[gfly]

Screw the math renters talk about the last book they read or the next vacation they are taking, owners talk about the last thing they painted or the next that needs painting. One other thing if you own and have kids you are owned by the local school district. Land ownership no longer means freedom, if you need a permit to put in a garden shed you don't have anything. I rent a small house in a nice suburb the swpl masters decided an old factory would be a great place for 200 low income apartments. Might be moving soon, the fix might be in and it will be old people, but who knows it could screw the town and schools up. If it does lots of people will not be able to afford to sell and move to the next, smarter town over. That said owning many houses seems to pay off for lots of people, if you have the inclination to make it work. Of course then you end being the guy trashing the town making section 8 money....

[void]

(09-12-2013 07:47 PM)T and A Man Wrote:  

(09-12-2013 02:21 PM)void Wrote:  

Rent is 100% lost money,

The interest component of your repayments is also 100% lost money.

Quote:

landlords want to make their profits too. Mortgage may be lost money if the house is not near a city and you have to sell it after some time for a loss, because no one wants to live at the countryside or suburbs far away anymore.

For a young mobile (global) (professional). It doesn't make much sense. A option to consider for medium time spans is buying a apartment in a city and treating the mortgage payments as rent and sell it later on.

So your strategy is reliant on capital gains? ... that's called speculation.

No, but as you said. The money you lose is the interest of the mortgage. In the long run, a landlord will always try to make profit. A house is useful in retirement, because you only need to maintain it. If you have to pay rent with a low pension, you are fucked.

[Que enspastic]

(09-13-2013 09:30 AM)gfly Wrote:  

Screw the math renters talk about the last book they read or the next vacation they are taking, owners talk about the last thing they painted or the next that needs painting. One other thing if you own and have kids you are owned by the local school district. Land ownership no longer means freedom, if you need a permit to put in a garden shed you don't have anything. I rent a small house in a nice suburb the swpl masters decided an old factory would be a great place for 200 low income apartments. Might be moving soon, the fix might be in and it will be old people, but who knows it could screw the town and schools up. If it does lots of people will not be able to afford to sell and move to the next, smarter town over. That said owning many houses seems to pay off for lots of people, if you have the inclination to make it work. Of course then you end being the guy trashing the town making section 8 money....

How are govts supposed to increase social housing if any housing complex will lower house prices in the area. Lower house prices leading to massive resistance among whichever community is nearest?

Or put up powerlines?

Or windpower?

Or anything that affects the value of houses in one area yet is immensely valuable to society as a whole?

I seriously don't know the answer to the NIMBY question.

[worldwidetraveler]

(09-13-2013 09:35 AM)void Wrote:  

No, but as you said. The money you lose is the interest of the mortgage. In the long run, a landlord will always try to make profit. A house is useful in retirement, because you only need to maintain it. If you have to pay rent with a low pension, you are fucked.

If you have to maintain a house on a low pension you are fucked. The older you get, the less things you can do and need to hire out.

I just replaced a furnace in my aunt's house that cost just over 3k. I also need to fix her garage roof which will be thousands as well.

You would be better off renting on a low pension. You wouldn't be able to absorb those kind of costs.

[worldwidetraveler]

(09-12-2013 08:11 PM)el mechanico Wrote:  

Mike there's even way more to it than that and it's all America specific so you really can't go by what foreigners have to say about this...

If you want to invest for long term profit light industrial warehousing is the way to go. You're not responsible for shit and own all the improvements also only business people are your tennants not struggling families.

I can go way deeper into this if anyone wants to know..

One more thing about property managers.. Your money sits in their escrow and they deduct when repairs are needed if you're absent they use their own people or whoever the tenant calls and deducts from the rent. Youre getting fucked hard at that point.

I can go way deeper into that as well

I was always interested in those triple net leases. I like real estate, I just find better ways of making money without being tied down to it.

I got a buddy here who has been buying up commercial properties. The financing on those typically only last for 5 years before they need to refinance. With property valuations being down, he has been scooping them up since many of those can't get a big enough loan.

[scotian]

I bought a condo two years ago and am happy with the decision, in that time I've also spent almost a year traveling all over the world so its not really tying me down. I decided to buy a condo because I was sick of living with roommates and wanted a nice place of my own in a good part of town. I also literally had more money than I knew what to do with and after sitting down with a financial adviser blab on about mutual funds and stock markets, I decided I'd just put my money into real estate.

I was stoked to be moving into my new place but three days after buying it I quit my job and took another one in a different city where the employer put me up in a company condo, I've been living in company accommodation ever since. At first I was worried about it not renting easily or not covering my expenses, to be honest, I didn't do much home work but I found a great property manager who found an excellent tenant within a week. My condo has been rented out by the same guy ever since and just this month he signed another year lease. Here's some details about my place:

-Built in 2011, the unit was brand new when I bought it.
-950 square feet, two bedrooms, two full bathrooms.
-Located in one of the most desirable parts of the city, drive downtown in about five minutes, walk to entertainment district in 15 minutes, five minute drive to a huge university, five minute walk to a college, two minute walk to a shopping plaza with a big grocery store. Basically I wouldn't need a car if I lived there.
-Rent is $1500/month
-Mortgage is $1050/month, condo fees are $230/month and I pay the property manager 10% of the monthly rent, $150/month. ($1050+$230+$150= $1430)
-Property taxes are $2300/year, I pay it each June in one lump sum.

I haven't been in the condo since I handed the keys over and have only spent a couple of weeks in the city in the past couple of years, I've been working out of town and traveling. I've had no problems whatsoever and my property manager assures me that I'll never have a problem renting it out. I agree that some ownership isn't for everyone, especially if you're really stretching your budget just to buy, there's definitely nothing wrong with renting. In my situation, it makes sense because my career isn't location independent, I work in the oil biz and the city of Edmonton is basically the epicentre of oil activity in Canada.

Since I"m technically homeless, I'm actually thinking of buying another condo in Edmonton but not so sure that I want to carry such a high debt load, we'll see.

[WanderingSoul]

Scotian, has your property value raised much since you've bought it?

[scotian]

(09-13-2013 12:47 PM)RioNomad Wrote:  

Scotian, has your property value raised much since you've bought it?

I haven't had it assessed or anything but I found a listing for a unit in the same building that's going for $9K more than I bought it for, my place is about 50 square feet bigger, you can see the condo here. My unit is exactly the same except the interior colours are different, I like the place but the spare bedroom is a bit small as are both bathrooms, I don't think I'd have a roommate if I live there but the unit is comfortable for a single person.

[WanderingSoul]

Place looks sweet bro. Kitchen makes me jealous. I'd kill to have that here in Bangkok.

[King Solomon]

Hey Guys

I've been a Realtor for 17 years, and I want to offer my 2 cents.

First off, I'm not big on homeownership right now, for me. I had the house on the hill, exotic cars, everything... and lost it all. I'm not reaching for the brass ring, or the American dream. For that matter, my ex-wife wiped me out and I'm just now getting back on my feet. Shit economy didnt help.

I don't like having so much to lose, so much to worry about.

I did like the suggestion in this thread about buying a place in the Phillippines, for instance, sitting tight here whilst paying it off, and then moving for good or use it as a second home, whatever. Problem with that is, what if you get sick of the Phillippines?

So, I offer another approach, which I may well execute myself over the next few years:

Why not get a shitty/basic little condo around 40 to 50K? Preferably a 2 bedroom, and at least 1.5 baths. You also want washer/dryer hookups and maybe some kind of balcony/landing. It doesnt matter if its in a lower-end area. Live in it, with a mortgage (assuming you couldn't pay cash) and focus your efforts on paying it off. Make 40k a year? Focus half of that on paying off your condo. In 2 years or so, its paid off.

Forever.

Now, go buy another condo just like it. Maybe even in the same complex. Get good at snatching a good deal (I can offer more on this) and repeat. Another 2 years, another paid-off condo (use the cash-flow from the first rented-out paid-off condo to accelerate the payoff on the 2nd one)

Now you own 2 condos, free and clear. Why not do this once more? Get a 3rd condo. Focus on getting it paid off, and focus all your cash-flow from the other condos to pay it off.

5 to 6 years, 3 condos owned free and clear.

This is low-risk because anyone can afford the payment on these, even with a shit job, so you can't lose your ass if your job tanks. Further, because they are condos, there are no roofs to fix, nothing. No maintenance outside an occasional toilet tweak.

Now, you'll always have somewhere to live for the rest of your life, and don't have to answer to any landlord or mortgage company.

Ready to ex-pat or travel extensively? Great!

Get a prop mgmt co to rent out the three units and wire the proceeds into your account every month. Since there are no mortgages, the monthly proceeds from 3 condos will be respectable.

Move to anywhere you want in the world, and enjoy your retirement.

cheers.

[Samseau]

Quote:

Why not get a shitty/basic little condo around 40 to 50K? Preferably a 2 bedroom, and at least 1.5 baths.

What shithole city has such places to buy?

[Samseau]

(09-12-2013 07:43 PM)MikeCF Wrote:  

(09-12-2013 07:28 PM)j r Wrote:  

If you own in a place with high rents and steady demand for rentals you can "walk away" just as easily by handing the keys over to a management company and let them deal with the hassle of tenants for 9% of the rent. Even if unforseen maintenance costs and an empty month here or there eat into your profit, you're still breaking even and building some equity every month.

How many investment properties do you own?

I am going to buy my first properties this year.

It is not nearly as simple as you claim.

Or maybe it is.

Drop a data sheet on cash flow, etc.

Also, what happens if you get a tenant you have to evict? That's six months without rent.

Then what?

Do you always assume the most rosy scenario possible?

Actually Mike it is a lot simpler than you think;

When you sign your property over to a real estate agent (or renter agent, or whatever they call themselves) you ask them:

- How do you make sure the tenets are trustworthy?
- How do you know they will pay on time?
- What if they do not pay?

You can make sure that the company assumes some of the risk in the event of such happenings. For example:

- They make the tenets sign a lease which says if they fail to pay for two months they get an automatic eviction
- They have insurance of certain emergencies (fires, etc)
- They may pay out of their own pocket for tenets who do not pay on time (for a month out of two months or something like that)

Shop around and find the best property manager for you and see what they offer. All in all, this is a landlord's market... rents are rising through the roof in most urban areas and it's easy as fuck to cash in on it. I know a bunch of older guys all making bank on their property investments right now.

[scotian]

(09-14-2013 02:21 PM)Samseau Wrote:  

Quote:

Why not get a shitty/basic little condo around 40 to 50K? Preferably a 2 bedroom, and at least 1.5 baths.

What shithole city has such places to buy?

Exactly, in the city I bought in, the cheapest condos were in the $80-100K range, located in ghetto areas and the tenants tend to be drug addicts, welfare bums and refugees from third world shit holes. Who wants to live in a place where your car is going to get broke into all the time or you risk getting jumped by hood rats every time you walk out your door? Myself, I want to live in a place where I can have girls over or friends and they think I have a nice place, something I can take pride in I guess and live comfortably. I'm glad that I bought a rather expensive condo, the rent is fairly high so I don't have to deal with riff raff tenants simply because they can't afford the high rent.

King Solomon, what are your thoughts on income to debt ratios? I was told by several people that you want to keep your mortgage under 3 times what your annual income is, mine came in at around 2.5 but now I'm thinking of buying another condo and that would put up to around 5 times my annual income. Also, why the big rush to get the condos paid off ASAP? My mortgage is for 25 years and if I keep it rented out the entire time, the tenant pays it off for me, I can use my money to buy another property, invest elsewhere or blow it on things like travel.

Ideally I'd like to have 2-3 properties paid off by the time I'm 55, that gives me 25 years to do so, I'm thinking 2 condos (which tenants will pay off) and one small house which I'd likely pay off myself, all of these properties would be in the same city and likely cost $250-325K.

Is anyone on here currently doing something similar?

[bacon]

I own a condo with no mortgage. Rent it out for little under 10% what other similar condos in my area go for that way the tenant is more inclinded to stay(I think time to advertise, clean the place up and move another tenant is lost money). I still have to pay property taxes, HOA, home insurance and the management company, that said in the 3 years I have done this it has so far been a very easy passive investment which I make on average maybe 450 profit a month(75k 1 bedroom condo).

MIKECF if you are curious about my involvment on this it is basically nothing outside mailing a few checks over the couse of the year (hoa, property taxes etc). The management company takes care of everything else related to the tenant.

[LeBeau]

(09-13-2013 12:29 PM)scotian Wrote:  

Since I"m technically homeless, I'm actually thinking of buying another condo in Edmonton but not so sure that I want to carry such a high debt load, we'll see.

Yeah considering where major Canadian cities are at with the housing bubble, I've been telling friends to hold off for now.

If you examine the charts for income to property prices, personal debt to income, etc. for Canada it's really out of whack and close to where the U.S. was just before the housing collapse.

I'm all for having some inflation hedges, and a condo where you can raise rents helps, but there's lots of other options for asset allocation beyond doubling down on real estate.

[Tigre]

(09-14-2013 03:31 PM)scotian Wrote:  

I'm thinking 2 condos (which tenants will pay off) and one small house which I'd likely pay off myself, all of these properties would be in the same city and likely cost $250-325K.

Worth mentioning that you would be heavily exposed to the commodities cycle.

In the event that commodities prices go down, there will also be downward pressure on the CAD and local real estate.

So at the same time you're finding it less easy to pick up new work, your tenant is vacating and you won't get a good price if you want to offload one condo into a buyer's market.

Is there a strong reason for everything to be in the same city?

If you bought outside of Canada, you're partially hedged against a future drop in the Canadian dollar. You also have partial protection against any kind of legal claim on your assets (a divorce, a liability lawsuit etc).

[lavidaloca]

you can buy condos in Windsor, Ontario waterfront for in the $50,000 range. Albeit they won't be incredible places for that price. By waterfront I mean on the Detroit River. Houses are super cheap as well. I looked at a 6 bedroom that was 3000 or so square feet a couple years ago and it was listed at mid 100's.

[paninaro]

There's an awful lot of generalizing going on in this thread, and real estate markets really are local. For example, one poster wrote about interest rates going up and you being unable to make the payment -- well in the US, 30-year fixed rate loans are quite common, so you basically have no interest rate risk.

As for negative equity, that really depends on how much equity you had going into it (LTV - loan to value) and your outlook on the city you're in.

All that said, what I look at in any market is demographics. People need a place to live. Are you looking in a city where the population is growing? Is the construction industry adding enough housing to keep up with it?

The US overall added about 30 million people in the last 10 years (2000-2010 actually -- census data). That's like having the entire populations of Portugal, Greece, and Austria combined all showing up at the US's doorstep. Now I realize the growth is a mix of birthrate and immigration, but the fact remains -- 30 million more people needed a place to live now compared to 10 years earlier. That's a lot of houses. There are some US cities where the population grew by nearly 4% just in the last year.

So to me, I'd look at population growth compared to housing data. If population is growing faster than they can build houses, then those are cities where you're less likely to see negative equity situations. This all assumes those cities will stay at that level or continue to grow, so look at what drives the population. Investing in upstate New York, Detroit, etc can be risky as those areas are seeing population stagnation or decline as industry has moved away, and they were very reliant on specific industries.

[Tokyo]

All the negative points mentioned in this thread highlight an interesting demographic change. Which raises the question, if young people dont want to buy, and baby boomers entire net worth is locked up in their home, whos going to buy ?

[ElJefe]

I was only a student but decided to buy a flat because I was 1) overly eager and 2) wanted to "work" for myself, so to speak.

The trend where I live is increasing urbanization. In addition, I live right next to the university. I could pack 3 students into my flat, each of them paying a decent amount a month excl. utilities would give me a 25% profit margin after servicing the mortgage, condo fees and a healthy slice for depreciation of hardware (kitchen/bathroom/etc), in addition to the solid tax benefit from interest on debt

Problems are 1) the income is taxable (and I haven't reported anything) and 2) the other dwellers in the building can, if they desire, throw a stick in my wheel and require me to reside there myself.

[playa_with_a_passport]

(09-12-2013 12:58 PM)j r Wrote:  

I own an apartment for one reason: it would cost me around 25 percent more to rent the same apartment. If I move, I'll ret it, give a management company 10% to collect the rent and generally not worry about it.

Rent differentials are the thing to pay attention to when deciding whether or not to buy.

The decision to buy or not is highly local. In NYC with low vacancies and very strong tenants rights buying is a no brainier.

Low to mid range rentals in NYC have very spartan amenities. You going to get a dirty white fridge and stove and white subway tiles in the bathroom. Landlord don't give a shit because there are literally 10 people waiting to get into that apartment. Shit that I watch on "House Hunter" that other Americans take for granted are rare in NYC rentals like granite counter top, dishwashers, stainless Steele appliances or back splashes.

secondly in NYC, rent-always-goes up. Even if you manage to snatch a rent regulated apartment, the landlord is allowed to raise the rent at least 1% above inflation rate for that year. If you are in a non rent regulated apartment, landlord can raise your rent at whatever price he wants to. You either pay up or move.

At least with a mortgage your monthly nut will stay the same until you pay it off.

Personally, I am not a fan of condos or single family homes because there are better ways of going about it. I am a big fan of multi-family homes, either duplex, triplex or quads. It takes a little longer to come up with the down payment and closing cost but you'll get the money back within 5 years.

[Vendetta]

Personally, I want to own about 4 homes worldwide, in each major region (Europe, Asia, North America, maybe South) all paid for in cash, no mortgages, and spend like 3 months in each one, moving around the globe as I choose, chasing the good weather or specific events.

That way I can feel like I have a home (which you never do when you rent) I can decorate as I please, buy large ticket items like beds and vehicles and big televisions etc, in each of these locations.

Friends and family members can use them for free when I'm not in them.

Also, you avoid paying large taxes if you aren't resident in a country for most of the time.

It's a win win.

[King Solomon]

To answer the question asked of me above,

the Denver metro area.

The sort of condos I mentioned are not high end, but they are not crap.

There are specific techniques to get into such purchases so you can get more home for your dollar.

[paninaro]

(09-15-2013 12:54 AM)Tokyo Wrote:  

All the negative points mentioned in this thread highlight an interesting demographic change. Which raises the question, if young people dont want to buy, and baby boomers entire net worth is locked up in their home, whos going to buy ?

In most places, that's simply not the case. People change jobs, change family situation (divorce, marriage), die, retire every day. All those events result in people being in a buying or selling situation.

From the US Postal Service website:
"17% of Americans change addresses annually.
45 million people move each year.
Approximately one out of every six families moves each year."

Yes, not all of them are buying or selling (renting instead), but I'm sure a lot of them are.

[thirty-six]

(09-15-2013 04:18 AM)playa_with_a_passport Wrote:  

Personally, I am not a fan of condos or single family homes because there are better ways of going about it. I am a big fan of multi-family homes, either duplex, triplex or quads. It takes a little longer to come up with the down payment and closing cost but you'll get the money back within 5 years.

Yep.

(09-15-2013 08:01 AM)King Solomon Wrote:  

To answer the question asked of me above,

the Denver metro area.

The sort of condos I mentioned are not high end, but they are not crap.

There are specific techniques to get into such purchases so you can get more home for your dollar.

Could you recommend a good MLS listing (or whatever those real estate search engines are called) for Denver, or any other resources there might be for finding good properties? I'm interested in what PwaP mentioned above. A three-flat in the city would be my preference. Not sure what the housing market is like there at all, though.