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August 11, 2010 at 10:05 AM #590360August 11, 2010 at 10:08 AM #589294carlsbadworkerParticipant
[quote=bearishgurl]Can I just ask you if you bought your own property at or near the bottom of the market and when you bought it, did you think that was the “bottom” at the time?[/quote]
I bought around the same time piggs are starting to buy in Temecula. At that time, I thought it is about 10% above the most-likely bottom and 30% above from the doomsday scenario (I choose to not buying at the bottom because it is hard for my wife to find a house that she likes to live in). But with that in mind, I did what Ren did which is I put rental property as a possibility (even though my house at ~2700sqft wasn’t ideal for rental property, but the cash flow shows break-even with some possible rents decline included).
My prediction is about right as I think we bought just a few months before the real bottom, looking back at the current moment. (Who knows if it is the real bottom, when future is included).I actually don’t think timing is the most important thing in real estate. It is important from short-term perspective, but not for long-term. Just as timing is very important for traders but not for long-term equity investors. For long-term investors, valuation is most important. That means one has to sit down and run the number. For stocks, you calculate the discounted cash flow. For houses, you look at the price to rent. How difficult is that?
It’s really just a mindset issue. Too many people are so concerned about the possible gain that they forgot to ask what is there to lose. As Warren Buffett says, the first principle is don’t lose money. The second principle is don’t forget the first principle. If you aim to miminize loss, you minimized your loss. If one can not afford to add more principles to refin into lower rates (unless something unfortunate happens to you, such as job loss or illness), I would think one is not ready to buy the house. I think people who rely on real estate and mortgage broker to tell them whether they can or can not afford a house, are going to be more likely to lose their wealth.
I have a friend who bought during the UK housing bubble, who is now buying at the Australia housing bubble. She complained about her mis-fortune (that she bought when pound was really high). But I urged her not listening to the brokers into buying a terribly negative cash flow condo in Australia, she just wouldn’t listen. Apparently, the broker says everyone is going to be millionaire in Australia by investing into the hottest housing market on the planet. That’s nothing to do with timing but everything to do with math skill.August 11, 2010 at 10:08 AM #589388carlsbadworkerParticipant[quote=bearishgurl]Can I just ask you if you bought your own property at or near the bottom of the market and when you bought it, did you think that was the “bottom” at the time?[/quote]
I bought around the same time piggs are starting to buy in Temecula. At that time, I thought it is about 10% above the most-likely bottom and 30% above from the doomsday scenario (I choose to not buying at the bottom because it is hard for my wife to find a house that she likes to live in). But with that in mind, I did what Ren did which is I put rental property as a possibility (even though my house at ~2700sqft wasn’t ideal for rental property, but the cash flow shows break-even with some possible rents decline included).
My prediction is about right as I think we bought just a few months before the real bottom, looking back at the current moment. (Who knows if it is the real bottom, when future is included).I actually don’t think timing is the most important thing in real estate. It is important from short-term perspective, but not for long-term. Just as timing is very important for traders but not for long-term equity investors. For long-term investors, valuation is most important. That means one has to sit down and run the number. For stocks, you calculate the discounted cash flow. For houses, you look at the price to rent. How difficult is that?
It’s really just a mindset issue. Too many people are so concerned about the possible gain that they forgot to ask what is there to lose. As Warren Buffett says, the first principle is don’t lose money. The second principle is don’t forget the first principle. If you aim to miminize loss, you minimized your loss. If one can not afford to add more principles to refin into lower rates (unless something unfortunate happens to you, such as job loss or illness), I would think one is not ready to buy the house. I think people who rely on real estate and mortgage broker to tell them whether they can or can not afford a house, are going to be more likely to lose their wealth.
I have a friend who bought during the UK housing bubble, who is now buying at the Australia housing bubble. She complained about her mis-fortune (that she bought when pound was really high). But I urged her not listening to the brokers into buying a terribly negative cash flow condo in Australia, she just wouldn’t listen. Apparently, the broker says everyone is going to be millionaire in Australia by investing into the hottest housing market on the planet. That’s nothing to do with timing but everything to do with math skill.August 11, 2010 at 10:08 AM #589923carlsbadworkerParticipant[quote=bearishgurl]Can I just ask you if you bought your own property at or near the bottom of the market and when you bought it, did you think that was the “bottom” at the time?[/quote]
I bought around the same time piggs are starting to buy in Temecula. At that time, I thought it is about 10% above the most-likely bottom and 30% above from the doomsday scenario (I choose to not buying at the bottom because it is hard for my wife to find a house that she likes to live in). But with that in mind, I did what Ren did which is I put rental property as a possibility (even though my house at ~2700sqft wasn’t ideal for rental property, but the cash flow shows break-even with some possible rents decline included).
My prediction is about right as I think we bought just a few months before the real bottom, looking back at the current moment. (Who knows if it is the real bottom, when future is included).I actually don’t think timing is the most important thing in real estate. It is important from short-term perspective, but not for long-term. Just as timing is very important for traders but not for long-term equity investors. For long-term investors, valuation is most important. That means one has to sit down and run the number. For stocks, you calculate the discounted cash flow. For houses, you look at the price to rent. How difficult is that?
It’s really just a mindset issue. Too many people are so concerned about the possible gain that they forgot to ask what is there to lose. As Warren Buffett says, the first principle is don’t lose money. The second principle is don’t forget the first principle. If you aim to miminize loss, you minimized your loss. If one can not afford to add more principles to refin into lower rates (unless something unfortunate happens to you, such as job loss or illness), I would think one is not ready to buy the house. I think people who rely on real estate and mortgage broker to tell them whether they can or can not afford a house, are going to be more likely to lose their wealth.
I have a friend who bought during the UK housing bubble, who is now buying at the Australia housing bubble. She complained about her mis-fortune (that she bought when pound was really high). But I urged her not listening to the brokers into buying a terribly negative cash flow condo in Australia, she just wouldn’t listen. Apparently, the broker says everyone is going to be millionaire in Australia by investing into the hottest housing market on the planet. That’s nothing to do with timing but everything to do with math skill.August 11, 2010 at 10:08 AM #590031carlsbadworkerParticipant[quote=bearishgurl]Can I just ask you if you bought your own property at or near the bottom of the market and when you bought it, did you think that was the “bottom” at the time?[/quote]
I bought around the same time piggs are starting to buy in Temecula. At that time, I thought it is about 10% above the most-likely bottom and 30% above from the doomsday scenario (I choose to not buying at the bottom because it is hard for my wife to find a house that she likes to live in). But with that in mind, I did what Ren did which is I put rental property as a possibility (even though my house at ~2700sqft wasn’t ideal for rental property, but the cash flow shows break-even with some possible rents decline included).
My prediction is about right as I think we bought just a few months before the real bottom, looking back at the current moment. (Who knows if it is the real bottom, when future is included).I actually don’t think timing is the most important thing in real estate. It is important from short-term perspective, but not for long-term. Just as timing is very important for traders but not for long-term equity investors. For long-term investors, valuation is most important. That means one has to sit down and run the number. For stocks, you calculate the discounted cash flow. For houses, you look at the price to rent. How difficult is that?
It’s really just a mindset issue. Too many people are so concerned about the possible gain that they forgot to ask what is there to lose. As Warren Buffett says, the first principle is don’t lose money. The second principle is don’t forget the first principle. If you aim to miminize loss, you minimized your loss. If one can not afford to add more principles to refin into lower rates (unless something unfortunate happens to you, such as job loss or illness), I would think one is not ready to buy the house. I think people who rely on real estate and mortgage broker to tell them whether they can or can not afford a house, are going to be more likely to lose their wealth.
I have a friend who bought during the UK housing bubble, who is now buying at the Australia housing bubble. She complained about her mis-fortune (that she bought when pound was really high). But I urged her not listening to the brokers into buying a terribly negative cash flow condo in Australia, she just wouldn’t listen. Apparently, the broker says everyone is going to be millionaire in Australia by investing into the hottest housing market on the planet. That’s nothing to do with timing but everything to do with math skill.August 11, 2010 at 10:08 AM #590340carlsbadworkerParticipant[quote=bearishgurl]Can I just ask you if you bought your own property at or near the bottom of the market and when you bought it, did you think that was the “bottom” at the time?[/quote]
I bought around the same time piggs are starting to buy in Temecula. At that time, I thought it is about 10% above the most-likely bottom and 30% above from the doomsday scenario (I choose to not buying at the bottom because it is hard for my wife to find a house that she likes to live in). But with that in mind, I did what Ren did which is I put rental property as a possibility (even though my house at ~2700sqft wasn’t ideal for rental property, but the cash flow shows break-even with some possible rents decline included).
My prediction is about right as I think we bought just a few months before the real bottom, looking back at the current moment. (Who knows if it is the real bottom, when future is included).I actually don’t think timing is the most important thing in real estate. It is important from short-term perspective, but not for long-term. Just as timing is very important for traders but not for long-term equity investors. For long-term investors, valuation is most important. That means one has to sit down and run the number. For stocks, you calculate the discounted cash flow. For houses, you look at the price to rent. How difficult is that?
It’s really just a mindset issue. Too many people are so concerned about the possible gain that they forgot to ask what is there to lose. As Warren Buffett says, the first principle is don’t lose money. The second principle is don’t forget the first principle. If you aim to miminize loss, you minimized your loss. If one can not afford to add more principles to refin into lower rates (unless something unfortunate happens to you, such as job loss or illness), I would think one is not ready to buy the house. I think people who rely on real estate and mortgage broker to tell them whether they can or can not afford a house, are going to be more likely to lose their wealth.
I have a friend who bought during the UK housing bubble, who is now buying at the Australia housing bubble. She complained about her mis-fortune (that she bought when pound was really high). But I urged her not listening to the brokers into buying a terribly negative cash flow condo in Australia, she just wouldn’t listen. Apparently, the broker says everyone is going to be millionaire in Australia by investing into the hottest housing market on the planet. That’s nothing to do with timing but everything to do with math skill.August 11, 2010 at 10:27 AM #589329RenParticipant[quote=bearishgurl]Ren, I forgot to add last night that Paramount only put 10% down so he is most likely paying at least $180 mo. PMI premium in his “PITI.” Not sure if this is also tax deductible also after putting the property into rental service.
It may be a very l-o-o-o-ong time before he is able to get rid of the PMI.[/quote]
If his PMI is included in the $1,600 PITI, then that’s okay in my book (of course not ideal), because someone else is paying for it.
The way I look at it, he either buys at the peak and then walks at the trough, or he buys at the peak and then sells at the next peak (or keeps it indefinitely). The former guarantees a large loss, which has not actually taken place yet, and doesn’t have to. He didn’t buy at the artificially inflated highs of 2004-2006. If that had been the case and he was far in the red, then sure, walking might be a good idea, as those highs will never be seen again. As it is, he’s got a property that will be cash flowing in a couple years and only has 22 to go on the loan. Like I said it’s not ideal, but I wouldn’t mind having it in my portfolio.
August 11, 2010 at 10:27 AM #589423RenParticipant[quote=bearishgurl]Ren, I forgot to add last night that Paramount only put 10% down so he is most likely paying at least $180 mo. PMI premium in his “PITI.” Not sure if this is also tax deductible also after putting the property into rental service.
It may be a very l-o-o-o-ong time before he is able to get rid of the PMI.[/quote]
If his PMI is included in the $1,600 PITI, then that’s okay in my book (of course not ideal), because someone else is paying for it.
The way I look at it, he either buys at the peak and then walks at the trough, or he buys at the peak and then sells at the next peak (or keeps it indefinitely). The former guarantees a large loss, which has not actually taken place yet, and doesn’t have to. He didn’t buy at the artificially inflated highs of 2004-2006. If that had been the case and he was far in the red, then sure, walking might be a good idea, as those highs will never be seen again. As it is, he’s got a property that will be cash flowing in a couple years and only has 22 to go on the loan. Like I said it’s not ideal, but I wouldn’t mind having it in my portfolio.
August 11, 2010 at 10:27 AM #589958RenParticipant[quote=bearishgurl]Ren, I forgot to add last night that Paramount only put 10% down so he is most likely paying at least $180 mo. PMI premium in his “PITI.” Not sure if this is also tax deductible also after putting the property into rental service.
It may be a very l-o-o-o-ong time before he is able to get rid of the PMI.[/quote]
If his PMI is included in the $1,600 PITI, then that’s okay in my book (of course not ideal), because someone else is paying for it.
The way I look at it, he either buys at the peak and then walks at the trough, or he buys at the peak and then sells at the next peak (or keeps it indefinitely). The former guarantees a large loss, which has not actually taken place yet, and doesn’t have to. He didn’t buy at the artificially inflated highs of 2004-2006. If that had been the case and he was far in the red, then sure, walking might be a good idea, as those highs will never be seen again. As it is, he’s got a property that will be cash flowing in a couple years and only has 22 to go on the loan. Like I said it’s not ideal, but I wouldn’t mind having it in my portfolio.
August 11, 2010 at 10:27 AM #590066RenParticipant[quote=bearishgurl]Ren, I forgot to add last night that Paramount only put 10% down so he is most likely paying at least $180 mo. PMI premium in his “PITI.” Not sure if this is also tax deductible also after putting the property into rental service.
It may be a very l-o-o-o-ong time before he is able to get rid of the PMI.[/quote]
If his PMI is included in the $1,600 PITI, then that’s okay in my book (of course not ideal), because someone else is paying for it.
The way I look at it, he either buys at the peak and then walks at the trough, or he buys at the peak and then sells at the next peak (or keeps it indefinitely). The former guarantees a large loss, which has not actually taken place yet, and doesn’t have to. He didn’t buy at the artificially inflated highs of 2004-2006. If that had been the case and he was far in the red, then sure, walking might be a good idea, as those highs will never be seen again. As it is, he’s got a property that will be cash flowing in a couple years and only has 22 to go on the loan. Like I said it’s not ideal, but I wouldn’t mind having it in my portfolio.
August 11, 2010 at 10:27 AM #590375RenParticipant[quote=bearishgurl]Ren, I forgot to add last night that Paramount only put 10% down so he is most likely paying at least $180 mo. PMI premium in his “PITI.” Not sure if this is also tax deductible also after putting the property into rental service.
It may be a very l-o-o-o-ong time before he is able to get rid of the PMI.[/quote]
If his PMI is included in the $1,600 PITI, then that’s okay in my book (of course not ideal), because someone else is paying for it.
The way I look at it, he either buys at the peak and then walks at the trough, or he buys at the peak and then sells at the next peak (or keeps it indefinitely). The former guarantees a large loss, which has not actually taken place yet, and doesn’t have to. He didn’t buy at the artificially inflated highs of 2004-2006. If that had been the case and he was far in the red, then sure, walking might be a good idea, as those highs will never be seen again. As it is, he’s got a property that will be cash flowing in a couple years and only has 22 to go on the loan. Like I said it’s not ideal, but I wouldn’t mind having it in my portfolio.
August 11, 2010 at 11:10 AM #589369bearishgurlParticipant[quote=carlsbadworker]. . . Look at how Carmel Valley’s housing market is holding up, then you know what is “Good Schools”. It’s not just 20 minutes drive. It’s parents willing to sink their retirement savings into a hole. That is “Good Schools” to me.[/quote]
carlsbadworker, I’m almost there (retirement). I do not think “sinking your retirement savings into a hole” is a good idea, at any age. Neither did my parents . . . or do my own kids. Nobody wants to have to “be taken care of” (or take care of) an able-bodied “near destitute” 62-year old that can’t get a job due to age discrimination.
I thought I made a few good investments in my life and did everything right. I even have a coveted “defined-benefit” plan. A 40-50 year working-life is a long time. Sh*t can happen during that time in both the worker’s personal and professional life. Sometimes you have control over it and sometimes you don’t.
At the end of the day, your kids will remember they went to homecoming and prom and recieved a HS diploma in accordance with CA Standards and were (hopefully) accepted into the college of their choice which they were able to graduate from. They won’t remember that you lost >50% of (the $$ that would have gone to) your retirement savings in your peak earning years to MR, HOA dues, street bonds, water line bonds and/or a ridiculous mortgage because you felt you had to pay $600K for a property *worth* $350K in order to live within certain “school boundaries.”
It’s up to you, as the adult/parent to provide for yourself in your later years (so your kids won’t have to) and do everything in your power as early as possible to ensure your kids become independent.
I just read a piece on how the OASDI Fund (“SS”) will become insolvent in 2037 (and maybe earlier, if steps aren’t taken). I don’t know if I’ll still be alive then or not. If I was ten years younger, I’d be VERY worried about whether I’d even see a dime of my own contributions to the “system.” If I was still in my “peak earning years” I would socking as much as the law allows into tax-free retirement vehicles at the expense of everything else. The public school system exists to serve kids K-12 (“free of charge”) and graduate them according to state standards and A-G requirements for college entrance. The teachers in the Merced Union HS Dist., the South San Francisco Unified SD, the Death Valley Unified SD, the Mt. Shasta Union SD and the San Dieguito Union HS Dist must all adhere to the SAME CURRICULUM – they have NO CHOICE in the matter.
No other public school payments are required unless you own property and the citizens in your jurisdiction vote school construction bonds in. Any payments voluntarily made to other entities after that just to attend public school are NOT required as Prop. 13 provides for most of the 1% base tax to go to the local school districts, anyway.
Just my .02 [end of rant]
August 11, 2010 at 11:10 AM #589463bearishgurlParticipant[quote=carlsbadworker]. . . Look at how Carmel Valley’s housing market is holding up, then you know what is “Good Schools”. It’s not just 20 minutes drive. It’s parents willing to sink their retirement savings into a hole. That is “Good Schools” to me.[/quote]
carlsbadworker, I’m almost there (retirement). I do not think “sinking your retirement savings into a hole” is a good idea, at any age. Neither did my parents . . . or do my own kids. Nobody wants to have to “be taken care of” (or take care of) an able-bodied “near destitute” 62-year old that can’t get a job due to age discrimination.
I thought I made a few good investments in my life and did everything right. I even have a coveted “defined-benefit” plan. A 40-50 year working-life is a long time. Sh*t can happen during that time in both the worker’s personal and professional life. Sometimes you have control over it and sometimes you don’t.
At the end of the day, your kids will remember they went to homecoming and prom and recieved a HS diploma in accordance with CA Standards and were (hopefully) accepted into the college of their choice which they were able to graduate from. They won’t remember that you lost >50% of (the $$ that would have gone to) your retirement savings in your peak earning years to MR, HOA dues, street bonds, water line bonds and/or a ridiculous mortgage because you felt you had to pay $600K for a property *worth* $350K in order to live within certain “school boundaries.”
It’s up to you, as the adult/parent to provide for yourself in your later years (so your kids won’t have to) and do everything in your power as early as possible to ensure your kids become independent.
I just read a piece on how the OASDI Fund (“SS”) will become insolvent in 2037 (and maybe earlier, if steps aren’t taken). I don’t know if I’ll still be alive then or not. If I was ten years younger, I’d be VERY worried about whether I’d even see a dime of my own contributions to the “system.” If I was still in my “peak earning years” I would socking as much as the law allows into tax-free retirement vehicles at the expense of everything else. The public school system exists to serve kids K-12 (“free of charge”) and graduate them according to state standards and A-G requirements for college entrance. The teachers in the Merced Union HS Dist., the South San Francisco Unified SD, the Death Valley Unified SD, the Mt. Shasta Union SD and the San Dieguito Union HS Dist must all adhere to the SAME CURRICULUM – they have NO CHOICE in the matter.
No other public school payments are required unless you own property and the citizens in your jurisdiction vote school construction bonds in. Any payments voluntarily made to other entities after that just to attend public school are NOT required as Prop. 13 provides for most of the 1% base tax to go to the local school districts, anyway.
Just my .02 [end of rant]
August 11, 2010 at 11:10 AM #589998bearishgurlParticipant[quote=carlsbadworker]. . . Look at how Carmel Valley’s housing market is holding up, then you know what is “Good Schools”. It’s not just 20 minutes drive. It’s parents willing to sink their retirement savings into a hole. That is “Good Schools” to me.[/quote]
carlsbadworker, I’m almost there (retirement). I do not think “sinking your retirement savings into a hole” is a good idea, at any age. Neither did my parents . . . or do my own kids. Nobody wants to have to “be taken care of” (or take care of) an able-bodied “near destitute” 62-year old that can’t get a job due to age discrimination.
I thought I made a few good investments in my life and did everything right. I even have a coveted “defined-benefit” plan. A 40-50 year working-life is a long time. Sh*t can happen during that time in both the worker’s personal and professional life. Sometimes you have control over it and sometimes you don’t.
At the end of the day, your kids will remember they went to homecoming and prom and recieved a HS diploma in accordance with CA Standards and were (hopefully) accepted into the college of their choice which they were able to graduate from. They won’t remember that you lost >50% of (the $$ that would have gone to) your retirement savings in your peak earning years to MR, HOA dues, street bonds, water line bonds and/or a ridiculous mortgage because you felt you had to pay $600K for a property *worth* $350K in order to live within certain “school boundaries.”
It’s up to you, as the adult/parent to provide for yourself in your later years (so your kids won’t have to) and do everything in your power as early as possible to ensure your kids become independent.
I just read a piece on how the OASDI Fund (“SS”) will become insolvent in 2037 (and maybe earlier, if steps aren’t taken). I don’t know if I’ll still be alive then or not. If I was ten years younger, I’d be VERY worried about whether I’d even see a dime of my own contributions to the “system.” If I was still in my “peak earning years” I would socking as much as the law allows into tax-free retirement vehicles at the expense of everything else. The public school system exists to serve kids K-12 (“free of charge”) and graduate them according to state standards and A-G requirements for college entrance. The teachers in the Merced Union HS Dist., the South San Francisco Unified SD, the Death Valley Unified SD, the Mt. Shasta Union SD and the San Dieguito Union HS Dist must all adhere to the SAME CURRICULUM – they have NO CHOICE in the matter.
No other public school payments are required unless you own property and the citizens in your jurisdiction vote school construction bonds in. Any payments voluntarily made to other entities after that just to attend public school are NOT required as Prop. 13 provides for most of the 1% base tax to go to the local school districts, anyway.
Just my .02 [end of rant]
August 11, 2010 at 11:10 AM #590106bearishgurlParticipant[quote=carlsbadworker]. . . Look at how Carmel Valley’s housing market is holding up, then you know what is “Good Schools”. It’s not just 20 minutes drive. It’s parents willing to sink their retirement savings into a hole. That is “Good Schools” to me.[/quote]
carlsbadworker, I’m almost there (retirement). I do not think “sinking your retirement savings into a hole” is a good idea, at any age. Neither did my parents . . . or do my own kids. Nobody wants to have to “be taken care of” (or take care of) an able-bodied “near destitute” 62-year old that can’t get a job due to age discrimination.
I thought I made a few good investments in my life and did everything right. I even have a coveted “defined-benefit” plan. A 40-50 year working-life is a long time. Sh*t can happen during that time in both the worker’s personal and professional life. Sometimes you have control over it and sometimes you don’t.
At the end of the day, your kids will remember they went to homecoming and prom and recieved a HS diploma in accordance with CA Standards and were (hopefully) accepted into the college of their choice which they were able to graduate from. They won’t remember that you lost >50% of (the $$ that would have gone to) your retirement savings in your peak earning years to MR, HOA dues, street bonds, water line bonds and/or a ridiculous mortgage because you felt you had to pay $600K for a property *worth* $350K in order to live within certain “school boundaries.”
It’s up to you, as the adult/parent to provide for yourself in your later years (so your kids won’t have to) and do everything in your power as early as possible to ensure your kids become independent.
I just read a piece on how the OASDI Fund (“SS”) will become insolvent in 2037 (and maybe earlier, if steps aren’t taken). I don’t know if I’ll still be alive then or not. If I was ten years younger, I’d be VERY worried about whether I’d even see a dime of my own contributions to the “system.” If I was still in my “peak earning years” I would socking as much as the law allows into tax-free retirement vehicles at the expense of everything else. The public school system exists to serve kids K-12 (“free of charge”) and graduate them according to state standards and A-G requirements for college entrance. The teachers in the Merced Union HS Dist., the South San Francisco Unified SD, the Death Valley Unified SD, the Mt. Shasta Union SD and the San Dieguito Union HS Dist must all adhere to the SAME CURRICULUM – they have NO CHOICE in the matter.
No other public school payments are required unless you own property and the citizens in your jurisdiction vote school construction bonds in. Any payments voluntarily made to other entities after that just to attend public school are NOT required as Prop. 13 provides for most of the 1% base tax to go to the local school districts, anyway.
Just my .02 [end of rant]
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