ouch $9,800/month negative cash flow

[Fearful]

I bought my house about 10 years ago. Its worth alot more than I paid for it and always will be. If something were to happen that made it worth less than i paid it wouldnt bother me in the least. I have no desire to sell it and probably never will. As a rental it would be cash flow positive in big way even today.

Now unless I’m not “everyone”, please explain to me how I’ve lost money?

You have lost money because you could have sold for more earlier. Your house has dropped in value, and as long as selling it was an option, that drop in value was a real cost to you.

And only considering the payment means you are ignoring the opportunity cost of money. The monthly cost of your house is cash flow out plus the earning you could have gotten from the capital. For example, the payment on my house in San Jose was about $2,500 a month, but that was on about $450K of the $920K total value. When I sold it, I was able to earn interest on an additional $430K.

None of this is to say that you should have sold earlier, or that you are a fool for not doing so, just that depreciating assets do incur a real cost.

The flip side of this is someone’s comment to me, circa 2000, that I was living effectively rent free in San Jose because of the appreciation of my house. True then, opposite true now.

[Fearful]

And if I were the speculator at the beginning of this thread, I would seriously consider extracting as much money as I could, converting it to gold coins, stuffing them up my ass, and fleeing the country. Hope he knows spanish and can find his way around, as suggested, Costa Rica.

We are entering a phase, the end results of which I saw in Austin around 1992: One fine fellow from Houston came in and spoke to our business school about his ride from $0 to $500M all the way down to negative $500K, all based on Texas real estate. The carnage this time around is going to be just awful.

[Fearful]

And if I were the speculator at the beginning of this thread, I would seriously consider extracting as much money as I could, converting it to gold coins, stuffing them up my ass, and fleeing the country. Hope he knows spanish and can find his way around, as suggested, Costa Rica.

We are entering a phase, the end results of which I saw in Austin around 1992: One fine fellow from Houston came in and spoke to our business school about his ride from $0 to $500M all the way down to negative $500K, all based on Texas real estate. The carnage this time around is going to be just awful.

[Fearful]

And if I were the speculator at the beginning of this thread, I would seriously consider extracting as much money as I could, converting it to gold coins, stuffing them up my ass, and fleeing the country. Hope he knows spanish and can find his way around, as suggested, Costa Rica.

We are entering a phase, the end results of which I saw in Austin around 1992: One fine fellow from Houston came in and spoke to our business school about his ride from $0 to $500M all the way down to negative $500K, all based on Texas real estate. The carnage this time around is going to be just awful.

[Fearful]

And if I were the speculator at the beginning of this thread, I would seriously consider extracting as much money as I could, converting it to gold coins, stuffing them up my ass, and fleeing the country. Hope he knows spanish and can find his way around, as suggested, Costa Rica.

We are entering a phase, the end results of which I saw in Austin around 1992: One fine fellow from Houston came in and spoke to our business school about his ride from $0 to $500M all the way down to negative $500K, all based on Texas real estate. The carnage this time around is going to be just awful.

[sdrealtor]

Still dont understand how I lost money that I never had. I’ve got to live somewhere and moving is expensive. My tax basis is low. My after tax monthly cost is about half of my cost to rent a similar property. I still could sell my house if I wanted to so the only opportunity cost of concern is on the opportunity cost of investing the excess proceeds that you think I lost. That is neglible at this point. I’ve lost nothing.

As for the other side of the coin, I never got to live rent free and always paid a mortgage. Sure my property value went up but I still had monthly rent.

[sdrealtor]

Still dont understand how I lost money that I never had. I’ve got to live somewhere and moving is expensive. My tax basis is low. My after tax monthly cost is about half of my cost to rent a similar property. I still could sell my house if I wanted to so the only opportunity cost of concern is on the opportunity cost of investing the excess proceeds that you think I lost. That is neglible at this point. I’ve lost nothing.

As for the other side of the coin, I never got to live rent free and always paid a mortgage. Sure my property value went up but I still had monthly rent.

[sdrealtor]

Still dont understand how I lost money that I never had. I’ve got to live somewhere and moving is expensive. My tax basis is low. My after tax monthly cost is about half of my cost to rent a similar property. I still could sell my house if I wanted to so the only opportunity cost of concern is on the opportunity cost of investing the excess proceeds that you think I lost. That is neglible at this point. I’ve lost nothing.

As for the other side of the coin, I never got to live rent free and always paid a mortgage. Sure my property value went up but I still had monthly rent.

[sdrealtor]

Still dont understand how I lost money that I never had. I’ve got to live somewhere and moving is expensive. My tax basis is low. My after tax monthly cost is about half of my cost to rent a similar property. I still could sell my house if I wanted to so the only opportunity cost of concern is on the opportunity cost of investing the excess proceeds that you think I lost. That is neglible at this point. I’ve lost nothing.

As for the other side of the coin, I never got to live rent free and always paid a mortgage. Sure my property value went up but I still had monthly rent.

[NotCranky]

I would bet that housing for almost everyone on this blog represents an opportunity cost, whether they are renting or paying a mortgage or debt free. Anyone who has more roof over their heads than a shack with a toilet and a sink is paying an opportunity cost. It is easier to swallow that opportunity cost, as sdrealtor says, when it is on paper, the inflated value of it was a gift anyway and keeping the property in the face of depreciation is offset by several other factors, some of them economic.

[NotCranky]

I would bet that housing for almost everyone on this blog represents an opportunity cost, whether they are renting or paying a mortgage or debt free. Anyone who has more roof over their heads than a shack with a toilet and a sink is paying an opportunity cost. It is easier to swallow that opportunity cost, as sdrealtor says, when it is on paper, the inflated value of it was a gift anyway and keeping the property in the face of depreciation is offset by several other factors, some of them economic.

[NotCranky]

I would bet that housing for almost everyone on this blog represents an opportunity cost, whether they are renting or paying a mortgage or debt free. Anyone who has more roof over their heads than a shack with a toilet and a sink is paying an opportunity cost. It is easier to swallow that opportunity cost, as sdrealtor says, when it is on paper, the inflated value of it was a gift anyway and keeping the property in the face of depreciation is offset by several other factors, some of them economic.

[NotCranky]

I would bet that housing for almost everyone on this blog represents an opportunity cost, whether they are renting or paying a mortgage or debt free. Anyone who has more roof over their heads than a shack with a toilet and a sink is paying an opportunity cost. It is easier to swallow that opportunity cost, as sdrealtor says, when it is on paper, the inflated value of it was a gift anyway and keeping the property in the face of depreciation is offset by several other factors, some of them economic.

[drunkle]

flu:

i was wondering about buying another house as a means of protecting his cash against seizure… use the whole thing to buy outright or as a downpayment should someone lend him the rest…

i think it’d be a lot harder to simply make that kind of money “disappear”… pretty sure cc fraud is also a serious offense…

[drunkle]

flu:

i was wondering about buying another house as a means of protecting his cash against seizure… use the whole thing to buy outright or as a downpayment should someone lend him the rest…

i think it’d be a lot harder to simply make that kind of money “disappear”… pretty sure cc fraud is also a serious offense…

[Author]

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