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I picture homeowners putting their homes in LLCs and then renting from themselves. That would be a fun discussion.
You picture homeowners being audited then paying back taxes and penalties to the IRS then. Go look at the Economic Substance Doctrine before you try this at home.
Not even sure why he is even talking about housing in the first place
Logan Mohtashami saysNot even sure why he is even talking about housing in the first place
Isn't that strange? The S&P is producing a return last I checked. A house is a liability.
A house is a liability.
My favorite kind of liability is the one that pays a monthly dividend so large that it covers the rent
Those are terrible housing charts too
errc saysMy favorite kind of liability is the one that pays a monthly dividend so large that it covers the rent
First owning a house doesn't cover the rent: you still have to pay for maintenance and taxes. That would be included in the rent.
It doesn't matter that you have to pay for shelter....
It still doesn't produce anything and costs money.
It's still a big widget sitting there doing nothing.
It can still be produced on demand in other places.
So why would its price stay more or less in line with an investment in massively productive assets?
I also have to pay for food, and toothpaste. By your logic why can't I buy and store a lifetime supply of THESE and have it increase in price just like financials assets?
Yet, it's the landlord that that becomes wealthier. Please explain how.
Whatever net equity you create that is even better as that goes into the forced saving thesis.
First owning a house doesn't cover the rent: you still have to pay for maintenance and taxes. That would be included in the rent.
It doesn't matter that you have to pay for shelter....
It still doesn't produce anything and costs money.
It's still a big widget sitting there doing nothing.
It can still be produced on demand in other places.
Yet, it's the landlord that that becomes wealthier. Please explain how.
Now its worth $2M.Logan Mohtashami says
Nobody cares about the investment demand theory outside investors
how do you see housing market going in CA over this year?
Housing had some nice appreciation in last 6 years, but so did everything else. From 2012 and on you could have put money into stock market and gotten all same gains as houses. Hell some stocks would have made you an instant millionnaire.
Only difference, is you can't borrow money to buy stocks. So some borrow money to buy houses, and hope to cash out on appreciation. Although most house purchases are still families.
Logan Mohtashami saysWhatever net equity you create that is even better as that goes into the forced saving thesis.
I bought my million dollar shaq in bay area in 2009. Now its worth $2M. I have a loan of $420K remaining on the property (it would have been lower if the bitch didn't ditch me and cash out her share of equity in the house) and my mortgage is around $2500 per month, out of which around $1500 is interest. So I figure my real cost of staying in the house is $1500 (mortgage interest) + $1000 (property tax) = $2500 per month. After cashing out all the equity in the house, my ex-bitch is now paying $3600 per month in rent compared to my $2,500. I already feel like I am one up on the bitch. If I rent out the house, I will get $5300 per month in rent or around $1500 profit every month.
anon_eba5e saysI’m an old timer from this site’s past.
Roberto,
Did you calculate if this investment would still be possible in Nevada? Or whether it would have been possible in a big city at all?
Be mindful with housing that real home prices national are not back to 2006 levels here in the U.S. and interest rates are 2% - 2.75% lower in this cycle duration period which lasting a long time.
Channel out 10 year yield peaks in 2000 and 2006 & 2007 and we haven't even come close to breaking over the 3% 10 year yield data and even with more PMI data on fire our 10 year yield is still sticking in it's big cycle channel between 1.56% - 2.62%
2 year yield is up over 2% and we can easily see an inversion this year with any market pull back and drop in oil prices
I’m an old timer from this site’s past.
I’m an old timer from this site’s past.
I have 16 homes in Phoenix, bought 2009-2012.
I collect $24000 a month in rent, and pay $9800 in mortgages, of which $2400 is principle. Of course, I average another couple k in repairs.
I’ve retired, and now live in Nevada.
If buying homes doesn’t work Out as an investment, you did it wrong.
I have 16 homes in Phoenix, bought 2009-2012.
I collect $24000 a month in rent, and pay $9800 in mortgages
I’m an old timer from this site’s past.
I have 16 homes in Phoenix, bought 2009-2012.
I collect $24000 a month in rent, and pay $9800 in mortgages, of which $2400 is principle. Of course, I average another couple k in repairs.
I’ve retired, and now live in Nevada.
If buying homes doesn’t work Out as an investment, you did it wrong.
Coastal communities prices will remain unchanged or go up slightly.
The government won’t allow another drop in prices, and certainly won’t allow another bubble to burst. Don’t bet on the fundamentals when there’s enough owned money out there to skew any economic function.
That’s what I failed to see in 2010, when I should have bought a house. But I expected it to crater further as the recession deepened, and didn’t realize the above truth until a couple years later. By then I’d missed out on at least 20% housing price growth.
I see the possibility of a drop in housing prices if rates rise significantly, but will they, that is the question. Not enough rumbles in the bond/rate market yet.
those saying diversify to another city, sure, which ones have compelling price/rent ratios, that would be nice to actually live in too? Preferably in a low or no tax state, since my college pension is taxed in the state I live in!
Housing had some nice appreciation in last 6 years, but so did everything else. From 2012 and on you could have put money into stock market and gotten all same gains as houses. Hell some stocks would have made you an instant millionnaire.
Only difference, is you can't borrow money to buy stocks. So some borrow money to buy houses, and hope to cash out on appreciation. Although most house purchases are still families.
A fair comparison should use index performance of the stock market and in that case there is no way stocks can outperform housing due to leverage. When i put down 3.5% and borrow 96.5%, a 6% annual appreciation translates to 171% return.
anon_e09d2 saysLogan Mohtashami saysWhatever net equity you create that is even better as that goes into the forced saving thesis.
I bought my million dollar shaq in bay area in 2009. Now its worth $2M. I have a loan of $420K remaining on the property (it would have been lower if the bitch didn't ditch me and cash out her share of equity in the house) and my mortgage is around $2500 per month, out of which around $1500 is interest. So I figure my real cost of staying in the house is $1500 (mortgage interest) + $1000 (property tax) = $2500 per month. After cashing out all the equity in the house, my ex-bitch is now paying $3600 per month in rent compared to my $2,500. I already feel like I am one up on the bitch. If I rent out the house, I will get $5300 per month in rent or around $1500 profit every month.
Housing had some nice appreciation in last 6 years, but so did everything else. From 2012 and on you could have put money into stock market and gotten all same gains as houses. Hell some stocks would have made you an instant millionnaire.
Only difference, is you can't borrow money to buy stocks. So some borrow money to buy houses, and hope to cash out on appreciation. Although most house purchases are still families.
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This is a great article that uses the Case-Shiller housing price index to compare home affordability today to the bubble ten years ago. This is eye opening!!