[Coronita]

[quote=bearishgurl][quote=Myriad]I don’t think this something either party necessarily could solve. With the end of the Cold War and opening of China, the world had to absorb 500M+ new workers into the global system. That created a gap in the high-wage countries where middle tier and low tier skilled work shifted to those countries.
Now that workforce has more or less been absorbed and the workforce has aged considerably. For example production in China is almost as expensive as the US now, accounting for shipping, energy, insurance, etc. Now with new technology and shift in consumer demand to more immediate needs, I think we’ll see a shift in middle tier skilled labor back to developed economies.[/quote]There you go again, Myriad. The “world” didn’t “have” to “absorb” 500M (Chinese) workers. The “world” doesn’t owe these workers a damn thing! In the case of the US, what actually happened was that our leaders actually gave away our jobs to the Chinese at our expense! Even the “high tier” executive and white-collar professional jobs disappeared along with the US manufacturer-employers who closed up shop in the US and moved to MX or overseas to take advantage of slave labor. It was our OWN esteemed leaders who sold American workers down the river by creating NAFTA and other trade agreements making it possible for our OWN manufacturers to get their goods made for pennies on the dollar in another country! US citizens didn’t really need all this cheap Chinese junk back then and we don’t need it now. America’s millions of displaced workers would rather have a selection of JOBS to choose from in their respective locales rather than regular freight trains loaded with double-stacked Chinese crates barreling through their towns at all hours of the day and night to unload at big box stores coast to coast. One used to be able to leave a job easily and have another one waiting to start in the same locale but this is now near impossible to do in most cities and towns.

Since you couched what happened to millions of American jobs in language which appears to be making excuses here, I don’t mind discussing what really happened. Regardless if a so-called “global `system'” actually exists … or not, we Americans aren’t responsible for China’s population explosion OR their unemployment level.[/quote]

And before you change what your wrote.

[Coronita]

You know what I’m thankful for? I am thankful that in America there are still lots of people who are white, who are not like BG.

For all of you piggs that are “white” who don’t stoop so low to blame someone that isn’t white on all of your financial problems and career limitations because you chose not to go to college and chose never to go back, I thank you for being the shred of decency left in this country.

I don’t know how what your financial situation is BG. But you certainly have no class. No amount of money can fix that.

[Coronita]

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[Coronita]

I read somewhere a significant cause of manufacturing job losses comes from automation. What percentage of that versus outsourcing, I forget. Need to dig that up.

[Coronita]

[quote=mixxalot]Correct, I work for a bay area company and based as telecommute employee. Fortunately, I get a bay area salary and have lower living costs here in San Diego than the bay area. I have San Diego tech firms all the time trying to lowball me for jobs. Pay here sucks compared to what bay area firms pay. And the commute would be hell.

I wonder how engineers afford to buy a home here? A 100k salary does not compute into even a tiny 2-3 condo down payment and mortgage payment.[/quote]

Actually, for me, there’s not that much of a pay difference between my employer in SD and in the Bay Area. it’s only off by about 7%-10%.. But the cost of living is considerably less than up there. I’m wondering how people who don’t hit the stock option jackpot up there can afford to buy a home up there. Milipitas starts around $900k. Santa Clara starts around $1.3million for a 1700sqft SFH. Cupertino, which probably would be equivalent to CarmelV starts around $2million. Plus, once you hit a higher AGI, your tax rate is much more, and a lot of things start to get phased out wrto itemized deductions. Between LA, SF, SD, with the exception of stock grants, I don’t see significant difference with salary, especially after taxes take a bite out of both.

QC engineers are pretty well compensated here. Once upon a time there were layoffs, but I’m told that they have an attrition issue, and so for some, there’s something called retention bonuses.

I guess it depends specifically on what skills/focus area your career is in. The biggest problem I see for tech workers in any other areas outside of Bay Area is lack of stock grants, which really is the only thing that can propel you to a financial level that is significantly different from simply a salaried employee.

Once upon of time, that was QC, that was Intuit, that was Broadcom, that was Illumina. But while stock grants is still a significant part of one’s compensation in the Bay Area, other parts outside of Bay Area seemed to have slimed down on that, especially for newer employees that are just starting out. Older employees get grandfathered in and with lateral moves, usually there is some matching grant just to fish you over. In part of my negotiations with prospect employers, I have been in situations in which they offered me a comparable salary close enough to the bay area. But when it came to equity, it was different. And then even when I tried to negotiate less salary more equity, there was a limit on how much that was possible. At least that was the case for me. In fairness, I’m not really good at these negotiations. I just do it to the level that I try not to get screwed.

There are a couple of other tidbit difference between working remotely and working from a local office, because I’ve done similar things in the past. Working remotely, one’s compensation typical starts higher, but over time, it about evens out. Working remotely, I was the last to get promoted, and there was very limited opportunity for leadership and career growth. When i switched over to a local office for the same company, promotions came faster and so did increased responsibilities. Also, from a safety net perspective, layoffs typically happened first to those that worked remotely versus those that were based out of a home office, unless you just happen to be that much better. So in all, over the long period of time, I found that it pretty much evens out. I was paid more initially when I worked remotely for a bay area group, but then when I switched over to the group down here in the same company, i moved up much faster, and so comp ended up about the same..

[Coronita]

[quote=FlyerInHi][quote=flu]I don’t know, I don’t think the economy is as bad as people make it out to be. At least not for some of us. I guess if you’re in the rustbelt regions, that’s a different story.[/quote]

I know a guy with a good job. I encouraged him buy a better house. He still thinks the economy will go to shit. Has been watching too much scare mongering.

I think a recession (2 consecutive quarters of negative growth) is a least 3 years out. But then the economy would have grown from what it is today. Some people think a recession as some calamity. It’s just normal business cycle.

Depends where in the rustbelt. Harrisburg has government, medical, etc. downtown is rejuvenating with new condos. Pittsburg has education and medical, new condos and lofts in the city. Except for the wealthy suburbs, the outlying areas aren’t doing well, but it’s the normal reshaping of the urban geophaphy.[/quote]

Most people can’t outsmart the economy consistently by being contrarian all the time. They might get lucky once or twice.

And if you are one the ones that think the system is rigged, even more of a reason why you won’t win being a contrarian over the long haul

[Coronita]

I don’t know, I don’t think the economy is as bad as people make it out to be. At least not for some of us. I guess if you’re in the rustbelt regions, that’s a different story.

[Coronita]

[quote=Panderso]It’s definitely interesting to hear everyone’s opinions. I think we’re going to try to buy. Inventory is tight right now but we have time on our side so we can wait for the right place at an okay price. I did notice a bunch of price drops at the end of summer last year so fingers crossed the same thing happens this year.

I’m leaning towards keeping the condo too. I ran numbers today on keeping the condo vs putting the money in the stock market, assuming 7 percent annual return in the market, 3 percent annual rent increases, and 2 percent appreciation (and really, I think the numbers for rent and appreciation are quite conservative considering actual historical data) and it still comes out way in favor of the condo. And yes, I considered maintenance, improvements, less than 100 percent occupancy, depreciation, PALs, depreciation clawback on the sale (I’m an accountant).

Again, we don’t need access to that capital any time soon. We would be keeping the condo for the long haul. I could see our future kids using it for college or us even retiring in it when we’re older.

Yes, it’s a risk to keep money in a rental, but we’re young, are saving like crazy, and I think some calculated risk is how you build wealth. People are trending towards the overwhelmingly negative right now on home prices — yes, prices will dip at some point, but assuming less than 2 percent annual appreciation over 30 years in coastal CA is a bit silly IMO.[/quote]

Well, in that case. I’m glad you crossed over to the dark side 🙂
Congrats!

[Coronita]

[quote=treehugger]
Where the heck has house prices doubled in SD since 2012?[/quote]

near SDSU

[Coronita]

[quote=Panderso]Thanks all for your thoughts. This is exactly why I like posting on the internet — folks have no qualms about telling it like it is and exploring worst case scenarios, which is important to hear.

Flu, I totally get what you are saying and luckily we’ve considered all those factors. To clarify, I don’t expect 100 percent occupancy, I just said that to give some frame of reference to the cash flow numbers. I expect negative cash flow the first few years. I’m not thrilled about becoming a landlord and that’s weighed on our decision to keep the condo. The thing is, where would we invest that capital if we sold? We ran the numbers and, assuming 2 percent annual appreciation on the condo and averaged cash flow of only $100 a month, we’re stillwont way better off compared to having it in the stock market at a 5 percent annual return.

I do like diversified investments though … If folks can suggest a better place to park the cash I’d love to hear it.[/quote]

I am not going to recommend where you should park your cash because what works for me might not work for others. And it’s always something I ask myself anyway.

Sometimes the best investment is no investment if it just doesn’t feel right imho.

I personally don’t think we will see 2% appreciation each year for the next few years unless the banks start to relax lending standards imho. But who knows.

If I were in your situation, I like dealing with rentals so I would probably keep the condo as a rental because for me, all else being equal, I get more satisfaction with money earned from a tangible asset than on paper so I wouldn’t mind the pita factor. But I am weird.

If you are going to be starting a family, there’s probably things you’ll want to do there, and plus you’ll also want some emergency funds in cash there’s ever a job loss in the future(knock on wood). You probably have already thought about it so I won’t go there that’s your business.

It is probably ok if you have to wait for the right investment to come along too. So you just need to figure out if you want to be a landlord or not.

One thing I’ll bring up too is about passive losses on real estate. You might already know, but if you have a rental loss , you may or may not be able to deduct the complete amount. If your household modified agi is greater than $100k ( which it probably is if your husband is a techie) , how much you can write off of your rental losses against income you have elsewhere will get limited, with the write-off completely gone if your modified agi is $150k or higher I believe. The exception would be if one of you guys are a “real estate professional” as defined by the IRS. If you can’t write-off your losses, it gets carried over to the next year to offset any rental income gain that year and/or offsets your gain when you sell the property. I am not a tax guy or accountant, just an engineer…so talk to an accountant or read publication 925 I think from the IRS regarding passive activity.

[Coronita]

[quote=Panderso]Edit to my last comment: I just checked the Zillow rental estimate again and apparently cash flow would be $100-$200 a month, not $300-$400.

Bewildering – yeah, we’ve considered child-care in our budget. That’s why we have a cap on what we’ll buy. It is expensive and unfortunately we don’t have immediate family in the area so no free day care. :([/quote]

I would not count on your condo being cash flow positive 100-200/month, at least for the 1-3 years. In fact, I would consider that you count just breaking even at least when you first start out as a more realistic outcome.

People move, things break, property taxes/hoa/insurance goes up, rent might come down in the future. No one ever assumes 100% occupancy. Also, you and your husband might not want to deal with being actively involved in it’s management so add another 5-8% in management fees if you want someone else to do it. Also, unless you and your husband plans on doing the maintenance yourself, anytime something breaks, in all likelihood, you will end up running negative that month. Calling a handyman to simply replace a leaky faucet will set you back around $100-200, including the cost of the faucet itself.

On one of my condos, the A/C just went out. I got lucky. The repair bill was only around $200. It could have been way worse. On another SFH rental, the dishwasher went out. And a few months ago, another condo the fridge went out. And last month, I got a $200 repair bill on something that broke on a condo that is managed by someone else. I personally don’t mind dealing with all this, because I like being a landlord, and across all my rentals, the numbers still look really good. I wanted to give you a realistic picture right when you are starting out, and you need to consider a cushion in your budget for this. This is not to scare you into deciding to not keep the condo, but I think you need to consider a worst case scenario, and plan for that to see if you are willing and able to juggle being a landlord and if it fits into your family’s financial goals.

Keep in mind also, that since it’s your primary home right now, capital gains will be totally exempt for you guys (up to $500k for joint filers) if you do sell. That’s a pretty big gift from the IRS. And with that nice chunk of cash, you could (in theory) invest it elsewhere. Plenty of ways to skin the cat. You could also try renting it out first and then decide to sell and still get your capital gains tax break, if you do so within the rules regarding the timeline…

[Coronita]

Gold broke through $1360/ounce
Platinum up to $1170/ounce
Silver is over $20.60

[Coronita]

[quote=HLS]FLU,
Your 5 details are the epitome of anecdotal evidence and completely meaningless.
Not one of your 5 points meant anything regarding your HELOC
subordination approval, which is the thread topic.

He didn’t have to mention HELOC. I’m 99.5% sure it’s a HELOC based on the details.

MM…. If the HELOC is left in 2nd position, it’s going to require a subordination whether it is at zero, maxed out or any balance in between. It’s probably going to cost $250 to subordinate.
Another recent issue recently is Solar lien subordinations, which can also delay loan fundings.

If your loan originator isn’t on it from the beginning, it could delay your closing which could cost you even more money if you need to pay for a lock extension at the end.(In addition to sub. fee)
In FLU’s example, extending a $350K loan for 3 weeks could cost $1400 with some lenders.
It should not take that long if addressed from the beginning.

Different lenders can have different policies about open available line on HELOCS. There was a time that you were better off having your line maxed out VS. having no balance drawn; because the payment factor was lower.
It may still be true with some lenders.

Believing that a loan was approved solely because of low LTV, W2 income & lack of debt is completely missing the point.
Your loan was approved, because it was approved based on guidelines. You didn’t get ANY extra credit for things that you point out.

Self employed people with a 680 credit score and lots of debt can get approved for 97% LTV loans.

Loans are approved on income & expenses.
They are priced on a combination of credit score & equity.

Lots & lots of people get approved with 3% equity.
Lots of people with 800+ credit scores and 50% equity get turned down, even if they have $1 million dollars in the bank.

Although W2 income without bonus, commission or overtime is easier to figure, those with other sources of income qualify also.
You don’t get extra credit with W2 income.
Being on a job for 6 years or 20 years means nothing extra to an approval. If 30 or 60 days income is needed, you get no extra credit for 6 years.
If a 740 credit score is needed for best pricing, you get no extra credit for 800 or 830.
2 months bank statements are generally required.
You get no extra credit for providing 12 months bank statements.
60% LTV is best pricing, it isn’t any easier to get an approval with 35% equity.

Getting loan approvals can involve 100 pieces of a puzzle all coming together, 80% of which the borrower isn’t even aware of.
If there’s only 99 pieces available, the loan gets denied.

There are people with $1,000,000 homes with an 800 credit score, $1M in the bank and no mortgage who don’t qualify for a $200,000 refi loan.

The govt regulations have made getting a loan denial a humbling experience. I chuckle every someone tells me that they will have ‘no problem’ getting approved for a loan.[/quote]

fair enough…i stand corrected. I’m out/

[Coronita]

…oh and Moneymaker, if it makes you feel any better, I have no tickets and no accident, and yet my insurance goes up every 6 months for the past 3 years.

My latest renewal is around $990/6months for 4 cars.

[Coronita]

[quote=CafeMoto]thank you Flu. I will look into an umbrella[/quote]

I’m not saying you need to get umbrella. I’m just saying what some people get it for…It’s probably the first step towards asset protection, since for a few hundred a year, it can provide a pretty good shelter for your net worth.

As the saying goes, part of your life you spend on trying to build your net worth. The rest of your life, you spend trying to protect it from all the vultures, lol.

FWIW: some umbrella insurance actually have what’s called I think excess personal liability. That often extends to issues in the 21st century like, being sued for libel or slander on Yelp, if you happen to post a negative review that is construed as a malicious attack against a business owner. Yeah, I know go figure.

If you’re concerned about asset protection, you probably should consult with an attorney that is knowledgeable in this area. Not solicit internet advice. Most of the time, it’s wrong.

All I can say, is out of all the thing you can cheapen out in life, you don’t want to cheapen out on liability insurance, especially if you stand to lose out a lot, especially in CA. I mean, consider this. You are a landlord, and your tenant decides to raise a pit bull without telling you, and the pit bull bites your tenant’s friend while he is visiting. Does it fall under your tenant’s renter’s insurance (which hopefully he has and that you insisted him provide you a copy each year), or does it fall under your rental’s liability insurance, or both? What if the tenant’s friend ends up suing you? You want to pay legal costs alone?

[Author]

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