 5 minute drive, 17 minute red line, or 30 minute walk from work), well need an updated home for an apples to apples comparison.

And if I don't want a commute over 30 minutes, that leaves just a handfull of halfway safe neighborhoods in that price range...Highland Park, and El Sereno. Keep in mind that also means that I'm committing myself to living in a very small place...certainly under 1200 sq ft and likely under 1000 sq ft....for an extended period of time...until home prices increase by at least 12-15% or until such time as I can rent it out.

Note also that the entire game changes if I can get a home under 350K with 20% down or under ~$300K with 3.5% down as we are now talking about a ~$1350/mo mortgage...a payment point where renting at $1600-1700/mo actually yields quite a nice cashflow.

Thats around a 18% price decline and I don't really know if that will happen or not, but clearly you can see that the rent/mortgage ratio is not necessarily in favor of the home debtor.

dodgerfanjohn says

Since my rental is stainless mcgranite, and I'll already be sacrificing commute(I live 5 minute drive, 17 minute red line, or 30 minute walk from work), well need an updated home for an apples to apples comparison.

Actually, for an apples to apples comparison, you'd need to buy a loft/condo downtown, not a single family house outside of downtown, right? I no longer know what such loft/condos go for, however.

JG1 says

dodgerfanjohn says

Since my rental is stainless mcgranite, and I'll already be sacrificing commute(I live 5 minute drive, 17 minute red line, or 30 minute walk from work), well need an updated home for an apples to apples comparison.

Actually, for an apples to apples comparison, you'd need to buy a loft/condo downtown, not a single family house outside of downtown, right? I no longer know what such loft/condos go for, however.

I've done that before on this site and the answer was that it's not even close. Selling prices on equivalent units start at 300-350k with $600+ HOA. There's a few cash only building where prices are in the 100's.

But Suboink is using a house vs crap rental so I was trying to provide a equivalent comparison to that scenario.

Buy now or be priced out forevah!

How clever and creative of you ducky.

dodgerfanjohn says

But Suboink is using a house vs crap rental so I was trying to provide a equivalent comparison to that scenario.

I am using a house vs house comparison - the houses I could afford renting and now the house I can afford paying off. apples n apples. It just happens to be that compared to the house I bought my rental houses were rotten apples in comparison. Quality, size and neighborhood comparison.

Your comparison is apples an oranges on the other hand.

Where was the rental located?

I guess each individual situation is different. Glad it worked out well for you. Still too pricey for me in the Bay Area.

dodgerfanjohn says

Where was the rental located?

woodland hills

GameOver says

Game Over.

huh?

I agree - if Aliens come to invade us, the whole buying vs renting discussion is obsolete...

?!?!

SubOink says

I agree - if Aliens come to invade us, the whole buying vs renting discussion is obsolete...

?!?!

That depends on whether they are staying long term, and what their incomes are.

The sooner the masses learn WHY house prices became detached from reality, the sooner they will back away and wait for phenomenal values to return. In the meantime we must prepare to bailout the blind, or rich.

Literally, the trend shows housing prices going to zero, and below, so we should all wait until they are paying people to take houses, and then "buy".

I wonder if the price of tulips is more now than it was Feb 3, 1937?

Also, no one really needs tulips, they do need places to live.

Which the landlord has to buy or already own (not sell).

No, renters still have to live in and pick from the rental stock. Because this tends to be inferior, is one reason to own. And your landlord's problems are indirectly yours (it's like Democrats calling for high[er] taxes on corporations - which becomes a cost of doing business and is usually passed along to... the end consumer).

Not all problems can be passed along, but on the flip side no one I know of ever got rich renting, while the same cannot be said of owning.

There have been discussions here and on Redfin forums about renters buying because they couldn't find what they wanted, or got sick of tolerating their options.

That's true about passing on costs/losses, in the short term, for the individual renter. But as with corporate taxes, these costs usually, generally, over the long term, get passed along to renters as a whole. The cost of roof maintenance, repair, and replacement, and insurance on the rental, are all built into your rent payment.

The benefits of appreciation (when applicable, which is, historically, over time, usually), however, never get passed along to the renter.

And while SoCal is a bit of an unusual market, in most of the country, landlords make positive cash flow (profits) in addition to appreciation, which means that renters are not only losing out over time, but month to month as well. Of course, there are exceptions, it's better to rent than own when price depreciation is occurring, etc.

GameOver says

You say not all problems can be passed along, but in fact almost NO problems can be passed along from landlord to renter, since the renter ALWAYS has the option of simply picking-up stakes and moving on.

and when your landlord cant pay his debt? That's when it becomes your problem.

GameOver says

Good for you! I'm glad it's working out well and hope it continues to do so for you. All I can say is that I have a friend who bought a house last year too. It was a short, listed at $360K which after about 6 months of back & forth negotiating became $380K.

Now, a full year later, there are NEWER houses on the market with all the same amenities as my friend's; featuring BIGGER lots, MORE sq footage, in BETTER areas, and for LESS. Many of which are standard sales or REO's.
So there's DEFINITELY an advantage to waiting

As long as prices keep declining. But what makes you and your friend think you are better market timers than Wall Street, real estate developers, and other buyers and sellers? In other words, it just as easily, IMO, could have gone the other way, and eventually, in whatever particular market you are talking about, that day will come. Sure, it may be smart to wait til the bottom or even for the upswing - if you can figure out what this is. In the meantime, for most people, a place to live isn't and shouldn't be an investment, so timing the market and sitting on the sidelines forever doesn't make sense for most people.

Also, if the friend is married, does he regret that because he saw a prettier, younger girl walk by one day?

gameover - you seem to be in some sort of panic. What's the cause? Are you unemployed? Has your wife left you? You seem to be in a very dark place, I feel bad for you. It's called hysteria.

Things aren't nearly as bad as you say. Just go out, enjoy life. Book a flight to Hawaii...you'll notice that most of them are sold out. Buy an ipad...go to a very expensive restaurant, they are all packed with people enjoying life.

Everyone still has to eat, drive, live somewhere etc - nothing has changed. Car's need to be fixed, surgery's need to be performed, goods have to be produced etc...

Not sure where you get the idea of an implosion. I guess a meteor could fall out of the sky and crush us all.

You remind me of the guy that predicted that the world would end in 2011.

SubOink says

go to a very expensive restaurant, they are all packed with people enjoying life.

I notice that! I keep asking, 'where's the recession, why aren't these people at Denny's or at home?' whenever I walk into one.

toothfairy says

GameOver says

You say not all problems can be passed along, but in fact almost NO problems can be passed along from landlord to renter, since the renter ALWAYS has the option of simply picking-up stakes and moving on.

and when your landlord cant pay his debt? That's when it becomes your problem.

Which happened to a renter friend of mine. LL got foreclosed on, she had to move somewhere else.

SubOink says

Everyone still has to eat, drive, live somewhere etc - nothing has changed. Car's need to be fixed, surgery's need to be performed, goods have to be produced etc...

Not sure where you get the idea of an implosion. I guess a meteor could fall out of the sky and crush us all.

You remind me of the guy that predicted that the world would end in 2011.

In fact, housing-wise, of the two developer/investor types I know, one is holding rather than selling, and the other is buying. (I also know some flippers, who are flipping, but that are market agnostic, more or less.) So it's interesting to me that while many here who would be in the market for one house for themselves are waiting for prices to drop, the big boys - at least the two I refer to here, not much of a sample, I know - won't sell because he thinks a better time to sell will emerge later, and is buying, because he thinks now is a great time to buy, respectively.

GameOver says

SubOink says

What's the cause? Are you unemployed? Has your wife left you? You seem to be in a very dark place, I feel bad for you.

My tummy hurts. I need a belly rub AND a BJ. Hope you REALLY feel bad enough for me that you'd be willing to help me out with either one or the other?

No, I can't help you because I am too busy packing my stuff - in case the economy implodes...and the world as we know it ends. No time for belly rubbing, or BJ's.

Although, I could meet you at BJ's for a burger though. It's sunday so there is only going to be a 45min. wait...must be all people eating their last meal :)