You seem oh so certain that in 10-15 years you will still be sitting pretty. God forbid, these prices adjust in the coming years OR the bond bull market of the last 20+ years doesn't fall apart and re-adjust prices for the overall "tightness" of much higher interest rates. But then again, you strike me as product of a handful of Tony Robbins tapes and Kiyosaki books. i.e. a perfectly complacent imbecile. Have a wonderful day sir.
Help me with my math please: 1. 400k loan 2. assume 6% interest rate (ball park) 3. 400k*6% = 24k annual interest 4. assume Property Taxes of 2% ?? 5. 400k *2% = 8k annual prop tax 6. 40k - 24k - 8k = 8k annual after mortgage payment cash flow I believe he is in the 10% tax bracket after deductions. Can one who makes 40k really qualify for a 400k loan no money down?
In case you hadn't noticed, he has been insulting quite a few others with his incessant claims that homeownership is always a no brainer. However, might I dare say that the most recent hyper inflation of home values is shall we say "out of the norm". If we simply retraced the past 2 years of gains in some markets, it would have a devestating effect on many lenders or borrowers. As he said, let's see where we are in 10-15 years. Good day son.
does not "tax shelter" directly correlate with income? if someone is paying 50% in taxes on 300k salary/year...150k seized by the state. however, this same person pays 100k a year in mtg interest which is tax deductible, does not this substanially lighten the tax burden, plus it provides a nice place to live? surfer
Martin Gale: First, maintenance and repairs. There seems to be some discrepancy between your numbers and numbers I see and use every day. Obviously cost to carpet, paint, and roof a house depend on the size. But over the last 3 decades of rehabbing and renting out houses and small income properties, I can say I have never once paid $10K for a roof, $10K to paint a house, or $10K to carpet. In fact, I operate considerable numbers of rental houses with a budget for all of the things that you mention that is considerably UNDER this $5K that you are using. It's clear that I won't be persuading you of anything, you'd rather ask your co-worker if something is "reasonable" than to listen to a guy who has managed rental houses and rehabbed quite a number of them. I am only suggesting to the reader here that your numbers are way off base. I currently for instance have a quote for a roof tearoff of approximately 29 squares (that's the size of the roof Martin), which is $6900. This is a 3 story house which was painted a year ago for $2K (exterior). So that you know, one of the numbers that landlords use is 10% of the gross annual rent as an estimate for repairs and maintenance. On a property with gross rent of $20000 that would be $2000. Next Martin, you seem to discount rent inflation by offsetting it with property taxes inflation. It seems only fair to point out to you that property taxes on a $250K property might run $2500 in many parts of the US, while rent for the same property might run $18000-20000 (at least in my area) Clearly rent increasing at lets say 3% is going to have alot more impact over 30 years than property taxes increasing. You should also might want to check various states (like California) where property taxes have a cap. Finally I used your numbers for the profit on a house over 30 years after all the various expenses that you used. See your post on about page 2 or 3....but here is the pertinent data reprinted for your perusal: I said $500K....sorry for my error. And the best for last. You've got your renter saving $10K per year. You might want to check the US savings rate before you come up with these outlandish figures. Recent reports show the US consumer at a negative savings rate. This certainly is not the AVERAGE renter, let alone the renter I've had for 3 decades who doesn't have a dime. And over the last 3 decades I've had literally hundreds of renters to base my opinion on. OldTrader
Your opinions are foolhardy....yet another poster on ET who failed to investigate the facts. If you knew anything about either of those two authors, you'd know that complacency is the last thing they want you to be. Both of them want you to become educated and not an imbecile. Kiyosaki would say that a home is a liability, not an asset(supports much of what the rent crowd is saying)...and Tony, well he all about be proactive and taking action to get the results you want. You sir....have been drinking too much kool-aid lately. May I suggest you get off the band wagon...take the time to read the thread and really learn the facts and you will discover that imbecile you see is staring back at you when you look in the mirror. You have a good day!
I have not insulted anyone...nor have I made any false claims! I even stated that the easy money in realestate has been made and that going forward one needs to find deals to make it work. Either a don't wanter, who will sell at a discount or favorable terms, or a fixer, where you put in sweat equity and rehab and flip the property. Real estate market retracements are not similar to retracements in other markets. There is no margin call, (although maverick has a loan shark buddy that puts some unique terms into his contracts!) As for your contention that markets have to retrace...I say hogwash. Markets, especially real estate markets can plateau and stay at levels for years. One look at the S&P 500 over the last 25 years, and one could highlight many areas where the market performance was "out of the norm" yet the market continue to move much higher. Retracing gains in Realestate markets has very little impact on lenders. You won't see significant increases in foreclosures, etc. because of a 20% pullback in RE markets. What will impact the market, is a prolonged economic down turn, where people start losing jobs and are unable to make payments on their home. Finally, don't talk down to me! I am not your son, and real happy about that.