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Both lost on rural California Special spec homes in Colorado (after being very successful on many other ventures), Ironically the homes were rural ranch homes under $500k, easily worth much more (my parents had 7 of them under construction, In-laws had 3. ) They were all nearly complete (some were complete) for 'spring sale'... then the spring buyers fled.
Economy dried up, (jobs and buyers left town) interest rates went to 18% (why did I buy and mortgage a house in May of 1980)
March 19, 1980 19.00
March 28, 1980 19.50
April 2, 1980 20.00
April 18, 1980 19.50
May 1, 1980 18.50
May 7, 1980 17.50
May 16, 1980 16.50
May 23, 1980 14.50
May 30, 1980 14.00
Bankers came in a cleaned house (as they did to several of my commercial RE investor friends in 2008).
Never late on a payment (in 30+ yrs), excellent credit... yet banks 'called' the commercial loans and you either coughed up a few million in a few weeks...or you gave your property and equity to the newly formed hedge funds that the bankers used to recapture the properties.
My mom came back and did many flip homes during retirement (~ 6 through her 80's)
Inlaws went back to hard labor to survive.
my father... he never recovered (stroke, heart attack and 30 yrs of elder care (for me))
Lesson learned... past results do not = future returns...
Stuff happens.
But... so many very successful people turn their financial lives around AFTER they lost everything in retirement 'ventures'. and others ... (I have 3 ex-coworkers) who are paupers (very poor planning / early spending in Retirement (All did FT RV, way too expensively)
Most of my friends who retired with income props did fine, but never made it to RICH. (not my plan either... just enough to keep my $35 car in insurance money ($300 / yr), and afford to travel while I still can.)
I am replacing my wage income with RE (no pension) (Which I could have done with my investment RE at age 22, and been DONE with working) Slow learner...
Handling this investment sector correctly is perfect for many, (those who can swallow high risk and high input, and who are very diligent buyers) but a huge challenge for others. Those happily counting their pensions. (the biggest risk they were took was a 61 minute lunch break during the last 40 yrs). That's OK... different strokes...
Yep... a lot of people have no idea how hard it was circa 1980... highest unemployment since the Great Depression... that was after Stagflation... and Gas Lines of the 70's.
Looking back it is easy to think it was a cake walk... people remember prices and not wages or interest rates!
I think making money in residential real estate should be a professionals game - there should be inherent risk.
Here in SF, we have rich investors buying single family homes left and right, driving up the cost mainly for first time home owners. If the state would simply tax investors more for investment properties ( via property taxes, like many states ) first homes wouldn’t be out of reach for so many.
They did in a meaningful way and let it go...
A $7000 home owner exemption really meant something when a modest home could be purchased for 12 to 15k and no commercial or investors qualified.
Sacramento refused to index for inflation and property taxes were increasing at double digit rates plus the energy crisis of the 70's... the voters had enough and voted in Prop 13 against the biggest anit-prop 13 campaign ever... Goverment, Unions, School Teachers, Construction, Police, Fire and even Nurses were against Prop 13... but a grass roots movement swept it to victory...
All prop 13 does is establish the tax base as the Fair Market Value at the time of transfer, limit annual inflation increase to 2% and require voter approval for new assessments...
I don’t have it in for landlords, not at all. They are merely taking advantage of the situation in front of them as any good investor would.
I’ve lived in the Bay Area 22 years now, and I’ve seen how unaffordable it has become for anyone that didn’t “get in” decades ago. My own home has doubled in value since I’ve owned it, but that only helps me if I intend to leave the Bay Area.
I think anything that can be done to make homes more affordable for young people starting out is a good thing.
Maybe decades ago or just 5 years ago???
Homes in my East Oakland neighborhood peaked at 500k in 2007... by 2009 these homes were under 200k with one that sold for 510k going for 100k... and it was not trashed... now they are selling for 600k
2009 to 2012 with the buy opportunity of a lifetime... plus don't forget low interest rates... I was able to get a 2.75% fixes no cost mortgage... still don't believe it today but it is fact.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,347 posts, read 8,564,711 times
Reputation: 16689
Quote:
Originally Posted by M3 Mitch
To get a bit back on topic, it seems to me that if you are making "massive" income from rentals, you are not actually retired. Even if you have property managers, there are going to be decisions that the owner has to make themselves, seems to me.
You may set yourself up as the "semi-retired" owner of a rental "empire", but, that looks like a job, if only part time, to me.
So I've been told that I am not retired by some people with my real estate income because I spend a few hours a month dealing with my real estate. Some of that time is spent checking my bank accounts to see what my balances are and if rents came in. Some time it's just updating book keeping so I have it for the tax returns. Of course the property manager will occasionally ask me to make a decision.
When others are retired, do they spend exactly zero time? They don't spend time making decisions on reallocation of assets, doing transactions, checking to make sure their income came in before writing checks for daily living, doing their taxes, meeting with financial advisers?
It just seems that if you are retired in the normal sense that you still have to spend some time dealing with your assets. If that is just an hour a month, isn't it also a part time job?
i wouldn't say your not retired because you own real estate if the real estate is interaction free for the most part .
i am against me owning it in retirement because i want total liquidity and i want nothing to do with dealing with tenants and the occasional tenant headaches and we have douglas elliman handling the properties for us . but there is still the aggravation when we have tenant issues like evictions or late rents .
i love the "click " of a mouse and an investment is gone or money is available for the next opportunity .
A $7000 home owner exemption really meant something when a modest home could be purchased for 12 to 15k and no commercial or investors qualified.
Sacramento refused to index for inflation and property taxes were increasing at double digit rates plus the energy crisis of the 70's... the voters had enough and voted in Prop 13 against the biggest anit-prop 13 campaign ever... Goverment, Unions, School Teachers, Construction, Police, Fire and even Nurses were against Prop 13... but a grass roots movement swept it to victory...
All prop 13 does is establish the tax base as the Fair Market Value at the time of transfer, limit annual inflation increase to 2% and require voter approval for new assessments...
Prop 13 makes it easier for people to not move - thus limiting supply, usually of smaller homes that people have been in for years. Heck, I’d stay in that 1200 sq ft home too if moving up to the 2000 sq ft home meant an annual property tax increase from $1500 to $12000. Very realistic scenario, as those living in the Bay Area know.
Prop 13 helps the older folks, and certainly limits supply of smaller, older entry level homes for those starting out.
When you’ve the old people staying put, and the investors taking advantage of the ridiculously low residential exemption, it adds up to an impossible market for the first time buyer.
Homes in my East Oakland neighborhood peaked at 500k in 2007... by 2009 these homes were under 200k with one that sold for 510k going for 100k... and it was not trashed... now they are selling for 600k
2009 to 2012 with the buy opportunity of a lifetime... plus don't forget low interest rates... I was able to get a 2.75% fixes no cost mortgage... still don't believe it today but it is fact.
There was certainly a bottoming out for 5 years there. But remember, prior to 2007, home prices were unaffordable too.
Do we really want the housing market to have the volatility of the stock market?
Housing should be a form of shelter primarily, an investment secondarily.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,347 posts, read 8,564,711 times
Reputation: 16689
Quote:
Originally Posted by mathjak107
i wouldn't say your not retired because you own real estate if the real estate is interaction free for the most part .
i am against me owning it in retirement because i want total liquidity and i want nothing to do with dealing with tenants and the occasional tenant headaches and we have douglas elliman handling the properties for us . but there is still the aggravation when we have tenant issues like evictions or late rents .
i love the "click " of a mouse and an investment is gone or money is available for the next opportunity .
How much time do retired people spend managing their nest egg. I know nothing about this since no one I personally know is retired. Are most people just getting a pension check or deposit and that takes but a few minutes each month?
Btw you were a lot smarter than me putting your retirement together. I failed badly at that and just got lucky the last few years with my real estate. Not that I didn't put effort into setting it up, but still I know I had some lucky breaks along the way.
Prop 13 makes it easier for people to not move - thus limiting supply, usually of smaller homes that people have been in for years. Heck, I’d stay in that 1200 sq ft home too if moving up to the 2000 sq ft home meant an annual property tax increase from $1500 to $12000. Very realistic scenario, as those living in the Bay Area know.
Prop 13 helps the older folks, and certainly limits supply of smaller, older entry level homes for those starting out.
When you’ve the old people staying put, and the investors taking advantage of the ridiculously low residential exemption, it adds up to an impossible market for the first time buyer.
I moved into a neighborhood of old folks... most built the homes in the late 50's and early 60's...
My current neighbors range from 80 to over 100...
They stay not for taxes but because it is home... California allows seniors to move without losing their existing tax base... it is automatic in the county for downsizing and many counties will accept the tax base from others...
Prop 13 is not keeping seniors from selling...
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