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this is a rediculious statement on sooooo many levels.
we own co-op apartments over looking central park and they barely have a positive cash flow. in fact they may turn negative over the next few years . they have origonal rent stabilized tenants in them who are at way below market rent.
but who cares , the game plane is wait it out for them to die or take a lease buy out offer and sell the apartments for a million diollars plus.
it is worth the wait.
there are so many reasons to invest in a property and cash flow is not the only reason..
i have never been a cash flow investor. my game has been to buy co-ops in manhattan that have origonal rent satabilized tenants who pay low rents , offer them 100k to move and sell the apartments.
sometimes they accept and sometimes they don't so i just may have negative cash flow or close to it after depreciation if they are not ready to move yet. .
other properties were bought at negative cash flow for appreciation and the game plan was to sell them at a profit eventually.
i bought lease rights and not even the properties at negative cash flow origonally and waited years and years for them to turn positive.
we just had one of the hottest commercial lease rights sales in the real estate world take place when we sold our lease rights we held in partnership with real estate mogal bernard spitzer for 18 million bucks in march on a nyc building.
we didn't even own the properties, just the right to collect commercial rents for the next 20 years and then those rights expire worthless.
those origonally had a negative cash flow for me when i first bought in.
that is why comments about negative cash flow like above are just flat out a lack of understanding of things in the real estate world.
by the way: i was only able to come up with that money to invest because i rented and did not have all that money tied up in the house anymore since i sold it.
that money that was not tied up in that house generated enough to buy many houses after subtracting out all the rent we paid.
wrong again,...you are talking landlords and rentals , that makes them investors. you were the one calling landlords dumb if they invested in properties with negative cash flow at any point which made little sense.
Last edited by mathjak107; 05-25-2014 at 11:56 AM..
wrong again,...you are talking landlords and rentals , that makes them investors. you were the one calling landlords dumb if they invested in properties with negative cash flow at any point which made little sense.
Why don't you simply give an intelligent response to the OP, who is asking whether or not he should buy or rent.
You're off in the weeds somewhere spouting information on your own agenda, and not helping the OP.
Own or buy depends on so many things. If I were still renting today I don't know that it would be a good move to buy in my area. We purchased our home in 2010 and it was close to the low for our market, at just over $300,000. Realize I am talking the market in my area. That same home had been in a high $600,000 to low $700,000 market back in mid 2007. As of now on my street a 4 bedroom 2 bath that is 100 square feet smaller than our home is selling as a fixer for $432,000. It was just listed this past week. A coworker is working on buying a home with a VA loan and he told me that it is hard to find any homes under $400,000 right now. They walked into a 3 bedroom 2 bath that had been on the market for a bit over $400,000 but the owner, a Vet himself, let it go for $390,000 because my coworker is a vet. (Note: He had inherited the home and it was paid off.)
What I am saying in the current local market I would keep renting. (Once again my area only.) Prices had declined to a comfortable point for us when we bought. We needed a larger place and would have had to rent a larger place or buy one. When we found out that we could buy a place we decided to take that course of action. It was the best thing that we ever did. We found a home that we love and it met our needs. We are in a nice neighborhood and plan on staying for many years to come. I see home ownership as a lifestyle issue and not as an investment. We need a place to live. We found a home that we could pay off in a reasonable amount of time. We love the area and not only grew up in this city but plan on living our life here.
Lets get back to this idea that investors don't make any money on rentals. Once again it depends on your situation and what you see as the potential for that property. For me I would need a positive cash flow if I were going to be in that business. No need for me to invest without the chance for a favorable outcome. Currently our mortgage, insurance, taxes, and everything else that we happen to pay for our home is less than $2,000 a month. Rents for a similar home in our area would be in the $2,500 a month range. Not a bad deal having an extra $500 a month income. It does cost to own a home though. Repairs have to be made. The place needs to be maintained. We live in a home that is over 50 years old. Chances are thought that I could get away without any out of pocket costs. Then again it also depends on the renters.
As far as making a choice, I don't think that anyone can make that choice for you. Here is what I would go on though
1. Do you plan on staying where you are?
2. Are you fine with missing out on opportunities in other areas of the nation? Will you be OK with saying no to a job transfer?
3. Is this the place for you? Can you see yourself building a life where you are?
Why don't you simply give an intelligent response to the OP, who is asking whether or not he should buy or rent.
You're off in the weeds somewhere spouting information on your own agenda, and not helping the OP.
you mean this?
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Originally Posted by QuilterChick
(a) You must have a dumb landlord who owes more on the house than he's taking in.
Yes it absolutely is, on both examples you gave. Are you
I'm more arguing against the idea that just because what you pay for a good or service is partly used to repay debt on the capital used in its production means you're "throwing money away". It seems this is invoked all the time to argue that rent is "wasted" or even "dead" money, yet those using this argument don't seem to think what they pay for food, tolls, or whatever else is "wasted" money.
I'm trying to point out that that is a double standard, but I was trying to phrase it in such a way so as not to seem too technical to an average Joe or Jane. Point is, when a good or service is sold to service a debt incurred on the capital required to produce/provide it, either that means the money was "wasted" by the buyer (in which case almost every expense you have is "dead" or "wasted" money) or it isn't (in which case rent is just as legitimate of an expense as food, tolls, and other things).
OP shouldn't buy a house just to stop "throwing money away" on rent. Buying a house is a decision that needs a plan and a lot more thought behind it, not something that should be done on inconsistently applied and sentimentally promoted financial ideals propagated by people in the real estate industry to boost their commissions!
you mean this?
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Originally Posted by QuilterChick
(a) You must have a dumb landlord who owes more on the house than he's taking in.
did you forget you posted this ? i responed to YOUR POST!
Well the post you quoted above was my response to CSD610's Post #10, I was not talking to you.
You can stop the counter-productive bickering. I have no interest in a debate with you.
Repeat: offer the OP some worthwhile advice rather than blowing your own horn.
Yes, my job is as stable as a job can be. If there's a great depression I'll get laid off, but if that happens we're all screwed.
I'm committed to staying in the area at least 3 and probably 5 or 6 more years before I seriously consider giving it up. In my line of work, salary compared to living costs is about the same everywhere, so the question would be whether or not I wanted a different lifestyle (this area only has about 150,000 people and the nearest big city is 3 hours away).
A push factor is that apartments here suck - the clientele at mine gets sketchier every month. It's now pretty much overrun with party kids and sketchy people doubling & tripling up. Other rentals would cost me far more per month that this house is going to, like 30-50% more for a deluxe apartment, or condo, a good 80-100% more to rent a house.
If the decision is between repairs and sketchy & obnoxious people, I'll take the repairs.
Problem is my area was a small city version of the housing crisis - many people here were foreclosed on during the crisis, cannot buy & are forced to rent, which means we have 1% rental vacancy and rapid rent inflation.According to Zillow, this home was worth 111K in 2003, 201K in 2007, 65K in 2011, 96K in 2014. The last time it was actually sold was in 1984 for $38K. You can see the housing crisis small city version going on there. I feel fairly confident about holding its value going forward.
Last edited by redguard57; 05-25-2014 at 04:18 PM..
Well the post you quoted above was my response to CSD610's Post #10, I was not talking to you.
You can stop the counter-productive bickering. I have no interest in a debate with you.
Repeat: offer the OP some worthwhile advice rather than blowing your own horn.
if you post a mis-informed statement like you did on a public forum you will be called out on it no matter who you addressed. that is how public forums work.
the end!
Last edited by mathjak107; 05-25-2014 at 05:40 PM..
The OP said nothing about a co-op with sweeping views of central park, oceanfront property in La Jolla or a Victorian in San Francisco. Everyone here knows there are high COL areas where renting is sometimes more feasible. The OP was posting about a $90,000 house, not sure why some elderly member felt it was beneficial to bring up his 60 years of experience in Manhattan real estate investment as if it pertained to a rent vs buy analysis of a different market. Just another thread "hi-jak" if you will.
in the case presented by the OP, you absolutely are paying the landlords mortgage and it is a better deal to buy IF you are long term. short term changes things obv.
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