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Old 08-24-2015, 07:31 PM
 
119 posts, read 95,071 times
Reputation: 250

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Quote:
Originally Posted by Raiderman View Post
Nope, not kidding you. Whether they buy a house or rent a house, they are here to check it out. If they find they hate it, and they rent, they are out $12,000. If they buy, and hate it, who knows how much they are out...
No, Scoopie, he's right. Do you know how many of us were financially crushed during the bust? Good people, intelligent people, found themselves in renter by unscrupulous landlord hell. Neighborhoods were destroyed, people lost the biggest investment of their lives. Your experiences are not everyone else's.
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Old 08-24-2015, 07:37 PM
 
Location: Sunrise
10,865 posts, read 16,934,196 times
Reputation: 9084
They only lost if they bit off more than they could chew and couldn't make the payments. You have to assume that someone coming from Texas after teaching 35 years is simply selling one house and buying another. The 1031 exchange alone makes renting a dumb strategy.
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Old 08-24-2015, 07:46 PM
 
119 posts, read 95,071 times
Reputation: 250
Quote:
Originally Posted by ScoopLV View Post
They only lost if they bit off more than they could chew and couldn't make the payments. You have to assume that someone coming from Texas after teaching 35 years is simply selling one house and buying another. The 1031 exchange alone makes renting a dumb strategy.
No dude. Your words are all about you, and your experiences here.. And I'm biting my tongue because I know exactly what brought you here, and why. But I'm not a person who would spit that out to win an argument. You need to sit down and shut up while you listen. You are too smart to believe your own bs.
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Old 08-24-2015, 07:48 PM
 
15,759 posts, read 14,368,122 times
Reputation: 11814
Well, if, as you believe, they'll decide that moving to Vegas was a huge mistake, if they rent, the can get out more quickly, cheaply and easily compared to buying. And, in point of fact they can get more quickly easily and cheaply also.

Besides hating Vegas in general, there may be other reasons why someone would want to leave a given housing unit (note I didn't say SF house.) They may not like the area. They may not like the commute. They may not like the residence. Maybe that want the flexibility to scope out the area slowly, as a resident, without committing to a particular residence.

My sister moved from NYC to FL. She exhaustively researched which town live in, which development, extensive went through the available houses, and picked one, bought it, and moved down there. Within a year, she decided she needed more room and sold that house for a bigger one in the development.

If we're talking a possible short term situation, renting may very well make more sense than buying. There are a lot of sunk costs with buying. Brokerage, which is somewhat optional in renting (someone can usually find a property dealing directly with the owner), is much more prevalent in purchases. Yes, the seller writes the check for it, but it's still very much built into the price. And if someone, as is usually the case, needs a mortgage, there are whole big bunches of fees involved with that. There's also the issue of the down payment money tied up. The person in question may also own another house wherever they're moving from. They may need that house to pay the down payment on the next house. Maybe they want or need to move before they close on the other house and free up the money tied up in the old house.

I'm also ignoring market risk (or possible reward here.) Houses are more likely to go up than go down. But when they go down, the go down hard. And unlike other investments, if you're in a house that goes underwater, getting out of it will cost you money that you may not have, and you can be trapped. If

Also, comparing apples to apple properties, monthly costs may be cheaper if buying. But if you're moving to town and want to try before you buy, you can scale down to a cheaper property for a year, scope the market, then move up if/when you buy, keeping down your expenses in the mean time.

I know you have your irrational aversion to renting, and in many cases it is better to buy. I very much don't deny that. I own my home, and I also own and investment property. But in certain cases renting makes sense. This is one of them.

Quote:
Originally Posted by ScoopLV View Post

As for the the strategy that nearly every Las Vegas newbie employs of renting for a year, this is one I'll never understand. The decision has been made to move to Las Vegas. The die is cast. The big decision (and mistake, IMO) has already been made. What does it matter which clone-stick house newcomers select?

Why on Earth rent if buying is an option? I chalk it up to timidity. People are happy to gamble their money. They'll gamble their health. They'll gamble anything they can. But move to Las Vegas and immediately buy a house? Oh no! The risk! The unacceptable risk!

Whatever. I'm glad I bought as soon as I moved here -- not only did it save me a year's rent, it gave me a year's head start doing all the finishing work that needed to be done.

Move here, buy a house. It's not like there's a dime's worth of difference between all the $200K houses in this town. (Pick a price point, you can say the same until you reach half-a-mil or so.) If you don't like the house after five years, sell it and buy a different house. It's not like buying and selling houses is rocket science. Any reasonably-bright high-school student could do it.
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Old 08-24-2015, 08:02 PM
 
Location: Sunrise
10,865 posts, read 16,934,196 times
Reputation: 9084
How is the cash buyer going to go underwater? That's impossible.

The cash buyer could lose net worth. But isn't going to be on the hook for a mortgage. That's the point. There is likely to be significant capital gains. And renting for a year makes the 1031 exchange impossible.

Summing up. The cash buyer who holds off a year and rents instead of simply buying a house in a 1031 exchange:

1) Pays a year's rent.

2) Pays the full freight of capital gains tax following the sale of his or her primary residence.

3) Loses out on any equity from the purchase of the Las Vegas house. (But avoids the risk of another market crash, granted.)

4) Pays more for the house a year down the line provided housing prices go up. (But could pay less if the market crashes again, granted.)


Numbers one and two make renting a bad idea for prospective retirees -- providing this is a "sell one house and buy another" scenario.
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Old 08-24-2015, 08:03 PM
 
Location: Silicon Valley
3,683 posts, read 9,829,267 times
Reputation: 3015
Quote:
Originally Posted by ScoopLV View Post
They only lost if they bit off more than they could chew and couldn't make the payments. You have to assume that someone coming from Texas after teaching 35 years is simply selling one house and buying another. The 1031 exchange alone makes renting a dumb strategy.
Why does a 1031 exchange even enter the picture? The 250k primary residence exemption probably covers all the gain he made on his existing home. Even if it doesn't, given the fact that he's looking at modestly priced homes, I'd think he'd pay less taxes taking the exemption than by making the exchange. The new property has to cost as much as the old one with a 1031 exchange, otherwise you pay tax on the difference.
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Old 08-24-2015, 08:08 PM
 
Location: Sunrise
10,865 posts, read 16,934,196 times
Reputation: 9084
Quote:
Originally Posted by MediocreButArrogant View Post
Why does a 1031 exchange even enter the picture? The 250k primary residence exemption probably covers all the gain he made on his existing home. Even if it doesn't, given the fact that he's looking at modestly priced homes, I'd think he'd pay less taxes taking the exemption than by making the exchange. The new property has to cost as much as the old one with a 1031 exchange, otherwise you pay tax on the difference.
We don't know what homes he's looking at. And if he rents, exchanging is no longer an option.

Let's assume $12K in rent and another $10K in taxes down the drain. That's more than $20K for the "security" of renting a year. I can buy and sell an average Las Vegas house and come out ahead.
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Old 08-24-2015, 08:13 PM
 
Location: Las Vegas
84 posts, read 92,106 times
Reputation: 22
Quote:
Originally Posted by MediocreButArrogant View Post
Why does a 1031 exchange even enter the picture? The 250k primary residence exemption probably covers all the gain he made on his existing home. Even if it doesn't, given the fact that he's looking at modestly priced homes, I'd think he'd pay less taxes taking the exemption than by making the exchange. The new property has to cost as much as the old one with a 1031 exchange, otherwise you pay tax on the difference.
After looking on redfin, zillow etc I am finding that houses are more expensive in Vegas than where I live outside of Dallas. I live in a nice neighborhood with a 4 BDR, 1and 1/2 bath, 2200 sq.ft price at $140,000 and having difficulty finding something in Vegas that is equal in a nice neighborhood.
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Old 08-24-2015, 09:20 PM
 
Location: Las Vegas, Nevada
12,686 posts, read 36,245,414 times
Reputation: 5516
Quote:
Originally Posted by lacrosse View Post
I'm 60 yrs old, no children, single, no need for a job, retired, receiving a monthly annuity check, have a health plan, 2 small dogs, love betting on sports(Vegas-where it's legal and receive payouts immediately) and have no strings attached. All I want to do is live a simple life without any stress(just retired from teaching 35 yrs of stress) hanging out in the sports books, traveling at least 6 times a year (conveniently with McCarran Airport close by is a plus). I know it's hot there but I'm use to it with the Dallas humidity that we have. Also, with the crime I plan to live in a fairly safe place unlike North or NE Vegas etc. Somebody please let me know why I shouldn't move out there. I feel right now that living in Texas has nothing to offer me.
There is no reason you shouldn't live in Las Vegas. None. Nada. Zip. Come on down.

Do you like the out doors too. If so that's a huge plus.

And Las Vegas heat is much easier to take than Texas humidity, believe me.
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Old 08-24-2015, 10:07 PM
 
Location: Henderson
1,245 posts, read 1,820,870 times
Reputation: 948
Quote:
Originally Posted by lacrosse View Post
After looking on redfin, zillow etc I am finding that houses are more expensive in Vegas than where I live outside of Dallas. I live in a nice neighborhood with a 4 BDR, 1and 1/2 bath, 2200 sq.ft price at $140,000 and having difficulty finding something in Vegas that is equal in a nice neighborhood.
Dallas isn't Las Vegas. Why anyone would retire in Dallas is beyond me. Sure, houses are more expensive here but the property taxes are less. If you like mosquitoes and humidity, stay in Dallas.
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