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Strategist saysPatrick will love this. Home ownership doesn't build wealth.
ha Ha, when I saw that article earlier, I immediately thought of Patrick too.
Actually, most of that article is correct. Except for some small pockets of the country, homeownership definitely costs more than renting, when you factor everything in.
"In other words, the rent argument only works if the renter invests the rental savings rather than consuming it."
Yeah, tell that to the tattooed, forebrain-less, oxycontin and Jack swilling, monster truck riding masses.
The Mid West is a horrible place to buy a home long term.
Unless Cali pumps massive amounts of money into de-sal plants
"On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation."
Strategist saysThe Mid West is a horrible place to buy a home long term.
Disagree. I HATE Chicagoland area. I live here, so I can say that. In 30-50 years, it will be one of the most popular areas in the country and maybe world. Water is a thing and even though I'd choose Cali over my current location today, can't survive without water. It's a problem and will continue to be one everywhere and Cali usually has a problem with fresh water.
Unless Cali pumps massive amounts of money into de-sal plants, fresh water is going to be a problem with the current population. Add more people and it gets worse. Chicago and the great lakes hold wealth that is completely unrealized and untapped at this point. You Cali folks got lucky with a historic winter last year. Lake Michigan is always here. And Superior, Erie, Huron and Ontario. We have 25% of the Worlds above ground fresh water...
WookieMan saysStrategist saysThe Mid West is a horrible place to buy a home long term.
Disagree. I HATE Chicagoland area. I live here, so I can say that. In 30-50 years, it will be one of the most popular areas in the country and maybe world. Water is a thing and even though I'd choose Cali over my current location today, can't survive without water. It's a problem and will continue to be one everywhere and Cali usually has a problem with fresh water.
Unless Cali pumps massive amounts of money into de-sal plants, fresh water is going to be a problem with the current population. Add more people and it gets worse. Chicago and the great lakes hold wealth that is completely unrealized and untapped at this point. You Cali folks got lucky with a historic winter last year. Lake Michigan is always h...
WookieMan saysUnless Cali pumps massive amounts of money into de-sal plants
Yeah, that's why I've been telling people Detroit will come back in a big way as well. Who knows when though. Good de-sal tech might change that but here in SoCal it was a major pain in the butt to get one. Just one. Good luck ever getting another one in CA with the enviro-lobby and demoncrat monopoly.
Then we pumped all of that water into a lake to evaporate during the drought. We had a one size fits all policy in CA and the SD area had too much water after people cut back. Poway even dumped their water tower into the street.
And then they thanked us by increasing our rates. Their logic....We saved too much on conserving water, which cut back on our revenues, and now we have to raise the rates.
My last monthly water bill was around $425.
to support the support infrastructure/workers.
California can get lots of water from Canada
I understand your point. I'm speaking from the point of view of an investor. If you have a flat or falling population, investing in real estate for the long term is not a good idea.
The best places to invest in real estate are where people want to live, where tourists like to visit etc
Strategist saysAnd then they thanked us by increasing our rates. Their logic....We saved too much on conserving water, which cut back on our revenues, and now we have to raise the rates.
My last monthly water bill was around $425.
They do that in NorCal too. Not enough sales $ to support the support infrastructure/workers.
When would you like to post some numbers to back that up?
And then they thanked us by increasing our rates. Their logic....We saved too much on conserving water, which cut back on our revenues, and now we have to raise the rates.
My last monthly water bill was around $425.
Strategist says
I understand your point. I'm speaking from the point of view of an investor. If you have a flat or falling population, investing in real estate for the long term is not a good idea.
The best places to invest in real estate are where people want to live, where tourists like to visit etc
When would you like to post some numbers to back that up? I've asked a couple times and it always comes down to it's true because I say it's true. I'd really like to see the breakdown on the long term (over 10 years at least, 20 would be better) ROI for a property in orange county to see how this all works out. I've done the numbers for some of the places "people want to live" on the east coast, but they just don't add up even with appreciation.The initial cost is far too high and the rents are too low relative to the amount of money tied up. I made a very good ROI in vegas (assum...
researchers in the study claim the old adage of "throwing your money away on rent," doesn't hold up. That is because it assumes that the extra money a renter saves by not owning a home and not saving for a downpayment is simply spent on goods or services and not invested.
"When you assume that those monies are reinvested at a rate of return, renting, on average, wins in terms of wealth creation,"
I have given you the numbers.
You can also simply use the average appreciation rates for California homes for whatever time frame you choose.
That would be 6% to 8% depending on the time frame. Add 2% to 4% CAP rates. Now you have your 8% - 12% returns.
All that said, I respect your critical thinking ability bob, and since you've recently done a long analysis, I have a few questions for you. I'm assuming that you put in expected appreciation in different locations, and then did some calculation to put income on a year adjusted basis (e.g. calculation of ROI or NPV). Would you mind sharing the ranges that you got? Also, what assumptions you made regarding interest rates and expected appreciation in the calculations? Actually, if you are organized and have a spreadsheet with calculations that you would be willing to share, I would appreciate having a look.
Someone who lives in the midwest, and has plenty of disposable income might want to hedge bets (if they ever want to move) and buy an investment property on the coast. That is all ignoring the cost of having someone else maintain a property long distance. If one is willing to do the work, it would make sense to invest locally, unless the buy/rent equation is bonkers.
So why is your 8-12% somehow a superior return? I'm getting a better return than that and can reinvest the money every single month that is tied up in an appreciating house you seem to believe is the end all be all.
Sorry epic fail in proving you have a superior investment strategy.
But at some point would like to buy something in CA or some other low property tax state-just not at these levels.
CA doesn't even make the top 10 for low property taxes. The list from the tax foundation is:
lostand confused saysBut at some point would like to buy something in CA or some other low property tax state-just not at these levels.
CA doesn't even make the top 10 for low property taxes. The list from the tax foundation is:
Hawaii - 0.28 percent
Yes but in the other states, does it stay at purchase price? For example in CA if you bought a house for 300k in the crash and it is 1 million now-you are still paying 1% of 300k. In most other states it jumps with the market price. In IL for example your property axes can go up 15-20% in one single year.
https://www.cnbc.com/2017/11/16/homeownership-doesnt-build-wealth-study-finds.html "On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation."