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Old 09-03-2009, 08:52 PM
 
Location: Montgomery County, PA
2,771 posts, read 5,174,152 times
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Quote:
Originally Posted by millsan1 View Post
Yeah like a nice safe place like the stock market. SO that way, if you had a $500K house last year, it would be worth $400K this year. But the wily renter would have had $500K in stocks and those stocks would be worth $300K today. Shrewd.
Only if they put in all of their money at the top of the market, and took it all out at the bottom.

One of the many differences between stocks and housing, is that when buying into the stock market, you dollar-cost-average, whereas when you're buying a house, all your money goes in (and out) at the same time.
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Old 09-03-2009, 09:21 PM
 
7,479 posts, read 6,257,603 times
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Quote:
Originally Posted by gagaliya View Post
Give me a break, being a landlord is not easy especially for a multi-unit building. As with any profession, there are always successful people who made it, this is no exception, but dont make it sound like if it's so easy with all the depreciation and renter paying off mortgage. Most units in NJ, even including that has negative cashflow, not to mention all the problems a landlord has to deal with.
That's for sure. Especially if you don't have a management company running the joints like I don't because it's my bread and butter. Some tenants are great. I think those are the ones who actually read their leases. The others who call at 2am because their toilet is clogged and I tell them to get their plunger and plunge it. Then I hear "I don't own a plunger". They want me to get out of bed and drive 20 minutes to plunge their toilet.

I got smarter over the years. I put in my leases that I don't accept maintenance requests after 7pm unless it's a dire emergency.
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Old 09-03-2009, 09:42 PM
 
7,479 posts, read 6,257,603 times
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Quote:
Originally Posted by elflord1973 View Post
Only if they put in all of their money at the top of the market, and took it all out at the bottom.
this is true.

Quote:
One of the many differences between stocks and housing, is that when buying into the stock market, you dollar-cost-average, whereas when you're buying a house, all your money goes in (and out) at the same time.
I don't think I understand what you mean here? People who lost money in the stock market took that risk. No matter how safe their portfolio is investing there is always a chance to lose it all on any given day. Unless you buy a house you can't afford to start with you shouldn't run into too much trouble unless unforseen circumstances happen and that is never controllable anyway.

As you said, if you did not purchase at top of the market, you should still be fine. Some people look at buying a house as an investment and others look at it as having a back yard for their kids to play in, the ability to paint their walls any colors they want, living in a community that is not as transient as a rental community and etcetera.
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Old 09-03-2009, 09:51 PM
 
52 posts, read 81,619 times
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When Should I Buy a Home? Have We Reached Bottom Yet? What Is The Right Price? a good article
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Old 09-03-2009, 10:11 PM
 
Location: Montgomery County, PA
2,771 posts, read 5,174,152 times
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Quote:
Originally Posted by Sawdustmaker View Post
this is true.
I don't think I understand what you mean here? People who lost money in the stock market took that risk.
When you buy stock (at least if you're smart), you don't put all your money in at any single point of the market. You put in money gradually over several months. A 401k plan automates this process so that you put in equal size monthly installments.

That means that while the current liquidation value of your portfolio may go up and down wildly,

(a) your profit is the price you sell compared to the price you paid, and the price you paid was based on a dollar cost average (you bought some at the top of the market, but you also bought some at the bottom of the market)

(b) this doesn't matter a whole lot unless you plan to liquidate your portfolio at the bottom of the market (with a 401k, you would pull your money out the same way you put it in -- gradually)

With a house, you put it all in, and pull it all out on the same day.

Quote:
No matter how safe their portfolio is investing there is always a chance to lose it all on any given day.
That's pretty much impossible if your portfolio includes at least some government issued fixed income (even corporate fixed income is usually worth something -- about 40% of face value on average -- in the event of issuer default)

Quote:
Unless you buy a house you can't afford to start with you shouldn't run into too much trouble unless unforseen circumstances happen and that is never controllable anyway.
When it comes to buying, you take on risks related to market timing both when you buy and when you sell. When you invest, it is possible to avoid both of these by dollar-cost averaging both when you put money in and when you take it out.
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Old 09-03-2009, 10:24 PM
 
7,479 posts, read 6,257,603 times
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Quote:
Originally Posted by BATIKA View Post
She's a millionaire?

Interesting but that article is leaving out or I didn't see in it, where real-esate appreciates in value, even over non-bubble years. The home I bought in 1998 is still worth more today then what I bought it for in 1998. Bubble or not.
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Old 09-03-2009, 11:08 PM
 
7,479 posts, read 6,257,603 times
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[quote=elflord1973;10600393]When you buy stock (at least if you're smart), you don't put all your money in at any single point of the market. You put in money gradually over several months. A 401k plan automates this process so that you put in equal size monthly installments.

Quote:

I'm aware of this process and you never stick all your money in even over years.
Quote:
That means that while the current liquidation value of your portfolio may go up and down wildly,

(a) your profit is the price you sell compared to the price you paid, and the price you paid was based on a dollar cost average (you bought some at the top of the market, but you also bought some at the bottom of the market)

(b) this doesn't matter a whole lot unless you plan to liquidate your portfolio at the bottom of the market (with a 401k, you would pull your money out the same way you put it in -- gradually)
And you pay a penalty if you pull your money out before you are fully vested. And you pay capital gains on anything earned.

Quote:
With a house, you put it all in, and pull it all out on the same day.
If you sell it. Look at owning a home as investing in a different type of market and just a piece of a portfolio if you don't want to look at it as a long term, for the family, like the neighborhood, happy to own a house type of an investment. The real estate market has been one that has always appreciated over the years. It got out of control and now everyone is waiting for it to hit bottom. For example, I bought some stock in the company that makes Crocs. Bought around $20.00 per share. Sold when it hit $50.00. Went as high as $70.00 and of course after I sold. Now it is around 50 cents.

You don't typically see that type of high and low when investing in buying a primary residence. Especially when you can afford to.

Quote:
When it comes to buying, you take on risks related to market timing both when you buy and when you sell. When you invest, it is possible to avoid both of these by dollar-cost averaging both when you put money in and when you take it out.
I disagree. The market fluctuates on a daily basis. You have to have the nerve to see those fluctuations through and stay in for the long haul. When you purchase a home or mortgage you can afford, you don't have to worry about the daily Dow or Nikkei index and watching your retirement or hard earned money float away.

My point is that you are much more in control when you buy a mortgage you can afford instead of buying stock in a market you have no control over.
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Old 09-04-2009, 02:52 AM
 
744 posts, read 1,160,046 times
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Quote:
Originally Posted by Sawdustmaker View Post
She's a millionaire?

Interesting but that article is leaving out or I didn't see in it, where real-esate appreciates in value, even over non-bubble years. The home I bought in 1998 is still worth more today then what I bought it for in 1998. Bubble or not.
The paragraph you missed:
"Obviously our landlord was betting on home price appreciation to continue at unprecedented rates. Bummer."

The point is if market rents are too low to justify market house prices then expecting appreciation to make up the difference is silly. Why would the price appreciate if it is already overpriced with respect to market rents?

Land appreciates with population growth, though can depreciate in the presence of population growth if new land is opened up for the same purpose (which in lots of places in NJ won't happen since there aren't any huge empty areas). Plus of course random location issues, a nuclear power plant melt down nearby is going to drop the value, a new conveniant transport option built nearby will increase the value (assuming they don't put a train station in your backyard...).

Houses appreciate with inflation, which is the same as saying they don't appreciate in real terms at all. In fact they depreciate since they require maintenance and upgrades to compete with new construction.

Outside of the three bubbles the real price of housing has been remarkably flat for the last fifty years.

Of course I've never understood buying something because the price will hopefully rise in the future for no apparent reason. Not with houses and not with stocks. Stocks I've bought have been because they pay a dividend, and hopefully haven't lost value when you want to sell. Houses as an investment are the same, they pay rent and hopefully haven't lost value when you want to sell.

Of course a house as a home is a different beast. When I buy a car I don't expect to get rich when I sell it, but I still buy it since it's not an investment. Same with a home, though at the moment I rent, partly because it's cheaper (which is changing slowly now) and partly because it's more convenient at the moment.
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Old 09-04-2009, 06:25 AM
 
Location: Montgomery County, PA
2,771 posts, read 5,174,152 times
Reputation: 601
Quote:
Originally Posted by Sawdustmaker View Post
And you pay a penalty if you pull your money out before you are fully vested. And you pay capital gains on anything earned.
Are you trying really really hard not to get it, or are you ignoring my point and just trying to make an argument that home ownership is the best use of your money ?

My point is, AGAIN, that when buying into financial markets, it is possible to eliminate market timing risk, by both putting in money and pulling out your money over a period of time. Trying to argue with this is like trying to argue with gravity.

The fact that there exist stocks that are more volatile than the housing market is not a rebuttal (because you can choose investments which are less volatile)

The fact that there is a penalty for early withdrawal of a 401k is not a rebuttal.

Please read my post again, and at least try to understand what I wrote before trying to "rebut" it.
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Old 09-04-2009, 07:13 AM
 
636 posts, read 1,168,322 times
Reputation: 163
Quote:
Originally Posted by Sawdustmaker View Post




And you pay a penalty if you pull your money out before you are fully vested. And you pay capital gains on anything earned.
Why would you pull it out? You wouldn't unless you have an extreme emergency. Just like you wouldn’t sell your house and rent unless you absolutely had to.

Quote:
If you sell it. Look at owning a home as investing in a different type of market and just a piece of a portfolio if you don't want to look at it as a long term, for the family, like the neighborhood, happy to own a house type of an investment. The real estate market has been one that has always appreciated over the years. It got out of control and now everyone is waiting for it to hit bottom. For example, I bought some stock in the company that makes Crocs. Bought around $20.00 per share. Sold when it hit $50.00. Went as high as $70.00 and of course after I sold. Now it is around 50 cents.
You’re data mining with anecdotal evidence. That’s hardly convincing.


Quote:
You don't typically see that type of high and low when investing in buying a primary residence. Especially when you can afford to.
I would call the 2005-2007 run-up a pretty big bubble and many people couldn’t afford it.
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