nesting young 4s Ranch experiences and puzzling questions

[an]

That definitely irks me too. That $4600 take home is possible only if you don’t put anything away for retirement. If you max out your 401k and ROTH IRA, it’ll probably be closer to $3500. So if you have 2 people making $90k each and both put away $ for retirement, their combined take home is $7000/month. Even $180k/year, the mortgage of a condo would be about 50% of their take home pay. That’s just crazy to me.

[blahblahblah]

That Microsoft Excel “rent vs. buy” template is great. It really shows you just how screwed up things are right now. Make sure to experiment with negative annual appreciation numbers to really get a feel for how much more expensive buying is, even if houses are “only” going down 1-2% a year. Also, if you work from home (and for yourself) don’t forget that you can write off a portion of your rent for your office. This can make up some of the difference you lose by not being able to detuct mortgage interest and property taxes.

[PerryChase]

Concho, that is a great point. People who are self-employed (ie consultants) can deduct part of their rent from their ordinary income. If they own their own homes, they’d have to depreciate and recapture (upon sale) the home office portion (a bookkeeping hassle).

asianautica, putting away for retirment?! Buyers were counting on ever appreciating homes for retirements. On a related note, it’s better for the economy if people work now and consume now, and seniors keep on working and consuming rather than living leisurely lives off of investments/savings.

[mixxalot]

I usually max out my 401k and Roth IRA so yeah thats true. For me, I do not want to depend on living on 900 a month social security payments when I retire.

So yeah it means I probably wont be able to buy even a crappy condo for at least several more years until major correction hits the San Diego market. It is taking a real long time to hit people though. Too many sheeple still have the fantasy that real estate never goes down. I guess we will know toward the end of 2008 what really is happening with real estate prices.

[ocrenter]

new posting on 4Closure Ranch Part VI is now out. enjoy!

[gold_dredger_phd]

It’s crazy to buy now. Why buy now? What sort of downpayment will you make on this McMansion? If you and your wife are making $200K per year or more, then by all means buy!

It’s the women who drive the irrational housing market as they convince their husbands to buy a nest at all possible costs or otherwise you’ll be priced out forever!

Before buying a nest, I would wait for an egg to hatch. That’s the bottom line in my household. No eggs, no house.

[powayseller]

We hatched 3 eggs, and we are renting. Nestingcouple, we sold our house in Jan 06 and are renting out the downturn. I have 1 in elementary school, and 2 in high school. Our family loves renting, although our rental is not nearly as nice as the home we sold. I, a woman, value the financial security over home ownership. Possibly because I have owned several homes, I don’t have that “gotta have a house” itch anymore.

To your costs, add $500/month for Home Depot and remodeling costs. Don’t let anyone tell you it’s only $100. All you need is one broken pipe or leaking roof to blow through $10K – $15K. My neighbor had a bust pipe that her insurance didn’t cover (flood) so they had a hug expense in replacing all downstairs flooring and furniture.

All all the “I want…” items: furniture and draperies to fill the space, matching towels/sheets (who cares in a rental, but when it’s your own house, you want it to be perfect), landscaping, upgrading for energy conservation (replacing windows). If I owned this rental, I would already have spent a ton, replacing the old windows, the carpet, painting, new countertops, better flooring and baseboards, better landscaping. The truth is, as a homeowners, you spend a ton of money making everything nicer. So it’s not just the repairs and maintenance, it’s the improvements, and it is constant. Our biggest savings in renting is eliminating all those home improvements.

My suggestion is to get a rental you really like, and invest a couple grand in painting it, or adding some landscaping, and make it nice. It’s a lot lot cheaper to sink a tiny bit into a rental than to lose several hundred thousand grand on a place you own. We bought a lot of potted plants, including several trees and ivy plants, that we will take with us when we move. I consulted with a tenant attorney before I signed my 2 year lease.

I love ocrenter’s suggestion to use that same money to buy one house plus several rentals. If you don’t mind living in a duplex, you can live on one side and let your tenant on the other side pay the entire mortgage.

To your rent-buy calculator, add a 5-10% annual decline in nominal house prices. Personally, I expect a 30-50% nominal decline before this is all over, and I believe that we will not be back to today’s prices in my lifetime.

[PerryChase]

Duplexes? I don’t think they build anymore of those? Where do do you find a duplex?

Young married couples should not be buying expensives houses. They should travel the world and have romance and fun. When you’re old you’ll appreciate the memories.

[Ranjan]

Hi,

Is anybody tracking Raveena and Amante communities ( Lyon Homes) in 4s ranch area? Are there are lot of flippers there?
Are the homes holding on to the price or have gone down?

Thanks

[sdcellar]

I’ve not been tracking those specifically (as I’m not interested in condos or condo-like properties), but I’ve noticed many Amante listings and they seem to linger (like pretty much everything else). I also seem to think they have indeed come down in price (and will continue to do so). My sense is that Amante is a little flipper heaven (well, I guess it would be hell now).

[SHILOH]

Just out of curiosity…do you really need 3100 square feet??

Over the holidays I was in a home near SouthBend, Indiana, but in Michigan, owned by a surgeon and his stay-at-home wife & mother of 3.
The house was like two homes in one…it was in an expensive area I suppose. The house was very nicely built, had a home theater room, family room with pool table, bar, etc. It must have been at least 6000 square feet. I don’t foresee ever being able to afford a home like that, but some people simply want large homes I guess…and it has nothing to do with need.

[ibjames]

“Young married couples should not be buying expensives houses. They should travel the world and have romance and fun. When you’re old you’ll appreciate the memories.”

Perry, you have a great outlook on life, I really enjoy your posts, and love your outlook on things.

[ibjames]

Poway seller,

Did you keep the plants in their pots, or did you plant them? My wife has a green thumb and I would love to hear what you have done because we could maybe do the same.

Thanks!

[powayseller]

We replanted the plants into larger pots, using potting soil. If you use regular planting soil, the plants won’t thrive. Our orange tree is bearing fruit, the ivy is starting to cover the back fence, and the bougainvillea is just stunning. I purchased fabric from Ethan Allen that matches the fabric on my dining room chairs, and had valances made. I bought some cheap closet organizers. I can take all that with me in the future.

[PerryChase]

powayseller, you can the Martha Stewart of renters. 🙂 How about a section on your website on how to make a rental feel like “home” with things you can easily take away with you when you move?

I too have potted plants on my patio. It looks much better if you have nice planters instead of the cheap plastic kinds. I have cacti because I don’t have time to care for the plants. My elderly auntie is staying with me for a couple of months. She’s teaching me how to start an herb garden.

[Author]

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