What’s your family income?

[sdrealtor]

If there are several dozen folks on this board with incomes between 100k and 400K and plenty of assets sitting on the sidelines, could there be more that arent on this blog? This thread brought 2 thoughts to mind.

1.) There are plenty of folks on the sidelines with the assets and income to buy at today’s prices who are waiting for lower prices and/or a mor epostive market psychology.

2.) After seeing those income figures SD R, renewed his committment to this board and selling RE to as many of you as possible over the next several years. Looks like he should be buying the beer, the bourbon, the scotch etc…

Heck, I think those income figures got Ozzie back on board also!

[sdrealtor]

If there are several dozen folks on this board with incomes between 100k and 400K and plenty of assets sitting on the sidelines, could there be more that arent on this blog? This thread brought 2 thoughts to mind.

1.) There are plenty of folks on the sidelines with the assets and income to buy at today’s prices who are waiting for lower prices and/or a mor epostive market psychology.

2.) After seeing those income figures SD R, renewed his committment to this board and selling RE to as many of you as possible over the next several years. Looks like he should be buying the beer, the bourbon, the scotch etc…

Heck, I think those income figures got Ozzie back on board also!

[KIBU]

Look like a few got really high income, in the 300,000s. My question is if for example one doesn’t have a business (some here probably must have a bussiness to reach that high income) and you make 200,000, 300,000, would one lose a big chunk of money to SIR IRS ? Waiting on the sideline therefore would be at a big cost (but maybe smaller cost than buying at peak), wouldn’t it???

Any one know the approximate cut off point for a huge income like two to three hundred thousands that would make sense to buy rather than wait???

[KIBU]

Look like a few got really high income, in the 300,000s. My question is if for example one doesn’t have a business (some here probably must have a bussiness to reach that high income) and you make 200,000, 300,000, would one lose a big chunk of money to SIR IRS ? Waiting on the sideline therefore would be at a big cost (but maybe smaller cost than buying at peak), wouldn’t it???

Any one know the approximate cut off point for a huge income like two to three hundred thousands that would make sense to buy rather than wait???

[surveyor]

RETD

I’ve mentioned this before, but there is a way for people who make huge amounts of money pay little or no taxes legally.

The ironic thing is that it is a real estate tax deduction (the real estate professional tax deduction).

Taking that into consideration, even a household income as “low” as $150k would benefit…

=shrug=

[surveyor]

RETD

I’ve mentioned this before, but there is a way for people who make huge amounts of money pay little or no taxes legally.

The ironic thing is that it is a real estate tax deduction (the real estate professional tax deduction).

Taking that into consideration, even a household income as “low” as $150k would benefit…

=shrug=

[patientrenter]

KIBU,

For me there is no cut-off even though I am a poster child for tax deduction opportunity. Let’s take the best possible case for buying now using borrowed funds and I’ll tell you why it doesn’t work for me.

My marginal tax rate is… I’m not sure exactly, but probably the maximum, 45% or so. So if I can borrow at 6%, and property taxes are another 1% minimum, and maintenance expenses are 1% minimum and I assume they are fully deductible, then I need to see annual returns of at least 4.4% after tax on the property to justify buying more than I can afford with just 100% cash. I don’t believe that 4.4% gross is a good bet in today’s local property market. I wouldn’t even feel very comfortable betting on 0% gross today.

Patient renter in OC

[patientrenter]

KIBU,

For me there is no cut-off even though I am a poster child for tax deduction opportunity. Let’s take the best possible case for buying now using borrowed funds and I’ll tell you why it doesn’t work for me.

My marginal tax rate is… I’m not sure exactly, but probably the maximum, 45% or so. So if I can borrow at 6%, and property taxes are another 1% minimum, and maintenance expenses are 1% minimum and I assume they are fully deductible, then I need to see annual returns of at least 4.4% after tax on the property to justify buying more than I can afford with just 100% cash. I don’t believe that 4.4% gross is a good bet in today’s local property market. I wouldn’t even feel very comfortable betting on 0% gross today.

Patient renter in OC

[cyphire]

Well said patientrenter… Same with me. We just moved into a house in La Jolla which would probably cost 2.5M. Using the above numbers – it would cost 200K per year int/only, taxes, maint. I am using the entire home cost in the calculation, because any amount down would reduce my investment income as it would be tied into the house. Only the interest on the first 1,000,000 (and an additional 100,000 equity) is deductible. If you are in the AMT situation, not even that 1.1 Million is all deductible.

This house is costing 6.5K / month to rent. Even grossing that up by 40% would be equivalent to 9.1K. Much better deal than 18,000 / month for a purchase.

The more important issue is that house prices have to appreciate over 6% per year minimum to make buying a better proposition. If that 2.5M house decreases in value to 2.3M, that is a 200K hit to equity, but still having a mortgage of 2.5M (or whatever was not put down as downpayment.

[cyphire]

Well said patientrenter… Same with me. We just moved into a house in La Jolla which would probably cost 2.5M. Using the above numbers – it would cost 200K per year int/only, taxes, maint. I am using the entire home cost in the calculation, because any amount down would reduce my investment income as it would be tied into the house. Only the interest on the first 1,000,000 (and an additional 100,000 equity) is deductible. If you are in the AMT situation, not even that 1.1 Million is all deductible.

This house is costing 6.5K / month to rent. Even grossing that up by 40% would be equivalent to 9.1K. Much better deal than 18,000 / month for a purchase.

The more important issue is that house prices have to appreciate over 6% per year minimum to make buying a better proposition. If that 2.5M house decreases in value to 2.3M, that is a 200K hit to equity, but still having a mortgage of 2.5M (or whatever was not put down as downpayment.

[ibjames]

I still think these forums are not the norm, and that this board consists of financially savvy people. The average person does not computer drops in % in real estate and get a hard on talking about statistics like people on this board. While there is a broad range of people on this board I do think the mind set is different, and the amount in savings and the ethics used in purchasing is different too.

It’s like comparing the people on this board to the people who post for sale items on craigslist. There would be no comparison.

[ibjames]

I still think these forums are not the norm, and that this board consists of financially savvy people. The average person does not computer drops in % in real estate and get a hard on talking about statistics like people on this board. While there is a broad range of people on this board I do think the mind set is different, and the amount in savings and the ethics used in purchasing is different too.

It’s like comparing the people on this board to the people who post for sale items on craigslist. There would be no comparison.

[studenteconomist]

28 yo with 4 degrees (1 PhD and 2 Masters) and $0 monthly income (currently unemployed):( Married with our first child due in 1 week! Getting desperate for a job that would pay just the family median. Getting a PhD at UCSD (Biochemistry) a huge financial mistake, trying to rectify it by moving into financial services (with my MBA). Family income of 45k (wife working). Anyone here need a new employee with exception analytical skills (both scientific and financial)?

[studenteconomist]

28 yo with 4 degrees (1 PhD and 2 Masters) and $0 monthly income (currently unemployed):( Married with our first child due in 1 week! Getting desperate for a job that would pay just the family median. Getting a PhD at UCSD (Biochemistry) a huge financial mistake, trying to rectify it by moving into financial services (with my MBA). Family income of 45k (wife working). Anyone here need a new employee with exception analytical skills (both scientific and financial)?

[beanmaestro]

Me: 32 yo PhD Engineer ~100k
Wife: 25 yo Materials grad student ~25k
Colleges: Cornell, UCSB
Rent: $1650 for 2-1 half-duplex
Total Expenses (inc rent): ~50k

We can afford to buy, but it would take most of our assets and most of our future income (especially when my wife takes 5 years off to have kids), and would demolish any hope we have of retiring young. And though I can see that some people can afford to buy at current prices, I seriously doubt that anyone would be able to buy from US in a decade such that we could escape with a reasonable profit. Until that changes, the opportunity cost (in money and flexibility) of buying a house is just too bloody high.

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