Goran: Joining the debt slaves?


By Goran_K   Follow   Wed, 23 Jan 2013, 9:59am   2,079 views   37 comments
In Irvine CA 92614   Watch (0)   Share   Quote   Permalink   Like (5)   Dislike (1)  

I've been a long time lurker, and a member since 2011. I love Patrick and his site, bought his book, and really liked the community here (although the school yard fights could sometimes grate on the nerves). The entire time I've been here, I tried to analyze the market through fundamental economic indicators, waited patiently for things to return to normal. I never thought I'd witness our government throw the entirety of its law given power to change and manipulate the market into a "new normal" that probably won't subside for many years.

For some, waiting for house prices to decline to “the old normal” is simply going to be a long wait. Though we may be bitter about it, our federal monetary policy clearly involves inflating/devaluing our way out of debt and explicitly encouraging higher home prices. This may not be a normal healthy market, but it’s the market we’ll be living with for a very long time.

A little about me. I sold my first home in the early 2000s. I never tried to time anything, I only did things that made sense for my personal situation. I probably left some money on the table seeing as housing didn't peak until 2006, but it was a blessing in disguise for me (more on that later). It wasn't a huge home, just a small 3/2 condo starter home I bought with my hard earned W2 paychecks working at Goldman Sachs, Citigroup, and other financial institutions. I got to travel the world, spent time in Hong Kong (before the skyline was even littered with skyscrapers), and even fell in love with a woman in Taiwan. I brought her back here to the states and we had a "little Goran".

Fast forward to 2003, I bought a pretty large stake in Gold, which I ended up selling in 2010. Again, I left a lot of money on the table selling early, but I count my blessings that I was able to put money from my home sale into a place where it literally grew nearly 4x (wish I would've waited another year or two). Reason I sold was I was ready to buy, all cash of course, and ready to pull the trigger.

Over the past 3 years, I've seen the market go up, down, up in a very boom bust way. Anytime housing would show a hint of normalcy, the government would hand out a tax credit. It would start to dip again, the FED started devaluing currency. I started looking in 2009-2010, and prices per sqft are pretty much the same as back then, over a 3-4 year period. Sure money is cheaper to borrow, but that never applied to me in the first place.

How long should one wait for things to return to the "old normal"? 3 years? 5 years? 20 years? By that time, I'd be an old man, and my kids would be teenagers by then, nearly ready to leave for college.

So, as it goes, Goran found a nice place on coastal OC (literally 3 minutes to the harbor and a view of white water). It was a probate sale. The old guy didn't die in the home, but he did leave it in fairly good condition. Those familiar with probate sales know the complicated nature of them. Me being all cash though, did help my cause. I'm now only a few days away from the court ordered 30 day waiting period ending, and it looks like (by all indicators) the house will be mine soon.

For the bears who I went to battle with, side by side, for a few years, keep up the good fight. Even as a homeowner, I'll be rooting for you. What this government has done to first time buyers on the fence is disappointing to say the least.

For the bulls, I don't see any rapid appreciation in the coming years, but for those who called the "new normal", good for you. You foresaw the future better than me.

I won't be completely leaving the real estate discussion boards, but I do foresee myself not participating nearly as much as before. As a homeowner, I feel I've settled, and the debates were more fun as a renter (at least I believe so).

Some personal shout outs to guys I've sort of had personal conversations with.

Patrick: You created a great website. Probably the best housing discussion site on the net. I hope someday you can do this full-time like a Reggie Middleton, or ZeroHedge. Keep up the good fight.

bmwman91: I hope you get your garage to work on cars. I know Silly-Con Valley is just as crazy as coastal OC/LA (maybe even more so), but I'm sure you'll get that garage.

Roberto: I hope things in Phoenix keep being profitable for you. Enjoy it all in good health, the air must be clean in the desert right?

In the end, I'm sort of glad to leave this last chapter in my life behind, and move on to better, and more important things, enjoying it all in good health, I pray.

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  1. uomo_senza_nome


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    1   10:20am Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Goran -

    If your purchase is all cash, you're not really a debt slave, right? :)

    Anyway, Congrats - hope everything goes smoothly.

  2. Goran_K


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    2   10:26am Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    You're right. I just sort of liked that term "Debt Slave".

    I also miss the guy who said "Why buy now when you can buy for 30% later?"

    So many memories on this website.

    btw uomo, I never could tell, but are you on the renter or homeowner (bear/bull) side of the battle?

  3. Goran_K


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    3   10:33am Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    SFace says

    Good luck. Hope no one shows up, who knows.

    Views of the ocean near Newport Beach, Laguna Beach are in high demand. Combined with rising price and lots of agents, it may surprise you. But good luck

    Yeah I keep thinking in the next few days, some guy may bid up the next 5%. If it happens, I guess I would be disappointed. Not sure if that's turning me into a housing lover now.

  4. Jimbo in SF


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    4   10:49am Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Would you not have been better to take out a mortgage for the tax write off ... with the security of having the cash in the bank as a backup if need be?

  5. Goran_K


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    5   10:55am Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Jimbo in SF says

    Would you not have been better to take out a mortgage for the tax write off ... with the security of having the cash in the bank as a backup if need be?

    I'm not sure. Maybe? Would the difference have been huge? I doubt it.

    I think there's a certain feeling that my only housing cost from now, until they drag me out of the house into a wooden box, will be property taxes and maintenance that soothes me more than having Bernanke destroy my money's value in the money market.

    I do have reserves. I'm not buying a new Ferrari anytime soon, but I think I'll be good for a long while.

  6. Jimbo in SF


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    6   11:02am Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Goran_K says

    Would the difference have been huge?

    I know in my first year of home ownership, I paid approx $30k in interest ... writing that off reduced my taxes by approx $10k.

    I guess it depends on your work situation ... do you earn a salary, or are you living off investments now?

    With mortgage rates so low, it seems possible to earn a return on the cash you 'held onto' that would exceed 3.5% (typical mortgage rate), thus you might even come out ahead on the investments as well as the tax write off.

  7. Goran_K


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    7   11:09am Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Interesting way to look at it gents.

  8. David9


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    8   12:16pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Goran_K says

    explicitly encouraging higher home prices.

    In every possible aspect this the statement above is true.

    What this says to me is that the Goldman Sachs, Citibank, and all the others don't give a rat's ass or a flying fuck about me, my life, my financial future or anybody else's for that matter.

    As in Patrick's book, if your rich or poor, sure, buy a house, it doesn't matter either way.

    And no, I don't begrudge you your money nor am I jealous and I hope you are happy there.

    I learn a lot from this site.

  9. Goran_K


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    9   12:31pm Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    David9 says

    In every possible aspect this the statement above is true.

    What this says to me is that the Goldman Sachs, Citibank, and all the others don't give a rat's ass or a flying fuck about me, my life, my financial future or anybody else's for that matter.

    As in Patrick's book, if your rich or poor, sure, buy a house, it doesn't matter either way.

    And no, I don't begrudge you your money nor am I jealous and I hope you are happy there.

    I learn a lot from this site.

    I'm not rich, I'm not old money or anything. I have a career that spans nearly two decades, and I've worked hard, and made somewhat more good decisions than bad.

    You're right, don't trust those banks. I've worked for them. They are predatory entities looking to strip your last dime from the flesh of your body by any legal means necessary (i.e - to the extent of the law that they are allowed to rape/pillage you).

    Thanks for the well wishes David. I hope you find your castle.

  10. HEY YOU


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    10   1:22pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike  

    Well written thread.
    Of course you can't get away without our massive criticism.

    "..really liked the community here .."
    You must be easily entertained.

    "..school yard fights.."
    They started it.
    LOL

  11. David9


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    11   1:23pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Goran_K says

    They are predatory entities looking to strip your last dime from the flesh of
    your body by any legal means necessary (i.e - to the extent of the law that they
    are allowed to rape/pillage you).

    Again, nothing wrong with money. I bought a condo in Dallas for cash just 7 years ago. Yes, I'm still figuring out a path forward.

    Much happiness in your new home ! And thanks for the validation on the banks

  12. Call it Crazy


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    12   2:44pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike (1)  

    Goran_K says

    I think there's a certain feeling that my only housing cost from now, until they drag me out of the house into a wooden box, will be property taxes and maintenance that soothes me more than having Bernanke destroy my money's value in the money market.

    Speaking of maintenance, make sure you have enough cash left after the purchase to cover all the "honey-do" upgrades... you know how wives are with new houses!!

  13. FortWayne


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    13   4:13pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike (1)  

    Call it Crazy says

    Speaking of maintenance, make sure you have enough cash left after the purchase to cover all the "honey-do" upgrades... you know how wives are with new houses!!

    Man speaks the truth. That one happens pretty fast. I remember when we bought, within a week there was a list of upgrades that were outside the "necessary".

    If you both like that stuff, it is fun.

  14. JodyChunder


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    14   5:21pm Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Call it Crazy says

    you know how wives are with new houses!!

    Heh. That's funny, because I've always been more wifey in that scenario, in that it's me with the Honey-do. Gotta have my digs looking just right. I'm goddamn picky about things.

    Congratulations and good luck, Goran -- you're a class act.

  15. Patrick


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    15   6:23pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    Why leave? We'd be very interested to hear how the probate sale turns out.

    Peter P is back after buying a house too.

  16. JodyChunder


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    16   6:28pm Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    Why leave? We'd be very interested to hear how the probate sale turns out.

    That's actually a really good point. That could a very illuminating thread for a lot of first timers.

    Besides which, I've never really understood the dramatic exits that some Pat.net members have felt he need to make in past.

  17. Goran_K


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    17   6:37pm Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    Why leave? We'd be very interested to hear how the probate sale turns out.

    Peter P is back after buying a house too.

    Hey Patrick.

    I'm not going to leave completely, but I feel as if once I am in a home, I may not be as "fired up" about examining market indicators, theories, and so-on. Perhaps I'm wrong, and the fun part is in the act itself, not the end result and its effect on my home search.

    I like the community here, and I'm not very good at being dramatic.

    I do promise to keep the details up here for people so they know what to expect. I'll also post a few pics of the new digs (minus my address).

  18. Patrick


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    18   6:38pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    It's an emotional hot-button topic. Almost religious.

    My main point over years has always been that it's not always better to buy to matter what the price. Sometimes it is better to buy, and sometimes it isn't. You have to actually do a little math with the price and the rents. But the realtors will always tell you to feed them more no matter what, a kind of systemic corruption in our culture.

    I have no objection to anyone's buying if it's really an OK deal for them.

  19. swebb


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    19   7:14pm Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Goran_K says

    I love Patrick

    Nominated for next bumper sticker.

  20. APOCALYPSEFUCKisShostikovitch


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    20   8:08pm Wed 23 Jan 2013   Share   Quote   Permalink   Like (5)   Dislike  

    You bought cash, and now you can walk up to every banker in the region and tell them how you are going to spend the money you saved, from paying cash and not allowing them to rape you, by living in Caligulan splendor.

    No hard feeling, though, you can tell them, offering them 40 cents to lick the toilets clean, or 10 cents to give the dog a hand job, chores that while overpaid reflect their true talents.

  21. Goran_K


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    21   9:19pm Wed 23 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Thanks for the well wishes everyone.

    I definitely will not be disappearing altogether. Love the community.

    As a gift though, I will document every part of the process in doing a probate sale. Not sure if any of the other pros have gone through this before, but it's definitely different than a standard sale, or even a short sale.

    Expect updates, and pictures as Goran goes through the process of closing.

  22. uomo_senza_nome


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    22   5:24am Thu 24 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike  

    I fully understand what you say below:

    Goran_K says

    How long should one wait for things to return to the "old normal"? 3 years? 5 years? 20 years? By that time, I'd be an old man, and my kids would be teenagers by then, nearly ready to leave for college.

    Goran_K says

    I never could tell, but are you on the renter or homeowner (bear/bull) side of the battle?

    Owner, but only because it makes sense. If you read Patrick's site enough, you get around to thinking that even owning is basically renting but ensuring that you minimize your losses :)

  23. taxee


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    23   5:49am Thu 24 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    uomo_senza_nome says

    How long should one wait for things to return to the "old normal"?

    All empires fail

  24. Facebooksux


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    24   6:11am Thu 24 Jan 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Good luck with the purchase. Sounds like it will be a reasonable purchase in a beautiful area.

    Make sure you parcel out some space to plant yams.

  25. CL


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    25   5:37pm Thu 24 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    You probably did well BECAUSE you weren't timing everything.

    Life happens best when you go with it...so go with it, and good luck!

  26. JodyChunder


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    26   5:44pm Thu 24 Jan 2013   Share   Quote   Permalink   Like (2)   Dislike  

    CL says

    Life happens best when you go with it

    That's true...until it isn't!

    Seriously - I can think of a dozen boomers (whose creed was a derivative of the above) living in basements, spare bedrooms, RVS. Etc.

    I can tell that Goran is a thoughtful guy, and he will be fine.

  27. Goran_K


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    27   3:57pm Wed 6 Feb 2013   Share   Quote   Permalink   Like (2)   Dislike  

    SFace says

    Any luck with this?

    Goran is confirmed as the winner. I thought I would be, this isn't a home that would be easily rented (unless it was to 5-10 people), and probably never has made sense to buy as a rental investment since it was built.

    We also passed the 15 day "notification of heirs" period where any objections from relatives could be brought to the court's attention.

    I've been packing lots of stuff (toys, clothes, giving stuff away, etc), and I'm looking forward to settling down, and getting old.

    Interestingly enough, the home across the street (lower level view and less sqft) was put on the market at $200,000+ what I am paying for my home. I wonder what it will eventually sell for.

  28. JodyChunder


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    28   4:59pm Wed 6 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Goran_K says

    Interestingly enough, the home across the street (lower level view and less sqft) was put on the market at $200,000+ what I am paying for my home. I wonder what it will eventually sell for.

    Just don't rub the fact in your new neighbors face when they move in!

  29. Goran_K


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    29   5:05pm Wed 6 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    I'm would never rub anything in anyone's face, I don't consider myself better than any homeowner, renter, investor, etc..

    Like Roberto said, my main reason for buying is to buy a home. I'm not an investor/speculator, I just want something that's comfortable to live in, and somewhere I feel I can provide a good life for my family. I've always been a beach person. I work in a high stress industry, and if I didn't take time to relax and spend time with nature (the ocean), I'd probably have a stroke.

    I'll be posting pictures soon, once I have keys and can sort of check things out. One thing I did find was some dry rot damage on the deck. Early estimate is around $1,500 to repair. I never had to do this as a renter... :)

  30. JodyChunder


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    30   5:11pm Wed 6 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Goran_K says

    I've always been a beach person. I work in a high stress industry, and if I didn't take time to relax and spend time with nature (the ocean), I'd probably have a stroke.

    Everyone should have an antidote. For me it's looking at the stars with my telescope and the smell of the creosote bushes after a good summer rain.

    Goran_K says

    Early estimate is around $1,500 to repair. I never had to do this as a renter... :)

    Yeah, but you know how it is...spending money on someplace you like doesn't sting so bad. It's actually pretty satisfying to fix something up. And some of that stuff you can do yourself. Dry rot's a pretty easy deal. Hell, there's Youtube videos showing how to patch that up.

    Glad it worked out!

  31. Reality


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    31   5:13pm Wed 6 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Congrats on getting the house! That's wonderful. Definitely stick around. I'm looking forward to reading your probate purchase experience. After some months of honey-do's, you might find the interest in numbers and indicators again . . . one house is never enough after you are familiar with the home improvements. Growing homes is even more fun than growing flowers and vegetables.

  32. bmwman91


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    32   5:26pm Wed 6 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Congrats Goran. I'm glad to hear that you managed ot get a fair sounding deal. Those are pretty rare in coastal CA these days. A college buddy of mine also recently got a good deal via probate sale in Ventura. Let us know how the honey-do list does as this progresses...I'll need to take notes!

  33. Goran_K


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    33   5:27pm Wed 6 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike  

    bmwman91 says

    Congrats Goran. I'm glad to hear that you managed ot get a fair sounding deal. Those are pretty rare in coastal CA these days.

    Well to be fair, someone had to die...

    But that's our market these days. :)

  34. Goran_K


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    34   5:28pm Wed 6 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    JodyChunder says

    Yeah, but you know how it is...spending money on someplace you like doesn't sting so bad. It's actually pretty satisfying to fix something up. And some of that stuff you can do yourself. Dry rot's a pretty easy deal. Hell, there's Youtube videos showing how to patch that up.

    I'm about as handy as a one armed man.

  35. Raw


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    35   10:55am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Goran_K says

    It was a probate sale.

    Gosh Goran, when I said a few months ago that you have to kill to get a home...I was only kidding.
    Congrats on buying your home. You will be glad.

  36. New Renter


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    36   12:09pm Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Goran_K says

    One thing I did find was some dry rot damage on the deck. Early estimate is around $1,500 to repair. I never had to do this as a renter... :)

    If you end up replacing the deck I'd look into Ipe or Cumaru. That plastic deck wood is pretty good too but doesn't look as nice.

    If the damage is minimal you can probably just replace the bad boards. If possible treat the repaired deck with bora-care and seal it to prevent further decay.

  37. New Renter


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    37   12:09pm Sat 9 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Goran_K says

    JodyChunder says

    Yeah, but you know how it is...spending money on someplace you like doesn't sting so bad. It's actually pretty satisfying to fix something up. And some of that stuff you can do yourself. Dry rot's a pretty easy deal. Hell, there's Youtube videos showing how to patch that up.

    I'm about as handy as a one armed man.

    For some things you only need one arm...

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