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Old 08-09-2009, 11:45 PM
 
Location: Santa Rosa
486 posts, read 679,707 times
Reputation: 497

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Quote:
Originally Posted by JohnG72 View Post

I might be catching a falling knife.

But their also is the old saying to buy when their is blood in the streets. I don't think the alt-A adjusting is a big deal because interest rate are still low. We are near the bottom and I'm wiling to gamble that I'm correct.
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Old 08-10-2009, 02:10 AM
 
Location: Seattle
1,368 posts, read 2,993,717 times
Reputation: 1476
a) your home is more likely to decline 20% in the next 5 years than increase 20% in the next 5 years...assuming appreciation is really terrible in this market, especially in a 3 year time horizon.

b) you didn't factor in closing costs and mortgage related costs into your break even calculation

c) you didn't factor in selling costs (6-10%) into your break even calculation

d) you didn't include PMI into your investment calculation (I am assuming your insurance field is actual homeowners insurance) so that means you have 20% down, which means you need to calculate opportunity cost of 20% down (e.g. 40k at 10% equity return is ~330 a month)

Your analysis is the equivalent of Goldilocks Economics IMO.
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Old 08-10-2009, 02:22 PM
 
Location: Santa Rosa
486 posts, read 679,707 times
Reputation: 497
a) Speculation your guess is as good as mine
b) yes i did
c) yes I did
d) yes i did

You forgot to include the fact that I would have to pay rent if I didn't buy.
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Old 08-10-2009, 03:06 PM
 
Location: Long Beach, California
1 posts, read 984 times
Reputation: 13
Hyperson- I was looking for a 1 bdrm 1 bath condo for a buyer in Belmont Heights and the Shore, and only 3 came up under $300,000. One was a short sale, the other had no parking (in a parking impacted area) and the third was already sold (lucky people!). For your price range, it might behoove you to widen your parameters a bit. Since you need a roommate, then perhaps expanding the geography where you want to live. There are great pockets in north Long Beach that are not bad at all, even though the overall zip code statistics might say otherwise. Signal Hill has some great areas that are generally less expensive than Long Beach (yet comparable). Just a thought...
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Old 08-10-2009, 03:11 PM
 
Location: Seattle
1,368 posts, read 2,993,717 times
Reputation: 1476
There is no way your numbers are correct if you're getting a 3 year break even period after making all those assumptions, I'm sorry. You didn't post detailed numbers. If you want I'll take a look at them but I do investment stuff for a living and have done dozens of real estate break evens and you'll never get a 3 year break even with 3% appreciation and factoring in closing costs, selling costs and opportunity cost of invested capital. You can't assume a roommate without assuming rental costs that include a roommate as well, I'm not sure if that's where you're getting the numbers you're getting.
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