Forum Replies Created
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AuthorPosts
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temeculaguy
Participantsvelte-actually that isn’t the one I’m looking at, but the math is the same, I never actually post the exact ones, I’m too afraid another pigg will beat me so I post ones that are as close as possible then modify the numners when I post the analysis, but thanks for the heads up anyway.
peter-I’m shocked that supported the idea, you are one the bears and if yo support it, then i may be onto something. I did what you said and did my due diligence and decided to wait. Rents are pretty much the same but I drove by my old rental, it’s still vacant after two months. It’s a different management company that had the sign out front and I’m pretty sure someone moved in just after I left so I’m not sure what happened. I do know what my landlord had paid and they were losing money at the rent I was paying them, lots of it, so I’m not sure if they can lower it even $100 to stay with the trend. It was the only one vacant out of a hundred units so the jury is out, but I obviously need to look into this further.
scardeycat-I almost did the same thing, sometimes I wish I had. I remember finding ubercheap places and calculating a 5 year mortgage, I just couldn’t get the kids to get out of the car and look at it, I don’t have a spouse to convince but in the end couldn’t convince myself, yet I loved the idea. I think you need to get a bunch of friends together and take over a cheap neighborhood, the biggest drawback wasn’t the age and the size, it was the neighbors.
kewp, there hasn’t been hardly anything built in a while, new construction has pretty much been shut down for a year. Forbes listed Temecula and Murrieta as two of top 5 markets in the country for the high sales due to the price drops, Nor is right about the activity, bread last longer at the store than houses these days, listings can’t be measured in days, but should be in hours sometimes. The point of the thread was the smaller places in cruddier hoods more than 20 years old without hoa’s are being overlooked and as Russell pointed out from his past experience, sometimes that is where the better investments are located. If you look at my example, prices are more than half off, that is why the glut isn’t there. I ran my old three car garage monitor formula, inventory is falling. Waiting hawk, as always is right, there really is no difference between mid 90’s and late 80’s here.
My biggest fear is maintenance on a 20-30 year old low end house that probably wasn’t built well to begin with, combining all the factors, I think I’ll just watch this for the next year and not act to hastily and I’ll e-mail pri-dk and compare notes, or rather just steal his, since i have only just begun taking notes.
Participantsvelte-actually that isn’t the one I’m looking at, but the math is the same, I never actually post the exact ones, I’m too afraid another pigg will beat me so I post ones that are as close as possible then modify the numners when I post the analysis, but thanks for the heads up anyway.
peter-I’m shocked that supported the idea, you are one the bears and if yo support it, then i may be onto something. I did what you said and did my due diligence and decided to wait. Rents are pretty much the same but I drove by my old rental, it’s still vacant after two months. It’s a different management company that had the sign out front and I’m pretty sure someone moved in just after I left so I’m not sure what happened. I do know what my landlord had paid and they were losing money at the rent I was paying them, lots of it, so I’m not sure if they can lower it even $100 to stay with the trend. It was the only one vacant out of a hundred units so the jury is out, but I obviously need to look into this further.
scardeycat-I almost did the same thing, sometimes I wish I had. I remember finding ubercheap places and calculating a 5 year mortgage, I just couldn’t get the kids to get out of the car and look at it, I don’t have a spouse to convince but in the end couldn’t convince myself, yet I loved the idea. I think you need to get a bunch of friends together and take over a cheap neighborhood, the biggest drawback wasn’t the age and the size, it was the neighbors.
kewp, there hasn’t been hardly anything built in a while, new construction has pretty much been shut down for a year. Forbes listed Temecula and Murrieta as two of top 5 markets in the country for the high sales due to the price drops, Nor is right about the activity, bread last longer at the store than houses these days, listings can’t be measured in days, but should be in hours sometimes. The point of the thread was the smaller places in cruddier hoods more than 20 years old without hoa’s are being overlooked and as Russell pointed out from his past experience, sometimes that is where the better investments are located. If you look at my example, prices are more than half off, that is why the glut isn’t there. I ran my old three car garage monitor formula, inventory is falling. Waiting hawk, as always is right, there really is no difference between mid 90’s and late 80’s here.
My biggest fear is maintenance on a 20-30 year old low end house that probably wasn’t built well to begin with, combining all the factors, I think I’ll just watch this for the next year and not act to hastily and I’ll e-mail pri-dk and compare notes, or rather just steal his, since i have only just begun taking notes.
Participantsvelte-actually that isn’t the one I’m looking at, but the math is the same, I never actually post the exact ones, I’m too afraid another pigg will beat me so I post ones that are as close as possible then modify the numners when I post the analysis, but thanks for the heads up anyway.
peter-I’m shocked that supported the idea, you are one the bears and if yo support it, then i may be onto something. I did what you said and did my due diligence and decided to wait. Rents are pretty much the same but I drove by my old rental, it’s still vacant after two months. It’s a different management company that had the sign out front and I’m pretty sure someone moved in just after I left so I’m not sure what happened. I do know what my landlord had paid and they were losing money at the rent I was paying them, lots of it, so I’m not sure if they can lower it even $100 to stay with the trend. It was the only one vacant out of a hundred units so the jury is out, but I obviously need to look into this further.
scardeycat-I almost did the same thing, sometimes I wish I had. I remember finding ubercheap places and calculating a 5 year mortgage, I just couldn’t get the kids to get out of the car and look at it, I don’t have a spouse to convince but in the end couldn’t convince myself, yet I loved the idea. I think you need to get a bunch of friends together and take over a cheap neighborhood, the biggest drawback wasn’t the age and the size, it was the neighbors.
kewp, there hasn’t been hardly anything built in a while, new construction has pretty much been shut down for a year. Forbes listed Temecula and Murrieta as two of top 5 markets in the country for the high sales due to the price drops, Nor is right about the activity, bread last longer at the store than houses these days, listings can’t be measured in days, but should be in hours sometimes. The point of the thread was the smaller places in cruddier hoods more than 20 years old without hoa’s are being overlooked and as Russell pointed out from his past experience, sometimes that is where the better investments are located. If you look at my example, prices are more than half off, that is why the glut isn’t there. I ran my old three car garage monitor formula, inventory is falling. Waiting hawk, as always is right, there really is no difference between mid 90’s and late 80’s here.
My biggest fear is maintenance on a 20-30 year old low end house that probably wasn’t built well to begin with, combining all the factors, I think I’ll just watch this for the next year and not act to hastily and I’ll e-mail pri-dk and compare notes, or rather just steal his, since i have only just begun taking notes.
ParticipantWhat would we riot over? Those in power just got started and are the choice of the protest types anyway. I just don’t see the berkely types or minorities staging a protest to oust Obama, we kinda have a free pass right now. White middle aged republicans traditionally are not likely to fill the streets in protest, it’s unlikely the newly unemployed lawyers and bankers will start tipping over cars.
With regards to France, they have been having riots for a few years, this isn’t new. I used to read the papers when the economy was good and the police injuries and torched car daily totals were larger than those in Iraq. A hundred cars a night would burn. the rodney king riots have nothing on France’s troubles with it’s muslim youth.
Ireland? This is also not a new thing, maybe it was fairly peaceful for a few years but civil unrest there is practically a sport. Most of the less lethal weapons used by our police were invented because of the irish riots.
SDtransplant, I know you are far more wordly than I, this is not my arena, so I may be off base here, but isn’t this stuff always going on? If it’s not jobs, it’s religion, race or soccer. Maybe I’m just too simple, but if the governemnt tried to take away my cigars, wine, porn or espn, maybe then I’ll hit the streets, until then, it is what it is. It’s crappy economy and nobody wants it, not the corporations, not the government, not the institutions, nobody wants it. Yelling or rioting won’t change anything, the power brokers aren’t going to decide “you know, they seemed pissed, let’s push the good economy button before someone gets hurt.” It’s one thing to protest a decision that can be changed, but all the kings horses and all the kings men already tried, usually they make it worse, it would be better if the people didn’t pressure them into hasty decisions because even the well thought decisions aren’t that good, I’d hate to see them get worse.
ParticipantWhat would we riot over? Those in power just got started and are the choice of the protest types anyway. I just don’t see the berkely types or minorities staging a protest to oust Obama, we kinda have a free pass right now. White middle aged republicans traditionally are not likely to fill the streets in protest, it’s unlikely the newly unemployed lawyers and bankers will start tipping over cars.
With regards to France, they have been having riots for a few years, this isn’t new. I used to read the papers when the economy was good and the police injuries and torched car daily totals were larger than those in Iraq. A hundred cars a night would burn. the rodney king riots have nothing on France’s troubles with it’s muslim youth.
Ireland? This is also not a new thing, maybe it was fairly peaceful for a few years but civil unrest there is practically a sport. Most of the less lethal weapons used by our police were invented because of the irish riots.
SDtransplant, I know you are far more wordly than I, this is not my arena, so I may be off base here, but isn’t this stuff always going on? If it’s not jobs, it’s religion, race or soccer. Maybe I’m just too simple, but if the governemnt tried to take away my cigars, wine, porn or espn, maybe then I’ll hit the streets, until then, it is what it is. It’s crappy economy and nobody wants it, not the corporations, not the government, not the institutions, nobody wants it. Yelling or rioting won’t change anything, the power brokers aren’t going to decide “you know, they seemed pissed, let’s push the good economy button before someone gets hurt.” It’s one thing to protest a decision that can be changed, but all the kings horses and all the kings men already tried, usually they make it worse, it would be better if the people didn’t pressure them into hasty decisions because even the well thought decisions aren’t that good, I’d hate to see them get worse.
ParticipantWhat would we riot over? Those in power just got started and are the choice of the protest types anyway. I just don’t see the berkely types or minorities staging a protest to oust Obama, we kinda have a free pass right now. White middle aged republicans traditionally are not likely to fill the streets in protest, it’s unlikely the newly unemployed lawyers and bankers will start tipping over cars.
With regards to France, they have been having riots for a few years, this isn’t new. I used to read the papers when the economy was good and the police injuries and torched car daily totals were larger than those in Iraq. A hundred cars a night would burn. the rodney king riots have nothing on France’s troubles with it’s muslim youth.
Ireland? This is also not a new thing, maybe it was fairly peaceful for a few years but civil unrest there is practically a sport. Most of the less lethal weapons used by our police were invented because of the irish riots.
SDtransplant, I know you are far more wordly than I, this is not my arena, so I may be off base here, but isn’t this stuff always going on? If it’s not jobs, it’s religion, race or soccer. Maybe I’m just too simple, but if the governemnt tried to take away my cigars, wine, porn or espn, maybe then I’ll hit the streets, until then, it is what it is. It’s crappy economy and nobody wants it, not the corporations, not the government, not the institutions, nobody wants it. Yelling or rioting won’t change anything, the power brokers aren’t going to decide “you know, they seemed pissed, let’s push the good economy button before someone gets hurt.” It’s one thing to protest a decision that can be changed, but all the kings horses and all the kings men already tried, usually they make it worse, it would be better if the people didn’t pressure them into hasty decisions because even the well thought decisions aren’t that good, I’d hate to see them get worse.
ParticipantWhat would we riot over? Those in power just got started and are the choice of the protest types anyway. I just don’t see the berkely types or minorities staging a protest to oust Obama, we kinda have a free pass right now. White middle aged republicans traditionally are not likely to fill the streets in protest, it’s unlikely the newly unemployed lawyers and bankers will start tipping over cars.
With regards to France, they have been having riots for a few years, this isn’t new. I used to read the papers when the economy was good and the police injuries and torched car daily totals were larger than those in Iraq. A hundred cars a night would burn. the rodney king riots have nothing on France’s troubles with it’s muslim youth.
Ireland? This is also not a new thing, maybe it was fairly peaceful for a few years but civil unrest there is practically a sport. Most of the less lethal weapons used by our police were invented because of the irish riots.
SDtransplant, I know you are far more wordly than I, this is not my arena, so I may be off base here, but isn’t this stuff always going on? If it’s not jobs, it’s religion, race or soccer. Maybe I’m just too simple, but if the governemnt tried to take away my cigars, wine, porn or espn, maybe then I’ll hit the streets, until then, it is what it is. It’s crappy economy and nobody wants it, not the corporations, not the government, not the institutions, nobody wants it. Yelling or rioting won’t change anything, the power brokers aren’t going to decide “you know, they seemed pissed, let’s push the good economy button before someone gets hurt.” It’s one thing to protest a decision that can be changed, but all the kings horses and all the kings men already tried, usually they make it worse, it would be better if the people didn’t pressure them into hasty decisions because even the well thought decisions aren’t that good, I’d hate to see them get worse.
ParticipantWhat would we riot over? Those in power just got started and are the choice of the protest types anyway. I just don’t see the berkely types or minorities staging a protest to oust Obama, we kinda have a free pass right now. White middle aged republicans traditionally are not likely to fill the streets in protest, it’s unlikely the newly unemployed lawyers and bankers will start tipping over cars.
With regards to France, they have been having riots for a few years, this isn’t new. I used to read the papers when the economy was good and the police injuries and torched car daily totals were larger than those in Iraq. A hundred cars a night would burn. the rodney king riots have nothing on France’s troubles with it’s muslim youth.
Ireland? This is also not a new thing, maybe it was fairly peaceful for a few years but civil unrest there is practically a sport. Most of the less lethal weapons used by our police were invented because of the irish riots.
SDtransplant, I know you are far more wordly than I, this is not my arena, so I may be off base here, but isn’t this stuff always going on? If it’s not jobs, it’s religion, race or soccer. Maybe I’m just too simple, but if the governemnt tried to take away my cigars, wine, porn or espn, maybe then I’ll hit the streets, until then, it is what it is. It’s crappy economy and nobody wants it, not the corporations, not the government, not the institutions, nobody wants it. Yelling or rioting won’t change anything, the power brokers aren’t going to decide “you know, they seemed pissed, let’s push the good economy button before someone gets hurt.” It’s one thing to protest a decision that can be changed, but all the kings horses and all the kings men already tried, usually they make it worse, it would be better if the people didn’t pressure them into hasty decisions because even the well thought decisions aren’t that good, I’d hate to see them get worse.
Participant[quote=XBoxBoy][quote=temeculaguy]I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]
Your own words are the clue to your quandry. I’ve read enough of your posts to know that you TG, are an analytic type of guy. You like to look at the numbers, the data and make rational decisions. (You like to drink good wine and make wise guy remarks late at night which make us all laugh too!) All good and well, but you and most economists today suffer from the belief that most people are like you. They are not. They listen to what they hear at the hair salon, or what they hear while watching Johnny play soccer, and they trust that. Data just confuses them.
The point being that the vast majority of people are not “rational consumers” and any analysis or economics based on that is deeply flawed. This expectation that people would be rational is what is hindering your understanding of the bubble going up, and why you’re going to misjudge the overshoot that is coming.
XBoxBoy
[/quote]
So what do you suggest? You are quite right, numbers are my friends, they give me comfort. Numbers never confuse me, people do. I made compelling arguments to people why 2003-2007 was not a good time to buy, yet they did so in droves. I can make a compelling argument why 2009-2012 will be a good time to buy, but they will run away. 2005 had great employment numbers and the economy was roaring, that was bad for buying, good for selling. 2009 will have high unemployment and a tanking economy, bad for selling, good for buying. Good is bad, bad is good, whatever the talk is at the soccer field is, do the opposite.
Let’s just say you paid cash, remove the leverage play. When that house was 260k in 2003, the rent was the same, lets say 1200 x 12 months, 14,400 a year return, lets go 4,400 for taxes, maint and emergencies. The return was 10k on 260k, about 4% return for a lot of risk and work, in 2005 it was probably worth over 300k, rate would be closer to 3%, at that time you could get those returns many other places. They were buying the appreciation potential, usually losing money for the right to bet on it. Now the cash outlay would be 110k, same 14400 annual return, the 4400 should be more than enough (1k taxes, 600 insurance, leaves 3k a year for maint or even a 10-15% drop in rents) so the net return is closer to 10% and that return cannot be found as easily today other places, certainly not in stocks or bonds today. Completely ignoring location, future appreciation, etc. the pure return exceeds other available investments and the leverage return is twice the cost of money. You used to pay them to leverage, now they pay you to leverage, how does that make it to the hair salon gossip agenda. If it were in texas or arkansas, I’d look at it. I have a similar feeling about stocks these days, when the dow breaks below 6k, I think I’m going “all in.” But back to these ever present cash positive rentals, they have another potential positive beyond the pure return, they are a hedge against the very real posiblity of inflation, something I think will be more likely to
happen than guns, riots and canned foods, but that’s me, I’m a betting man.Participant[quote=XBoxBoy][quote=temeculaguy]I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]
Your own words are the clue to your quandry. I’ve read enough of your posts to know that you TG, are an analytic type of guy. You like to look at the numbers, the data and make rational decisions. (You like to drink good wine and make wise guy remarks late at night which make us all laugh too!) All good and well, but you and most economists today suffer from the belief that most people are like you. They are not. They listen to what they hear at the hair salon, or what they hear while watching Johnny play soccer, and they trust that. Data just confuses them.
The point being that the vast majority of people are not “rational consumers” and any analysis or economics based on that is deeply flawed. This expectation that people would be rational is what is hindering your understanding of the bubble going up, and why you’re going to misjudge the overshoot that is coming.
XBoxBoy
[/quote]
So what do you suggest? You are quite right, numbers are my friends, they give me comfort. Numbers never confuse me, people do. I made compelling arguments to people why 2003-2007 was not a good time to buy, yet they did so in droves. I can make a compelling argument why 2009-2012 will be a good time to buy, but they will run away. 2005 had great employment numbers and the economy was roaring, that was bad for buying, good for selling. 2009 will have high unemployment and a tanking economy, bad for selling, good for buying. Good is bad, bad is good, whatever the talk is at the soccer field is, do the opposite.
Let’s just say you paid cash, remove the leverage play. When that house was 260k in 2003, the rent was the same, lets say 1200 x 12 months, 14,400 a year return, lets go 4,400 for taxes, maint and emergencies. The return was 10k on 260k, about 4% return for a lot of risk and work, in 2005 it was probably worth over 300k, rate would be closer to 3%, at that time you could get those returns many other places. They were buying the appreciation potential, usually losing money for the right to bet on it. Now the cash outlay would be 110k, same 14400 annual return, the 4400 should be more than enough (1k taxes, 600 insurance, leaves 3k a year for maint or even a 10-15% drop in rents) so the net return is closer to 10% and that return cannot be found as easily today other places, certainly not in stocks or bonds today. Completely ignoring location, future appreciation, etc. the pure return exceeds other available investments and the leverage return is twice the cost of money. You used to pay them to leverage, now they pay you to leverage, how does that make it to the hair salon gossip agenda. If it were in texas or arkansas, I’d look at it. I have a similar feeling about stocks these days, when the dow breaks below 6k, I think I’m going “all in.” But back to these ever present cash positive rentals, they have another potential positive beyond the pure return, they are a hedge against the very real posiblity of inflation, something I think will be more likely to
happen than guns, riots and canned foods, but that’s me, I’m a betting man.Participant[quote=XBoxBoy][quote=temeculaguy]I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]
Your own words are the clue to your quandry. I’ve read enough of your posts to know that you TG, are an analytic type of guy. You like to look at the numbers, the data and make rational decisions. (You like to drink good wine and make wise guy remarks late at night which make us all laugh too!) All good and well, but you and most economists today suffer from the belief that most people are like you. They are not. They listen to what they hear at the hair salon, or what they hear while watching Johnny play soccer, and they trust that. Data just confuses them.
The point being that the vast majority of people are not “rational consumers” and any analysis or economics based on that is deeply flawed. This expectation that people would be rational is what is hindering your understanding of the bubble going up, and why you’re going to misjudge the overshoot that is coming.
XBoxBoy
[/quote]
So what do you suggest? You are quite right, numbers are my friends, they give me comfort. Numbers never confuse me, people do. I made compelling arguments to people why 2003-2007 was not a good time to buy, yet they did so in droves. I can make a compelling argument why 2009-2012 will be a good time to buy, but they will run away. 2005 had great employment numbers and the economy was roaring, that was bad for buying, good for selling. 2009 will have high unemployment and a tanking economy, bad for selling, good for buying. Good is bad, bad is good, whatever the talk is at the soccer field is, do the opposite.
Let’s just say you paid cash, remove the leverage play. When that house was 260k in 2003, the rent was the same, lets say 1200 x 12 months, 14,400 a year return, lets go 4,400 for taxes, maint and emergencies. The return was 10k on 260k, about 4% return for a lot of risk and work, in 2005 it was probably worth over 300k, rate would be closer to 3%, at that time you could get those returns many other places. They were buying the appreciation potential, usually losing money for the right to bet on it. Now the cash outlay would be 110k, same 14400 annual return, the 4400 should be more than enough (1k taxes, 600 insurance, leaves 3k a year for maint or even a 10-15% drop in rents) so the net return is closer to 10% and that return cannot be found as easily today other places, certainly not in stocks or bonds today. Completely ignoring location, future appreciation, etc. the pure return exceeds other available investments and the leverage return is twice the cost of money. You used to pay them to leverage, now they pay you to leverage, how does that make it to the hair salon gossip agenda. If it were in texas or arkansas, I’d look at it. I have a similar feeling about stocks these days, when the dow breaks below 6k, I think I’m going “all in.” But back to these ever present cash positive rentals, they have another potential positive beyond the pure return, they are a hedge against the very real posiblity of inflation, something I think will be more likely to
happen than guns, riots and canned foods, but that’s me, I’m a betting man.Participant[quote=XBoxBoy][quote=temeculaguy]I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]
Your own words are the clue to your quandry. I’ve read enough of your posts to know that you TG, are an analytic type of guy. You like to look at the numbers, the data and make rational decisions. (You like to drink good wine and make wise guy remarks late at night which make us all laugh too!) All good and well, but you and most economists today suffer from the belief that most people are like you. They are not. They listen to what they hear at the hair salon, or what they hear while watching Johnny play soccer, and they trust that. Data just confuses them.
The point being that the vast majority of people are not “rational consumers” and any analysis or economics based on that is deeply flawed. This expectation that people would be rational is what is hindering your understanding of the bubble going up, and why you’re going to misjudge the overshoot that is coming.
XBoxBoy
[/quote]
So what do you suggest? You are quite right, numbers are my friends, they give me comfort. Numbers never confuse me, people do. I made compelling arguments to people why 2003-2007 was not a good time to buy, yet they did so in droves. I can make a compelling argument why 2009-2012 will be a good time to buy, but they will run away. 2005 had great employment numbers and the economy was roaring, that was bad for buying, good for selling. 2009 will have high unemployment and a tanking economy, bad for selling, good for buying. Good is bad, bad is good, whatever the talk is at the soccer field is, do the opposite.
Let’s just say you paid cash, remove the leverage play. When that house was 260k in 2003, the rent was the same, lets say 1200 x 12 months, 14,400 a year return, lets go 4,400 for taxes, maint and emergencies. The return was 10k on 260k, about 4% return for a lot of risk and work, in 2005 it was probably worth over 300k, rate would be closer to 3%, at that time you could get those returns many other places. They were buying the appreciation potential, usually losing money for the right to bet on it. Now the cash outlay would be 110k, same 14400 annual return, the 4400 should be more than enough (1k taxes, 600 insurance, leaves 3k a year for maint or even a 10-15% drop in rents) so the net return is closer to 10% and that return cannot be found as easily today other places, certainly not in stocks or bonds today. Completely ignoring location, future appreciation, etc. the pure return exceeds other available investments and the leverage return is twice the cost of money. You used to pay them to leverage, now they pay you to leverage, how does that make it to the hair salon gossip agenda. If it were in texas or arkansas, I’d look at it. I have a similar feeling about stocks these days, when the dow breaks below 6k, I think I’m going “all in.” But back to these ever present cash positive rentals, they have another potential positive beyond the pure return, they are a hedge against the very real posiblity of inflation, something I think will be more likely to
happen than guns, riots and canned foods, but that’s me, I’m a betting man.Participant[quote=XBoxBoy][quote=temeculaguy]I never understood the massive price increases of the bubble and I’m beginning to get confused about the massive decreases during the meltdown.[/quote]
Your own words are the clue to your quandry. I’ve read enough of your posts to know that you TG, are an analytic type of guy. You like to look at the numbers, the data and make rational decisions. (You like to drink good wine and make wise guy remarks late at night which make us all laugh too!) All good and well, but you and most economists today suffer from the belief that most people are like you. They are not. They listen to what they hear at the hair salon, or what they hear while watching Johnny play soccer, and they trust that. Data just confuses them.
The point being that the vast majority of people are not “rational consumers” and any analysis or economics based on that is deeply flawed. This expectation that people would be rational is what is hindering your understanding of the bubble going up, and why you’re going to misjudge the overshoot that is coming.
XBoxBoy
[/quote]
So what do you suggest? You are quite right, numbers are my friends, they give me comfort. Numbers never confuse me, people do. I made compelling arguments to people why 2003-2007 was not a good time to buy, yet they did so in droves. I can make a compelling argument why 2009-2012 will be a good time to buy, but they will run away. 2005 had great employment numbers and the economy was roaring, that was bad for buying, good for selling. 2009 will have high unemployment and a tanking economy, bad for selling, good for buying. Good is bad, bad is good, whatever the talk is at the soccer field is, do the opposite.
Let’s just say you paid cash, remove the leverage play. When that house was 260k in 2003, the rent was the same, lets say 1200 x 12 months, 14,400 a year return, lets go 4,400 for taxes, maint and emergencies. The return was 10k on 260k, about 4% return for a lot of risk and work, in 2005 it was probably worth over 300k, rate would be closer to 3%, at that time you could get those returns many other places. They were buying the appreciation potential, usually losing money for the right to bet on it. Now the cash outlay would be 110k, same 14400 annual return, the 4400 should be more than enough (1k taxes, 600 insurance, leaves 3k a year for maint or even a 10-15% drop in rents) so the net return is closer to 10% and that return cannot be found as easily today other places, certainly not in stocks or bonds today. Completely ignoring location, future appreciation, etc. the pure return exceeds other available investments and the leverage return is twice the cost of money. You used to pay them to leverage, now they pay you to leverage, how does that make it to the hair salon gossip agenda. If it were in texas or arkansas, I’d look at it. I have a similar feeling about stocks these days, when the dow breaks below 6k, I think I’m going “all in.” But back to these ever present cash positive rentals, they have another potential positive beyond the pure return, they are a hedge against the very real posiblity of inflation, something I think will be more likely to
happen than guns, riots and canned foods, but that’s me, I’m a betting man.ParticipantI have a calendar conflict but I’m working on fixing it, if I can, I’m in.
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