patrick.net

Cutting your losses would be unwise when it comes to stocks. Most people for some reason fail to understand even the basics of stock investment. If you buy higher and sell lower then you've just lost your initial investment. Up to that point you have not lost a penny. Most people also react in the total opposite manner when it comes to stocks versus houses. When home prices go lower people go berserk and exclaim what a steal it is. When stock prices go down people panic and either sell everything or they get scared. As mentioned stocks are just like houses in that they're a financial asset. If a car was $5,000 cheaper tomorrow would you buy it? Of course you would. So why not the same with stocks? In my opinion its because people like to have something physical in their hands. If they can't actually hold it, its not "real". Hence why there is usually more enthusiasm to invest in houses and physical gold instead of simply buying gold as a symbol on the stock market at current rates.

edvard2 says

Cutting your losses would be unwise when it comes to stock

it entirely depends on your strategy.

i suspect you only buy and hold indexes. you don't have the luxury of buy and hold if you own shares in a crappy individual company.

You are correct in your assumption in that I don't buy individual companies. I've seen way too many people do that and lose tons of money in the process- my Grandmother included. For the most part if you invest broadly enough in many different sectors, industries, and in various international markets you'll in all liklihood do just fine.

owning the total market (domestic, foreign and various asset classes) using indexes is a great strategy for many people

one thing stocks have in common with housing is that people who try to time the market usually end up losing money.

I know people who sold their house at the "peak" in 2004 and have been renting for 7 years waiting for prices to come back down to 2004 levels.

The illiquidity of housing is actually a good thing because it forces you to ride it out and not panic and sell at exactly the wrong time.

Bellingham Bill says

Supply is fixed regardless of who rents and who buys.

That is not possible - Supply changes, here is one factor - Household formation, or currently the lack thereof.

http://www.bloomberg.com/news/2011-11-29/home-price-recovery-in-u-s-hinges-on-household-formation-gain-case-says.html

mike2 says

Don't forget also how much money you are savin gin taxes by writing off your interest abd preoperty taxes! I myself bought 5 rentals in the last 4 years for cash...

You, sir, appear to be a liar for writing an internally inconsistent comment. If you paid cash, you are not able to write off interest. Furthermore, your story at least appears inconsistent for other reasons, such as passive loss rules.

SubOink says

everybody jumped the gun on me and told me how I will regret my decision come xmas 2011

SubOink says

This summer we did so many updates and improvements,

Well, you are still in the "buyer high" mode. You havent known it yet, you already regretted it by spending so much on reno.

Looking back, for all the reno I spent on the many houses I used to own, I must say that I shouldnt have done so.

SubOink says

When you post something here, its sometimes easier to simplify a story to get the point across more clearly. Otherwise, you would have to explain the backstory and the story of that backstory. Not possible.

It can be, but there's a balance between too much info and not enough. I wasn't talking about you, btw, I was talking about mike2.

MoneySheep says

You havent known it yet, you already regretted it by spending so much on reno

I have no clue what you are talking about. Sorry.

Clara says

I bought a $110k condo all cash and renting it out for $1350 per month now. Do YOUR math, "bro".

Not everyone can afford to wait almost seven years to break even after spending $110k. Then there's being a landlord. Seven years! That's with ideal conditions like it keeps renting for that amount, renters pay on time, you don't have lapses between renters. I don't get it.

So after 30 years at the same payment you'd get $486000. So $376000 more than you paid. I get a !3.5% annual return. That's great if you were just sitting on it, which explains the actions of a lot of landlords. ; )

EBGuy says

The San Francisco Bay Area C/S Index fell 1.5% month-to-month. To be frank, that number is pretty brutal. It beats every other Aug. to Sept. drop except the free fall in 2008. I'm fairly confident of new relative lows come this January (year over year).

Makes sense to me. The last time I looked at the Case Shiller numbers for San Francisco, it looked like the biggest number showed up in Sept 2007, which is over a year after the agreed national peak in April 2006. I'm not sure how that "national" number connects with the 20city Index CS number, if it does.

100 years? WTF?
"In the long run, we're all dead"
-John Maynard Keynes

Lol at counting in appreciation in the short term future

And then mostly writing annecdotes having nothing to do with your original deceptive post.

In 10 years, I will totally recap all my initial capital on this condo. All the rental income will be free and clear. This is still not considering home price appreciation. I am looking to buy more obviously.

I own stocks/gold index. Thr return of stock is about the same as the condo. Gold, of course, is over 100% return. That's a pleasant surprise over the last decade of being a gold bug. In short, buying cheap condo is just another good way to diversify my total investment. I stand by my investment decision.

Clara says

In 10 years, I will totally recap all my initial capital on this condo. All the rental income will be free and clear. This is still not considering home price appreciation. I am looking to buy more obviously.

I, like many other homeowners who bought years before the bubble could say that. But like the Tech stock bubble, not fundementally supported in the long run.

The flip side, all the gains the seller received, like the Tech stock bubble translated to deep deep losses to the buyers.

Now that the we are very aware of the bubble and the ongoing correction. Would the buyers be equally eager to over pay at the heavy cost they have incurred ? Not likely...

Its all an anomoly when you look back.

dodgerfanjohn says

doing his best Don Lepre immitation

what ever happened to Don Don..

Lapre was criticized as selling questionable business plans that often did not work for his clients. In June 2011, Lapre was charged with 41 counts of conspiracy, mail fraud, wire fraud, and promotional money laundering related to his Internet businesses. He was arrested on June 24, 2011, for failing to appear in court to face these charges.[2] On October 2, 2011, Lapre died of an apparent suicide while awaiting trial in federal custody.

Sayeth the Duck: Break even on a condo that costs $110,000 is nothing more than netting more money than you're paying in expenses + the loss in value of your investment. If the decline in value is $0, and rent is greater than expenses, you do better than break even in the first month. If you paid more attention to what you write, you'd know this.

Sayeth me: Yes, this time you got it correct. But not when you cite gross as a basis for seven years. Which is just lolbad.

FunTime,

$1350 (Monthly rental income) - $300 (HOA+maintenance) = $1050 net monthly income

$1050 x 12 = $12,600 annual

$12,600 / $110,000 (condo price) = 11.4% annual return fixed

Subtract all tax/deductibles get me 8-9% fixed return guarantee. (Depend on how good an accountant you have). Also, not counting the potential up-side of condo price appreciation when I sell it down the road. That's just a bonus. What's not to love about it being a landlord? :-)

By the way, my tenants are 2 lovely college girls (as hot as I'm ;>) who are quite hassle-free. Very low maintenance. 1 year contract signed. Central heat & air-cond covered by HOA.

I invest in stock also. This rental thingy is just another way of diversification for me. YMMV, of course.

I suppose my math is fairly right since I get my checks every month & did my last tax return quite smoothly.

Gameisrigged,
You are just a douchebag. no one should waste his/her time discussing with you - ignorant and sad... [facepalm]. I wish you rent for the rest of your life.

You say whatever you want , I won't waste time on you. You just don't worth it.

If SubOink is happy with his purchase then great! My only comment is whether or not during the refinance of the mortgage, did it turn it into a recourse mortgage or not. If it did, then that is too high of a price to pay for me for the savings in my opinion. But I am not SubOink and don't have to live with his decision there. I want to be able to walk away if necessary. Not a criticism at all. Just something that people should consider when refinancing if it applies in their case and if it matters to them.

Regarding charts that have "turned flat". Any old technical investor knows that after a sharp and steady run up or down in prices that there is a period of accumulation/distribution where the prices pause. It pauses because a lot of people are guessing that it is the bottom (or top when prices are going up) or that the current prices make sense for a group of people and they are happy to be in the market at that level. When it is proved to not be the bottom (or top,) the prices continue in the same direction. Usually, that pause can be used as a measuring tool to mark the halfway point of the price move. I think we are in at the tail end of the halfway point and the prices are getting ready to move down again (in general.)

gameisrigged says

By the way, I don't believe you're doing as well with your purchase as all the bragging you're doing would indicate. If you were really in such great shape, why would you be so defensive about it and feel the need to start threads like this?
Yeah, you're just a real class act, aren't you, SubOink?

And if you weren't so jealous, you wouldn't feel the need to post on this thread.

(is my grammar OK? Please let me know)

There are some reasons to buy a house for yourself to live in. To buy rental properties to me is absurd, but each has his own taste which no one will change.
If you have a large income then the mortgage interest deduction makes the case for buying more compelling. The ability to reverse-mortgage your house in the future moreso.
The parts about buying a house for MOST people make it more tricky: few people can afford it without the income of a wife, partner, whatever word you use.
Changing your mind about 1. the wife partner 2. the house will cause you to lose money making any change about 1,2, or both 1&2.
My grandmother operated a business since the 1930's. She was probably the original "feminist", she was a very shrewd and interesting person. She rented her awesome house which was an ancient pre-revolution carriage house in NY State where she operated her antique business from. She lived later in another awesome place in a really beautiful town in her last years.
She was a lifelong renter because she hated debt too much probably. I found out only a few years ago it was she who lent my father the cash to buy the property with an ocean view in martha's vineyard. She had the cash, he didn't because he had a mortgage somewhere else to pay.
My grandmother was clever. So, after lending my father some dough, he built a house, had a pole line put in to have electricity, made us do landscaping, rock walls, etc. bust our butts and make a nice house for my grandmother to visit every summer she wished to.
Now I see my older brother married to a witch, while he carries a huge mortgage. Someone saw us together in a picture and said "Is he your father?"

clambo says

The parts about buying a house for MOST people make it more tricky: few people can afford it without the income of a wife, partner, whatever word you use.

I forgot where I heard it (most likely some conservative talk show) they were talking about how high housing prices are good because the marriage rate is declining and high housing prices will usually require dual incomes will encourage more people to get married.

tatupu70 says

gameisrigged says

By the way, I don't believe you're doing as well with your purchase as all the bragging you're doing would indicate. If you were really in such great shape, why would you be so defensive about it and feel the need to start threads like this?

Yeah, you're just a real class act, aren't you, SubOink?

And if you weren't so jealous, you wouldn't feel the need to post on this thread.

(is my grammar OK? Please let me know)

Ha, ha. I'll be "jealous" of a bunch of bragging bullshit artists who put up fake pictures of "themselves" and pretend to be financial geniuses when they can't even write a simple grammatically-correct sentence in English, when hell freezes over.

moldhaven says

bulletdodger says

I'd much rather have prices rising at historic norms while I save than have to wait on the sidelines watching the government do back flips to keep an overpriced asset class from dropping back to reality.

I'm pretty sure there aren't many here that are happy about the insane policies of our government. But, I'm left wondering why 95% of them have repeatedly voted either republican or democrat and will do so again in 2012?

Perhaps they are satisfied with those choices?

Or they don't want to throw their vote away voting for Nader or Ron Paul, neither of who will ever be elected?

clambo says

She was a lifelong renter because she hated debt too much probably. I found out only a few years ago it was she who lent my father the cash to buy the property with an ocean view in martha's vineyard. She had the cash, he didn't because he had a mortgage somewhere else to pay.
My grandmother was clever. So, after lending my father some dough, he built a house, had a pole line put in to have electricity, made us do landscaping, rock walls, etc. bust our butts and make a nice house for my grandmother to visit every summer she wished to.

I'm guessing grandma's real estate portfolio is now worth zero, but unless father bought in the last 5 years, he may have doubled his money - am I right?

Owning a home was probably the biggest pain in my ass ever, in fact, I would probably go through another military boot camp vs. owning again. I can't say I blame some people who like staying in one place, or who are 40+ and looking to lock in their rent payment...but it's not for me. Good luck to you though.

First Congrats!!!

Second why give anything that even seems like an "all clear signal"now?

third,..
you may never feel this out but the home and the loan really own you BTW. you work for the house (and the Bank.) some folks like this idea,...some don't,... some never realize its truth. Some even teach their children how to be debt slaves.

forth
ego is a bitch

fifth.
Debt is slavery! ( I would have just said congrats had you paid all cash)

Katy Perry says

Some even teach their children how to be debt slaves.

That's the difference between my kid and yours. When mine is 35 (hopefully not sooner) she'll live debt free in the house I paid for...yours will be renting and paying the landlord EVERY month...and exposed to some landlords BS while paying it.

Now THAT is slavery. I just wish my parents hadn't rented all their life...because the money is gone either way, except there is nothing left behind.

:)

I don't have kids Suboink

you sound like you think your house debt is an investment or something. it's not like it's increasing in price every month.

it's more like a used car That needs lots of work and stuff bought for it. That you bought with money you didn't even have. your agreed debt is worth more than the house BTW.

your not dumb enough to believe you"ll be actually paying the price you Realturd told you over 30 years. look at the bottom of your loan paper work. Thats the price you really agreed to pay.

There is a chance your house will never be worth that number. It's going to lose value like a used car every year for another decade at least IMHO. plus maints costs and taxes.

you're fooling yourself if you think you own anything other than debt and liability. that is not real security BTW. That's a pretty strong exposer to risk in this market IMHO. Renting is Not.

Maybe you could rent it out and break even after all costs maybe not. I bet not in your part of LA. I bet Rents are very close to your actual costs if you added everything up.

How can you call yourself anything other than a debt owner, or Home Borrower. I mean what is someone called that Payed %100 cash for a house. They're called an Owner also. Should we call them Super duper Owners or Extra special Owners now maybe? Quit fooling yourself. Your a debt slave that's why you go to work to Pay your Master

SubOink says

Katy Perry says

Some even teach their children how to be debt slaves.

That's the difference between my kid and yours. When mine is 35 (hopefully not sooner) she'll live debt free in the house I paid for...yours will be renting and paying the landlord EVERY month...and exposed to some landlords BS while paying it.

Now THAT is slavery. I just wish my parents hadn't rented all their life...because the money is gone either way, except there is nothing left behind.

:)

You actually mean you wish your parents had invested the money they saved by renting instead of spending it don't you. For most people it USED to be better to buy as a forced savings plan. With all the equity loan stuff that's not even close to true any more. Now far to many people simply blow the equity at any opportunity.

Katy Perry says

That's a pretty strong exposer to risk in this market, IMHO. Renting is Not.

Sure it is. What happens when rents rise?? That sure sounds like exposure to me...

Katy Perry says

Your a debt slave that's why you go to work to Pay your Master

And you go to work to pay your landlord. How is that any different?

people throw around the term debt slave but it usually applies to someone with unsecured debt.
Your house is not unsecured debt. If you feel enslaved you simply sell the house.

tatupu70 says

And you go to work to pay your landlord. How is that any different?

you're talking about someone who most like lives in their parent's basement.

Hauling junk from foreclosures doen't sound that bad. You can get lucky and end up with some really nice stuff. Heck, I would be willing to do it for FREE provided the hosues are in a rich neighborhood.

toothfairy says

If you feel enslaved you simply sell the house.

Sure, simply sell the house. Easy!

Realtors will line up around the corner to get the listing, and buyers will..., er, never mind.

BD

Katy Perry says

Thats the price you really agreed to pay.

And that is less than what you will pay in rent for the remainder of your life.

Don't forget, I can pay the house off at any point without a pre payment penalty. We are already doing principal only checks with the money that we are saving from the refy (the difference between mortgage and what rent used to be).

And with interest rates at 3.85% its really not that much. Less than what your rent increase is going to be over 30 years. Just go back in time.

You are lying to yourself. You simply don't understand how it works, do you?

Katy Perry says

There is a chance your house will never be worth that number

You don't get it, it does not matter if the house would be worth that number EVER, because I am not going to sell it. What don't you understand?? I am paying LESS than rent for the house. My "rent" is frozen. It will NEVER go up. And once the house is paid off, I do not have to pay to live anywhere anymore.

I am not ever planing on selling the house. Where should I live? on the street?

This is our home - period. Not an investment. And its cheaper than renting.

Have you ever calculated how much you are going to have WASTED over 30 years. If you rented my house for the going rate of 3000...you'd have thrown out 1mill in 30 years. That's without a rent increase in 30 years. Quite frankly, in 30 years from now, you will still be renting with your attitude and rent is going to be more like 6000/month - woops! Hope you will have a big retirement account to give to a landlord.

Who is the realturd here? :)