patrick.net

Eman says

Based on my experience, it’s a matter of time before the kids of Patrick’s current property owner will sell, and Patrick will no longer be shielded from the rent inflation.

If somebody is shielded from rent inflation it means that the owner is not running his rental as a business (or there is rent control in place which is not the case here) . So it's a fluke.

Until globohomo achieves its stated WEF goal of 500,000,000 humans on the planet, housing will be largely unaffordable except for those who can find a stake in east bumblefuck or rural flyover country.

That's the rub - you want "the life," then you have to be financially independent/retired. This is a lot easier with bachelors or empty nest families. For women in general - HAHAHAHAHAHAHAHAH.

Rubicon says

I gave up a long time ago to believe things for the avg joe will get better. They get worse every year instead.

Debt may be becoming more manageable, albeit it seems like the Federal Reserve and federal government are trying to inflate out of a future debt crisis. So the tax we pay is through inflation for this policy.

Granted, Professor Robert Shiller claimed that housing prices increased 4% a year from the early 1950s to 2019. I am not sure if that is true today with the +40% increase in prices over the last few years. Rent has gone up a lot also.

Seems like the ratio is returning to pre pandemic levels.

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Rubicon says

This is survival of the fittest. Brutal reality. It’s still much better here compared to living in any other country though.

Said Marie Antoinette.

B.A.C.A.H. says

Rubicon says

This is survival of the fittest. Brutal reality. It’s still much better here compared to living in any other country though.

Said Marie Antoinette.

Certainly among the better/best countries, and it all depends on where in the country you're at, but certainly not among the top 5 in terms if quality of life on average. That being said, real estate relative to wages has become expensive in most countries worth living, mostly due to unfettered immigration from shitholes

Warren Buffett's $31,500 House Is Now Worth $1.44 Million But He Says He Would Have Made Far More Money By Renting Instead

https://www.benzinga.com/real-estate/23/08/33577953/warren-buffetts-31-500-house-is-now-worth-1-44-million-but-he-says-he-would-have-made-far-more-money

ad says

Warren Buffett's $31,500 House Is Now Worth $1.44 Million But He Says He Would Have Made Far More Money By Renting Instead

https://www.benzinga.com/real-estate/23/08/33577953/warren-buffetts-31-500-house-is-now-worth-1-44-million-but-he-says-he-would-have-made-far-more-money

Keep in mind Buffett is part of the WEF Schwab crew, which means they want to push people to own nothing and you will be happy. I'm not say he's wrong, but there is broader motivation at play IMO.

Buffett continues to live in the same modest home in Omaha that he purchased in 1958 for just $31,500.

Buffet was not a billionaire when he bought that home, he was instead living on the loan from his father-in-law. At the time, that home was in Omaha's most exclusive neighborhood.

Notice how it is fenced off as if it is a museum. Unlikely he really still "lives" there.

HeadSet says

Buffett continues to live in the same modest home in Omaha that he purchased in 1958 for just $31,500.

Buffet was not a billionaire when he bought that home, he was instead living on the loan from his father-in-law. At the time, that home was in Omaha's most exclusive neighborhood.

Notice how it is fenced off as if it is a museum. Unlikely he really still "lives" there.

It's not that modest either. Looks pretty substantial.

ad says

Warren Buffett's $31,500 House Is Now Worth $1.44 Million But He Says He Would Have Made Far More Money By Renting Instead

https://www.benzinga.com/real-estate/23/08/33577953/warren-buffetts-31-500-house-is-now-worth-1-44-million-but-he-says-he-would-have-made-far-more-money

A couple things to keep in mind, Warren Buffett is one of the greatest investors of our time. Not many individuals can generate the same returns as he has been doing for decades. It used to be over 50% return annually when he started his career.

Buffett is frugal. He wanted to save every dollar to invest, not buying stuff. When his wife bought him a brand new Cadillac, she had to buy the cheapest/basic model. 😅

The 3rd best investment was his Laguna Beach vacation house that his wife made him buy it. He paid $150k for it in 1971 and sold it around 2017 for $7.5M.

Buffett married well. His FIL was a doctor, and also his biggest investor when he started his career.

Buffett became a millionaire at the age of 30 so buying a $31.5k house at the age of 28 seemed affordable to him at the time.

Rubicon says

Housing only goes up in the longterm.

So does the stock market, and at a consistently faster rate.

Patrick says

Rubicon says

Housing only goes up in the longterm.

So does the stock market, and at a consistently faster rate.

Leverage helps.

Patrick says

So does the stock market, and at a consistently faster rate.

Large caps such as S&P 500 increase about 10% a year over long run. Robert Shiller stated over long that housing goes up about 4% a year.

That is why I like when you mentioned about putting the savings from rent to work by wisely investing it in stocks.

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"I paid $426k for my house last year, now it's worth $370k"

https://www.youtube.com/watch?v=h6zdBKVzsIU

zzyzzx says

"I paid $426k for my house last year, now it's worth $370k"

https://www.youtube.com/watch?v=h6zdBKVzsIU

Median price for USA home has gone down about 16.5% from its recent peak and all time high.

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Rubicon says

I have nothing against stocks and invest in them myself but I don’t get how you can compare the two as if they were interchangeable. You have to live somewhere. I would never rent and invest in stocks because I think that’s a better investment.

I agree. If rents and mortgages are roughly the same, why rent if you have the down payment?

Rubicon says

I bought a brand new house and my PITI is lower than someone renting a 3B room
House. Imagine how the picture looks like in a decade from now. Rents keep going up while my PITI remains the same.

You'll have repairs and all kinds of other shit, utilities increasing etc. Generally you have more leverage in RE if you are a risk taker, and more safety as you mentioned if you just want to live in your primary home and pay off the mortgage. However that assumes you have stable income, if you can't pay your mortgage, downsizing a rental is easier than your home, and incurs no losses. It's different than stock trading for sure, hard to compare.

mell says

It's different than stock trading for sure, hard to compare.

Its interesting as housing over the last 20 years particularly has been viewed as an investment asset. I wonder if this, combined with zoning policies is what has caused housing to become unaffordable as compared to the 1940's to 1990's.

For me, my home is just a roof over my family's head and a monthly payment of PITI, HOA fee, and maintenance & repair (M & R).

Who on Patrick.net views housing / residential real estate as their only income and retirement savings ? Who views housing equally as stocks as being an asset ?

Eman seems like he is only in housing / residential real estate and knows how to work with banks to maximize leverage.

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ad says

Its interesting as housing over the last 20 years particularly has been viewed as an investment asset. I wonder if this, combined with zoning policies is what has caused housing to become unaffordable

Don't forget the AirBnB effect.

GNL says

Don't forget the AirBnB effect.

Yes, where there is a lot of tourism like Colorado mountains towns, beach towns in the Florida panhandle, etc.

And it has not done anything as far as lower the nightly rates for hotels.

I remember the claim that more AirBnB homes means that people will be able to afford a vacation since the increase in vacation rentals or units will drive down the cost to vacation.

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GNL says

Don't forget the AirBnB effect.

zzyzzx says

GNL says

Don't forget the AirBnB effect.

I'm not buying this one. Sure, it may be true in places like Sedona or South Lake Tahoe, but your average Elko, NV or Boomfuck, AZ? No way, Jose.

Look what just hit my inbox. Looks like CalFHA down payment assistance program was a hit. More money is coming to help buyers with the down payment.

“The average number of occupants in each home fell, while the average size of a new single-family home ballooned - from just 909 square feet in 1949 to 2,480 square feet in 2021. In 1950, 15.7% of U.S. homes were overcrowded; by 2000 that number had fallen to 5.7%.” - Interesting statistics

https://www.ahs.com/home-matters/real-estate/the-2022-american-home-size-index/#

Eman says

“The average number of occupants in each home fell, while the average size of a new single-family home ballooned - from just 909 square feet in 1949 to 2,480 square feet in 2021. In 1950, 15.7% of U.S. homes were overcrowded; by 2000 that number had fallen to 5.7%.” - Interesting statistics

Look at the housing starts and the typical as well as minimum size per square foot. Seems like I've not seen a detached home or a townhome less than 1500 square feet.

If not the developers deciding this, then the local government (i.e., zoning) is the reason for this.

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ad says

Look at the housing starts and the typical as well as minimum size per square foot. Seems like I've not seen a detached home or a townhome less than 1500 square feet.

If not the developers deciding this, then the local government (i.e., zoning) is the reason for this.

There are many places where you cannot build a home, per regulations, smaller than X. I believe it's to keep home prices, and therefore property taxes, high.

GNL says

There are many places where you cannot build a home, per regulations, smaller than X. I believe it's to keep home prices, and therefore property taxes, high.

Yep, which economically forces people to live in rental apartments or if they buy, force them into townhomes or condos.

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1337irr says

Leverage helps.

Leverage works both ways.

If you put 5% down and the market goes down 5%, you just lost 100% of your deposit.

Actually, considering the 6% commission, with 5% down you're underwater from the start.

Patrick says

1337irr says

Leverage helps.

The premise is the landlord investor will never lose out as far as applying leverage.

They'll never get foreclosed on and they'll earn an ROI that rivals what they would earn investing in the stock market.

That is there is very little chance to fail as a residential landlord.

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ad says

That is there is very little chance to fail as a residential landlord.

It depends on whether the rent covers the cost of owning. If someone pays more than the rent can cover, they are likely to fail.

https://twitter.com/alanfryermedia/status/1694553345401430187



Canada, but still.

Patrick says

ad says

That is there is very little chance to fail as a residential landlord.

It depends on whether the rent covers the cost of owning. If someone pays more than the rent can cover, they are likely to fail.

Wasn't there a commenter here that bragged about buying cash flow negative properties?

Patrick says

It depends on whether the rent covers the cost of owning. If someone pays more than the rent can cover, they are likely to fail.

The impression I get from Eman is that the risk of this is very small. And I see the same in the Florida panhandle.

That is residential rental property is a very safe investment especially given the trends with rental rate increases each year.

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WE JUST NEED TO BUILD MORE HOUSES! WHY CAN'T YOU UNDERSTAND THAT!? WHAT'S WRONG WITH YOU :PEOPLE!!!

https://www.zerohedge.com/personal-finance/problem-isnt-housing-shortage-its-concentration-ownership-wealthy

NuttBoxer says

WE JUST NEED TO BUILD MORE HOUSES! WHY CAN'T YOU UNDERSTAND THAT!? WHAT'S WRONG WITH YOU :PEOPLE!!!

https://www.zerohedge.com/personal-finance/problem-isnt-housing-shortage-its-concentration-ownership-wealthy

Yeah, I just look at the Florida panhandle such as all the homes (i.e., condos, townhomes, detached homes, etc.) on or near the beach, and at least 90% are not homestead exemption (based on review of the county appraiser websites).

That means they are not the primary residence as they cannot claim homestead exemption to pay lower property tax.

I wonder nationwide what percentage of homes are not occupied by a full time renter or their owner (i.e., vacation/short term rentals, a second home get away, etc.) ?

Wolfman at Wolf Street website has been making references to this topic of home ownership, new housing starts, etc.

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NuttBoxer says

WE JUST NEED TO BUILD MORE HOUSES! WHY CAN'T YOU UNDERSTAND THAT!? WHAT'S WRONG WITH YOU :PEOPLE!!!

https://www.zerohedge.com/personal-finance/problem-isnt-housing-shortage-its-concentration-ownership-wealthy

The problem with California is a few folds:

1) NIMBYism - which drives the cost up astronomical as developers have to pay all kinds of fees to do studies and impacts

2) the city permit fees in the six figures if you want to build a SFH

Once you factor in 1 and 2, it’s already $200k before the cost of land, labor and materials

And I haven’t talked about the city made us installed a new sprinkler system when we remodeled the house. That’s $25k right there, not including Fire Marshall inspection fee, etc…

They made us installed new sidewalk when it was never there in the first place. That’s another $20k. It’s ridiculous

Eman says

Once you factor in 1 and 2, it’s already $200k before the cost of land, labor and materials

Where do the working class live there ? Where do those who work the restaurants, the landscaping jobs, etc. live ?

They live 6 people in a 2 bedroom apartment ? They can't reasonably live more than 90 minutes travel distance away from their jobs.

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Eman says

Look what just hit my inbox. Looks like CalFHA down payment assistance program was a hit. More money is coming to help buyers with the down payment.

Also yesterday I tuned into NPR (after a long time) and caught some cunt speaking about plans to basically subsidize ALL renters in AlCo with state money. What that would do to housing prices is obvious.

Under what economic conditions do you think allows communism to raise its ugly head? Think about that.