[SDEngineer]

[quote=patientrenter]

SDEngineer, in the old days, lenders kept loans on their own books, and took 100% of the loss from a failure to repay, or a failure to pay the full agreed original monthly payment. Today, nonrepayment of most mortgages is covered by guarantees from a govt agency, e.g. the FHA (directly) or the FDIC (indirectly). So the mortgage and housing markets will look nothing like they used to.[/quote]

What does this have to do with a property grading out as a cash flow investment however? My entire point was that both historically and currently, you can’t get a 0 down (or even low down) loan for an investment property, therefore the floor for investors is set at 20% or somewhere nearby down where all the expected expenses are lower than the rent it can bring in.

The fact that 5 years of catastrophic homeownership decisions by the fed, the banks, the realtors, the mortgage brokers, and the buyers is currently being unwound will eventually wind up hitting a wall set by investors based on what they can buy the place and rent it out for. That is simple market economics.

As a side note, once prices do fall to that level (and, as has been pointed out by Rich in some of his recent charts, in San Diego as an aggregate, we may be either near there or already there – though higher priced submarkets like the coast and the high end areas are pretty clearly not there yet), the risk to a bank then becomes fairly minimal in a default scenario, no matter who pays – since only in a deflating market do banks take large losses from a defaulted mortgage loan. After prices become normalized relative to rent and income levels, the value of the foreclosed property is high enough that in general it covers the value of the foreclosed loan.

Only in the case where the asset is extremely overvalued relative to the mortgage (i.e. a bubble priced house) do banks take a really big bath in a foreclosure scenario. Similarly, a buyer who winds up in danger of default can generally sell that house, avoid the ding on his/her credit, and pay off the mortgage if need be.

[SDEngineer]

[quote=flu][quote=SDEngineer]
Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[/quote]

I think Maytag is Whirpool. At least Whirpool owns Maytag, as is does Jenn Air and Amana(was owned by Maytag), and KitchenAid….

In my experience, the 3 rules I follow for reliable appliances.

1) Avoid too much electronics and too many features…(Prefer manual controls versus those cool looking LCD/LED). My experience has been the electronics fail long before mechanical stuff.

2) Avoid Bosch appliances (especially dishwashers)…Expect your reliability from this german brand to be on par with german cars 🙂

3) Avoid Chinese brands.[/quote]

Maytag was bought by Whirlpool in 2006, but they are seperate product lines, manufactured in seperate factories (sort of like Ford and Jaguar were). Kitchen-Aid is another brand name owned by Whirlpool, but I believe they are actually manufactured by Whirlpool themselves.

[SDEngineer]

[quote=flu][quote=SDEngineer]
Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[/quote]

I think Maytag is Whirpool. At least Whirpool owns Maytag, as is does Jenn Air and Amana(was owned by Maytag), and KitchenAid….

In my experience, the 3 rules I follow for reliable appliances.

1) Avoid too much electronics and too many features…(Prefer manual controls versus those cool looking LCD/LED). My experience has been the electronics fail long before mechanical stuff.

2) Avoid Bosch appliances (especially dishwashers)…Expect your reliability from this german brand to be on par with german cars 🙂

3) Avoid Chinese brands.[/quote]

Maytag was bought by Whirlpool in 2006, but they are seperate product lines, manufactured in seperate factories (sort of like Ford and Jaguar were). Kitchen-Aid is another brand name owned by Whirlpool, but I believe they are actually manufactured by Whirlpool themselves.

[SDEngineer]

[quote=flu][quote=SDEngineer]
Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[/quote]

I think Maytag is Whirpool. At least Whirpool owns Maytag, as is does Jenn Air and Amana(was owned by Maytag), and KitchenAid….

In my experience, the 3 rules I follow for reliable appliances.

1) Avoid too much electronics and too many features…(Prefer manual controls versus those cool looking LCD/LED). My experience has been the electronics fail long before mechanical stuff.

2) Avoid Bosch appliances (especially dishwashers)…Expect your reliability from this german brand to be on par with german cars 🙂

3) Avoid Chinese brands.[/quote]

Maytag was bought by Whirlpool in 2006, but they are seperate product lines, manufactured in seperate factories (sort of like Ford and Jaguar were). Kitchen-Aid is another brand name owned by Whirlpool, but I believe they are actually manufactured by Whirlpool themselves.

[SDEngineer]

[quote=flu][quote=SDEngineer]
Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[/quote]

I think Maytag is Whirpool. At least Whirpool owns Maytag, as is does Jenn Air and Amana(was owned by Maytag), and KitchenAid….

In my experience, the 3 rules I follow for reliable appliances.

1) Avoid too much electronics and too many features…(Prefer manual controls versus those cool looking LCD/LED). My experience has been the electronics fail long before mechanical stuff.

2) Avoid Bosch appliances (especially dishwashers)…Expect your reliability from this german brand to be on par with german cars 🙂

3) Avoid Chinese brands.[/quote]

Maytag was bought by Whirlpool in 2006, but they are seperate product lines, manufactured in seperate factories (sort of like Ford and Jaguar were). Kitchen-Aid is another brand name owned by Whirlpool, but I believe they are actually manufactured by Whirlpool themselves.

[SDEngineer]

[quote=flu][quote=SDEngineer]
Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[/quote]

I think Maytag is Whirpool. At least Whirpool owns Maytag, as is does Jenn Air and Amana(was owned by Maytag), and KitchenAid….

In my experience, the 3 rules I follow for reliable appliances.

1) Avoid too much electronics and too many features…(Prefer manual controls versus those cool looking LCD/LED). My experience has been the electronics fail long before mechanical stuff.

2) Avoid Bosch appliances (especially dishwashers)…Expect your reliability from this german brand to be on par with german cars 🙂

3) Avoid Chinese brands.[/quote]

Maytag was bought by Whirlpool in 2006, but they are seperate product lines, manufactured in seperate factories (sort of like Ford and Jaguar were). Kitchen-Aid is another brand name owned by Whirlpool, but I believe they are actually manufactured by Whirlpool themselves.

[SDEngineer]

[quote=patb]sears sells LG badged as kenmore for half the price.

do not get stainless or designer colors, as those will be harvest gold
in a few years. White is in vogue forever.

Stainless shows smudges like crazy, you can go ape trying to keep it clean.

[/quote]

Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[SDEngineer]

[quote=patb]sears sells LG badged as kenmore for half the price.

do not get stainless or designer colors, as those will be harvest gold
in a few years. White is in vogue forever.

Stainless shows smudges like crazy, you can go ape trying to keep it clean.

[/quote]

Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[SDEngineer]

[quote=patb]sears sells LG badged as kenmore for half the price.

do not get stainless or designer colors, as those will be harvest gold
in a few years. White is in vogue forever.

Stainless shows smudges like crazy, you can go ape trying to keep it clean.

[/quote]

Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[SDEngineer]

[quote=patb]sears sells LG badged as kenmore for half the price.

do not get stainless or designer colors, as those will be harvest gold
in a few years. White is in vogue forever.

Stainless shows smudges like crazy, you can go ape trying to keep it clean.

[/quote]

Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[SDEngineer]

[quote=patb]sears sells LG badged as kenmore for half the price.

do not get stainless or designer colors, as those will be harvest gold
in a few years. White is in vogue forever.

Stainless shows smudges like crazy, you can go ape trying to keep it clean.

[/quote]

Most Kenmore stuff is actually Whirlpool, but sort of a moot point, since Whirlpool is considered pretty reliable across all the appliances it makes. LG does make some Kenmore stuff though. Unfortunately though, Maytag also makes some Kenmore stuff, and they’re hardly the reliable manufacturer they used to be. I’d say most Kenmore stuff is probably made by reliable manufacturers though.

[SDEngineer]

[quote=tlefort]This subject always makes the hair on my back stand on its end (I am a hairy fellow 🙂 )

When a relator hits me with the comment ” You will save so much on taxes because you can write off your interest on a mortage”, I have to educate them on a few facts.

As a renter one does not pay property tax. So say a 300 k home and aprox 3500 in property tax.

Say a household income of 75k, three kids and a federal tax liability of ~ 3500. If the renter buys a home he gets to write off about 20k a year in interest (depending on the size of the mortgage, interest rate etc). Which might bring his fed tax liability down to close to 0. But he has to pay property tax now, so he is back where he started at a 3,500$ tax laibility, just now it is in the form of property tax.

Also, don’t forget about the 10k standard decuction given to the renter. In this scenario there would only be an additional 10k write off.

everyone’s tax situation is different. You have to actually owe taxes before you can save on them via write offs.

I just hate relators just flippently quoteing how much money you can be saving by writing off a mortgage. Talk to a CPA first and work out the math. Buying and house (and a mortgage) is not always the tax savings it appears.[/quote]

State taxes are an itemized tax deduction as well. So are property taxes (outside of Mello-Roos). In my case, prop taxes + state taxes alone will be the equivalent of the standard deduction, though for someone with the income profile you noted they might only amount to half the standard deduction, but that still adds $5000 to the net deductions for about $15K in extra deductions.

I believe both interest and prop. tax are also state deductions as well, which is another consideration.

In any case, I don’t know anyone who buys a house based on P&I alone. In most cases, the number given as a monthly payment on the mortgage disclosure forms is PITI, including both the tax component and insurance. Once you figure the tax advantages (not too difficult), you can subtract them out of the PITI number and get a good comparison of what you’re paying vs. what renting costs.

[SDEngineer]

[quote=tlefort]This subject always makes the hair on my back stand on its end (I am a hairy fellow 🙂 )

When a relator hits me with the comment ” You will save so much on taxes because you can write off your interest on a mortage”, I have to educate them on a few facts.

As a renter one does not pay property tax. So say a 300 k home and aprox 3500 in property tax.

Say a household income of 75k, three kids and a federal tax liability of ~ 3500. If the renter buys a home he gets to write off about 20k a year in interest (depending on the size of the mortgage, interest rate etc). Which might bring his fed tax liability down to close to 0. But he has to pay property tax now, so he is back where he started at a 3,500$ tax laibility, just now it is in the form of property tax.

Also, don’t forget about the 10k standard decuction given to the renter. In this scenario there would only be an additional 10k write off.

everyone’s tax situation is different. You have to actually owe taxes before you can save on them via write offs.

I just hate relators just flippently quoteing how much money you can be saving by writing off a mortgage. Talk to a CPA first and work out the math. Buying and house (and a mortgage) is not always the tax savings it appears.[/quote]

State taxes are an itemized tax deduction as well. So are property taxes (outside of Mello-Roos). In my case, prop taxes + state taxes alone will be the equivalent of the standard deduction, though for someone with the income profile you noted they might only amount to half the standard deduction, but that still adds $5000 to the net deductions for about $15K in extra deductions.

I believe both interest and prop. tax are also state deductions as well, which is another consideration.

In any case, I don’t know anyone who buys a house based on P&I alone. In most cases, the number given as a monthly payment on the mortgage disclosure forms is PITI, including both the tax component and insurance. Once you figure the tax advantages (not too difficult), you can subtract them out of the PITI number and get a good comparison of what you’re paying vs. what renting costs.

[SDEngineer]

[quote=tlefort]This subject always makes the hair on my back stand on its end (I am a hairy fellow 🙂 )

When a relator hits me with the comment ” You will save so much on taxes because you can write off your interest on a mortage”, I have to educate them on a few facts.

As a renter one does not pay property tax. So say a 300 k home and aprox 3500 in property tax.

Say a household income of 75k, three kids and a federal tax liability of ~ 3500. If the renter buys a home he gets to write off about 20k a year in interest (depending on the size of the mortgage, interest rate etc). Which might bring his fed tax liability down to close to 0. But he has to pay property tax now, so he is back where he started at a 3,500$ tax laibility, just now it is in the form of property tax.

Also, don’t forget about the 10k standard decuction given to the renter. In this scenario there would only be an additional 10k write off.

everyone’s tax situation is different. You have to actually owe taxes before you can save on them via write offs.

I just hate relators just flippently quoteing how much money you can be saving by writing off a mortgage. Talk to a CPA first and work out the math. Buying and house (and a mortgage) is not always the tax savings it appears.[/quote]

State taxes are an itemized tax deduction as well. So are property taxes (outside of Mello-Roos). In my case, prop taxes + state taxes alone will be the equivalent of the standard deduction, though for someone with the income profile you noted they might only amount to half the standard deduction, but that still adds $5000 to the net deductions for about $15K in extra deductions.

I believe both interest and prop. tax are also state deductions as well, which is another consideration.

In any case, I don’t know anyone who buys a house based on P&I alone. In most cases, the number given as a monthly payment on the mortgage disclosure forms is PITI, including both the tax component and insurance. Once you figure the tax advantages (not too difficult), you can subtract them out of the PITI number and get a good comparison of what you’re paying vs. what renting costs.

[SDEngineer]

[quote=tlefort]This subject always makes the hair on my back stand on its end (I am a hairy fellow 🙂 )

When a relator hits me with the comment ” You will save so much on taxes because you can write off your interest on a mortage”, I have to educate them on a few facts.

As a renter one does not pay property tax. So say a 300 k home and aprox 3500 in property tax.

Say a household income of 75k, three kids and a federal tax liability of ~ 3500. If the renter buys a home he gets to write off about 20k a year in interest (depending on the size of the mortgage, interest rate etc). Which might bring his fed tax liability down to close to 0. But he has to pay property tax now, so he is back where he started at a 3,500$ tax laibility, just now it is in the form of property tax.

Also, don’t forget about the 10k standard decuction given to the renter. In this scenario there would only be an additional 10k write off.

everyone’s tax situation is different. You have to actually owe taxes before you can save on them via write offs.

I just hate relators just flippently quoteing how much money you can be saving by writing off a mortgage. Talk to a CPA first and work out the math. Buying and house (and a mortgage) is not always the tax savings it appears.[/quote]

State taxes are an itemized tax deduction as well. So are property taxes (outside of Mello-Roos). In my case, prop taxes + state taxes alone will be the equivalent of the standard deduction, though for someone with the income profile you noted they might only amount to half the standard deduction, but that still adds $5000 to the net deductions for about $15K in extra deductions.

I believe both interest and prop. tax are also state deductions as well, which is another consideration.

In any case, I don’t know anyone who buys a house based on P&I alone. In most cases, the number given as a monthly payment on the mortgage disclosure forms is PITI, including both the tax component and insurance. Once you figure the tax advantages (not too difficult), you can subtract them out of the PITI number and get a good comparison of what you’re paying vs. what renting costs.

[Author]

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