We are richer when house prices go down

[felix]

I see where you’re coming from here TG.

I purchased what would be considered a coastal property with ocean views. I certainly agree with your assessment that tract homes in newer subdivisions are different animals, at least, for the time being.

[felix]

Well written, Ray.

I agree that speculating or extending yourself probably won’t end well in this market.

I guess as a cash buyer I look at the situation differently. I’m not going to be forced to sell. I’ll probably own this home until I die. I feel reasonable certain it will be worth quite a bit more by then.

Anyway, I’m not quite sure where I would do better with this cash in a relatively passive investment. I already have enough non-margin exposure to the stock market. I also have plenty of money in a variety of other financial instruments.
To me the return is good and the long term prognosis is as well.

Since I’m not there everyday, looking at Re, I was not going to wait in hopes of getting a better deal when this one was good enough.

[felix]

Well written, Ray.

I agree that speculating or extending yourself probably won’t end well in this market.

I guess as a cash buyer I look at the situation differently. I’m not going to be forced to sell. I’ll probably own this home until I die. I feel reasonable certain it will be worth quite a bit more by then.

Anyway, I’m not quite sure where I would do better with this cash in a relatively passive investment. I already have enough non-margin exposure to the stock market. I also have plenty of money in a variety of other financial instruments.
To me the return is good and the long term prognosis is as well.

Since I’m not there everyday, looking at Re, I was not going to wait in hopes of getting a better deal when this one was good enough.

[felix]

Well written, Ray.

I agree that speculating or extending yourself probably won’t end well in this market.

I guess as a cash buyer I look at the situation differently. I’m not going to be forced to sell. I’ll probably own this home until I die. I feel reasonable certain it will be worth quite a bit more by then.

Anyway, I’m not quite sure where I would do better with this cash in a relatively passive investment. I already have enough non-margin exposure to the stock market. I also have plenty of money in a variety of other financial instruments.
To me the return is good and the long term prognosis is as well.

Since I’m not there everyday, looking at Re, I was not going to wait in hopes of getting a better deal when this one was good enough.

[felix]

Well written, Ray.

I agree that speculating or extending yourself probably won’t end well in this market.

I guess as a cash buyer I look at the situation differently. I’m not going to be forced to sell. I’ll probably own this home until I die. I feel reasonable certain it will be worth quite a bit more by then.

Anyway, I’m not quite sure where I would do better with this cash in a relatively passive investment. I already have enough non-margin exposure to the stock market. I also have plenty of money in a variety of other financial instruments.
To me the return is good and the long term prognosis is as well.

Since I’m not there everyday, looking at Re, I was not going to wait in hopes of getting a better deal when this one was good enough.

[felix]

Well written, Ray.

I agree that speculating or extending yourself probably won’t end well in this market.

I guess as a cash buyer I look at the situation differently. I’m not going to be forced to sell. I’ll probably own this home until I die. I feel reasonable certain it will be worth quite a bit more by then.

Anyway, I’m not quite sure where I would do better with this cash in a relatively passive investment. I already have enough non-margin exposure to the stock market. I also have plenty of money in a variety of other financial instruments.
To me the return is good and the long term prognosis is as well.

Since I’m not there everyday, looking at Re, I was not going to wait in hopes of getting a better deal when this one was good enough.

[Raybyrnes]

felix

When you did your analysis did you factor vacancy rates in when calculating you net ROR?

Do you foresee yourself living in the house at some point down the line or would it be something that your would leave to your children knowing that they would benefit from the adjusted cost basis?

I sort of think of real estate from a perpetuity standpoint.

[Raybyrnes]

felix

When you did your analysis did you factor vacancy rates in when calculating you net ROR?

Do you foresee yourself living in the house at some point down the line or would it be something that your would leave to your children knowing that they would benefit from the adjusted cost basis?

I sort of think of real estate from a perpetuity standpoint.

[Raybyrnes]

felix

When you did your analysis did you factor vacancy rates in when calculating you net ROR?

Do you foresee yourself living in the house at some point down the line or would it be something that your would leave to your children knowing that they would benefit from the adjusted cost basis?

I sort of think of real estate from a perpetuity standpoint.

[Raybyrnes]

felix

When you did your analysis did you factor vacancy rates in when calculating you net ROR?

Do you foresee yourself living in the house at some point down the line or would it be something that your would leave to your children knowing that they would benefit from the adjusted cost basis?

I sort of think of real estate from a perpetuity standpoint.

[Raybyrnes]

felix

When you did your analysis did you factor vacancy rates in when calculating you net ROR?

Do you foresee yourself living in the house at some point down the line or would it be something that your would leave to your children knowing that they would benefit from the adjusted cost basis?

I sort of think of real estate from a perpetuity standpoint.

[(former)FormerSanDiegan]

Certainly, but as someone not there everyday and with cash I need to put my cash to use, getting over 4.5% return with long term growth potential seems pretty good. Of course, you do have to have a renter for this to work.

I believe that one can pay cash in San Diego today and clear about 4 % after expenses on rental property if self-managed. Examples would be Clairemont or Mira Mesa properties in the ~400-425K range renting for 2000-2200. Getting 6% or more gross. Assume about 4500 for property tax, 1500 for insurance and 200 per month for maintenance puts it right in the 4% range.

Certainly buying today for 20% off 2005 prices and making 4% compared to money market funds in the 3% range might be a feasible part of a well-balanced portfolio and a decent inflation hedge. This only makes sense to me though if the property is say 25% or so of your portfolio. So it might not be that crazy an idea.

Personally, I think most investors would like to see another 10-15% or so price decline (or 15-20% rent increases at current prices) before considering the jumping in (assuming current interest rates and rental rates). At that point 8% or more gross on property would surely look pretty good, assuming short-term interest rates (t-bills, money markets) in the 4% or lower range.

[(former)FormerSanDiegan]

Certainly, but as someone not there everyday and with cash I need to put my cash to use, getting over 4.5% return with long term growth potential seems pretty good. Of course, you do have to have a renter for this to work.

I believe that one can pay cash in San Diego today and clear about 4 % after expenses on rental property if self-managed. Examples would be Clairemont or Mira Mesa properties in the ~400-425K range renting for 2000-2200. Getting 6% or more gross. Assume about 4500 for property tax, 1500 for insurance and 200 per month for maintenance puts it right in the 4% range.

Certainly buying today for 20% off 2005 prices and making 4% compared to money market funds in the 3% range might be a feasible part of a well-balanced portfolio and a decent inflation hedge. This only makes sense to me though if the property is say 25% or so of your portfolio. So it might not be that crazy an idea.

Personally, I think most investors would like to see another 10-15% or so price decline (or 15-20% rent increases at current prices) before considering the jumping in (assuming current interest rates and rental rates). At that point 8% or more gross on property would surely look pretty good, assuming short-term interest rates (t-bills, money markets) in the 4% or lower range.

[(former)FormerSanDiegan]

Certainly, but as someone not there everyday and with cash I need to put my cash to use, getting over 4.5% return with long term growth potential seems pretty good. Of course, you do have to have a renter for this to work.

I believe that one can pay cash in San Diego today and clear about 4 % after expenses on rental property if self-managed. Examples would be Clairemont or Mira Mesa properties in the ~400-425K range renting for 2000-2200. Getting 6% or more gross. Assume about 4500 for property tax, 1500 for insurance and 200 per month for maintenance puts it right in the 4% range.

Certainly buying today for 20% off 2005 prices and making 4% compared to money market funds in the 3% range might be a feasible part of a well-balanced portfolio and a decent inflation hedge. This only makes sense to me though if the property is say 25% or so of your portfolio. So it might not be that crazy an idea.

Personally, I think most investors would like to see another 10-15% or so price decline (or 15-20% rent increases at current prices) before considering the jumping in (assuming current interest rates and rental rates). At that point 8% or more gross on property would surely look pretty good, assuming short-term interest rates (t-bills, money markets) in the 4% or lower range.

[(former)FormerSanDiegan]

Certainly, but as someone not there everyday and with cash I need to put my cash to use, getting over 4.5% return with long term growth potential seems pretty good. Of course, you do have to have a renter for this to work.

I believe that one can pay cash in San Diego today and clear about 4 % after expenses on rental property if self-managed. Examples would be Clairemont or Mira Mesa properties in the ~400-425K range renting for 2000-2200. Getting 6% or more gross. Assume about 4500 for property tax, 1500 for insurance and 200 per month for maintenance puts it right in the 4% range.

Certainly buying today for 20% off 2005 prices and making 4% compared to money market funds in the 3% range might be a feasible part of a well-balanced portfolio and a decent inflation hedge. This only makes sense to me though if the property is say 25% or so of your portfolio. So it might not be that crazy an idea.

Personally, I think most investors would like to see another 10-15% or so price decline (or 15-20% rent increases at current prices) before considering the jumping in (assuming current interest rates and rental rates). At that point 8% or more gross on property would surely look pretty good, assuming short-term interest rates (t-bills, money markets) in the 4% or lower range.

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