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Old 11-21-2013, 11:08 AM
 
Location: Sunrise
10,864 posts, read 16,986,499 times
Reputation: 9084

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Only after. And real estate is just one facet of my investing strategy. It's not like it's an either-or choice. With the exception of foreign stocks, forex and precious metals, I'm diversified into just about everything.

But that has very little to do with the fact that renting isn't a financially smart choice. It's the right choice for people without the means to own, or for people who move around a great deal. Being a landlord, however, can be very smart. The landlord gets free monthly money from people like TraderKev.

The people on this forum who have cried "Rent! Don't buy!" from the rooftops for the past five years could have paid off a mortgage by now and would be living free and clear. And then they'd have considerably more money every month for investment.

 
Old 11-21-2013, 01:31 PM
 
2,928 posts, read 3,549,370 times
Reputation: 1882
I have friends who are still 80k underwater and they didn't even buy at the highest point. RE is a risky investment just like anything else. Nothing in life is 100%.
 
Old 11-21-2013, 01:51 PM
 
Location: ( ͡° ͜ʖ ͡°) (╯°□°)╯︵ ┻━┻ ̡
7,112 posts, read 13,152,514 times
Reputation: 3900
To answer the OP's original question: Are all the cheap houses gone?

No, if compared to 2005-2008.
Yes, if compared to 2010-2012



Sent from watch
 
Old 11-21-2013, 02:35 PM
 
Location: Las Vegas
2,880 posts, read 2,804,494 times
Reputation: 2465
Quote:
Originally Posted by ddrhazy View Post
I have friends who are still 80k underwater and they didn't even buy at the highest point. RE is a risky investment just like anything else. Nothing in life is 100%.
'cept death n taxes... some smart dude said that once.
 
Old 11-21-2013, 02:47 PM
 
1,030 posts, read 1,587,847 times
Reputation: 1209
I suspect everyone's story is a little different. I bought one home in Henderson at the peak and the exact same house nearby at the bottom. Both have been rented since the day I have owned them and continue to be so. The last time I had a tenant move out it was rented within 10hrs of when I listed it.

I have had my renters recoup what I was underwater for. I have no plans to sell.
 
Old 11-21-2013, 03:11 PM
 
2,928 posts, read 3,549,370 times
Reputation: 1882
Quote:
Originally Posted by Packrat1 View Post
I suspect everyone's story is a little different. I bought one home in Henderson at the peak and the exact same house nearby at the bottom. Both have been rented since the day I have owned them and continue to be so. The last time I had a tenant move out it was rented within 10hrs of when I listed it.

I have had my renters recoup what I was underwater for. I have no plans to sell.
To continue about my friend's investment. He purchased the place in May 2004 for 195k and put down 15%. He's not making any money on the rent after taxes and insurance. If all the sudden he loses the renter and can't rent for an extended period of time, he said he will short sell the house.

He's only 8 years into a 30 year loan and only 28k has been paid off the principal. In another 5 years the principal's balance will equal what the house is worth today. He could sell it and have no hit on his credit and walk away, but he would've gone through all this trouble of holding onto this asset and after all that he loses the down payment. There's no way the house's value will go back to 195k anytime soon.
 
Old 11-21-2013, 03:35 PM
 
164 posts, read 260,470 times
Reputation: 265
My interest rate is 3.125% locked for the next thirty years. Out of the mortgage payment of 770 dollars per month, already over 300 dollars of it goes to principal... which basically goes into my pocket. so i'm effectively paying 400+ dollars per month in "rent" to the bank to live in a home that zillow currently estimates is worth 240k... and because of amortization, that rent decreases each month as well. near the end of the 30 years the "rent" i'll be paying the bank will be around 100 dollars a month to live in what in three decades with inflation will be over a half million dollar home.

[mod cut--orphaned responses to deleted post]

Last edited by observer53; 11-22-2013 at 05:14 AM..
 
Old 11-21-2013, 03:51 PM
 
329 posts, read 431,118 times
Reputation: 160
Quote:
Originally Posted by ddrhazy View Post
I have friends who are still 80k underwater and they didn't even buy at the highest point. RE is a risky investment just like anything else. Nothing in life is 100%.
While it is true nothing is 100%, real estate was always the best investment you could make. It was one of the only low risk and high return investments. It always beat inflation and never went down in price until 2008.
 
Old 11-21-2013, 04:43 PM
 
149 posts, read 346,850 times
Reputation: 72
Quote:
Originally Posted by ddrhazy View Post
Some people are in a position to invest in a risky venture. RE has risk just like other investments. Stocks in my opinion can be more risky as they can hit zero and then you have nothing. For a house to "disappear" requires a hurricane to blow through it.

Would my friend have been better off not buying that house in 2005? Sure. But nobody knows the future and if you aren't doing something with your money, it's as good as throwing it away.
Actually, since houses are usually purchased with a mortgage, they represent a leveraged investment that can hit zero much sooner than you think. If someone pays $200k for a house with 10% down it only takes a 10% move in price to lose their entire investment, at least on paper.
 
Old 11-21-2013, 05:04 PM
 
2,928 posts, read 3,549,370 times
Reputation: 1882
Quote:
Originally Posted by bumpercar View Post
Actually, since houses are usually purchased with a mortgage, they represent a leveraged investment that can hit zero much sooner than you think. If someone pays $200k for a house with 10% down it only takes a 10% move in price to lose their entire investment, at least on paper.
That's also true, but I'm talking more for the people who don't purchase with a mortgage.
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