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Old 04-13-2024, 01:28 AM
 
Location: moved
13,693 posts, read 9,783,410 times
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Quote:
Originally Posted by Silverfall View Post
Having some type of wealth-generating investment is important. Most people can't afford to put a lot into a 401K or don't have a business opportunity like this. The house they live in is their wealth-generating opportunity.

The agents on here just want to see consumers doing something to build wealth and we know from experience that for most people, homeownership can do that for them. ...
For about 20 years I was a homeowner. Paid off the mortgage early. Eventually sold the house at a loss. Instead of an engine of wealth-building, it was an engine of wealth-destruction. Why? Wrong house, in the wrong neighborhood, in the wrong general location, bought at the wrong price, for the wrong reasons, and then tended-to... wrongly.

Instead, the wealth-building opportunity was paper assets (stocks, bonds, etc.). Some day in the future I'll again own a house, but it will be a vanity-purchase, like a sports car or a boat. It wouldn't be intended to serve the function of wealth-building, or even wealth-preservation.
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Old 04-13-2024, 01:39 AM
 
107,114 posts, read 109,424,019 times
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Quote:
Originally Posted by ohio_peasant View Post
For about 20 years I was a homeowner. Paid off the mortgage early. Eventually sold the house at a loss. Instead of an engine of wealth-building, it was an engine of wealth-destruction. Why? Wrong house, in the wrong neighborhood, in the wrong general location, bought at the wrong price, for the wrong reasons, and then tended-to... wrongly.

Instead, the wealth-building opportunity was paper assets (stocks, bonds, etc.). Some day in the future I'll again own a house, but it will be a vanity-purchase, like a sports car or a boat. It wouldn't be intended to serve the function of wealth-building, or even wealth-preservation.
i think one would really have to be the exception not to have seen a house be a wealth building tool .

sure , it can happen but for most , except for short term buyers it’s rare.

usually it’s those who bought and had to sell shortly after who lose
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Old 04-13-2024, 08:36 AM
 
Location: North Idaho
32,723 posts, read 48,321,659 times
Reputation: 78629
Quote:
Originally Posted by NORTY FLATZ View Post
Renting is a great way to avoid paying property taxes, too! .....:
Renters pay property taxes. It is baked into the rent.

But because so many tenants mistakenly believe they don't pay property taxes, they will vote to increase the taxes to pay for expensive over-priced amenities for their town. Then when the taxes go up, the landlord raises the rent to cover the increased cost of maintaining the rental and the tenants get mad because rent has gone up, when they are the ones who voted to raise taxes which raised their own rent.
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Old 04-13-2024, 08:44 AM
 
107,114 posts, read 109,424,019 times
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rents are based on what markets allow .

markets don’t care if you have a 7% mortgage and those around you who own rentals don’t .

they don’t care if you spend five figures on a roof or had to renovate to stay competitive.

in many areas it can be tough as a new buyer of a property to get close to your costs without depreciation.

it took us about 7 years to see our first profit not including depreciation.

two weeks after we bought the stock market here crashed in 1987 and real estate fell about 20-25% .

our entire down payment vanished as the equity we had vanished .

we were about even but only with depreciation.

i tried raising the rent just 25 a month and we lost our tenant .

we had to go a month with no tenant defeating the increase we tried to get .

so not everything is recovered via a tenant ….many times a landlord has to pay their dues like any long term investment to first see a profit


which is why i was never big on being a conventional landlord . i really only like the special situation stuff.

i have no interest in just collecting rents , and waiting years for appreciation.

which is why i went after the methods i did for investing in real estate
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Old 04-13-2024, 08:57 AM
 
8,084 posts, read 3,987,124 times
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Quote:
Originally Posted by NORTY FLATZ View Post
Renting is a great way to avoid paying property taxes, too!
All landlording costs ultimately are bundled into the monthly rental rate (ignoring NYC which no one cares about and the handful of other areas with rent control). In the long run, higher wealth taxes (a property tax is a wealth tax) reduces the supply of rental units which in turn drives up rental rates.
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Old 04-13-2024, 08:58 AM
 
Location: South Raleigh
546 posts, read 295,768 times
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Quote:
Originally Posted by ohio_peasant View Post
For about 20 years I was a homeowner. Paid off the mortgage early. Eventually sold the house at a loss. Instead of an engine of wealth-building, it was an engine of wealth-destruction. Why? Wrong house, in the wrong neighborhood, in the wrong general location, bought at the wrong price, for the wrong reasons, and then tended-to... wrongly.

Instead, the wealth-building opportunity was paper assets (stocks, bonds, etc.). Some day in the future I'll again own a house, but it will be a vanity-purchase, like a sports car or a boat. It wouldn't be intended to serve the function of wealth-building, or even wealth-preservation.
Did you really sell at a loss, or did you sell for less than you paid for it? Two different things.

I too have sold houses for less than I paid ( though mostly I have made huge profits ). But even when I have sold "at a loss" I still come out ahead, because ( a ) I would have been paying rent all those years and ( 2 ) I had mortgage interest and real estate tax deductions along the way.

So the only way to know if you have really lost money or wealth is to weigh all the factors, to see the whole picture.
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Old 04-13-2024, 09:07 AM
 
107,114 posts, read 109,424,019 times
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Quote:
Originally Posted by moguldreamer View Post
All landlording costs ultimately are bundled into the monthly rental rate (ignoring NYC which no one cares about and the handful of other areas with rent control). In the long run, higher wealth taxes (a property tax is a wealth tax) reduces the supply of rental units which in turn drives up rental rates.
it’s no different anywhere else . local markets set rents not one person’s individual expenses unless they want to wait for a sucker tenant who doesn’t care if they are paying to much.

so local markets are a mix of many different parameters not unique to anyone’s circumstances unless rural with few rentals .

but most urban areas you are in competition for tenants

Last edited by mathjak107; 04-13-2024 at 09:19 AM..
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Old 04-13-2024, 09:54 AM
 
Location: moved
13,693 posts, read 9,783,410 times
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Quote:
Originally Posted by mathjak107 View Post
i think one would really have to be the exception not to have seen a house be a wealth building tool .

sure , it can happen but for most , except for short term buyers it’s rare.

usually it’s those who bought and had to sell shortly after who lose
Rarely mentioned by advocates of either buying or renting, is that a house purchase introduces idiosyncratic risk, akin to buying an individual stock. Is Boeing going to recover? Will Nvidia keep rising? I don't know. But I don't have to know... because I can just buy into an S&P 500 index fund! With houses, I have to know... because I'm only buying one house at a time (if buying several, they're going to be rentals... different scenario entirely). So if I worry about miscalculating and doing something stupid like putting a big chunk of my money into Boeing, the remedy is to just nibble a tiny bit on Boeing stock, putting the vast majority of my capital into the good old S&P. However, I can't just buy say 5% of one house, 5% of another house and so on... I am buying 100% of one house. Pretty risky, no?

But risk goes both ways - pro and con. A buyer might luck-in into a spectacular housing deal, enjoying very handsome profits, say for example if a dodgy neighborhood gentrifies.

Quote:
Originally Posted by Upminster-1 View Post
Did you really sell at a loss, or did you sell for less than you paid for it? Two different things.

I too have sold houses for less than I paid ( though mostly I have made huge profits ). But even when I have sold "at a loss" I still come out ahead, because ( a ) I would have been paying rent all those years and ( 2 ) I had mortgage interest and real estate tax deductions along the way.

So the only way to know if you have really lost money or wealth is to weigh all the factors, to see the whole picture.
It's a complicated calculation, because to be thorough, we'd have to include things like...

1. House was in the country, and alternative apartment would have been in the city. The former had much higher commuting costs.

2. House had much higher utility costs.

3. Apartment would have had the additional cost of renting a separate space for my hobby-car. A major reason for buying a house in the first place, was NOT necessarily having a place to live, but rather, a place for working on cars.

4. House of course had maintenance and so on.

Paying off my mortgage early, the interest-deduction was nugatory. After a year or two, it no longer made sense to itemize. it was [then] a fairly low property tax state, too. So yes, my "selling at a loss" means that the gross sales price in year X was higher than the gross sales price in year X+20. Transaction fees (such as real estate commission) would render my calculation even less favorable towards owning.

Bottom line: if your house more or less keeps up with inflation, your ownership costs - buying vs. renting - will probably be OK. They will likely even favor owning, especially if what you'd have been renting, is a house, instead of a small apartment. If your house falls in price perennially, so that decades later, adjusted for inflation, it's worth maybe half or a third of what you had originally paid, you probably would have been further ahead, by renting.

But once again, these financial losses are OK, if the prospective buyer is older, wants the comforts and prestige of ownership, and doesn't mind the losses, because the paper-assets are rising nicely (knock on wood!) and offset the losses of ownership. Thus I'm not utterly against owning, and will eventually buy again.
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Old 04-13-2024, 10:57 AM
 
Location: Elsewhere
88,844 posts, read 85,240,026 times
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Quote:
Originally Posted by mathjak107 View Post
we are n my wife’s original rental .

she moved in 40 years ago …i am here over twenty with her .

so we have guaranteed renewal in half of all rentals here .

i would want never be a tenant to some small time wanna be landlord .. so local laws matter as to what rights tenants have
I took a rental in another city. Still have a condo in a townhouse in NJ, which is closer to where I am working right now. I will likely sell my condo in a year or so and maybe move out to where I keep the apartment.

The landlord is a company started by a man who years ago bought old brick houses and converted them to apartments. He died some time back, and his daughter now owns the company. They have approximately 500 apartments. They keep them up, do maintenance regularly, and are well-run and organized. This is much different from the jerk from whom I rented back in the 00s before I bought my place. He would fix nothing, took three weeks to fix the broken furnace in winter because he was in Europe and his maintenance guy flew home to Costa Rica while the boss was away, and I had to buy space heaters to heat the upstairs of the house. Then when I moved out, he tried to get me to pay for things that were broken or missing when I moved in and apparently "forgot" that I had sent him a letter listing those things when I'd first taken the lease. Guess he thought I was stupider than I am.

I think that's probably typical of most small-time landlords who just want to collect rent and live high on the hog off the rent money but not spend to maintain their properties. This guy only owned four or five houses, which were clustered together, all built in the late 1890s. His real aim was to knock them down and build an office building, but we were too close to a school, there would be traffic issues, and the town council kept turning him down.

Anyway, night and day difference between that landlord and this one. I needed a TV mounted onto the wall, and I stopped in the landlord company's office down the street to ask if it would be OK for me to do that, since they state in their rules that they don't want you making too big of holes in the plaster. They said, "Oh, just put in a work order. Our maintenance guys can do that for you, but you might have to wait because they do urgent or emergency work first." I said fine. The next day, two guys show up, tell me they are glad to do the TV that day because things are slow, and they put up the TV for me. I handed them some cash, and they said, "No, we don't take that, just give us a good review to the landlord."

I am only still here because I was recently given a good work opportunity that pays very well, so I'm going to continue until I get sick of working full-time again, then I will sell my condo and go stay in my apartment until I figure out where I am going to go next. I love the apartment. Two brick walls and a fireplace in the living room, high ceilings, walk to everything I need. And no homeless brother who has taken up residence and won't leave like the one currently in my condo, lol.
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Old 04-13-2024, 05:29 PM
 
Location: Salem, OR
15,605 posts, read 40,539,112 times
Reputation: 17540
Quote:
Originally Posted by ohio_peasant View Post
Wrong house, in the wrong neighborhood, in the wrong general location, bought at the wrong price, for the wrong reasons, and then tended-to... wrongly.
This is why an excellent, professional buyer agent is so important. I know I have talked people out of buying homes, and I am sure the other agents on CD have as well to avoid your experience. I think I begged a client not to buy a house three times in 20 years. Most of the time I can talk them out of it with reason so that they don't do what you did.

Only one refused to listen and purchased that home and that was a few years ago. She has been trying to sell it with other agents for two years now. She is on her third agent now. It is still for sale.
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