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ONE OF THE BIGGEST REGRETS I HAVE: During the housing boom I wish I would have brought 20 properties via a No Income No Asset Loan program, took 20 equities loans against the properties, averaging $50K each (or more if I would have used Construction Loans) and then walked away. I would have been a millionare with bad credit. HA.
BTW I AM SERIOUS!!! I'll take a million with bad credit, bankruptcy, whatever, anyday.
I know this is an old discussion; but this statement above is the main reason why Atlanta has so many foreclosures particularity in Southwest part of Atlanta, with the large number of crooks getting over on the bank and walking away with equity($$$) that was never really there in the first place on said properties. Now if they're getting a divorce; it isn't an excuse to walk away from their responsibility of paying their mortgage compare to someone who lost their job and couldn't obtain followon suitable employment to continue meeting their obligations. Although some people have already committed such act (case in point--one partner leaving the other partner, after divorce, to continue to paying the mortgage on their own). They should rent it out for the maximum allowable amount (provided the property is in such condition to command the high rent rate). Or stay in the house as roommates & continue to pay the mortgage until the house sells and each one taking their proportionate share of sale proceeds.
In your example, you have lost $11,000. True, not the best investment. But still MUCH better than the alternative of renting for that same period and losing almost $30,000. With the housing example, even a little work on the house could gain you back your money and at least let you break even. With the renting example, you will never see that money again, no matter what you do.
I never said I'd see my money back renting. But, it's more convenient for me at this point in my life. Much easier to move, don't have to worry about maintenance, etc.. I've moved ~7 times in the last 3 years. So, as you can see, getting a mortgage and trying to flip a house in the small amount of time isn't worth it right now.
Quote:
DUDE!? PLEASE tell me you are joking!!??
Well, will you answer this question:
How much have you lost by renting in the last 3 years?
Clue: [$800/month rent x 36 months = $28,800]
Please post us an answer, we'd love to know whether you prefer to "lose" $11K in my example, or "lose" the amount from you answer above.
And the reality is: that real estate historically does not lose value, it appreciates (gains) value. Millions of properties, over hundreds of years, in hundreds of countries, have well proven that fact. I was being conservative to show that even in a worser case scenario, that you STILL come out ahead of giving the money to someone else. Of course then again, all those millions of owners could be wrong..... and you are right.
I don't know your situation; it's starting to sound like you live with your mommy since you talk like you could just "not" buy a house and you get to keep all that money and don't pay anybody. Therefore, when I say "YOU", I am referring "people" in general, not you specifically. My point is that "everybody" has to live somewhere, and aside from living with your mommy and not paying her rent (though even if you live with mommy you SHOULD be paying her something), you only have 3 choices if you are an adult and live in the real world:
PAY RENT TO SOMEONE ELSE FOR THEIR HOUSE.
PAY TO BUY YOUR OWN HOUSE.
LIVE ON THE STREETS.
You're calling ME dude and trying to say I live with my mommy? If you read, it's not convenient for me to buy this point in my life, and for MANY others. Some have credit problems, some aren't "at that stage" yet, and some are transient. The benefit of renting outweighs the costs for some... why aren't you getting that? Again, I don't treat a domicile like a cash machine. That's what helped get people in their upside down mortgages. If I buy a house, it'll be because I want to live there and I won't need to move. However, that's not the current state of affairs.
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My bad, do you live in a 3rd world country? If so, my apologies - I didn't know. However, if you live in the United States, the average inflation rate in the U.S. is 3.4% [1903 - 2006].
If you learned economics history, you'd know that since the 50s and 60s, huge changes have occurred to our monetary policy and fiscal policy. We've been supporting a system that encourages low unemployment, thus higher average inflation. And, lets not forget that the CPI calculations were changed in the 80s. Things can look much better when taking off energy costs from the CPI or even certain types of food stuffs.
Last edited by xavier132487; 03-06-2009 at 07:23 PM..
Whom ever said that that "real estate historically does not loss value, it appreciates (gains) value" does not know what they're talking about. It's ok runningncircles1 the poster whom you were quoting doesn't seem to understand not everyone can afford to buy their first house right out of high school. Some choose to rent instead of buy because that's what they feel is best for their situation at that point in their lives until they're really ready to purchase their first home.
Whom ever said that that "real estate historically does not loss value, it appreciates (gains) value" does not know what they're talking about. It's ok runningncircles1 the poster whom you were quoting doesn't seem to understand not everyone can afford to buy their first house right out of high school. Some choose to rent instead of buy because that's what they feel is best for their situation at that point in their lives until they're really ready to purchase their first home.
I'm glad somebody gets it. I wasn't knocking homeowning, I just don't like to think of it as an ATM machine. Plus, many just can't or aren't ready to buy a home. Using funny money from our homes got us into this mess.
... I'm glad somebody gets it. I wasn't knocking homeowning ...
Well, let's review the instant replay:
Quote:
Originally Posted by runningcircles1
Lucky me. I don't own property. It's a bad investment really. It's nothing more than a consumer good made of ticky-tacky, costs too much in maintenance costs. Not really an investment at all after all the costs.
Yeah, sounds like a contradiction to me. It always cracks me up when folks are so busy posting out of emotion that they don't even know what's in THEIR OWN posts.
In all your posts, you have (tried to) point out that homeowning is not a good investment. If you had just said from the start that "yes, homeowning IS the better way to go from a money standpoint, but I'm just not in a position to take advantage of it right now" everything would have been cool. But you were so busy trying to make the obvious math "magically" go away, that you got carried away trying to push non-sense math.
I notice that you still have not answered my question from post #69:
Quote:
Originally Posted by johnishere
How much have you lost by renting in the last 3 years?
Clue: [$800/month rent x 36 months = $28,800]
Please post us an answer, we'd love to know whether you prefer to "lose" $11K in my example, or "lose" the amount from your answer above.
Would you like to NOW answer whether it's a better investment to lose $11K or whether it's a better move to lose $28,800?
Again:
*Just because you are not in a position to take advantage (which is perfectly OK) of the better option (homeowning), does not make losing $29K a better move than only losing $11K.
*Just because a person may feel it is more "convenient" to rent (which is fine), does not make losing $29K a better move than only losing $11K.
*Just because a person chooses to rent "just because they want to" (which is perfectly fine), STILL does not make losing $29K a better move than only losing $11K.
But we will wait for YOUR answer in your next post.
. Notes: And as I said earlier, I was being conservative and giving a worser case scenario. Historically - as in "look up the statistical numbers of the hundreds of thousands of databased homes-sold transactions" - real estate has appreciated in value and is the NUMBER ONE source of consumer wealth. For most people, their top wealth asset is the single largest purchase asset that a person will make in their lifetime (a home), than in any other asset object. Or would you like to argue that you think that most people in America have $150 thousand in the bank, but they are hiding it and "pretending" to be going through hard times and accepting foreclosures just for kicks.
Here's the deal with my friend. She and her husband were together for 15 years. They bought a house in 1995. They put a lot in to it financially with making an addition for her mother to live in and some other remodeling, repairs, etc. They took money out of the equity of the house for other things, too like his kids' college expenses/tuition. Maybe it's not right, but it's what they decided to do together at the time.
Their marriage is definitely over and there is no living together as roommates at this point. He has a girlfriend. What's he going to do, move in his gf, too?
The reason for not renting is b/c even with renting it out at $1200 a month and paying the $300 difference there will still be expenses with repairs (house needs a new roof) and where is that money going to come from?
The ex-husband has started saying he can't afford to continue paying half the mortgage, his own rent and child support. My friend can't afford to pay the mortgage on her own and raise her daughter, too. She has a full time job, he has a full time job, but it's not enough to run two households.
Really, I started this post not to eventually have to explain my friend's situation, but because I wasn't sure what happens when someone gets foreclosed on and she didn't know either. Nobody ever thinks they'll be in this situation, but what's happened has happened. Everybody makes bad financial choices and sometimes they come back to bite you. I don't know anyone, personally, who has been foreclosed on and neither does she so really this was just a way to find out exactly what the consequences are, i.e. finding out the tax implecations, whether there will be a judgement against them, etc. Obviously it will ruin their credit and they know that. As you can imagine they are receiving advice from everyone and their mother and they're both just trying to figure out the right thing to do in this very bad situation.
Here's the deal with my friend. She and her husband were together for 15 years. They bought a house in 1995. They put a lot in to it financially with making an addition for her mother to live in and some other remodeling, repairs, etc. They took money out of the equity of the house for other things, too like his kids' college expenses/tuition. Maybe it's not right, but it's what they decided to do together at the time.
Their marriage is definitely over and there is no living together as roommates at this point. He has a girlfriend. What's he going to do, move in his gf, too?
The reason for not renting is b/c even with renting it out at $1200 a month and paying the $300 difference there will still be expenses with repairs (house needs a new roof) and where is that money going to come from?
The ex-husband has started saying he can't afford to continue paying half the mortgage, his own rent and child support. My friend can't afford to pay the mortgage on her own and raise her daughter, too. She has a full time job, he has a full time job, but it's not enough to run two households.
Really, I started this post not to eventually have to explain my friend's situation, but because I wasn't sure what happens when someone gets foreclosed on and she didn't know either. Nobody ever thinks they'll be in this situation, but what's happened has happened. Everybody makes bad financial choices and sometimes they come back to bite you. I don't know anyone, personally, who has been foreclosed on and neither does she so really this was just a way to find out exactly what the consequences are, i.e. finding out the tax implecations, whether there will be a judgement against them, etc. Obviously it will ruin their credit and they know that. As you can imagine they are receiving advice from everyone and their mother and they're both just trying to figure out the right thing to do in this very bad situation.
Well for what it is worth I wish them the best of luck.
Here's the deal with my friend. She and her husband .....
In most cases, by the time both have decided on divorce, it's not likely to "just kiss and make up and stay together" (not likely to work it out to stay together). For those who haven't been in the situation, it's like being at a job that you have come to hate, finally found another job and have given your 2 weeks notice to quit.... once your head and your heart are out of it, it would be extremely difficult of turn back and stay. As far as living together after deciding on divorce - Man! the vibe in the air that you have to live in in that same house, in some cases, can be literally sickening. Can eat away at you one day at time , for everyday that you have to live together . Sooooo, "no", not always possible to do.
I hope we gave enough info, interspersed with all the "magic math" non-sense, about what happens with credit, with how 'possible but not usually' that creditor could still come after them for the difference, time on credit report, etc.
And "yes", sometimes you gotta do what you gotta do - have to walk away from the house - that's just the way it is sometimes and each individual will have to make that decision for themselves. And unless and until it's made criminally illegal to do so, not much anybody else can do about it. They'll just need to "immediately" put a plan together regarding their credit. Talk to - or research it, Google it, whatever - a credit specialist who will advise them to try to:
*Pay off certain small bills to get them off credit report.
*Possibly to obtain a credit card (in individual names) to balance credit profile and start, now, to rebuild a solid credit history. And since some folks can't qualify for a credit card, this means even if they have get a "secured credit card" - where you put $300 in a bank, and they issue you a $300 credit-limit Visa card.
*And various other little things that will bring their credit score up so that having a foreclosure on report won't bring overall score down as much.
It costs money to have good credit (interest charges, etc), but in today's world, sometimes you it's extremely difficult to do with out it. It also takes time to build it up, so you have to start early as possible so that one day 2 or 3 years from now, the car breaks down and NEED to get another one and don't have cash, will have a better shot at it.
I wish your friend the best of luck as well.
If they filed for bankruptcy, (to get rid of the house), would that be worse on your credit than a foreclosure? I know both put negative marks on your credit, but a bankruptcy signals rebuilding credit, right? I'm not sure. Someone has probably answered this question as well in this post earlier, but sometimes when there's a lot of back and forth, you lose insight on the main idea .
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Can eat away at you 
.
