Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
The advantages of owning real estate...
Old 09-05-2006, 11:52 PM   #1
Thinks s/he gets paid by the post
cube_rat's Avatar
 
Join Date: Jul 2005
Posts: 1,466
The advantages of owning real estate...

... in California. The San Francisco Bay Area in particular. Someone please describe the advantages of owning (newly purchased that is) real estate in the SF Bay Area? We've owned our place for over 2 years in one of the most overpriced markets on the planet. I'm saddled with an obese mortgage (380k) at 44 years old and a property tax bill that runs ~5.5K per year. I also dislike our place for a myriad of reasons all of which seem to point to three things: asthestics, location and noise.

I've toyed with the idea of renting, but I really don't want to deal with tenants. So the only other option is to sell and SELL NOW. I'd like to sit on the proceeds and build upon it, but I know that I will a) lose a significant annual write-off b) land up paying taxes on the money earned from the proceeds that I'd invest. The pros are that I'd get out from under this mortgage for a place that I really dislike living in.

I don't know what else to do at this point. I hate being frozen with fear because I can't move forward and/or become so indecisive, I go into a tailspin.

This is not about what I could afford. We are quite comfortable with our mortgage, taxes, and other living expenses. It's just that I really hate dislike where I live! (Did I say I disliked where I live??) Also, facing paying off a 380K mortgage at my age scares me.

Can I hear some objective advice? Thanks
__________________

__________________
fuzzy? cute?
cube_rat is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: The advantages of owning real estate...
Old 09-06-2006, 12:28 AM   #2
Full time employment: Posting here.
 
Join Date: Mar 2005
Posts: 699
Re: The advantages of owning real estate...

Were I you, I'd sell as soon as possible. Sell, because you hate the place, and it can't be fun to be paying a mortgage on a place you hate. As soon as possible, because you're on the downhill side of a housing bubble right now (and make sure it is priced low enough to sell right away -- don't follow the market down).
__________________

__________________
bpp is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 12:32 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Re: The advantages of owning real estate...

IMHO real estate will pay out with enough time. It took me 10 years to recover once, but I like where I live. If you don't really like it then see how much it will cost to bail out. Renting may be cheaper, more mobile and (to me, most importantly) less time spent in maintenance.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 12:38 AM   #4
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: The advantages of owning real estate...

When I lived in the bay area for about 2 years, I rented. When I first moved there, the company I worked for offered to pay relocation and closing costs, but I let the offer lapse. There was no place I wanted to own that didn't have a nasty commute, so I just rented a place that was biking distance to work.
__________________
wabmester is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 12:47 AM   #5
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 899
Re: The advantages of owning real estate...

C_R,

It's not worth being unhappy about where you live.

Do a decision analysis/trade where you write down and weigh the good and bads of staying, selling and renting, selling and buying elsewhere, renting elsewhere and retaining your place. *Include the goods and bads of other locations where you might want to live.

Remember a $380k mortgage isn't bad for SF. *That could certainly be alot worse. *Would you take a financial hit to move to a place that you like more?

Where would you like to live? Why would it be better?

Would you consider Oakland or the east bay? *I used to live in north Oakland a few blocks from the Rockridge BART station. *I thought it was a great place, lots of restaurants, theaters, books stores and easy access to SF (via BART) and Berkeley.

Also what does your significant other think. *If I was single and without kids I would consider selling my house and renting similar to what WAB did but with kids it would be to disruptive and DW is the type that needs to OWN and hates to move. There is a good chance that I would become single if I suggested that at this point.

If it still looks like you might want to move then do the experiment? *Try renting for a while in a place where you think you might want to live and see how you like it? *If you do rent out your place make sure you understand the law with respect to the rights of the tennant if you think that you may want to move back. *I'm sure that you have heard all the horror stories about that sort of thing in SF.

Not sure how you feel about the timing of selling RE now versus sometime in the future. *My opinion is that we will have a dip in N. CA. but I think that it will be shallower but take longer to develop and then longer to recover than most so I think that you have time to make a decision on selling.

MB
__________________
mb is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 06:16 AM   #6
Full time employment: Posting here.
 
Join Date: Oct 2002
Posts: 717
Re: The advantages of owning real estate...

I would go ahead and sell.* The nice thing about a real estate investment (primary residence) is you can live in it and enjoy it.* Since you aren't enjoying it, get rid of it.* This also looks like the right time to be dumping California real estate.* If the real estate market was rising, it would be a tougher decision.* You should have avoided hugh capital gains because you held it 2 years, and with some luck, you may be able to get more value when you purchase another.* *I know a guy who buys and sells every two years.* He started with 100K house and is up to a multi million beach house now.* *Not many investments could have produced that return without paying tax on the capital gains.* *
__________________
Random Reinforcement is Highly Addictive.
riskadverse is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 07:43 AM   #7
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 227
Re: The advantages of owning real estate...

Sell and 1031 Exchange to defer capital gains.
__________________
"Those who think it cannot be done, need to stay out of the way of those of us doing it."
PsyopRanger is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 10:03 AM   #8
Thinks s/he gets paid by the post
cube_rat's Avatar
 
Join Date: Jul 2005
Posts: 1,466
Re: The advantages of owning real estate...

Quote:
Originally Posted by mb
C_R,

It's not worth being unhappy about where you live.

Do a decision analysis/trade where you write down and weigh the good and bads of staying, selling and renting, selling and buying elsewhere, renting elsewhere and retaining your place. *Include the goods and bads of other locations where you might want to live.

Remember a $380k mortgage isn't bad for SF. *That could certainly be alot worse. *Would you take a financial hit to move to a place that you like more?

Where would you like to live?* Why would it be better?

Would you consider Oakland or the east bay? *I used to live in north Oakland a few blocks from the Rockridge BART station. *I thought it was a great place, lots of restaurants, theaters, books stores and easy access to SF (via BART) and Berkeley.

Also what does your significant other think. *If I was single and without kids I would consider selling my house and renting similar to what WAB did but with kids it would be to disruptive and DW is the type that needs to OWN and hates to move.* There is a good chance that I would become single if I suggested that at this point.

If it still looks like you might want to move then do the experiment? *Try renting for a while in a place where you think you might want to live and see how you like it? *If you do rent out your place make sure you understand the law with respect to the rights of the tennant if you think that you may want to move back. *I'm sure that you have heard all the horror stories about that sort of thing in SF.

Not sure how you feel about the timing of selling RE now versus sometime in the future. *My opinion is that we will have a dip in N. CA. but I think that it will be shallower but take longer to develop and then longer to recover than most so I think that you have time to make a decision on selling.

MB
Thanks to all who have replied. I needed a sanity check.

MB: My SO is very supportive of whatever decision is made that benefits our portfolio in the long term. I just want to make sure our decision doesn't bite us in the behind later on.

You are correct that the tide is turning slowly in North California and the will not revert back to the highs for quite a while. I remember back in 1989, when my best friend's sister tried to sell her newly built house in a very nice area called Emerald Hills. Her house stayed on the market for 1 year and suffered through 3 price reductions. 1989 was not a pretty year for real estate in California. :P Great for the bargain hunters, terrible for ones who wanted to profit or just get out.
__________________
fuzzy? cute?
cube_rat is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 11:09 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Oct 2005
Posts: 4,898
Re: The advantages of owning real estate...

California is in for some really bad times, if you look at the numbers of people who had ARMs slated to adjust in the next two years. I vote to sell! Especially because you have no kids/or dogs to uproot. Seriously,the difficulty of finding a good rental that allows dogs is the biggest reason I decided to buy own an expensive townhome with $234K mortgage. I don't like the big mortgage at my age and am seriously thinking of selling next spring and downsizing to a little house with yard. Then I can get another dog!

__________________
Zoocat is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 12:20 PM   #10
Full time employment: Posting here.
 
Join Date: Mar 2005
Posts: 557
Re: The advantages of owning real estate...

CR, I'll put my two cents in as well. Sell. Not because of the market, not because of the mortgage, not because of any reason other than that you don't like living there.

If there's anything that the collective wisdom of this board demonstrates it is that life is about choices. Choose to live you life in a place and in a manner that is solid, contributes to society and you enjoy.
__________________
uncledrz is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 02:08 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,201
Re: The advantages of owning real estate...

Are you planning on moving out of the rat's nest Bay Area?

I remember that once we decided to move out of the Oakland Hills, the crowding, traffic, and noise bothered us even more than before.

Perhaps one strategy would be to choose a price for your home. If it doesn't sell at that price, stay. I didn't say that was a good strategy.
__________________
Al
TromboneAl is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 02:12 PM   #12
Thinks s/he gets paid by the post
cube_rat's Avatar
 
Join Date: Jul 2005
Posts: 1,466
Re: The advantages of owning real estate...

Quote:
Originally Posted by TromboneAl
Are you planning on moving out of the rat's nest Bay Area?

No, we plan on sitting on the proceeds and hopefully build upon it. I really don't want to be > 50 years old with a fat mortgage. I'd rather move to a low cost area or buy a RV to live in Just kidding.
__________________
fuzzy? cute?
cube_rat is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 03:17 PM   #13
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Re: The advantages of owning real estate...

Sounds like the decision to sell is unanimous ... would just add that capitol gains are a good thing to pay (gains will be less if you wait ). Also the tax rates are the lowest in decades (15% federal!).

Have a good laugh all the way to the bank!
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Re: The advantages of owning real estate...
Old 09-06-2006, 06:34 PM   #14
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Re: The advantages of owning real estate...

Quote:
Originally Posted by PsyopRanger
Sell and 1031 Exchange to defer capital gains.
Not necessary or possible

This is her primary residence.

__________________

__________________
saluki9 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Real estate escape question queeneev FIRE and Money 16 02-04-2007 10:26 AM
Prepaying real estate taxes for SEVERAL future years? MooreBonds FIRE and Money 16 01-25-2007 06:40 PM
What Real Estate Bubble? Art FIRE and Money 76 11-09-2006 03:33 PM
Real Estate Bubble in D.C. - CBS News tonite.... Cut-Throat FIRE and Money 23 05-19-2005 02:44 PM
Whither stocks when real estate crashes? wabmester FIRE and Money 12 09-27-2004 07:13 AM

 

 
All times are GMT -6. The time now is 07:51 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.