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Price this rental!


By RentingForHalfTheCost   Follow   Mon, 4 Feb 2013, 5:19am PST   970 views   27 comments
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Now is your chance to back up the owning is cheaper claims.

Looking at the rent-vs-buy calculator with basic assumptions this place should sell for 600-650K to be on par with the $4285/mth.

Anyone care to take a stab at the sale values of this place? Dig up some comparable sales in the area? It might just make my handle speak the truth in the SFBA. Hey, if I am wrong then I would be a buyer then. ;)

http://livelovely.com/listing/6775700/5130-Foothill-Road-Pleasanton-CA-94588

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tatupu70   Mon, 4 Feb 2013, 6:56am PST   Share   Quote   Permalink   Like   Dislike     Comment 1

$600-650 is way too low. It all depends on your assumptions, but according to NYT calculator with 2% inflation of rents and prices, even at $1MM, it's cheaper to buy than rent assuming a 7 year hold time.

RentingForHalfTheCost   Tue, 5 Feb 2013, 5:59am PST   Share   Quote   Permalink   Like   Dislike     Comment 2

tatupu70 says

$600-650 is way too low. It all depends on your assumptions, but according to NYT calculator with 2% inflation of rents and prices, even at $1MM, it's cheaper to buy than rent assuming a 7 year hold time.

Now sure why you have to use the NYT calculator as opposed to the perfectly fine calculator on this site. Weird. Anyway, I put in your 2% inflation on rents and prices, but don't get anything near 1MM. Maybe you are doing 0% down, and don't have any investment growth.

tatupu70   Tue, 5 Feb 2013, 6:43am PST   Share   Quote   Permalink   Like   Dislike     Comment 3

RentingForHalfTheCost says

Now sure why you have to use the NYT calculator as opposed to the perfectly fine calculator on this site. Weird. Anyway, I put in your 2% inflation on rents and prices, but don't get anything near 1MM. Maybe you are doing 0% down, and don't have any investment growth.

Good point. I should have used Patricks. I put it in his calculator and the only assumption I changed was 2% price growth. It comes out with a value of $1.1M.

What are your assumptions?

RentingForHalfTheCost   Tue, 5 Feb 2013, 6:48am PST   Share   Quote   Permalink   Like   Dislike     Comment 4

tatupu70 says

RentingForHalfTheCost says

Now sure why you have to use the NYT calculator as opposed to the perfectly fine calculator on this site. Weird. Anyway, I put in your 2% inflation on rents and prices, but don't get anything near 1MM. Maybe you are doing 0% down, and don't have any investment growth.

Good point. I should have used Patricks. I put it in his calculator and the only assumption I changed was 2% price growth. It comes out with a value of $1.1M.

What are your assumptions?

Assumptions attached. And yes, I have been getting 12% and more after-tax returns in this crazy market. It has actually been more like 16% so I am giving a little here.

tatupu70   Tue, 5 Feb 2013, 6:56am PST   Share   Quote   Permalink   Like   Dislike     Comment 5

RentingForHalfTheCost says

Assumptions attached. And yes, I have been getting 12% and more after-tax returns in this crazy market. It has actually been more like 16% so I am giving a little here.

nominated.

varmint   Tue, 5 Feb 2013, 7:52am PST   Share   Quote   Permalink   Like   Dislike     Comment 6

Last sold price 1,235,000 in 2009. Estimated current price 1.4 - 1.7M.

RentingForHalfTheCost   Tue, 5 Feb 2013, 8:17am PST   Share   Quote   Permalink   Like   Dislike     Comment 7

varmint says

Last sold price 1,235,000 in 2009. Estimated current price 1.4 - 1.7M.

That is one hell of a lot of $4285 chunks. Forget interest rates for a minute. Lets just say we only have to pay back principle. Lets say the place can be sold for 1.55M (half way in your range). Just in paying $4285 in principle reduction payments it would take us this many years.

1550000/(4285*12) = 30.1 Years!!!

Yah, I get it now. You need to forget about interest, taxes, maintenance, realtor fees, etc. I'm with the owning is better than renters now. It all makes sense. ;)

tatupu70   Tue, 5 Feb 2013, 8:37am PST   Share   Quote   Permalink   Like   Dislike     Comment 8

RentingForHalfTheCost says

Yah, I get it now. You need to forget about interest, taxes, maintenance, realtor fees, etc. I'm with the owning is better than renters now. It all makes sense. ;)

Well, to be fair, you also forgot about inflation and tax deductions. But $1.5M seems a bit high.

iwog   Tue, 5 Feb 2013, 8:54am PST   Share   Quote   Permalink   Like   Dislike     Comment 9

Anyone who wants to make a universal argument about renting being cheaper than owning on a one-percenter $1 million plus house in Pleasanton is delusional.

What I find interesting is that you yourself have claimed numerous times that these homes are plentiful in the $3000 range so where the hell did $4285 come from?

Most homes are now cheaper to buy than rent. It's sad you can't handle the truth, but it happens to be the truth regardless.

varmint   Tue, 5 Feb 2013, 9:02am PST   Share   Quote   Permalink   Like   Dislike     Comment 10

tatupu70 says

RentingForHalfTheCost says

Yah, I get it now. You need to forget about interest, taxes, maintenance, realtor fees, etc. I'm with the owning is better than renters now. It all makes sense. ;)

Well, to be fair, you also forgot about inflation and tax deductions. But $1.5M seems a bit high.

No tax deductions, all payments on principle

RentingForHalfTheCost   Tue, 5 Feb 2013, 11:09am PST   Share   Quote   Permalink   Like   Dislike     Comment 11

iwog says

Anyone who wants to make a universal argument about renting being cheaper than owning on a one-percenter $1 million plus house in Pleasanton is delusional.

What I find interesting is that you yourself have claimed numerous times that these homes are plentiful in the $3000 range so where the hell did $4285 come from?

Most homes are now cheaper to buy than rent. It's sad you can't handle the truth, but it happens to be the truth regardless.

The word delusional comes to mind, but in a slightly different context. :)

I could list 3K/mth homes a dime a dozen for cheaper than owning. That doesn't moot the point I am making here. Kinda like say, yah, but but you can never get a wine stain out of white pants.

The point is, as you are afraid to admit, that renting has never been better and owning might be a good thing if you believe in double-digit appreciation.

I would like to own, but not when it costs me considerably more than renting. Just my thing I guess, others don't seem to care.

iwog   Tue, 5 Feb 2013, 7:33pm PST   Share   Quote   Permalink   Like   Dislike     Comment 12

RentingForHalfTheCost says

The point is, as you are afraid to admit, that renting has never been better and owning might be a good thing if you believe in double-digit appreciation.

If renting has never been better, then why do you require a one percenter house to make your point?

Almost the entire city of Concord is cheaper to buy than rent. Ditto for most of the country. Your desperation is readily apparent by the examples you use.

tatupu70   Tue, 5 Feb 2013, 8:41pm PST   Share   Quote   Permalink   Like   Dislike     Comment 13

RentingForHalfTheCost says

The word delusional comes to mind

Yes, for someone who claims to be making 16% after tax on his investments. Delusional is appropriate.

zesta   Tue, 5 Feb 2013, 10:34pm PST   Share   Quote   Permalink   Like   Dislike     Comment 14

RentingForHalfTheCost says

It has actually been more like 16% so I am giving a little here.

Funny, your "hot stock picks" a year ago haven't quite done 16% after taxes.

RentingForHalfTheCost says

E-man says

So what's your hot pick for now?

BRCM (long on 1000)

PVG (long on 2000) Sell only when it equals a BA home. ;)

RentingForHalfTheCost   Tue, 5 Feb 2013, 11:39pm PST   Share   Quote   Permalink   Like   Dislike     Comment 15

tatupu70 says

RentingForHalfTheCost says

The word delusional comes to mind

Yes, for someone who claims to be making 16% after tax on his investments. Delusional is appropriate.

Dow at 14000 and people still question the wisdom of stocks. That is delusional. Crap, almost all indexes have performed double digit gains since 2009. Housing? Not so good. Delusional is right

tatupu70   Tue, 5 Feb 2013, 11:42pm PST   Share   Quote   Permalink   Like   Dislike     Comment 16

RentingForHalfTheCost says

Dow at 14000 and people still question the wisdom of stocks

Who questions the wisdom of stocks? So, you're basing your estimated investment performance over the next 30 years on stock gains over the last 3 years? Brilliant.

RentingForHalfTheCost   Tue, 5 Feb 2013, 11:46pm PST   Share   Quote   Permalink   Like   Dislike     Comment 17

zesta says

RentingForHalfTheCost says

It has actually been more like 16% so I am giving a little here.

Funny, your "hot stock picks" a year ago haven't quite done 16% after taxes.

RentingForHalfTheCost says

E-man says

So what's your hot pick for now?

BRCM (long on 1000)

PVG (long on 2000) Sell only when it equals a BA home. ;)

Your view is too narrow. My Broadcom avg cost is $22 and Pretium below $10. How is that bad? Good companies do still go on sale from time to time. Then I just invest more. Lets talk again about these 2 companies in a few years. That'll be more years of decaying wood and rusty nails later.

RentingForHalfTheCost   Tue, 5 Feb 2013, 11:47pm PST   Share   Quote   Permalink   Like   Dislike     Comment 18

tatupu70 says

RentingForHalfTheCost says

Dow at 14000 and people still question the wisdom of stocks

Who questions the wisdom of stocks? So, you're basing your estimated investment performance over the next 30 years on stock gains over the last 3 years? Brilliant.

Can you post your rules of debate for all to see? I would like to comply.

tatupu70   Tue, 5 Feb 2013, 11:56pm PST   Share   Quote   Permalink   Like   Dislike     Comment 19

RentingForHalfTheCost says

Can you post your rules of debate for all to see? I would like to comply.

Sure--if you make an obviously outrageous statement that you expect to get 16% after tax returns on your investments, I'd expect some explanation as to how/why you arrived at that number.

Avg. stock market return is 7% before taxes last I checked, so you are obviously doing something different.

Honestly, you should be managing other peoples' money if you can truly make that return on a consistent basis.

RentingForHalfTheCost   Wed, 6 Feb 2013, 12:43am PST   Share   Quote   Permalink   Like   Dislike     Comment 20

tatupu70 says

RentingForHalfTheCost says

Can you post your rules of debate for all to see? I would like to comply.

Sure--if you make an obviously outrageous statement that you expect to get 16% after tax returns on your investments, I'd expect some explanation as to how/why you arrived at that number.

Avg. stock market return is 7% before taxes last I checked, so you are obviously doing something different.

Honestly, you should be managing other peoples' money if you can truly make that return on a consistent basis.

I expect it for at least the next 5-7 years. The question I have on my mind is when it will revert back to the mean. The crazy thing in all this is that as the market appreciates so does the wealth of the investors. This will in effect has some upward pressure on house prices. When people have more wealth in their IRAs/401k/brokerage accounts then they will be okay to pay more for a house.

I think the biggest decision I can make as a renter, is to time the move into a buyer to maximize my stock appreciation but be ahead of the masses that will eventually move over into buyers.

I don't think we are there yet, but it will happen in the next few years. I wish I knew when as we all would.

So, I may very well be wrong, but I believe the 15-20% growth in stocks is still around and house prices will stay struggling to eke out low single digits. That has been the pattern for the last 3. I don't begin to argue that this is the norm, nothing is normal about this market. The trick is to be one step ahead of the masses.

Remember, I am also an owner (5 houses/condos), none of them in the SFBA or even close. All my comments about rent/buy are always directed at the SFBA chaos.

RentingForHalfTheCost   Wed, 6 Feb 2013, 12:45am PST   Share   Quote   Permalink   Like   Dislike     Comment 21

tatupu70 says

Honestly, you should be managing other peoples' money if you can truly make that return on a consistent basis.

Almost everyone I know that I talk about stocks has experienced substantial gains in the last 3 years. I am not abnormal here. Unfortunately, when your wealth is all tied up in a house, you can't really benefit too much from this move.

tatupu70   Wed, 6 Feb 2013, 12:58am PST   Share   Quote   Permalink   Like   Dislike     Comment 22

RentingForHalfTheCost says

Almost everyone I know that I talk about stocks has experienced substantial
gains in the last 3 years. I am not abnormal here. Unfortunately, when your
wealth is all tied up in a house, you can't really benefit too much from this
move.

Sure--I've gained a bunch in stocks over the last few years too. I lost a bunch in the 3 years prior to that.

I'm not dumb enough to believe that the last 3 years return is indicative of future returns though... Do you really think stocks will continue to gain at the current pace forever???

RentingForHalfTheCost   Wed, 6 Feb 2013, 1:11am PST   Share   Quote   Permalink   Like   Dislike     Comment 23

tatupu70 says

RentingForHalfTheCost says

Almost everyone I know that I talk about stocks has experienced substantial

gains in the last 3 years. I am not abnormal here. Unfortunately, when your

wealth is all tied up in a house, you can't really benefit too much from this

move.

Sure--I've gained a bunch in stocks over the last few years too. I lost a bunch in the 3 years prior to that.

I'm not dumb enough to believe that the last 3 years return is indicative of future returns though... Do you really think stocks will continue to gain at the current pace forever???

I think for the next 5-7 years while companies keep benefiting from the free-money credit and people slowly get back on stable economic ground. Nothing is forever, especially in the market.

zesta   Wed, 6 Feb 2013, 3:03am PST   Share   Quote   Permalink   Like   Dislike     Comment 24

RentingForHalfTheCost says

Your view is too narrow. My Broadcom avg cost is $22 and Pretium below $10. How is that bad? Good companies do still go on sale from time to time. Then I just invest more. Lets talk again about these 2 companies in a few years. That'll be more years of decaying wood and rusty nails later.

Well, that was your pick at the time when asked.

16% annually after taxes is amazing, and I would hope that your two "hot stocks" would outperform the rest of your portfolio instead of dragging down the average.

How many years have you been "averaging 16% after taxes?"

RentingForHalfTheCost   Wed, 6 Feb 2013, 4:47am PST   Share   Quote   Permalink   Like   Dislike     Comment 25

zesta says

RentingForHalfTheCost says

Your view is too narrow. My Broadcom avg cost is $22 and Pretium below $10. How is that bad? Good companies do still go on sale from time to time. Then I just invest more. Lets talk again about these 2 companies in a few years. That'll be more years of decaying wood and rusty nails later.

Well, that was your pick at the time when asked.

16% annually after taxes is amazing, and I would hope that your two "hot stocks" would outperform the rest of your portfolio instead of dragging down the average.

How many years have you been "averaging 16% after taxes?"

We can hope, but sometimes, especially in high tech and gold miners, time is your friend. There is no question to me that PVG is sitting on $2B of gold and it will be realized in time. It is also no question that Broadcom is well diversified in the mobile and network space so it will benefit from long term growth. I invest with a longer horizon than 1 yr, and I think we all should. If someone asked me what stock will be higher next year I don't have a clue. Micro and Macro economics can swing things crazy over short terms, however over the long term I am pretty confident that these two players will do well. That is all I claim to know, not what it will do in months or even a year.

When you are diversified, as I try to be, you can have a few short term under-performers and it doesn't really matter. I have done well in some that I didn't expect.

KRFT, HSY, PPP, PG, GE, BAC, WFC, and more.

Anyone putting too much weight on two holdings is really gambling IMHO.

I've been catching 16% or more since 2007. Solid companies with good dividends and also selling cover-calls to the greedy or the people trying to hedge. Works great in this market IMHO.

zesta   Wed, 6 Feb 2013, 5:51am PST   Share   Quote   Permalink   Like   Dislike     Comment 26

RentingForHalfTheCost says

KRFT, HSY, PPP, PG, GE, BAC, WFC, and more.

Anyone putting too much weight on two holdings is really gambling IMHO.

I've been catching 16% or more since 2007

From the stocks you've posted, I don't see it, unless you've been buying at the absolute bottoms and selling at the peaks.

I agree it's important to be diversified, but diversification SHOULD bring you closer to the average, and AT LEAST 16% OR MORE AFTER TAX EVERY YEAR SINCE 2007 is way way above average. If you're doing covered calls as well you're probably hitting a lot of short-term cap gains taxes as well, which makes it all the more amazing.

If it's all true, more power to you.

RentingForHalfTheCost   Wed, 6 Feb 2013, 6:10am PST   Share   Quote   Permalink   Like   Dislike     Comment 27

zesta says

RentingForHalfTheCost says

KRFT, HSY, PPP, PG, GE, BAC, WFC, and more.

Anyone putting too much weight on two holdings is really gambling IMHO.

I've been catching 16% or more since 2007

From the stocks you've posted, I don't see it, unless you've been buying at the absolute bottoms and selling at the peaks.

I agree it's important to be diversified, but diversification SHOULD bring you closer to the average, and AT LEAST 16% OR MORE AFTER TAX EVERY YEAR SINCE 2007 is way way above average. If you're doing covered calls as well you're probably hitting a lot of short-term cap gains taxes as well, which makes it all the more amazing.

If it's all true, more power to you.

You can't see it? I never bought these companies this year, I owned them already from previous years.

Gains on appreciation and dividend re-investment

KRFT: split into two companies (KRFT and MDLZ), (20%)

HSY: 61 to 80 price action, (35%)

PPP: 3 to 6.30 ( 110%)

PG: 64 to 76 (25%)

GE: 19 to 23 (25%)

BAC: 8 to 12 (50%)

WFC: 30 to 35 (20%)

I am talking about the last 12 months. The beauty of stocks is that when they are in the toilet your dividends are buying more low, then when they are high they buy less. The ticket is to find stable companies that only grow the dividend and you get automatic dollar cost averaging. Works until it doesn't. ;)

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