We are richer when house prices go down

[(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.

[drunkle]

how do you go from this:

“If you are a renter waiting to buy and you miss out on the one you wanted or get no home at all what benefit did you get from the “sell off”?

I feel I have been able to get a great price on a 2nd home recently. It was the one I wanted in the neighborhood I wanted.

I was surprised to able to rent it for more than I could get by putting my money in other fixed income instruments. I was expecting only $3400/mo but got $3800/mo.. I’m sure others will be able to do the same as more and more people are being forced into the rental market.”

to “cash buyer of ocean view coastal”? does the typical renter have cash in pocket to buy an investment property that’s an ocean view coastal?

how do you calculate a rate of return when you paid cash? what is the rate of return in relation to? current value of the house? equivalent mortgage payment?

[drunkle]

how do you go from this:

“If you are a renter waiting to buy and you miss out on the one you wanted or get no home at all what benefit did you get from the “sell off”?

I feel I have been able to get a great price on a 2nd home recently. It was the one I wanted in the neighborhood I wanted.

I was surprised to able to rent it for more than I could get by putting my money in other fixed income instruments. I was expecting only $3400/mo but got $3800/mo.. I’m sure others will be able to do the same as more and more people are being forced into the rental market.”

to “cash buyer of ocean view coastal”? does the typical renter have cash in pocket to buy an investment property that’s an ocean view coastal?

how do you calculate a rate of return when you paid cash? what is the rate of return in relation to? current value of the house? equivalent mortgage payment?

[drunkle]

how do you go from this:

“If you are a renter waiting to buy and you miss out on the one you wanted or get no home at all what benefit did you get from the “sell off”?

I feel I have been able to get a great price on a 2nd home recently. It was the one I wanted in the neighborhood I wanted.

I was surprised to able to rent it for more than I could get by putting my money in other fixed income instruments. I was expecting only $3400/mo but got $3800/mo.. I’m sure others will be able to do the same as more and more people are being forced into the rental market.”

to “cash buyer of ocean view coastal”? does the typical renter have cash in pocket to buy an investment property that’s an ocean view coastal?

how do you calculate a rate of return when you paid cash? what is the rate of return in relation to? current value of the house? equivalent mortgage payment?

[drunkle]

how do you go from this:

“If you are a renter waiting to buy and you miss out on the one you wanted or get no home at all what benefit did you get from the “sell off”?

I feel I have been able to get a great price on a 2nd home recently. It was the one I wanted in the neighborhood I wanted.

I was surprised to able to rent it for more than I could get by putting my money in other fixed income instruments. I was expecting only $3400/mo but got $3800/mo.. I’m sure others will be able to do the same as more and more people are being forced into the rental market.”

to “cash buyer of ocean view coastal”? does the typical renter have cash in pocket to buy an investment property that’s an ocean view coastal?

how do you calculate a rate of return when you paid cash? what is the rate of return in relation to? current value of the house? equivalent mortgage payment?

[drunkle]

how do you go from this:

“If you are a renter waiting to buy and you miss out on the one you wanted or get no home at all what benefit did you get from the “sell off”?

I feel I have been able to get a great price on a 2nd home recently. It was the one I wanted in the neighborhood I wanted.

I was surprised to able to rent it for more than I could get by putting my money in other fixed income instruments. I was expecting only $3400/mo but got $3800/mo.. I’m sure others will be able to do the same as more and more people are being forced into the rental market.”

to “cash buyer of ocean view coastal”? does the typical renter have cash in pocket to buy an investment property that’s an ocean view coastal?

how do you calculate a rate of return when you paid cash? what is the rate of return in relation to? current value of the house? equivalent mortgage payment?

[CA renter]

This was too fun to pass up… 🙂 So much to refute, too little time. In keeping with Rich’s motto, “In God We Trust. Everyone Else Bring Data,” I am calling B.S. on Felix’s posts.

Felix said:

I was expecting only $3400/mo but got $3800/mo..

Ran a search on Craigslist for rentals between $3,000 and $4,000. Since Felix’s house was easily rented for $3,800, it must be real nice!

Here’s an example in La Costa (5 br). Based on text and advertised rent, looks like it was originally marketed for rent at $4,200 and is now available for $3,900. Didn’t get bid-up like Felix’s place (however, it does have an ocean view, like Felix’s rental):

http://sandiego.craigslist.org/nsd/apa/594895568.html

Here’s one (5br) in San Marcos for $3,295 (significantly lower than Felix’s):

http://sandiego.craigslist.org/nsd/apa/594896120.html

Another 5 br. “Sprawling & luxurious single level 3600 sq. ft. estate” in La Costa for $3,650:

http://sandiego.craigslist.org/nsd/apa/594516419.html

And this one (only 4 bedrooms, with a pool — check out the pics!), in Elfin Forest, where your kids can go to RSF Elementary School — a mere $3,250:

http://sandiego.craigslist.org/csd/apa/594787986.html
————————–

I could go on…

Back to the point. If Felix bought an investment property in the “San Diego area” with an ocean view, and could **easily** rent it out for $3,800 (he only expected $3,400), how much would that house cost?

Look at the above rentals. They would all list for $700K to over $1 million, and probably sell for around $800K (or more, in the case of $3,800 rentals).

Felix claims to have paid cash for the home. Let’s be **extremely** generous and say he paid $700K on a house that rents for $3,800.

At $700K, the property taxes would run at least $8750/yr. (1.25% of purchase price with additional bonds, etc. and it could go higher if prices rise). He says insurance costs him $1,500 annually, and has “minimal” HOAs…we’ll say $40/mo = $480/yr. Let’s add a very optimistic amount for maintenance and property management (he said he’s an “outsider” who purchased a rental in SD)…$500/yr. Assume “optimistic” vacancy of one month every three years ($3800 per month/36 months) at $105.56/mo=$1,267/yr. Add all those costs up, and we get $12,497/yr. Since he paid cash, there’s no mortgage deduction, so we’ll take 33% off the prop taxes ($2887.50), and we arrive at net expenses of $9,609.50 per year.

If he earns $3,800/month, that’s $45,600 annually. Deduct the $9,609.50in costs, and we arrive at a net “profit” of $35,990.50. I’m being generous on all the rent and purchase price assumptions, etc., so we won’t get into depreciation or deductions on maintenance.

With these very optimistic assumptions, Felix would earn about 5% on his investments ($35,990.50/$700,000 = ~5%).

Here’s the fun part… Home prices haven’t yet begun to fall in the higher-end areas. He would have been safer buying “investment” properties in the already hard-hit areas. If the higher-end prices drop just half as much as the lower end (by 50% or more, already), that $700K house stands to lose 25%, or $175,000 within the next ten years (FWIW, I think the higher-end will lose at least 40%, but that’s just a guess). How about rents dropping? Recession? “Unexpected” maintenance costs? Transaction and sales costs if he needed to sell?

All this for a return that Felix could have gotten with Treasuries just a short while ago — and no tenant hassles.

Other things he could do with that money? JP Morgan is issuing Principal Protected Notes on a basket of emerging market currencies with a 200% participation rate. It matures in two years, and you are guaranteed to get your principal back if JPM is still solvent. You will earn a decent return if the dollar falls against these currencies. NOT INVESTMENT ADVICE!!!! — he was asking what else he could do with his money. You can research more here, and follow links:

http://en.wikipedia.org/wiki/Principal_protected_notes

The Yen and Swiss Franc are up over 10% within the past few months. There’s oil, gold, silver, platinum, commodities, etc.

Of course, a trader who’s been watching the credit bubble would have made **very** good money shorting homebuilders, lenders/banks, ratings agencies, retailers, etc. This would net much, much more than 5%, and you wouldn’t have to deal with the hassles of landlording.

It’s interesting that someone who claims to be an active stock trader (since 1983) and partner in two “successful” small trading firms, would buy a rental with 100% cash and not know where to find an easier way to make a 5% return. Not to mention the claim that this downturn will be “well over” in 18 months.

So…I’m calling it: Certifiable troll. 😉

[CA renter]

This was too fun to pass up… 🙂 So much to refute, too little time. In keeping with Rich’s motto, “In God We Trust. Everyone Else Bring Data,” I am calling B.S. on Felix’s posts.

Felix said:

I was expecting only $3400/mo but got $3800/mo..

Ran a search on Craigslist for rentals between $3,000 and $4,000. Since Felix’s house was easily rented for $3,800, it must be real nice!

Here’s an example in La Costa (5 br). Based on text and advertised rent, looks like it was originally marketed for rent at $4,200 and is now available for $3,900. Didn’t get bid-up like Felix’s place (however, it does have an ocean view, like Felix’s rental):

http://sandiego.craigslist.org/nsd/apa/594895568.html

Here’s one (5br) in San Marcos for $3,295 (significantly lower than Felix’s):

http://sandiego.craigslist.org/nsd/apa/594896120.html

Another 5 br. “Sprawling & luxurious single level 3600 sq. ft. estate” in La Costa for $3,650:

http://sandiego.craigslist.org/nsd/apa/594516419.html

And this one (only 4 bedrooms, with a pool — check out the pics!), in Elfin Forest, where your kids can go to RSF Elementary School — a mere $3,250:

http://sandiego.craigslist.org/csd/apa/594787986.html
————————–

I could go on…

Back to the point. If Felix bought an investment property in the “San Diego area” with an ocean view, and could **easily** rent it out for $3,800 (he only expected $3,400), how much would that house cost?

Look at the above rentals. They would all list for $700K to over $1 million, and probably sell for around $800K (or more, in the case of $3,800 rentals).

Felix claims to have paid cash for the home. Let’s be **extremely** generous and say he paid $700K on a house that rents for $3,800.

At $700K, the property taxes would run at least $8750/yr. (1.25% of purchase price with additional bonds, etc. and it could go higher if prices rise). He says insurance costs him $1,500 annually, and has “minimal” HOAs…we’ll say $40/mo = $480/yr. Let’s add a very optimistic amount for maintenance and property management (he said he’s an “outsider” who purchased a rental in SD)…$500/yr. Assume “optimistic” vacancy of one month every three years ($3800 per month/36 months) at $105.56/mo=$1,267/yr. Add all those costs up, and we get $12,497/yr. Since he paid cash, there’s no mortgage deduction, so we’ll take 33% off the prop taxes ($2887.50), and we arrive at net expenses of $9,609.50 per year.

If he earns $3,800/month, that’s $45,600 annually. Deduct the $9,609.50in costs, and we arrive at a net “profit” of $35,990.50. I’m being generous on all the rent and purchase price assumptions, etc., so we won’t get into depreciation or deductions on maintenance.

With these very optimistic assumptions, Felix would earn about 5% on his investments ($35,990.50/$700,000 = ~5%).

Here’s the fun part… Home prices haven’t yet begun to fall in the higher-end areas. He would have been safer buying “investment” properties in the already hard-hit areas. If the higher-end prices drop just half as much as the lower end (by 50% or more, already), that $700K house stands to lose 25%, or $175,000 within the next ten years (FWIW, I think the higher-end will lose at least 40%, but that’s just a guess). How about rents dropping? Recession? “Unexpected” maintenance costs? Transaction and sales costs if he needed to sell?

All this for a return that Felix could have gotten with Treasuries just a short while ago — and no tenant hassles.

Other things he could do with that money? JP Morgan is issuing Principal Protected Notes on a basket of emerging market currencies with a 200% participation rate. It matures in two years, and you are guaranteed to get your principal back if JPM is still solvent. You will earn a decent return if the dollar falls against these currencies. NOT INVESTMENT ADVICE!!!! — he was asking what else he could do with his money. You can research more here, and follow links:

http://en.wikipedia.org/wiki/Principal_protected_notes

The Yen and Swiss Franc are up over 10% within the past few months. There’s oil, gold, silver, platinum, commodities, etc.

Of course, a trader who’s been watching the credit bubble would have made **very** good money shorting homebuilders, lenders/banks, ratings agencies, retailers, etc. This would net much, much more than 5%, and you wouldn’t have to deal with the hassles of landlording.

It’s interesting that someone who claims to be an active stock trader (since 1983) and partner in two “successful” small trading firms, would buy a rental with 100% cash and not know where to find an easier way to make a 5% return. Not to mention the claim that this downturn will be “well over” in 18 months.

So…I’m calling it: Certifiable troll. 😉

[CA renter]

This was too fun to pass up… 🙂 So much to refute, too little time. In keeping with Rich’s motto, “In God We Trust. Everyone Else Bring Data,” I am calling B.S. on Felix’s posts.

Felix said:

I was expecting only $3400/mo but got $3800/mo..

Ran a search on Craigslist for rentals between $3,000 and $4,000. Since Felix’s house was easily rented for $3,800, it must be real nice!

Here’s an example in La Costa (5 br). Based on text and advertised rent, looks like it was originally marketed for rent at $4,200 and is now available for $3,900. Didn’t get bid-up like Felix’s place (however, it does have an ocean view, like Felix’s rental):

http://sandiego.craigslist.org/nsd/apa/594895568.html

Here’s one (5br) in San Marcos for $3,295 (significantly lower than Felix’s):

http://sandiego.craigslist.org/nsd/apa/594896120.html

Another 5 br. “Sprawling & luxurious single level 3600 sq. ft. estate” in La Costa for $3,650:

http://sandiego.craigslist.org/nsd/apa/594516419.html

And this one (only 4 bedrooms, with a pool — check out the pics!), in Elfin Forest, where your kids can go to RSF Elementary School — a mere $3,250:

http://sandiego.craigslist.org/csd/apa/594787986.html
————————–

I could go on…

Back to the point. If Felix bought an investment property in the “San Diego area” with an ocean view, and could **easily** rent it out for $3,800 (he only expected $3,400), how much would that house cost?

Look at the above rentals. They would all list for $700K to over $1 million, and probably sell for around $800K (or more, in the case of $3,800 rentals).

Felix claims to have paid cash for the home. Let’s be **extremely** generous and say he paid $700K on a house that rents for $3,800.

At $700K, the property taxes would run at least $8750/yr. (1.25% of purchase price with additional bonds, etc. and it could go higher if prices rise). He says insurance costs him $1,500 annually, and has “minimal” HOAs…we’ll say $40/mo = $480/yr. Let’s add a very optimistic amount for maintenance and property management (he said he’s an “outsider” who purchased a rental in SD)…$500/yr. Assume “optimistic” vacancy of one month every three years ($3800 per month/36 months) at $105.56/mo=$1,267/yr. Add all those costs up, and we get $12,497/yr. Since he paid cash, there’s no mortgage deduction, so we’ll take 33% off the prop taxes ($2887.50), and we arrive at net expenses of $9,609.50 per year.

If he earns $3,800/month, that’s $45,600 annually. Deduct the $9,609.50in costs, and we arrive at a net “profit” of $35,990.50. I’m being generous on all the rent and purchase price assumptions, etc., so we won’t get into depreciation or deductions on maintenance.

With these very optimistic assumptions, Felix would earn about 5% on his investments ($35,990.50/$700,000 = ~5%).

Here’s the fun part… Home prices haven’t yet begun to fall in the higher-end areas. He would have been safer buying “investment” properties in the already hard-hit areas. If the higher-end prices drop just half as much as the lower end (by 50% or more, already), that $700K house stands to lose 25%, or $175,000 within the next ten years (FWIW, I think the higher-end will lose at least 40%, but that’s just a guess). How about rents dropping? Recession? “Unexpected” maintenance costs? Transaction and sales costs if he needed to sell?

All this for a return that Felix could have gotten with Treasuries just a short while ago — and no tenant hassles.

Other things he could do with that money? JP Morgan is issuing Principal Protected Notes on a basket of emerging market currencies with a 200% participation rate. It matures in two years, and you are guaranteed to get your principal back if JPM is still solvent. You will earn a decent return if the dollar falls against these currencies. NOT INVESTMENT ADVICE!!!! — he was asking what else he could do with his money. You can research more here, and follow links:

http://en.wikipedia.org/wiki/Principal_protected_notes

The Yen and Swiss Franc are up over 10% within the past few months. There’s oil, gold, silver, platinum, commodities, etc.

Of course, a trader who’s been watching the credit bubble would have made **very** good money shorting homebuilders, lenders/banks, ratings agencies, retailers, etc. This would net much, much more than 5%, and you wouldn’t have to deal with the hassles of landlording.

It’s interesting that someone who claims to be an active stock trader (since 1983) and partner in two “successful” small trading firms, would buy a rental with 100% cash and not know where to find an easier way to make a 5% return. Not to mention the claim that this downturn will be “well over” in 18 months.

So…I’m calling it: Certifiable troll. 😉

[CA renter]

This was too fun to pass up… 🙂 So much to refute, too little time. In keeping with Rich’s motto, “In God We Trust. Everyone Else Bring Data,” I am calling B.S. on Felix’s posts.

Felix said:

I was expecting only $3400/mo but got $3800/mo..

Ran a search on Craigslist for rentals between $3,000 and $4,000. Since Felix’s house was easily rented for $3,800, it must be real nice!

Here’s an example in La Costa (5 br). Based on text and advertised rent, looks like it was originally marketed for rent at $4,200 and is now available for $3,900. Didn’t get bid-up like Felix’s place (however, it does have an ocean view, like Felix’s rental):

http://sandiego.craigslist.org/nsd/apa/594895568.html

Here’s one (5br) in San Marcos for $3,295 (significantly lower than Felix’s):

http://sandiego.craigslist.org/nsd/apa/594896120.html

Another 5 br. “Sprawling & luxurious single level 3600 sq. ft. estate” in La Costa for $3,650:

http://sandiego.craigslist.org/nsd/apa/594516419.html

And this one (only 4 bedrooms, with a pool — check out the pics!), in Elfin Forest, where your kids can go to RSF Elementary School — a mere $3,250:

http://sandiego.craigslist.org/csd/apa/594787986.html
————————–

I could go on…

Back to the point. If Felix bought an investment property in the “San Diego area” with an ocean view, and could **easily** rent it out for $3,800 (he only expected $3,400), how much would that house cost?

Look at the above rentals. They would all list for $700K to over $1 million, and probably sell for around $800K (or more, in the case of $3,800 rentals).

Felix claims to have paid cash for the home. Let’s be **extremely** generous and say he paid $700K on a house that rents for $3,800.

At $700K, the property taxes would run at least $8750/yr. (1.25% of purchase price with additional bonds, etc. and it could go higher if prices rise). He says insurance costs him $1,500 annually, and has “minimal” HOAs…we’ll say $40/mo = $480/yr. Let’s add a very optimistic amount for maintenance and property management (he said he’s an “outsider” who purchased a rental in SD)…$500/yr. Assume “optimistic” vacancy of one month every three years ($3800 per month/36 months) at $105.56/mo=$1,267/yr. Add all those costs up, and we get $12,497/yr. Since he paid cash, there’s no mortgage deduction, so we’ll take 33% off the prop taxes ($2887.50), and we arrive at net expenses of $9,609.50 per year.

If he earns $3,800/month, that’s $45,600 annually. Deduct the $9,609.50in costs, and we arrive at a net “profit” of $35,990.50. I’m being generous on all the rent and purchase price assumptions, etc., so we won’t get into depreciation or deductions on maintenance.

With these very optimistic assumptions, Felix would earn about 5% on his investments ($35,990.50/$700,000 = ~5%).

Here’s the fun part… Home prices haven’t yet begun to fall in the higher-end areas. He would have been safer buying “investment” properties in the already hard-hit areas. If the higher-end prices drop just half as much as the lower end (by 50% or more, already), that $700K house stands to lose 25%, or $175,000 within the next ten years (FWIW, I think the higher-end will lose at least 40%, but that’s just a guess). How about rents dropping? Recession? “Unexpected” maintenance costs? Transaction and sales costs if he needed to sell?

All this for a return that Felix could have gotten with Treasuries just a short while ago — and no tenant hassles.

Other things he could do with that money? JP Morgan is issuing Principal Protected Notes on a basket of emerging market currencies with a 200% participation rate. It matures in two years, and you are guaranteed to get your principal back if JPM is still solvent. You will earn a decent return if the dollar falls against these currencies. NOT INVESTMENT ADVICE!!!! — he was asking what else he could do with his money. You can research more here, and follow links:

http://en.wikipedia.org/wiki/Principal_protected_notes

The Yen and Swiss Franc are up over 10% within the past few months. There’s oil, gold, silver, platinum, commodities, etc.

Of course, a trader who’s been watching the credit bubble would have made **very** good money shorting homebuilders, lenders/banks, ratings agencies, retailers, etc. This would net much, much more than 5%, and you wouldn’t have to deal with the hassles of landlording.

It’s interesting that someone who claims to be an active stock trader (since 1983) and partner in two “successful” small trading firms, would buy a rental with 100% cash and not know where to find an easier way to make a 5% return. Not to mention the claim that this downturn will be “well over” in 18 months.

So…I’m calling it: Certifiable troll. 😉

[CA renter]

This was too fun to pass up… 🙂 So much to refute, too little time. In keeping with Rich’s motto, “In God We Trust. Everyone Else Bring Data,” I am calling B.S. on Felix’s posts.

Felix said:

I was expecting only $3400/mo but got $3800/mo..

Ran a search on Craigslist for rentals between $3,000 and $4,000. Since Felix’s house was easily rented for $3,800, it must be real nice!

Here’s an example in La Costa (5 br). Based on text and advertised rent, looks like it was originally marketed for rent at $4,200 and is now available for $3,900. Didn’t get bid-up like Felix’s place (however, it does have an ocean view, like Felix’s rental):

http://sandiego.craigslist.org/nsd/apa/594895568.html

Here’s one (5br) in San Marcos for $3,295 (significantly lower than Felix’s):

http://sandiego.craigslist.org/nsd/apa/594896120.html

Another 5 br. “Sprawling & luxurious single level 3600 sq. ft. estate” in La Costa for $3,650:

http://sandiego.craigslist.org/nsd/apa/594516419.html

And this one (only 4 bedrooms, with a pool — check out the pics!), in Elfin Forest, where your kids can go to RSF Elementary School — a mere $3,250:

http://sandiego.craigslist.org/csd/apa/594787986.html
————————–

I could go on…

Back to the point. If Felix bought an investment property in the “San Diego area” with an ocean view, and could **easily** rent it out for $3,800 (he only expected $3,400), how much would that house cost?

Look at the above rentals. They would all list for $700K to over $1 million, and probably sell for around $800K (or more, in the case of $3,800 rentals).

Felix claims to have paid cash for the home. Let’s be **extremely** generous and say he paid $700K on a house that rents for $3,800.

At $700K, the property taxes would run at least $8750/yr. (1.25% of purchase price with additional bonds, etc. and it could go higher if prices rise). He says insurance costs him $1,500 annually, and has “minimal” HOAs…we’ll say $40/mo = $480/yr. Let’s add a very optimistic amount for maintenance and property management (he said he’s an “outsider” who purchased a rental in SD)…$500/yr. Assume “optimistic” vacancy of one month every three years ($3800 per month/36 months) at $105.56/mo=$1,267/yr. Add all those costs up, and we get $12,497/yr. Since he paid cash, there’s no mortgage deduction, so we’ll take 33% off the prop taxes ($2887.50), and we arrive at net expenses of $9,609.50 per year.

If he earns $3,800/month, that’s $45,600 annually. Deduct the $9,609.50in costs, and we arrive at a net “profit” of $35,990.50. I’m being generous on all the rent and purchase price assumptions, etc., so we won’t get into depreciation or deductions on maintenance.

With these very optimistic assumptions, Felix would earn about 5% on his investments ($35,990.50/$700,000 = ~5%).

Here’s the fun part… Home prices haven’t yet begun to fall in the higher-end areas. He would have been safer buying “investment” properties in the already hard-hit areas. If the higher-end prices drop just half as much as the lower end (by 50% or more, already), that $700K house stands to lose 25%, or $175,000 within the next ten years (FWIW, I think the higher-end will lose at least 40%, but that’s just a guess). How about rents dropping? Recession? “Unexpected” maintenance costs? Transaction and sales costs if he needed to sell?

All this for a return that Felix could have gotten with Treasuries just a short while ago — and no tenant hassles.

Other things he could do with that money? JP Morgan is issuing Principal Protected Notes on a basket of emerging market currencies with a 200% participation rate. It matures in two years, and you are guaranteed to get your principal back if JPM is still solvent. You will earn a decent return if the dollar falls against these currencies. NOT INVESTMENT ADVICE!!!! — he was asking what else he could do with his money. You can research more here, and follow links:

http://en.wikipedia.org/wiki/Principal_protected_notes

The Yen and Swiss Franc are up over 10% within the past few months. There’s oil, gold, silver, platinum, commodities, etc.

Of course, a trader who’s been watching the credit bubble would have made **very** good money shorting homebuilders, lenders/banks, ratings agencies, retailers, etc. This would net much, much more than 5%, and you wouldn’t have to deal with the hassles of landlording.

It’s interesting that someone who claims to be an active stock trader (since 1983) and partner in two “successful” small trading firms, would buy a rental with 100% cash and not know where to find an easier way to make a 5% return. Not to mention the claim that this downturn will be “well over” in 18 months.

So…I’m calling it: Certifiable troll. 😉

[drunkle]

ca renter:

thanks for posting in detail exactly what i was thinking. 4.5% return… on what? considering the huge risk in depreciation, counting your measley chickens at this point is beyond premature.

[drunkle]

ca renter:

thanks for posting in detail exactly what i was thinking. 4.5% return… on what? considering the huge risk in depreciation, counting your measley chickens at this point is beyond premature.

[drunkle]

ca renter:

thanks for posting in detail exactly what i was thinking. 4.5% return… on what? considering the huge risk in depreciation, counting your measley chickens at this point is beyond premature.

[drunkle]

ca renter:

thanks for posting in detail exactly what i was thinking. 4.5% return… on what? considering the huge risk in depreciation, counting your measley chickens at this point is beyond premature.

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