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we lucked out and got a tenant to take the lease buyout year one so we could sell a co-op but no one knew if we would have a single taker for years . .
See, what you are talking about is speculating and relies on LUCK, I just pulled out close to $400,000 on a property I bought in 2008. All that money is the APPRECIATION since I bought. If I were forced to sell the proceeds from the new buyer would pay off my $400,000 loan and I would get all my purchase money back! So I got paid $400,000 for living there. Plus I had the utility of the property for 7 years.
Now I could speculate like you and buy some rent controlled properties in San Francisco and hope my tenants die an early death...OR I could buy properties that have a proven track record of 9% compounded appreciation and 6% annual rent growth. Hell, I might even use the power of leverage and buy several of these.
And mortgage interest (net of tax impact and appreciation) and property taxes (after-tax) and maintenance, HOA, PMI, opportunity cost of equity and time, etc. are ALSO "squandered" just like rent. The question is which "squanders" more, and this can only be answered by running the numbers for the specific real estate market in question.
ncole1, those all are expenses of acquiring a return generating asset that also has utility. Rent is only an expense. See how they are not comparable?
See, what you are talking about is speculating and relies on LUCK, I just pulled out close to $400,000 on a property I bought in 2008. All that money is the APPRECIATION since I bought. If I were forced to sell the proceeds from the new buyer would pay off my $400,000 loan and I would get all my purchase money back! So I got paid $400,000 for living there. Plus I had the utility of the property for 7 years.
Now I could speculate like you and buy some rent controlled properties in San Francisco and hope my tenants die and early death...OR I could buy properties that have a proven track record of 9% compounded appreciation and 6% annual rent growth. Hell, I might even use the power of leverage and buy several of these.
It wasn't a speculation at all. It was just an issue of time.
Being in a landmark building over looking central park was pretty secure as being an extremely profitable venture worth up to around 10x what we paid.
So in 12 years we sold 7 out of 9 apartments and the commercial lease rights. I knew it was going to be good but i never imagined that good.
We ended up getting 20k a year in income from it while waiting too . that was mostly from some big name tenants taking commercial space in the building and we held the lease rights before they were sold .
It was only a waiting game but being they were all original tenants they were coming up on retirement age. i knew it could be a wait .
The only luck part was the partners we bought out had no clue what the property's were worth living down south.
They looked at the crappy cash flow from the stabilized tenants and that is all they based what they wanted on. It was crazy on their behalf so yeah that part was luck. but that is what made the deal not a speculation .
Last edited by mathjak107; 09-07-2015 at 02:18 PM..
Well, I would call it luck that someone sold you the properties for ONE TENTH of their value.
I would also call it luck, unethical, to cash out your partner for pennies on the dollar ONLY because of their ignorance of the market.
SPECULATION and a bit of predatory business practices. YOU must be the Trump of C-D. Waitaminnit. didn't you inherit all your start up money just like him?
i agree , i am the first one to admit that many successful people are successful not only by their own skills but luck too .
nothing unethical at all , they made up the deal they wanted not me . we were not in the partnership at all , they sold to us and that is when we got in so it was their deal .
inherited ? nope i made my own money ... had 3 jobs in my early 20's going on just to make sure i always could save money and invest .
growing up in a nyc housing project as a kid had such an effect on me and was such a motivating factor not to go back that my life was committed to not failing at that .
in my twenty's i was a pro drummer but the disco craze and dj's had me see the hand writing on the wall . so with no other skills i learned to be an hvac tech . got a job in the field , still worked as a drummer doing gigs and started my own hvac service company doing my own thing at night and weekends when not drumming ..
it was a grueling schedule but it did let me earn some good money .
Last edited by mathjak107; 09-07-2015 at 02:38 PM..
Home ownership costs are always less if you buy new construction as opposed to an existing older home. Everything is new and will not have associated on going repair costs over the time you live there.
A run down house in an affluent area is dollar for dollar worth more than a new contruction in a marginal area.
ncole1, those all are expenses of acquiring a return generating asset that also has utility. Rent is only an expense. See how they are not comparable?
Interest builds no equity, and neither do property taxes. Principal payments do build equity, but then again so do the side fund contributions a renter can make if their rent is less than the monthly bills of owning.
Complaining that the renter has to manually write separate checks for the investment and for the living expense is like saying you want your cell phone superglued to your laptop or desktop computer because then you have a computer that also doubles as a phone. Seems a bit silly.
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