patrick.net

SFace says

Unfortunately, real estate is a competitive game that can/will and proven to leave people behind.

That's a stupid argument.

First any saving can be invested. Housing is not the only possible investment.

Second building a house is not harder or more expensive than it was a few years back.
Land is still plentiful.

The only possible competition is to live in one specific place and it's pretty stupid to compete on that with richer people than you.

Heraclitusstudent says

First any saving can be invested. Housing is not the only possible investment.

SFAce is somewhat right in the current environment. For example, if 1.5M house goes up 10% a year, it would be hard to make 150K a year in profit if you only have 500K. So the person that leverages up first wins the game short term.

tr6 says

SFAce is somewhat right in the current environment. For example, if 1.5M house goes up 10% a year, it would be hard to make 150K a year in profit if you only have 500K.

Since when 1.5M houses are expected to go up 10% a year for very long?

tr6 says

o the person that leverages up first wins the game short term.

Since when buying a house is a short term investment?

The expectations here are just bizarre.

All I'm saving is leverage is just reality.

If your plan is to save up and buy ahome with cash (no leverage) chances are you are still waiting. cough cough, Patrick.

Heraclitusstudent says

The expectations here are just bizarre.

I agree with you. I am just trying to say that SFAce might be right short term. In my area 1.5M homes are flat from ten years ago.

Heraclitusstudent says

The only possible competition is to live in one specific place and it's pretty stupid to compete on that with richer people than you

Yes and no. Most people have to commute to work somewhere so their location choices are somewhat limited.

SFace says

All I'm saving is leverage is just reality.

If your plan is to save up and buy ahome with cash (no leverage) chances are you are still waiting. cough cough, Patrick.

Reality is a bitch. I'd rather keep my head in the sand. Nah nah nah nah nah nah.

Trees don't grow to the sky.

Zak says

Trees don't grow to the sky.

But inflation does. Reality is a bitch isn't it?

Call it Crazy says

tr6 says

SFAce is somewhat right in the current environment. For example, if 1.5M house goes up 10% a year, it would be hard to make 150K a year in profit if you only have 500K. So the person that leverages up first wins the game short term.

I'm sure the people who bought in 2007 thought THEY were in the right "environment" too. How did their leverage work out for them?

2007, not well, than you go back to 1997, and it is well. lol

The point is if you wait for "cash" to buy, which is Patrick's point of no leverage, it will work out horribly most of the time.

"The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage"

That simple fact is downright false. You know that because Patrick cannot save enough to buy a house in Menlo Park. Had he bought in 1997 or whatever, we would have paid the thing off already with savings and have the same cash in the bank. I don't get why people buy this point like gospel when the owner of this site is a living example that it does not work. reality is a biatch.

SFace says

Had he bought in 1997 or whatever, we would have paid the thing off already with savings and have the same cash in the bank. I don't get why people buy this point like gospel when the owner of this site is a living example that it does not work. reality is a biatch.

Buy low, sell high.
Buy in 1997, sell in ?.

The very fact that we are up so much is a big argument AGAINST buying.

The truth we all understand is that the last one to jump-in before it all crashes will pay for all the idiots that came before him and gloated about leverage.

SFace says

I don't get why people buy this point like gospel when the owner of this site is a living example that it does not work. reality is a biatch.

Unfortunately for Patrick, he is in a very unique real estate market. Unless there is a change in online advertising market (Google, FB, etc), that area is making a lot of money now.

In many other markets, Patrick's advise would work out fine.

I know I am, sigh.

http://www.zillow.com/homedetails/2117-W-San-Jose-Ave-Fresno-CA-93711/18707515_zpid/

was perhaps the finest house, value-wise, I've seen listed.

Thought I had more time, ack

Tim Aurora says

But, 2010 was a very good year to buy a house and those who missed it because they were listening to this website will be kicking themselves

I've participated in this website for a while, and was doing my best to buy a fixer in late 2011.

However, I couldn't get a mortgage on a fixer or a normal house, because
1. They were all appraising too low to get the mortgage.
2. They were going to big firms or small flippers with all cash, which is something I couldn't compete with.

SFace says

This sounds great in theory when prices come down. when prices go up, saving
will never catch up to price.

I concur 100% with this assessment. When I first graduated from college the bubble/price increases were gaining steam, no matter how much I saved every single year the home prices were increasing faster. Then the tables turned from 2007 to 2010 thanks be to god which resulted in me being able to purchase new construction. If the bubble continued without interruption and the economy did not implode chances are I would still be renting.

SFace says

The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage"

I don't see how that is possible to just blanket-ly say.

Right now to rent my house I would have to pay over 2/3 more in Rent, than what I'm paying on my mortgage in my area.

Also If you doubled up on Mortgage payments every month, it would be paid off in less than 7 years. Just making one payment a year cuts the time paid off to just 15 years.

Plus an existing homeowner has a much greater chances of being approved for a mortgage for a second, third, fourth, fifth and so house. Than a renter does at getting into their First time homeowner mortgage.

If you're a renter and are prudent enough to save up for a house in 15 years. Then you really screwed your self for paying rent or the mortgage for 71/2 years longer than was necessary.
You should have bought a house, what ever the dp requirements were, at a decent price with doable rates. Instead of saving paying rent and saving up for house. If you put all that money toward a Mortgage it would only take 7 years and you'd be done with it.

Or you could have just made one extra payment a year, and paid it off in the same time and saved that extra 11 mortgage/rent payment and still paid in the same 15 year timeline.
So don't feel superior because you took 15 years to save up to buy a house out right while you were renting.

SFace says

The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage"

Recently I was reading some old thread (titled PAY CASH I think) where Patrick was adamant about this idea that if you save and rent, you can buy in half the time....

He had it all laid out. Idea was just do what he did and "we renters will all win!!!" or some similar emotive nonsense.

Well, as Patrick has been renting for well past 15 years, and given his legendary financial prudence - im sure he practices what he preaches and is getting ready to now pay cash for his Menlo Park abode.

So, how bout it @Patrick ? You got the 1.6Million laying around that you saved with your 15+ years of renting? Its time. Show us how "renters win" by following your advice.

CaptainShuddup says

I don't see how that is possible to just blanket-ly say.

This is a debunked thread and the quote is not mine, it is the owner of the website.

You just debunked point #5. Leverage is just reality, it's damn if you do and sure as hell, more damning if you don't.

I've been here since 2009/2010 and argued against every point one time or another, and knew those headnote reasons are just not it. (Reasons #1 - #10)

Do I get a Level Up?

CDon says

So, how bout it Patrick ? You got the 1.6Million laying around that you saved with your 15+ years of renting? Its time. Show us how "renters win" by following your advice.

not quite, but not so far off. if i hadn't blown 4 years working on this site i prolly would have it.

thing is, it's still a shitty deal to buy compared to renting. oh well. :-)

not quite, but not so far off. if i hadn't blown 4 years working on this site i prolly would have it.

thing is, it's still a shitty deal to buy compared to renting. oh well. :-)

No worries. In all seriousness, please post here when you do pony up and pay that 1.6M (or god knows what it is by then) in cash. In some ways, this website has been a chronicle of your life... we have seen glimpses of what the last 15 years has been like for you. It will be interesting to see what the rest of your life will be like.

That said, if you cannot live by your own words and "buy a house with cash in half the time", do you really think anyone else living in an area like yours can realistically expect to achieve that?

CDon says

"buy a house with cash in half the time"

I think when he wrote that he was correct. But for many reasons that don't exist today.

1)more rentals have been apprehended by rent seeking corporations looking for monthly growth.

2)We don't have the same economy, we had in early and mid 2000's where rent was cheap, cost of living was decent, and wages were in step with the economy, and weren't eaten up by Poltergeist inflation.

3)The middle class were a national asset, now they are a burden some wish would shut up and go away. They're trying to handle bidness between the rich and the poor, and we're all up in it.

Call it Crazy says

I doubt you could have found ANYONE 10 years ago that could have called what happened since 2008 correctly.

When I told my friend in 2007 that everyone was going to be left holding the bag, and that the bubble was starting to crash. He was getting ready to put the house on the market. He paid $180K for it in 2001 and was looking to get the $375K that Zillow was still saying it was worth. I told him he was lucky he bought it when he did but he was not going to get $375 for it. I said the meidan price should be back to $120K by 2010. He said...

"The Government would never let that happen."

I thought that was the dumbest thing I ever heard someone say. Turned out he was correct. He did end up getting $300K for it though. I never heard from him again after he moved. Go figure. I think he held it against me for telling the truth and he only got $75K less than he wanted.

CaptainShuddup says

CDon says

"buy a house with cash in half the time"

I think when he wrote that he was correct. But for many reasons that don't exist today.

This problem always arise with analysis based on historical data and rules. Correct at the time of analysis and not in the future.

"

The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage"

Does Patrick even have any reason's that jive with reality. Here is one that ruined Jason.