patrick.net

SubOink says

CaptainShuddup says

On the flip side of the coin.

I really wish like hell, all of the rent I payed on the same house for 11 years, went to my current mortgage.

YES.

In my case that is 10 years of renting places for around $2400.- = 288k! I never see again! Ouch!

Well, as far as your mortgage payment goes, you'll never see your interest, taxes, or insurance portion of the payments again either, and the principal repayment would only be realized, if you sold the house. After paying 6% commish to a realtor and giving the buyer assistance. And at that point, you're back to homeless

errc says

Well, as far as your mortgage payment goes, you'll never see your interest, taxes, or insurance portion of the payments again either, and the principal repayment would only be realized, if you sold the house. After paying 6% commish to a realtor and giving the buyer assistance. And at that point, you're back to homeless

The interest portion (throw away portion) is a fraction of what my rent used to be. And it helps with taxes on top of it.

robertoaribas says

RentingForHalfTheCost says

Just doing it against the SP500 nets you over 10% annual since 1990. My approach is more specific to only high dividend paying stocks. These are where I get the 15-20% returns annually.

total bullcrap... so much in fact a shovel won't do, you need a bulldozer and a truck to handle this amount.

Believe what you want. Amazing, how people asked for the numbers, and then when presented they can't take it. All is left is to kill the messenger. Good luck to you guys/girls. Last time I share my details here, cause people are downright mean when it goes against their thinking. I'm extremely happy with my choices and they have done me well. Sounds like the OP is as well. Good for everyone. Others just seem mean around here. ;)

robertoaribas says

total bullcrap... so much in fact a shovel won't do, you need a bulldozer and a truck to handle this amount.

Which part? The S&P 500 has 9.6% return rate since 1990. Bond index funds were around 6% since 1990. That's definitely not BS.

What was housings return over that time period?

I have just one question for you all:

Is it cheaper to rent or to own the house you bought over the median holding period of 6 years? Remember that half of all buyers own for even less than 6 years.

The average tenure for owner-occupiers in California is 13.44 years, and over 11 years in Texas and Florida, according to this study - http://dss.ucsd.edu/~miwhite/wasi-white-final.pdf. Where is the 6 year figure coming from? The median and average couldn't be that different.

Goran_K says

Which part? The S&P 500 has 9.6% return rate since 1990. Bond index funds were around 6% since 1990. That's definitely not BS.

What was housings return over that time period?

Depends when you sold (and bought). :D

After reading this site since the beginning and reading Patrick's book, I just joined this site thinking it was far more grounded in fact and realism but what I see is absurd. I am not staying.

Recent threads read to me like the type who troll forums planting seeds of why someone should do precisely what Patrick always warned against. I do not buy into a minute of it. To me this is just more illusion and BS, this blind push on here that was on here in 2004 and I find it now as I found it then, just plain sick.

Thanks to Patrick and this site then I stayed away from that kind of BS talk then and saved my behind by not purchasing a life debt on a dump, while plenty of others did and in the course of it went bankrupt.

I have to say many of you appear to me like nothing but a bunch of ignorant and arrogant amateurs to me trying to prove to your own minds you are hot shots by bragging how much you have or make dreaming of that never ending real estate rise that is largely in my view in your own minds to entice others to follow. I don't buy it. I've seen this all before and find it really sad.

If the bond market crashes as all predictions say is very near I pity many of you in real estate.

robertoaribas says

I pity anyone who has to operate at the cognitive skill level evidenced in this post.

I think you just proved the whole point of his post. Nice.

robertoaribas says

RentingForHalfTheCost says

Also, selling naked call options is a fools game.

He had the physical silver. So, that would make it a covered call. If silver prices skyrocket, the value of his silver would go up as much as the loss on his call option...

Then, your right, I wouldn't call it a naked call. Covered calls make a lot of sense.

I think your analysis is full of assumptions (not sure about edvard's, I didn't see this analysis).

Why don't you break down the numbers so it's less full of assumptions?

- Amount of interest paid out
- maintenance
- Taxes, HOA
- etc

I'm not saying you're wrong, or that your theory is incorrect, but I'd like to see you break it down.

Going forward from this point I think most would agree 10% returns in the stock market is a dream. 6% is probably more realistic.

Goran_K says

Why don't you break down the numbers so it's less full of assumptions?

forget it man.

these guys have been using the same bad math for years. they refuse to include commission, interest, taxes, insurance (not to mention inflation and opportunity cost) to make it look like real estate is this guaranteed great investment.

they make dumb statements like "principal isn't a cost" while ignoring actual costs. there's a gazillion RE calculators they could have used to make their case factoring every conceivable variable, but that would just show the return is less than claimed. the arguments sound like they're coming from used car salesmen. it feels sleazy.

if i thought i could have an intelligent debate i would ask for clarification, but i know it's futile. it's not worth anyone's time. just let them make the same statements they've been making for so many years.

i have faith smart people can draw their own conclusion and dumb people will just follow the loudest loudmouthed sheep. it's actually better for me when people misallocate capital since my net worth will grow relatively faster; if people want to buy million dollar PA houses, by all means go ahead.

i do believe everyone should have some real estate exposure; whether it's buying a primary resident or owning REIT or some other liquid investment. but the lack of sophistication in determining how much is the right amount and what investment vehicle to use is mind boggling.

E-man says

Well, he answered it for me. Anyone with a double digit IQ can do the math.

So... you're not going to break down the numbers?

woppa says

Going forward from this point I think most would agree 10% returns in the stock market is a dream. 6% is probably more realistic.

True, 6% appreciation with a 4-5% dividend, then another 3-5% covered call grab. And that is with companies that have 20-40 years of increasing their dividends. The gov't is broke, housing is broke, large fortune 500 companies are the only real thing that looks strong in today's economy IMHO. WMT, GE, PG, JNJ, MCD, KO, etc. Time will tell if I am right, but so far so good.

woopee says

I pity many of you in real estate.

Why pity those that intentionally and knowingly demonize the market...
For every action there is an equal or opposite reaction...

E-man says

My results speak for themselves. Acquisition of 10 rental properties in 3 years is pretty impressive in my book.

You acquired 10 rental properties in socal or bay area in 3 years?

E-man says

We just borrowed $100k at $1k in interest/month to close a deal in November. Yeah, we were short on cash.

That is close to the rate I extend to my landlord each month for her to carry the 30 year debt, property taxes, maintenance, insurance, etc. for me. ;) Good love her heart.

errc says

Well, as far as your mortgage payment goes, you'll never see your interest, taxes, or insurance portion of the payments again either, and the principal repayment would only be realized, if you sold the house. After paying 6% commish to a realtor and giving the buyer assistance. And at that point, you're back to homeless

Or I could pay it off early or double up on payments, which all goes to principal with no fees. My title lawyer was impressed with the terms of my FHA loan. He said he's never seen one so one sided to the borrower.
It would almost take an act of congress to foreclose if I get behind on payments. They can't even charge late fees.
Of course I got my FHA mortgage at a time when Washington was playing around with the format of the single GFE form, and ridged hard fast rules to protect the consumer. But I've noticed since my Mortgage the FHA applicant has become the new whipping post, with fees and MIP premiums so high, it may was well be 6% interest.