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Re: Nothing quick about getting rich with real est
Old 03-25-2005, 09:43 AM   #21
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Re: Nothing quick about getting rich with real est

The Naples comment is interesting. That is one of the area's my wife underwrites mortgages. She told many stories of condos having three or four contracts on them as they are built. The condo has all of the closings within a week and normally the first buyer pays a very small fraction of the final selling price.

In Naples the area has been overlooked. The hot spot on the west coast had been Tampa. That area is quickly being built out and newbies are forced to move to smaller cities where the house prices are much less. The reports that certain areas are appreciating very rapidly, I think, are being scewed by smaller areas in the cities. As the prices for houses goes up it suddenly becomes cost effective to develop areas that require more work and resulting greater costs. Another area that is appreciating rapidly is the Brandon area just north of Naples. What is not told is that it also was overlooked and houses were very cheap. The appreceation is taking a $100,000 and making it comparably priced with the surrounding markets.
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Re: Nothing quick about getting rich with real est
Old 03-25-2005, 10:22 AM   #22
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Re: Nothing quick about getting rich with real est

Good to see so many familiar names! I am jumping from NFB ....

I love watching the midnight RE info-mertials ... I swear they are the same ones run in the late 80's. Timeless aren't they!

The one rule that has held for me after ~15 years and 23 units is very simple: pay the mortgage with 50% (or less) of the rents received. Won't hear that on midnight TV.

Got burned on any property where I didn't apply this (can you say "young n' stupid") and made a killing on every property I applied this rule to.

Now every first-time-buyer will say "I can't find a property that meets that criteria" ... and I say "exactly, that's why I've been a seller since ~2000".

Enjoy!
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Re: Nothing quick about getting rich with real est
Old 03-25-2005, 12:43 PM   #23
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Re: Nothing quick about getting rich with real est

Its possible the "boom" could be sustained in a bad way. I'm seeing this around this area where median home prices are >$600k in santa clara county and >$300k in the sacramento area.

40 year mortgages and interest-only loans.

Basically it would extend the boom by allowing people to still 'afford' to buy these homes at these valuation levels.

Causes a bit of a problem in ~7 years when people move and have no equity to index them into the still rising market prices of their next, usually more expensive home. Causes a really big problem when they retire and still have little or no equity, and in some cases still have a huge loan to service. Since many retirees are cashing out with little more than the equity in their home today, that could be bad. Do the math.

But its a nice long slow unpleasant problem, just like social security. It could happen, people dont get alarmed about long slow problems.
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Re: Nothing quick about getting rich with real est
Old 03-25-2005, 12:48 PM   #24
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Re: Nothing quick about getting rich with real est

My brother-in-law bought a little cape near the ocean.
He onced joked that he bought it for $40,000 and now after living in it for about 20 years and paying the mortgage the whole time, he only owes $300,000 on it.

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Re: Nothing quick about getting rich with real est
Old 03-25-2005, 01:22 PM   #25
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Re: Nothing quick about getting rich with real est

Quote:
I actually sold my wife's piano
(for you jokers out there that had nothing to do with my
divorce ).
Maybe not, but I was pretty sure for a minute there that we were being set up for a joke about tulips and organs...
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Re: Nothing quick about getting rich with real est
Old 03-26-2005, 07:07 AM   #26
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Re: Nothing quick about getting rich with real est

Anyone know real-estate books that cover subtleties and variations between States?

i.e. Is California the only state with little or no property tax?

Getting rich on real-estate isn't so easy when property Tax + Assessments eat away at single digit growth.


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Re: Nothing quick about getting rich with real est
Old 03-26-2005, 09:09 AM   #27
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Re: Nothing quick about getting rich with real est

Quote:
Its possible the "boom" could be sustained in a bad way. *I'm seeing this around this area where median home prices are >$600k in santa clara county and >$300k in the sacramento area.

40 year mortgages and interest-only loans.

Basically it would extend the boom by allowing people to still 'afford' to buy these homes at these valuation levels.
Silicon Valley (Santa Clara Valley) has differences in the income distribution that are not normal. *The income distribution here is bimodal (like a bactrian camel - the two humped camel). *The median family income is ~$75K but there are likely few families actually making that.

There's a large number of people working in lower paying (or relatively lower paying) jobs whose average family income is low enough that they will never buy a house here and likely haven't been able to for 20 or 30 years. *Many of them that have houses here got it because they bought long enough ago that this area was outside the "core" desirable area to live. *That "core" seems to be roughly centred on Palo Alto with prices decreasing as you spread further away. *However, to do that today means going much further away. *At the bottom of this lower income tier they rent or at the top they own a home far away and commute in (driving up the prices in the community they do live in).

The real house buying segment of the population in Silicon Valley works in the tech industry in some capacity. *Not neccesarily even in some high powered jobs. *Imagine a couple where he's a junior software engineer making $80K / year (about average) and she's a QA tester (quality assurance) making $60K / year. *That $140K / year for the couple and with traditional lending practices they can allocate ~35% of their income to mortgage payments. *That will allow them to buy a $500K home. *We're only talking about a couple at the bottom of the tech industry income ranges too. *Start looking at a couple where she's a senior engineer making $150K / year or more and he's a financial analyst making the same *for a total family income of $300K and we're talking about real house buying power.

The market here is a lot different than some big flat midwest town where the wages are more evenly distributed and it's easy enough to just go another 100 metres (~328 feet for the Americans) down the road and build another house.
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Re: Nothing quick about getting rich with real est
Old 03-26-2005, 10:06 AM   #28
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Re: Nothing quick about getting rich with real est

Quote:
Anyone know real-estate books that cover subtleties and variations between States?

i.e. Is California the only state with little or no property tax?

Getting rich on real-estate isn't so easy when property Tax + Assessments eat away at single digit growth.

Do a search here for keywords like "best state retirement tax". Or do the same on MSN's articles area...MSN ran some bits showing tables by state of the "best states to retire to". The tables included property tax, sales tax etc.

There are many, many better places than CA for taxes. It seems that they get you one way or another, but finding a state with high income tax and low property/sales tax would be good for a LBYM early retiree. If you're pulling down a big annual withdrawal rate though, a high income tax state like CA might be bad.

I'm paying ~ 1800 a year property tax against a home I bought 2 years ago for $252k thats worth ~350k right now. My wifes house which she's owned for 14 years...$481 this year in property taxes. Our "proposition 13" limits property tax to a percentage of the original purchase price + a small uptick per year. 7.5% sales tax and a 6% state income tax at our (intentionally) reduced income levels.

Some areas are oddly expensive...I forget if its wyoming or montana (I think montana) is one of the most expensive tax states in the country. Weird.

Texas and some states in the southeast have very inexpensive homes and low tax rates.

I dont think theres a reasonably priced home anywhere in the state of CA unless you really get out in the boonies. Even there I'm not so sure. When I moved to the fairly farmy, rural area I live in now the prices were ok. Today they're silly high and I can tell you that anything within an hours drive of me is just as expensive, even though there is NO commute option to any major city, NO big job houses unless you're a farmer or work in the retail/food service business, and no chance of those property values hanging in there over the long haul. Just not enough infrastructure.

Edit: heres the article...very easy to find...
http://moneycentral.msn.com/content/...lls/P45875.asp

Note that the numbers given in this article are based on a hypothetical scenario that may not match yours, and there are several 'breaks' factored in that only work if you're over 65.
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Re: Nothing quick about getting rich with real est
Old 03-27-2005, 07:40 AM   #29
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Re: Nothing quick about getting rich with real est

Quote:
Edit: heres the article...very easy to find...
http://moneycentral.msn.com/content/...lls/P45875.asp
The report was revealing, good to know. Thanks.
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Re: Nothing quick about getting rich with real est
Old 03-27-2005, 02:04 PM   #30
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Re: Nothing quick about getting rich with real est

It would be great if a similar list included another expense, our health insurance.

If you compare one state to another, you might determine that in one state you could save $2k less in taxes while your health insurance might be $3k more.

MJ
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Re: Nothing quick about getting rich with real est
Old 03-27-2005, 06:21 PM   #31
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Re: Nothing quick about getting rich with real est

Bpp dropping in here from NFB.

I read in the paper the other day that residential real estate prices in my area went down only 1-2% last year. Compared to the 8-9% drops typical in the surrounding areas, I'm living in a boom town. Overall, the tone of the article was upbeat, as the national yearly declines are gradually becoming smaller and smaller since the peak 13-14 years ago, and some big-city areas have actually seen slight increases lately.

Just some notes from the other side of a bubble.

Bpp in Japan
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Re: Nothing quick about getting rich with real est
Old 03-27-2005, 08:21 PM   #32
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Re: Nothing quick about getting rich with real est

Is anyone worried about banking/mortgage stocks? I'm starting to get a little edgy since I own one and a half, IndyMac Bancorp and H&R Block.
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Re: Nothing quick about getting rich with real est
Old 03-27-2005, 09:08 PM   #33
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Re: Nothing quick about getting rich with real est

Quote:
It would be great if a similar list included another expense, our health insurance.
MJ
A link off that page includes a wizard that covers other factors such as Health Insurance. The property-tax rates look questionable to me? But it would be interesting to see if others find this tool useful :-

http://www.bestplaces.net/fybp
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Re: Nothing quick about getting rich with real est
Old 03-27-2005, 09:28 PM   #34
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Re: Nothing quick about getting rich with real est

Quote:
I dont think theres a reasonably priced home anywhere in the state of CA unless you really get out in the boonies.
Puzzling how its ongoing as CA has had the greatest home appreciation in the US (after DC) for years. And it doesn't seem to putting people off either moving there or up-scaling late before the Fed rate onslaught.

Has CA always had an x-factor regarding popularity?Attractions like Proposition 13 might has been a draw in the past, but that seems redundant now as high sale prices will cripple new buyers with high property tax.
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Re: Nothing quick about getting rich with real est
Old 03-28-2005, 06:44 AM   #35
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Re: Nothing quick about getting rich with real est

ER@40 -

I have read a lot of reports that support people moving out of CA. Older, retired people & many businesses are fleeing the area to nearby states. People are being priced out of the market. However, the young dreamer crowd & immigrants continue to move in but the imbalance points to a net outlfow of people.
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Re: Nothing quick about getting rich with real est
Old 03-28-2005, 01:21 PM   #36
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Re: Nothing quick about getting rich with real est

Couple of fun dynamics in CA real estate...people who are selling their $1M plus homes in LA and SF areas and moving to places like visalia and sacramento and doubling the RE prices there.

And 6 singles or 2-3 couples working in service industries buying a house together in the 'expensive' areas.

Throw in 40 year mortgages and interest only loans.

There does have to be a brick wall in here somewhere though...
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Re: Nothing quick about getting rich with real est
Old 03-29-2005, 11:06 AM   #37
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Re: Nothing quick about getting rich with real est

Bought our house in Orange County, CA in 1987 for $170,000 and now worth over $600,000 and fully paid. The housing market/prices in Southern California have skyrocketed the past few years. A local news article stated only 13% of the population can afford to buy a home in this area. The young marrieds in my office have creative financing (second mortgages, second jobs) and strapped to the hilt trying to pay the mortgage.
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Re: Nothing quick about getting rich with real est
Old 03-29-2005, 01:33 PM   #38
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Re: Nothing quick about getting rich with real est

Quote:
Bought our house in Orange County, CA in 1987 for $170,000 and now worth over $600,000 and fully paid. *The housing market/prices in Southern California have skyrocketed the past few years. *
According to FreddieMac Property prices have doubled or better in CA in the last 5 years, and have been going up 20% per year of late.
What's the considered view of forum members regarding CA:- Will we still be seeing 20% two years from now, how about 5 years from now?
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Re: Nothing quick about getting rich with real est
Old 03-29-2005, 02:00 PM   #39
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Re: Nothing quick about getting rich with real est

Quote:
Bought our house in Orange County, CA in 1987 for $170,000 and now worth over $600,000 and fully paid. *The housing market/prices in Southern California have skyrocketed the past few years. * A local news article stated only 13% of the population can afford to buy a home in this area. *The young marrieds in my office have creative financing (second mortgages, second jobs) and strapped to the hilt trying to pay the mortgage. * *
Ginger: If you paid $170,000 for your home in 1987, my guess is that it is also a very modest home. (We sold our home in So. Calif. in 1987), and moved to the Sierra Foothills in No. Calif.
You must appreciate prop 13

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Re: Nothing quick about getting rich with real est
Old 03-29-2005, 02:27 PM   #40
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Re: Nothing quick about getting rich with real est

Quote:
What's the considered view of forum members regarding CA:- Will we still be seeing 20% two years from now
No.
Quote:
how about 5 years from now?
No.
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