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Sometimes people just are at the right place at the right time. My former boss is a lazy ass. He inherited the family business and has just kept it going marginally since the seventies. He definately wouldn't be living in Laguna if not for prop 13. He and his now deceased mom bought a distressed prop on S. Coast Hwy in the mid seventies. It was a bank foreclosure and then the bank went belly up what are the changes of that kind of luck?
He did nothing with the property for years. He got divorced and almost lost te biz. Eventually he re married a gold digger and had to remodel the place. Bascally they tore it to a shell and rebuilt it for alittle over 200k in 96. That asshole is paying the lowest prop tax in his area. After the rebuild it was worth in the 900K's. Probably close to 2 mil now. If he had to re- buy in that area and pay current taxes he's not be living there.
Speaking of Prop 13, has anyone seen the inane Phil Angelides adds where he vows to "protect" homeowner rights and keep Prop 13 going? Just for that I will not be voting for him, even if the governer has not much say in the matter. He seems like a tool anyway.
SFWoman,
Sometime back Peter P set me straight. The "1031 Exchange" can be used for everything from aircraft equipment leases to Llamas (livestock). When the RE "rugus" got a hold of it, quickly RE was all that was discussed.
Randy H
2006 Aug 16, 3:16am
Didn’t they do away with the property roll over exemption?
Short answer "No".
Randy H Says:
> It has always been true that a shrewd, well diversified
> “investor†can save much more over time than an
> equivalent home owner with equity and appreciation.
Then I wrote:
> Due to the bubble in the Bay Area I can’t think of any
> “investor†(even the shrewd and well diversified ones)
> who have done better than Bay Area real estate investors.
Then Randy H. wrote:
> That is entirely irrelevant to the discussion we were having.
> We were not talking about the intangibles of home ownership
Let me revise it to say “investors and homeownersâ€â€¦
Ten years ago you could buy decent homes in Burlingame or Mill Valley for about $300K and get in for $30K or less. Almost all these homes are worth a million dollars more today. Not many others that “invested†$30K in 1996 can sell their investment for $1.3mm (and get $500K tax free if they are married).
I don’t want to beat up on Randy, but only a statistically insignificant number of “investors†have come even close to the leveraged historic returns from real estate ownership in the Bay Area.
Since “past performance is no guarantee of future results†I think that many older Bay Area homeowners may die before their home is worth more than they paid in 2005…
Maybe the Revolutionary War was a bad idea. What would our tax rates be if England tried to "rule" 3-5000 miles away? I assume much lower. The decline in European/Western populations excluding immigration has been lamented in the Economist, Wall ST J., etc. The AMT actually encourages massive over investment in real estate.
Peter P
2006 Aug 16, 4:07am
I vote to keep X
No need to vote. I will ban myself before I ban X. :)
Fewlesh,
In the past it's been perfectly accessible for smaller RE investors to convert their apt. bldgs. and strip malls in exchange for public REIT shares. This "good old boy" practice has all but gone away. By having your RE holdings deemed "substantially the same" one could 1031 their "Sleazy Acres Mobile Home Park" for shares that pay out a regular dividend as per the the charter of the REIT.
Now that many smaller MF companies have been bought out this just isn't practical any more. The costs of appraisals etc. and the miniscule size of these portfolio aquisitions on this scale can no longer be justified.
True, you can will them to "fluffy the cat" if you want to, but fluffy would owe taxes on his/her income.
Randy H
2006 Aug 16, 4:20am
FAB,
Again, we weren't talking specifically about the Bay Area or other bubble areas. If you insist on this comparison then I ask you this:
Are there more historical cases of fragmented RE hyper bubble opportunities
- or -
Are there more historical cases of individual Equity hyper bubble opportunities?
You are comparing apples & oranges. Not everyone who has or does own a home participated in the fortunate regional bubble you keep referring to. Not everyone who owned or does own stock participated in an explosive IPO during a stock market bubble.
On balanced, applied to the average, participation in the market through a well diversified portfolio outperforms average real estate appreciation. Citing anomalies doesn't change that fact. I'm happy you enjoyed such an anomaly. That doesn't mean the average enjoyed similar spoils.
I remind you we were talking about NATIONAL TAX POLICY, not regional real estate markets. When discussing national "one size fits all" policy, it is necessary to average, not segment.
Am I wrong here? I thought the only way any dollars can be placed into ANY kind of a pre tax retirement plan is through "earned income". Not investment income.
If someone owned a TON of property (and could show a long established LLC or other entity) with themselves as an employee they "might" be able to go back and set up some kind of a Defined Benefit Plan or DCP. If you hadn't made adequate preparations going back and re-stating tax files may be more trouble than it's worth?
Even at that, any OTHER people that worked for you over the years may be "eligible" for a chunk of it too! (Provided they meet min. employment requirements). I would tread lightly here. Very lightly.
Off topic
Has anyone had phone calls saying that a grant has been awarded and they will be mailing it to you? I gave them short thrift, but now I wonder if I should have got more information to try and work out why they had my information and who they were exactly. I tried ringing the number back but it just rang and rang...
Does anyone recognise the area code and or number? 514-227-7955
SQT,
Actually it was a live person that called me, but I've been getting a lot of solicitation calls, so I'm pretty much rude straight off the bat and end the call as quickly as possible. It was only afterwards that I wondered whether I blew somebody off that had either legitimate business, or someone that had been passed my information for a reason, or someone else was trying to apply for grants in my name.....
Surfer-x
No worries...
I'm thinking of masquerading as a troll jus to get you going again :-)
I love having CNBC business channel droning on in the backdrop all day.
But ,it's so damn funny how bullish they are in the face of some real indicative data\number especially about this topic.
When someone does chime in bearish tones especially about hard vs soft landing or Fed actions they get cut off by commercial or next analyst guest. Nobody wants to yell fire in the theater....
Same ol shit deny , deny, deny I guess they all have short memories of dot com, early nineties housing bubble.
X - man no apologies needed. I just thought you were the local patrick neighborhood watch patrol. Humor rules.....
fewlesh,
There'll be a step up in basis when you inherit. So what capital gains?
SQT,
You may want to search for an uncharacteristic remark by "you" and get rid of it too.
That's why I CAN'T STAND CNBC! They totally cater to people that use the House ATM to fund 5K ETrade gambling (damn it, I mean "trading") accounts. Almost all of their on screen "talent" colors the coverage with their subjective opinions it's hardly worth watching at all.
Make the switch over to Bloombergs. NONE of their talking heads believe that THEY are bigger than the event they are being paid to COVER! There are plenty of people I can go to if I want to hear opinions.
Mr. Vincent,
Unfortunately, it's probably best to just to totally ignore some of the comments here. I tried enforcing a consistent standard on comments on my threads once...and I don't start threads anymore.
astrid,
I really couldn't tell where Fewlesh was trying to take us either? "Just flip your properties into a 401K kinda like thing then will them to junior". Huh? What? Is anyone out there aware of any prayer in the slightest that will get you from assets long held OUTSIDE of a "qualified plan" account INTO a retirement account and mind you all of this without so much as having a JOB?
Well you can will a ROTH IRA to your family and they are not required to draw from it, so it can be passed on down the generations. And you can get an intermediary to set up either (and I can't remember the exact details) a 401k or IRA with investment property (but I'm not sure it can be existing property), but it has to be carefully done or the IRS will have you. Not sure you can do it without a job though....but if you have investment property income, maybe there's a spin there somewhere....
BA,
Don't forget all the equity locusts from Las Vegas buying there too!
maybe there's a spin in there somewhere"
Claire, spin indeed. I've heard of these Miracle Roth IRA Seminars where the gist is to take an 80 year old (show them as having an income) and pump up their Roth as a means to pass wealth tax free. Where this house of cards falls apart is that guys like me don't have the audacity to tell a client it's O.K to show a now 84 year old janitor as recieving a "consultants fee" to show earned income!
*Not tax advice
RE: the "colorful exchange" between Surfer-X and Mr. Vincent.
I second Peter P & SQT: banning X? Never gonna happen.
OTH, the impartial, detached moderator part of me (reluctantly) says: "You know, Mr. Vincent may actually have a point. X was the one who first injected profanity in a personal way. Of course, X without his profanity is like a Boomer without his Viagra."
Then the not-so-detached, pissed off/screwed-over Gen-Xer in me says, "F--K yah!! Go give that smarmy, arrogant Boomer asshat the verbal ass-whooping he so richly deserves!"
What to do, what to do...
Oh, wait, this isn't even my thread! (whew! dodged that bullet :-) ).
DinOR Says:
That’s why I CAN’T STAND CNBC! They totally cater to people that use the House ATM to fund 5K ETrade gambling (damn it, I mean “tradingâ€) accounts.
Remember that CNBC stands for CONSUMER NEWS business channel. They're just living up to the moniker (pro housing ATM consumer). They suck. Kudlow gives me a huge headache. I want to take that white collar of his and strangle him every time I see that tool.
I've been thinking about Austin as one of the possible destinations in the next six month. Everything I've read indicate housing is really affordable in fact Texas in general has high affordability.
OH God Kudlow is on now EST. He is such a piece of work... They are so pissed off that people might find all this bad housing and economic slowdown news a reason to vote a different party in next time. As we get closer to november they get more agitated.
Randy H
2006 Aug 16, 7:35am
I think CNBC is reasonable during market hours. I heard plenty of housing hard-landing sentiment today. There is a bias towards a total-economy soft-landing right now, but they're just following momentum. Anyway, it's always good to see the occasional smugsuck senior analyst get humiliated on the big screen.
The commercials in this area at least are the best. About 15-20% of them are Remax love your realtor(tm) ads.
Sheesh, get your news from the internet and cut out the commercial breaks. :)
The news is all good! Haven't you heard? Inflation (ex food, energy, health care, education and housing) is under control!
Peter P
2006 Aug 16, 8:07am
I just saw on Google News that they have arrested Jon Benet’s killer.
But what about Natalie Holloway?
Randy H Says:
I think CNBC is reasonable during market hours.
One thing I'll give them is the reporters of the female persuasion are generally very attractive. I wonder if that had an effect when Bendover Ben blurted his opinion to Maria Bartiromo at that party a few months ago...
Peter P Says:
"I just saw on Google News that they have arrested Jon Benet’s killer."
But what about Natalie Holloway?
Are you implying Natalie Holloway is Jon Benet's killer?
One thing I’ll give them is the reporters of the female persuasion are generally very attractive.
What, you don't like Suzy Assaad?
(Glen-- I changed the link to a tinyurl because it was skewing the whole page-- SQT)
"I just saw on Google News that they have arrested Jon Benet’s killer."
Wow, that harkens back to lighter, more innocent days when this country thought it's biggest problem was angry gun toting suburban teens.
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By Joe Schome.
To me, one of the most interesting aspects of the bubble is that its effects are felt differently in differnet areas. Not just on a nationwide level -- appreciation has been mostly flat in TX, while prices have tripled in many parts of CA -- but the bubble even affects different regions of the same state in a disparate way.
For example, while the median price in the SF Bay Area is higher than the LA median, I think that SF is nonetheless far, far more affordable than LA.
For example, you can get a 2BR condo in a decent school district like Walnut Creek (average SAT score 1140) for $200k. To get a 2BR condo in an LA school district with that kind of average SAT score, you'd have to spend at least $400k, and probably $600k.
The disparity in SFH prices isn't as pronounced, but there is a disparity there too. For example, as of this posting there are 32 SFH's for sale in the SF Bay Area's best public school district, Cupertino (average HS SAT score 1251). In San Marino, the LA area's best public school district (average HS SAT score 1231), there are 5. Now, Cupertino has roughly two and a half times as many listings as San Marnio and is about four times as populous, so it's not an apples-to-apples comparison, but the fact remains that Cupertino is cheaper. Also -- and this is really important -- SFH's are not the only type of housing for sale in Cupertino. There are 2BR condos in Cupertino starting at $545k. San Marino is zoned solely for single family homes, there is not a single condo in the entire community. The cheapest avaialble listing of any kind in San Marino is a 1,000 square foot 2BR house for $798k.
So viewed in this light, while the SF Bay Area may have a significantly higher median price than LA, it is actually far more afforadble. A middle class, college-educated family not might want to live in a 2BR condo in Walnut Creek, but they can afford to do so if they stretch just a little bit. In SoCal, by contrast, the situation is much worse for middle class families. While there are several $200k condos in Walnut Creek, a place with very good schools, there is not a single 2BR condo listed for less than $200k in Compton, SoCal's worst public school district. Thus, the folks in SoCal are getting squeezed by the bubble a lot more than folks in NorCal.
The bubble is even more intersting in places like NYC. There, a generic 2BR condo in a one of the nicer areas of NYC's Upper West Side will cost you $949k. We're talking about Jerry Seinfeld's apartment here, not a high-end place with a view of Central Park or the river. The upper-income suburbs of New York are dirt cheap by comparison. Private schools are a must. Mehdham, NJ has SFH's starting at $374k; Scarsdale, NY (a city with an average per capita family income in excess of $200k) SFH's start at $600k. Values are all over the map in the NYC area. Clearly, the bubble affects different regions differently.
#housing