Looking for a great personal finance plan that will make me wealthy in 30 years

[RunningBum]

The housing crunch just hasn't reached there yet, but it will. I seriously doubt that real estate in SF will continue the rise at that rate for 30 years. And if an earthquake hits SF, and it likely will, property values would drop like a stone, insurance or not. See: New Orleans. Buying a $500k condo in SF to make 10 million in 30 years would be an extremely risky investment. No sure thing.

Well, if it isn't worth $10M in 30 years, you'll still have the condo and can get a planter for the deck to plant those Dutch tulip bulbs in.

 

[honobob]

The housing crunch just hasn't reached there yet, but it will. I seriously doubt that real estate in SF will continue the rise at that rate for 30 years. And if an earthquake hits SF, and it likely will, property values would drop like a stone, insurance or not. See: New Orleans. Buying a $500k condo in SF to make 10 million in 30 years would be an extremely risky investment. No sure thing.

So are you guys huddled in your bunker in Iowa predicting the demise of SF real estate? Even if the historical rate drops 20% (unlikely) your're still looking at $6.3M or more likely 10% if there is a drop which will get you $8.5M. New Orleans compared to San Francisco? What was their value BEFORE Katrina? Hey, be a pessimist and work with the 20% drop, but buy TWO!
Here's a development that's planning to be around after the next big one. Sorry though I believe they're all sold and $500,000 wouldn't get you in the door.
One Rincon Hill - Wikipedia, the free encyclopedia

 

[Milton]

I'm not sure I could do without "things". I like having a nice car and a nice place to live so I'm not sure I'll change that about myself but who knows.

With such focus and determination, success is inevitable.

Bear in mind, I would not be looking for these investments to make me wealthy. Rather, I would rely on Real Estate Investments to make me most of my money.

Get thee to a Robert Kiyosaki seminar!

 

[honobob]

I don't think 10 million is doable unless you hit the lottery.

Funny you should say that. Here's a quote from one of our forum real estate experts and naysayer.

"A couple months ago spouse and I spent 26 consecutive days rehabbing our rental. We juggled three contractors and did our own HGTV "Groundbreakers" yardwork so it was great exercise but not much fun. For the last five years it's been rented to my parents-in-law, who we thought would be living in it for the rest of their lives-- our long-term care gift. I expected to depreciate it for two more decades and we may still do that. However now that the PILs have returned to the Mainland the property has essentially been dropped back into our laps. It was never part of our ER planning, and it's slowly dawned on me that we've won the real estate lottery."

And he was only getting 9%!! So if you PLAN, by doing the research and the math, it's still almost as exciting. "slowly dawned" does that provoke a great mental image? Duh? Fire bad.

 

[honobob]

With such focus and determination, success is inevitable.

Get thee to a Robert Kiyosaki seminar!

Thank you for registering to attend the free Learn to be Rich™ Training at the Crowne Plaza Hotel, 32083 Alvarado-Niles Road in Union City on Wednesday April 16, 2008 6:00PM. Be sure to mark your calendar because this 1½ hour training is one you won't want to miss! At your fast-paced, action-oriented Learn to be Rich™ Training, you'll discover:

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Be prepared to learn a step-by-step system that will show you how to put the dynamic principles of the blockbuster bestseller Rich Dad Poor Dad into vibrant action in your life.


Come Ready to Learn and Depart Ready to Earn,

The Rich Dad® Education Training Team

I gotta go just to see why you guys hate him so! Submit your questions now.

 

[Razor]

http://www.beaconeconomics.com/people/press/SFChron1230071.pdf

 

[podey]

Well, if it isn't worth $10M in 30 years, you'll still have the condo and can get a planter for the deck to plant those Dutch tulip bulbs in.

 

[kombat]

Not dropping in San Francisco, if you didn't know! But we're looking at returns over time right? Thirty years...11%, do the math.

Whoa whoa whoa, hang on a second here.

Are you seriously saying that you not only believe that San Francisco is immune from the current subprime problems, but that housing prices will continue to appreciate at 11% per year for the next 3 decades

Do you honestly not see how ridiculous that sounds? That's saying that a dwelling worth $500,000 today will be worth $11,446,148 in 30 years. You said "do the math," well there you go. There's the math.

Considering that such a dwelling is probably not very flashy and borders on "bargain basement" today, do you really think that same "no frills" dwelling will be worth $11M in 30 years?

Say a family who earns an upper-middle class income of $150,000 can barely afford that $500,000 dwelling today. That is, they'd be stretching to afford a dwelling worth 3.3 times their annual household income.

In 30 years, assuming 3% inflation, a similarly-well-off family will earn $364,089. If they were to buy a similar dwelling, now worth $11,000,000 in your example, now they'd be buying a dwelling costing 30 times their income!

Do you seriously think that's realistic? Honestly. I'm sincerely curious how you reconcile this crazy math in your head. Do you envision that by 2038, families in San Francisco will be earning $3 million/year (to keep the same 3.3 earning factor that presently exists)? Or do you think people will be signing 300 year mortgages by then? How do you manipulate the math to allow yourself to believe in such a crazily out-of-whack future? Will upper-middle class families be forced to live in crowded community housing developments, being unable to afford even an $11,000,000 "starter home?" Or will San Francisco incomes wildly outpace the rest of the country, such that professionals in San Francisco will earn 10x as much as a similar job anywhere else in the country?

 

[Milton]

I gotta go just to see why you guys hate him so!

These links may help:

ABC News: Who Wants to Be an Entrepreneur?

John T. Reed's analysis of Robert T. Kiyosaki's book Rich Dad, Poor Dad

 

[Ronstar]

I recommend the following:

1. maxing out 401 k
2. maxing out IRA
3. build real estate by first buying house, and upgrade gradually to more expensive houses (make sure its a good deal) using equity from previous houses. Then downsize when you retire and convert the proceeds to a coservative retirement investment
4. Be an owner or part owner of a business, and have your business rent its work place in a bldg you own. Then when you retire, sell the business and real estate, and convert the proceeds to a retirement investment.
5. Take profits from your business and invest in more businesses/ real estate. Use tax losses from real estate to offset business gains to minimize taxes.

 

[megacorp-firee]

How about 1 million?

? are you negotiating with us?
what the other guy said ... learn excel and do the math

 

[eridanus]

S&P Shiller data shows almost a 16% drop from the high in San Narcissco. That's 5/06 to 1/08.

 

[RunningBum]

S&P Shiller data shows almost a 16% drop from the high in San Narcissco. That's 5/06 to 1/08.

Like the man says, 4% Appreciation My *ss.

 

[honobob]

S&P Shiller data shows almost a 16% drop from the high in San Narcissco. That's 5/06 to 1/08.

An yet all the paired sales that I've provided show 12-16% increases yearly from 2004-2005 to 12/2007. Of course, Shiller doesn't report these sales because there is a market for their distortion of the market for people like you who are looking for information that fits your perception of reality because you're so afraid of doing what it takes to earn these results and you want to make sure other people are not moving ahead of you. Sorry but I had to call you on that!

 

[honobob]

Whoa whoa whoa, hang on a second here.

Are you seriously saying that you not only believe that San Francisco is immune from the current subprime problems, but that housing prices will continue to appreciate at 11% per year for the next 3 decades

Hell Yeah!!

Do you honestly not see how ridiculous that sounds? That's saying that a dwelling worth $500,000 today will be worth $11,446,148 in 30 years. You said "do the math," well there you go. There's the math.

Do you honestly not see how ridiculous you sound? When I was about your age a $40,000 house was a upper middle class house. I know plenty of people that bought $25,000 houses back then that are worth over $1,000,000 now.

Considering that such a dwelling is probably not very flashy and borders on "bargain basement" today, do you really think that same "no frills" dwelling will be worth $11M in 30 years?

Oh hell yeah.

Say a family who earns an upper-middle class income of $150,000 can barely afford that $500,000 dwelling today. That is, they'd be stretching to afford a dwelling worth 3.3 times their annual household income.

Dude, I got teachers and garbagemen in my NBHD in $600,000 houses. You wanna go door to door and explain to them how they can't be in a house 10+ times more than their income?

In 30 years, assuming 3% inflation, a similarly-well-off family will earn $364,089. If they were to buy a similar dwelling, now worth $11,000,000 in your example, now they'd be buying a dwelling costing 30 times their income!

People were able to do it the last 30-50 years. The "bubble" may be new to you since you fell out of your crib but this is about my 4th and I'm not that much older than you!

Do you seriously think that's realistic? Honestly. I'm sincerely curious how you reconcile this crazy math in your head. Do you envision that by 2038, families in San Francisco will be earning $3 million/year (to keep the same 3.3 earning factor that presently exists)? Or do you think people will be signing 300 year mortgages by then? How do you manipulate the math to allow yourself to believe in such a crazily out-of-whack future? Will upper-middle class families be forced to live in crowded community housing developments, being unable to afford even an $11,000,000 "starter home?" Or will San Francisco incomes wildly outpace the rest of the country, such that professionals in San Francisco will earn 10x as much as a similar job anywhere else in the country?

There's multi million dollar homes here that are not occupied full time. One of the largest sales was for $65,000,000 and the people sold because it was only one of their several homes and they could afford but could not justify keeping the home that was only getting a few weeks use.

The information is out there and in this age with the internet there is no excuse for ignorance. You do not have to invest in real estate. You do not have to believe me. You should not ridicule something just because you can't "wrap your head around" the incredible wealth that is out there. Prove me wrong!!

 

[kombat]

do you really think that same "no frills" dwelling will be worth $11M in 30 years?

Oh hell yeah.

OK, I'm 90% certain I'm being trolled here, but just in case the OP actually takes this crazy advice, I'll respond.

honobob, if a "no-frills" house will be worth $11,000,000 in 30 years, what will the nice houses cost? If a nice house in San Francisco currently sells for $1,000,000, then you by your math (11%/year), it will be worth just under $23 million in 30 years.

Working professionals in San Francisco can currently (barely) afford these $750,000 - $1 million homes, even though they may be 5-10x their household income.

However, in 30 years, assuming wages match inflation at 3%/year, those same couples would be applying for mortgages at 30-60x their income. Do you seriously think that's how things will be in 30 years? What bank is going to approve mortgages at 30 times someone's annual income? Do you really not see how ridiculous that sounds?

Your only defense in this absurd prediction seems to be "that's what's happened in the past, so there's no reason it can't keep happening." But this ignores the nature of exponential growth. In the past, that $25,000 house you mentioned might've been 2 times that family's annual income. Now, maybe it's worth $1 million. A family buying it today would probably have a household income of $150,000 - $200,000. The mortgage would still only be 5 times their income.

However, if you continue this trend outwards at its current rate, then the math is undeniable. A family earning $200,000/year today is equivalent to a family earning $485,452/year 30 years from now. That $1 million home is currently 5 times their income, but in 30 years (at 11%), that same home will sell for $23 million, by your math.

If families are only earning $485,000/year, how would they ever get approved for a $23 million mortgage? That's 47 times their annual income! That's a BIG difference from the current 5 times their income.

That family would have to devote their entire income solely to the mortgage, with absolutely nothing left over for groceries, transportation, or taxes, for half a century, assuming a 0% interest mortgage, before they'd pay off that house! How can you possibly believe this will be the norm in 30 years?

The information is out there and in this age with the internet there is no excuse for ignorance.

Oh don't mistake me, I'm not denying that real estate has experienced such growth in the past. I'm simply saying that it's clearly impossible for similar growth to persist so far into the future, because the income-to-mortgage ratio gets ridiculously out of whack. No bank will ever approve a personal mortgage for 47 times someone's annual income. How do you explain that? How do you predict people earning $485,000/year will be able to afford $23 million starter homes?

Prove me wrong!!

I don't have to - time will do it for me.

 

[eridanus]

An yet all the paired sales that I've provided show 12-16% increases yearly from 2004-2005 to 12/2007. Of course, Shiller doesn't report these sales because there is a market for their distortion of the market for people like you who are looking for information that fits your perception of reality because you're so afraid of doing what it takes to earn these results and you want to make sure other people are not moving ahead of you. Sorry but I had to call you on that!

You called me alright. We all can't have your super-secret sources of super-selective paired sales.

I'm sure, with your record, you'll be playing bridge with Buffet and Gates in no time flat.

 

[Milton]

OK, I'm 90% certain I'm being trolled here, but just in case the OP actually takes this crazy advice, I'll respond.

The OP is already drinking the Kool-Aid.

 

[honobob]

You called me alright. We all can't have your super-secret sources of super-selective paired sales.

I'm sure, with your record, you'll be playing bridge with Buffet and Gates in no time flat.

Public record! San Francisco is the City & County. Assessor or Tax Collector site should work. All my paired sales are listed by address. It's so easy a caveman could do it! Fire hot...Fire bad. Buffet and Gates are moving faster than me and the OTHER hundreds of thousands of owners in SF so I don't think my little involvement is gonna allow a catchup...unless they up the charity. But then you weren't crazy enough to believe that were you? You were just trying to ridicule me to take away from my factual message? At least ya gatta plan. How's that working for you?

 

[eridanus]

At least ya gatta plan. How's that working for you?

Great, thanks for asking.

 

[Razor]

My lakehome is worth 4 times what I paid for it in '89. Do I believe it will be worth 4 times it's present value in 20 years? Nope.

High-end home sales soar in Bay Area

These deals are occurring even as the broader market tumbles, with resale homes in the nine-county Bay Area falling 43.7 percent in January and median prices dropping nearly 9 percent from a year earlier, according to DataQuick Information Systems.
The high-end market is experiencing the opposite trend primarily because things like tight credit, prices that outpace incomes and subprime mortgages aren't of particular concern to the wealthy, who can often pay all cash, said Avram Goldman, chief executive officer of Pacific Union.


A low end $500K condo is not going to be worth $10 million in 30 years. Their value is dropping.

 

[honobob]

- time will do it for me.

Very true.

But then you must be the smartest 32 year old in Canadia. And to speak American on top of your native language. Impressive! But when you use highly technical terms like "no frills" and "nice" houses you're over my head.

Income to mortgage ratio. I'll see if I can explain your theory to the lady in my office that just sold her $1.8M place. She's never made over $100K a year.

Interesting and timely article below that tell of the top 20% leaving the bottom 80% behind in SF. Humm. I believe home ownership is about 19%.


Rich getting richer, poor getting poorer

Hey, I am not trying to convince you or anyone else of anything. Just remember I stopped and offered you a ride with the top 20% and it was YOU that refused because you were afraid of them infernal combustion contraptions.

In my dust, Bye! Bye!

 

[bots2019]

It's an issue of sustainability. No one's doubting historical rates of appreciation, but to be so certain they'll continue 30 years into the future seems a little simplistic.

Let's use Chicago as a proxy for other large urban areas (the assumption is that they're competitors with SF for business professionals, etc). Assuming Chi real estate historically appreciates at 6% (or whatever the historical rate has been), and figure SF real estate is currently 50% more expensive than a similar dwelling in Chi. If SF sees 11% over the next 30 years and Chi sees 6%, that dwelling in SF that's currently 50% more expensive becomes 6x the cost of Chi. At some point, the cost differentials become unsustainable (and yes, I know it's happened in the past ).

 

[honobob]

High-end home sales soar in Bay Area

A low end $500K condo is not going to be worth $10 million in 30 years. Their value is dropping.

Another, "Oh, my lakehome quaddruppled in value but no one will ever duplicate my feat of financial prowess! Yep, it all ended with my last deal on the doublewide!!" You people are so predictable. Funny, your link does not provide any factual documentation of your claim that $500K condo's are dropping value.

So your support is that values Can't / Shan't / Musn't increase because when you contract and extend your palms by tens you can't comprehend houses selling for "that many"?

 

[Razor]

Another, "Oh, my lakehome quaddruppled in value but no one will ever duplicate my feat of financial prowess! Yep, it all ended with my last deal on the doublewide!!" You people are so predictable. Funny, your link does not provide any factual documentation of your claim that $500K condo's are dropping value.

So your support is that values Can't / Shan't / Musn't increase because when you contract and extend your palms by tens you can't comprehend houses selling for "that many"?

I had nothing to do with the value of my property, but I do believe property values have leveled off and the real estate boom is over. I guarrentee the next 20 years is not going to be like the last twenty years. Wages are not increasing that fast.

What about this:
These deals are occurring even as the broader market tumbles, with resale homes in the nine-county Bay Area falling 43.7 percent in January and median prices dropping nearly 9 percent from a year earlier,

Did you even read the article?