Biggest Housing Boom In History

[Cole Trickle]

So true...most people think their house is an asset.

And it is, the mortgage is listed as an asset on the bank's balance sheet.
For the howmeoner, it's a liability.

There are good reasons to buy, and also good reasons to rent.
It all depends on a ton of different factors.

The only reason to buy is to eventually not have a mortgage when your income drops from being retired...lol

We lost track of that in the late 80's when the baby boomers all decided bigger was better and that they needed a new home every 5 years.

I shake my head daily when a 60 year old client buys a new bigger house and it's on a 30 year buy. There is absolutely no plan they are looking for new and cheap and one day it will all blow up.

 

[RCDave]

The only reason to buy is to eventually not have a mortgage when your income drops from being retired...lol

We lost track of that in the late 80's when the baby boomers all decided bigger was better and that they needed a new home every 5 years.

I shake my head daily when a 60 year old client buys a new bigger house and it's on a 30 year buy. There is absolutely no plan they are looking for new and cheap and one day it will all blow up.

Bingo

 

[LargeOrangeFont]

Yup. Just ignore realtors and mortgage bankers, lol . Their perspectives can be tainted by conflicts of interest

We had a thread like that once. Everyone that said that was chastised

 

[LargeOrangeFont]

Very interesting thread,
As you can see from the above your house is not an asset, a asset puts money in your pocket liabilities take it out. When you live in your home the only way you can make money is when you sell it and most likely cause of the expense of owning you will just break even. When you live in your house you can only make money on the appreciation of the house. If you own and rent it you make it 4 ways appreciation, deprecation, amortization and cash flow.

There is nothing wrong with owning or renting or even owning and renting. They both have advantages and disadvantages. from a wealth building stand point you are better renting than owning. If the house is under about 175k your good owning, above that your better renting. Here is why. (RTV) Rent to value the more expensive the house the cheaper the rent. Example you can rent a 1ml home for 4 to 5k per month. The RTV is .4 to .5% I buy homes all day that rent @RTV 1% im in escrow on one right now rents for 1275. on a 132k purchase price. example lets say you have 1ml, instead of buying a 1 million house you buy 10 100k house that rent for (1%) 1k per month so that's 10k per month income. Now you rent the 1ml house for 5k and pocket the other 5k and when the water heater, AC, roof or 100 other things fail that's the owners problem.

Where the market is heading, this one is more complicated than in times past. I also owned personal home in Corona but sold in July 2005 expecting a drastic correction. After I sold I rented and waited, was one of the lucky few. I give 100% credit to God on that, being just another punk kid at that time I didn't have a clue about markets but knew something was not right. Since then I have made it a personal goal to educate myself on things financial. To make it simple there are 2 main drivers of the economy energy and debit. If you understand these 2 you can kinda predict the direction. Right now the expansion of debit is stalling.
That is why Trump is screaming at the fed to reduce rates. You reduce rates and more money will get borrowed. They have also reduced the borrowing standards
unless your a multi millionaire and want to buy assets than they have made it hard as fuk, otherwise no money no credit no problem. Can the market keeping going up? Sure but I think its 20% 80% risk ratio. Baby boomers are down sizing, gen x is busy buying boats and trucks, millennial's are maxed out with student loans. So where is the driver? 2 things control housing prices, income and interest rates. Do you suspect income to rise? Real inflation is 8% you will have to rise faster than that. Do you expect rates do go down further? They will have to go down further than in the past.
I predict 25% correction. I suspect another great depression.

Why I suspect a another Great Depression.
I recommend you do your own research on this but for the last 10 years we have followed the same pattern of the last great depression.
Ever heard of the depression of 1920? Google it. in 1920 commodity prices crashed. The government stepped in with a easy money policy to reflate commodity prices. Instead the money flowed into financial assets like stocks and real estate. (sound familiar?) then the crash of oct 1929. Great depression followed.
I hope im wrong.

To all you that keep bringing up interest rates. todays 4% is the same as the 1980's 15% it all based on inflation
4% rate with 8% inflation is a real rate of 4
15% rate with 19% inflation is a real rate of 4

Replace the word want with need in your personal vocabulary
Focus on your needs,
Use debit to buy income.
Don't save toilet paper with ink on it. Trade that toilet paper for real assets.

OH did you know the fed just stared QE again? More toilet paper coming to a bank near you're.

Give a man a gun and he will rob a bank, give a man a bank and he will rob the world.

Well said.

What areas are you buying in, if you don't mind me asking? I'd probably buy 3-5 units for 1% RTV with ~$130K entry point.

 

[Waterjunky]

The only reason to buy is to eventually not have a mortgage when your income drops from being retired...lol

This is my real end game. Most people are viewing it as an image / ego thing. I am also buying rental property but that is a totally different thing. My house is a roof over my families head and the sooner I pay it off the sooner I live "rent free". The other part of that is that no one can take it away if things get ugly. Now my rental property is a traditional asset and when I choose to leverage it as such it will be to expand the empire of rental units....... I currently think the market is at or near the peak so I am just sitting on equity and investment pool. Best case scenario that I see is that the market will flatten, then I will buy. The worst case is it crashes again and then I buy somewhere on the bottom of the arc.

 

[FishSniper]

This is my real end game. Most people are viewing it as an image / ego thing. I am also buying rental property but that is a totally different thing. My house is a roof over my families head and the sooner I pay it off the sooner I live "rent free". The other part of that is that no one can take it away if things get ugly. Now my rental property is a traditional asset and when I choose to leverage it as such it will be to expand the empire of rental units....... I currently think the market is at or near the peak so I am just sitting on equity and investment pool. Best case scenario that I see is that the market will flatten, then I will buy. The worst case is it crashes again and then I buy somewhere on the bottom of the arc.

Looking at buying a home in havasu as a vacation home/ poss rental and am having same debate. Hard to swallow some of the prices compared to a couple years ago but getting tired of paying boat storage and rental houses when we go up.

 

[Waterjunky]

Looking at buying a home in havasu as a vacation home/ poss rental and am having same debate. Hard to swallow some of the prices compared to a couple years ago but getting tired of paying boat storage and rental houses when we go up.

Unless you buy at a screaming deal (virtually don't exist right now) vacation homes are generally a wash at best as far as investments go. Not saying not to do it but don't really think of it as an investment. At that point its a second home which are almost never a good investment. Again, not saying don't do it if it is what you really want but don't have rose colored glasses on with it.
Most vacation rentals are just trying to take the edge off the monthly nut the owners have to crack. On good months, you can make a little money but on bad months you make nothing. The wife and I have gone all over this one and we finally concluded that we are better off buying a local long term rental and just sucking up vacation rentals 1-3 times a year. This plan will solidly put more money in our pockets, minimize our headache, build long term wealth, and still travel when and where we want within reason. The tradeoff is that we don't have "our" stuff when on vacation.

 

[LargeOrangeFont]

Looking at buying a home in havasu as a vacation home/ poss rental and am having same debate. Hard to swallow some of the prices compared to a couple years ago but getting tired of paying boat storage and rental houses when we go up.

Depending on how much you go it can reduce your costs significantly. It will depend on how aggressively you rent it out if it will be a monthly cost, break even or even make money. It will likely be some level of monthly cost for you if you use it as a vacation home.

It really depends on what level of house you are looking at. There are some nice 3 bed 2 bath 1300-1600 sq ft places with boat deep garages for mid/high 200s. A snowbird rental will pretty much cover your costs for the months they are there for a property like that. Once you factor in the monthly storage, rentals, and other costs and benefits you'll be able to see if it is worth it for you.

 

[Cole Trickle]

This is my real end game. Most people are viewing it as an image / ego thing. I am also buying rental property but that is a totally different thing. My house is a roof over my families head and the sooner I pay it off the sooner I live "rent free". The other part of that is that no one can take it away if things get ugly. Now my rental property is a traditional asset and when I choose to leverage it as such it will be to expand the empire of rental units....... I currently think the market is at or near the peak so I am just sitting on equity and investment pool. Best case scenario that I see is that the market will flatten, then I will buy. The worst case is it crashes again and then I buy somewhere on the bottom of the arc.

yep....

I hope to have my primary house paid off before I hit 55.

I am much more liquid this time around and if the market swings I would like to grab a rental in the havasu area where the rent would handle all expenses. When my primary is paid off we will grab another 1-2 and I will throw the 3K a month I currently pay at all the properties along with the rent and try and get to the point where all 3 rentals are paid off within 10 years. At that point I will sell my primary and buy a nice retirement house out in Havasu and collect rents along with our other investments.

 

[FishSniper]

Depending on how much you go it can reduce your costs significantly. It will depend on how aggressively you rent it out if it will be a monthly cost, break even or even make money. It will likely be some level of monthly cost for you if you use it as a vacation home.

It really depends on what level of house you are looking at. There are some nice 3 bed 2 bath 1300-1600 sq ft places with boat deep garages for mid/high 200s. A snowbird rental will pretty much cover your costs for the months they are there for a property like that. Once you factor in the monthly storage, rentals, and other costs and benefits you'll be able to see if it is worth it for you.

Yea that's kinda the plan also been looking at some larger places that are a bit more expensive that would be a bit more out of pocket a month but has larger garage and or a pool.

 

[Cole Trickle]

Yea that's kinda the plan also been looking at some larger places that are a bit more expensive that would be a bit more out of pocket a month but has larger garage and or a pool.

As much as I have tried to justify a vacation home or even a RV for that matter I just can't get the numbers to work. If the Lake is your #1 passion and nothing in life will distract you from heading out I think it can work. I used to head out every 2 weeks rain or shine. Life changes you get married have kids, they get busy and I have been to the lake 1x this year.

Same reason I sold my toyhauler and teryx....depreciating items sitting there not being used drove me crazy.

Be realistic with the usage and how much a pita it will be to hustle vacation rentals and see if it works.

 

[LargeOrangeFont]

Yea that's kinda the plan also been looking at some larger places that are a bit more expensive that would be a bit more out of pocket a month but has larger garage and or a pool.

Yea you really have to do the math and find out what makes sense for you.

My advice - As a plan B, if shit hit the fan and you had some financial or health hardship and could not go to Havasu anymore, I would look to buy something that has potential to be a longer term rental. That is nice but not ultra custom or nice, and not excessively large or high end. Buy something that if you DID have to rent it full time, you would make a little money or at minimum it would not cost you anything. That way if worse came to worse, you could just put the place on ice until you could get back to the lifestyle.

 

[LargeOrangeFont]

As much as I have tried to justify a vacation home or even a RV for that matter I just can't get the numbers to work. If the Lake is your #1 passion and nothing in life will distract you from heading out I think it can work. I used to head out every 2 weeks rain or shine. Life changes you get married have kids, they get busy and I have been to the lake 1x this year.

Same reason I sold my toyhauler and teryx....depreciating items sitting there not being used drove me crazy.

Be realistic with the usage and how much a pita it will be to hustle vacation rentals and see if it works.

This is true. I will say getting Snowbird renters is easy... stupidly easy.

 

[Cole Trickle]

This is true. I will say getting Snowbird renters is easy... stupidly easy.

That seems to work good and it seems if you bought right that income will almost pay for most of the June-Septs months while you enjoy it. Snowbird and long term rentals seem to not beat the crap out of the house as well.

I agree on picking up a nice boat deep simple house that will hold a 20-25' boat. No pool no rv garage and clean it up give the back yard a little love/fun so it is cool for renters. A nice pool/RV house is 400K+++ right now and it gets harder to work those numbers at that monthly nut.

 

[LargeOrangeFont]

That seems to work good and it seems if you bought right that income will almost pay for most of the June-Septs months while you enjoy it. Snowbird and long term rentals seem to not beat the crap out of the house as well.

I agree on picking up a nice boat deep simple house that will hold a 20-25' boat. No pool no rv garage and clean it up give the back yard a little love/fun so it is cool for renters. A nice pool/RV house is 400K+++ right now and it gets harder to work those numbers at that monthly nut.

Yea, spot on. Today with a simple $250K house, you are making a little profit on the snowbirds, but it is not covering you for the summer. But if you are going out more than 5-6 times a year and renting a house to do it, the numbers can quickly start to at least make sense.

 

[Cole Trickle]

Yea, spot on. Today with a simple $250K house, you are making a little profit on the snowbirds, but it is not covering you for the summer. But if you are going out more than 6 times a year and renting a house to do it, the numbers can quickly start to at least make sense.

for sure when you start talking about savings on storage/towing

 

[LargeOrangeFont]

for sure when you start talking about savings on storage/towing

And you are right, it does somewhat tie you to Havasu. But on the flip side there is tons to do.

We still generally do one "other" vacation event a year outside of Havasu. Aside from the weekends, we spend Spring Break, at least one week in the summer, and Thanksgiving week in Havasu, Which is MORE "vacation" than we would do before, simply because the house is sitting there, and really the only cost is gas.

 

[Cole Trickle]

And you are right, it does somewhat tie you to Havasu. But on the flip side there is tons to do.

We still generally do one "other" vacation event a year outside of Havasu. Aside from the weekends, we spend Spring Break, at least one week in the summer, and Thanksgiving week in Havasu, Which is MORE "vacation" than we would do before, simply because the house is sitting there, and really the only cost is gas.

Enjoy it brother...kids screw up everything when they get older...haha

Really wanted to do the RDP regatta...kid has a game on both Sat and Sun that weekend

 

[LargeOrangeFont]

Enjoy it brother...kids screw up everything when they get older...haha

Really wanted to do the RDP regatta...kid has a game on both Sat and Sun that weekend

Daughter is in dance.. very few Saturday commitments. My son will be the one that screws up the program somehow.

 

[steak&lobster]

Daughter is in dance.. very few Saturday commitments. My son will be the one that screws up the program somehow.

baseball. . . but I wouldn't have it any other way

 

[EmpirE231]

It's coming

 

[FishSniper]

Yea, spot on. Today with a simple $250K house, you are making a little profit on the snowbirds, but it is not covering you for the summer. But if you are going out more than 5-6 times a year and renting a house to do it, the numbers can quickly start to at least make sense.

That's where we're at right now paying to keep the boat up there and do 7-8 trips a year is the reason we're looking at getting a place up there.

 

[LargeOrangeFont]

That's where we're at right now paying to keep the boat up there and do 7-8 trips a year is the reason we're looking at getting a place up there.

Well there are worse places to park your money than real estate.....

 

[TCHB]

Lots of building going on at Lake Las Vegas. If you are a first time buyer buy location and stop throwing your cash away.

 

[bentprops]

Well said.

What areas are you buying in, if you don't mind me asking? I'd probably buy 3-5 units for 1% RTV with ~$130K entry point.

I look for linear markets where you don't get much price appreciation and the dirt has next to zero value. Midwest at this time. ID MS TN IA. I cashed out of the high flying markets and buy 3 for 1. I look at it like im buying a commodity basket that the world puts a value on. Not the local market. When prices head south people tend to not care about pricey dirt just a house over their head. That's why these corrections all ways start in the highest priced places. Look to ca, when it rolls over you know the rest will follow suit.

 

[Bobby V]

I shake my head daily when a 60 year old client buys a new bigger house and it's on a 30 year buy. There is absolutely no plan they are looking for new and cheap and one day it will all blow up.

What if the house payment is figured in as part of their retirement pensions plan.

 

[RCDave]

Pension plans are still subject to risks....They are not always 100% dependable.

 

[Bobby V]

Pension plans are still subject to risks....They are not always 100% dependable.

Yes I agree. Just depends on what pension plan you are in.

 

[Cole Trickle]

What if the house payment is figured in as part of their retirement pensions plan.

What have they been doing with the money they made at said union job for the past 40 years?

Anyone that has been unionized that long making big $$$ that is able to retire at 80% of current income should be wealthy upon retirement. If they aren't they are dumb as shit and didn't play there cards right. I'm not saying a extra condo in maui wouldn't be a good iddea but they absolutely should have the primary house or two payed off.

 

[LargeOrangeFont]

I look for linear markets where you don't get much price appreciation and the dirt has next to zero value. Midwest at this time. ID MS TN IA. I cashed out of the high flying markets and buy 3 for 1. I look at it like im buying a commodity basket that the world puts a value on. Not the local market. When prices head south people tend to not care about pricey dirt just a house over their head. That's why these corrections all ways start in the highest priced places. Look to ca, when it rolls over you know the rest will follow suit.

Nice, and I agree. Thank you.

 

[Bobby V]

What have they been doing with the money they made at said union job for the past 40 years?

Anyone that has been unionized that long making big $$$ that is able to retire at 80% of current income should be wealthy upon retirement. If they aren't they are dumb as shit and didn't play there cards right. I'm not saying a extra condo in maui wouldn't be a good iddea but they absolutely should have the primary house or two payed off.

If only it was that easy in a perfect world. A lot of things that can happen in those 40 years that can effect your plans.

 

[Cole Trickle]

If only it was that easy in a perfect world. A lot of things that can happen in those 40 years that can effect your plans.

Understand...pretty sure between the two properties and smart decisions both of you came out smelling ok moving forward.

 

[mbrown2]

What have they been doing with the money they made at said union job for the past 40 years?

Anyone that has been unionized that long making big $$$ that is able to retire at 80% of current income should be wealthy upon retirement. If they aren't they are dumb as shit and didn't play there cards right. I'm not saying a extra condo in maui wouldn't be a good iddea but they absolutely should have the primary house or two payed off.

Huh...Not a union person here but I have pensions and other retirement vehicles...I could not afford a 1M house at my 30 yr old salary but I could at my 40yr old salary...so if I wanted to by a 1M+ house in my 40's as long as I can pay for it based on my retirement salary I should be good...Although I think having all real estate paid off by 55 is a good goal...it is not necessary for everyone..

 

[Bobby V]

Understand...pretty sure between the two properties and smart decisions both of you came out smelling ok moving forward.

We still own both properties. I can pay off both when I retire. I just don't want to take the money out. Making to much $$$ with the pension investments.

 

[Cole Trickle]

Huh...Not a union person here but I have pensions and other retirement vehicles...I could not afford a 1M house at my 30 yr old salary but I could at my 40yr old salary...so if I wanted to by a 1M+ house in my 40's as long as I can pay for it based on my retirement salary I should be good...Although I think having all real estate paid off by 55 is a good goal...it is not necessary for everyone..

I would like to travel have freedom and not be a slave to a big mortgage at retirement age. You could very well live in a million dollar house now that you purchased for 400K in your late 20's.

My goal/plan might not be for everyone I just think people waste a ton of home equity on things that aren't smart and pay way to much interest towards things they don't really need.

I understand the need for a 30 year mortgage. what I don't understand is living at the property for 15+ years and then refinancing that property into another 30 so you can buy a depreciating asset. Work hard and grind for the first part of your career but I just can't agree with taking the easy way out and sacrificing the future for immediate gains.

 

[mbrown2]

I would like to travel have freedom and not be a slave to a big mortgage at retirement age. You could very well live in a million dollar house now that you purchased for 400K in your late 20's.

My goal/plan might not be for everyone I just think people waste a ton of home equity on things that aren't smart and pay way to much interest towards things they don't really need.

I understand the need for a 30 year mortgage. what I don't understand is living at the property for 15+ years and then refinancing that property into another 30 so you can buy a depreciating asset. Work hard and grind for the first part of your career but I just can't agree with taking the easy way out and sacrificing the future for immediate gains.

I get you....I have never used equity on items other than actual house and have not used equity in the last 20+ yrs on anything even the house. On your comment on appreciation it does not add up based on the up/down cycles of the last 30 years. My first property in 89 was 117K @10% and still is only valued at 315K @3.5....not necessarily a million dollar appreciation since my early 20's..

I travel now and plan to travel in retirement. My vacation property is paid for so I don't feel like I have to go to the river to feel like I get my monies worth. In fact I go less...from 15-20 trips down to 5-6 but when I go I stay a week versus 2 days. We are able to work from the house and boat in the afternoon. I like to use my work vacation to visit other states/countries vs the river.

 

[Cole Trickle]

I get you....I have never used equity on items other than actual house and have not used equity in the last 20+ yrs on anything even the house. On your comment on appreciation it does not add up based on the up/down cycles of the last 30 years. My first property in 89 was 117K @10% and still is only valued at 315K @3.5....not necessarily a million dollar appreciation since my early 20's..

I'm talking so cal/oc area

How did the HB property work out

 

[pronstar]

For me, money is a tool to make more money.
At this stage of my business plan, owned equity is cheap money that gets put to work.

I target a 20% cash-on-cash return and I’m close to 50% for the year. While that’s not sustainable at all, I’ll make hay while the sun shines...



Sent from my iPad using Tapatalk

 

[mbrown2]

I'm talking so cal/oc area

How did the HB property work out

The 117K to 315K was So Cal...Townhome in Chino...all we could afford at 19 ….The ups and downs in Cali mean that every property did not appreciate in a linear fashion….it did go up but it also went down. HB is appreciating well but my best buy was a Simi Valley property in 1998 for 300K (1st phase, smallest house big lot)...sold in 2007 for 875K... Worst move AZ Property 650K in 2007, sold for 450K in 2011...but in 2011 I wanted to buy while prices were down in a down Cali market so you have to gamble a bit.

 

[TCHB]

If only it was that easy in a perfect world. A lot of things that can happen in those 40 years that can effect your plans.

What about the guy who was divorced twice. He is not in good shape!!!!!

 

[LargeOrangeFont]

We still own both properties. I can pay off both when I retire. I just don't want to take the money out. Making to much $$$ with the pension investments.

Hopefully you thank Trump everyday.

 

[Ziggy]

It's coming

LOL.

 

[Bobby V]

Hopefully you thank Trump everyday.

Not the last 2 weeks.

 

[boatpi]

Yep, Vegas valley is still a good deal. Even on 5-7 year old houses as property tax is less. In the last 8 years, from 5-40% appreciation per year, and some great areas. And rents are way up for investors.

Look at you CA taxes, you will be paying 10.75% income tax, not to mention gas tax and other BS. We did, and set up out new business here, that corp pays NO state taxes and we pay NO state personal income taxes. So our new house payments are a trade off for CA income taxes. a push. I live in almost south 40's, no smog, open acres, quiet, all 1/2 area lots. No electric bill on solar and got that write off. We do pay CA corporate tax on that income, not too excessive.

When our investments, and business interests started to rapidly rise after the ELECTION ( and have not stopped) , we planned well and jumped ship from CA. NV has been so good, even the tax lady came by and explained it all, got her cell and e mail for nay questions, just very friendly and inviting. Google is building a 5 story building NOW, Amazon is adding ANOTHER 500,000 building, it just never ends the new investments here.

 

[TCHB]

Hopefully you thank Trump everyday.

I do not thank anyone. I earned my cash and invest it on my own.
Amazon has been good for years.

 

[jeepdog]

Havasu has golf

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[grumpy88]

Yep, Vegas valley is still a good deal. Even on 5-7 year old houses as property tax is less. In the last 8 years, from 5-40% appreciation per year, and some great areas. And rents are way up for investors.

Look at you CA taxes, you will be paying 10.75% income tax, not to mention gas tax and other BS. We did, and set up out new business here, that corp pays NO state taxes and we pay NO state personal income taxes. So our new house payments are a trade off for CA income taxes. a push. I live in almost south 40's, no smog, open acres, quiet, all 1/2 area lots. No electric bill on solar and got that write off. We do pay CA corporate tax on that income, not too excessive.

When our investments, and business interests started to rapidly rise after the ELECTION ( and have not stopped) , we planned well and jumped ship from CA. NV has been so good, even the tax lady came by and explained it all, got her cell and e mail for nay questions, just very friendly and inviting. Google is building a 5 story building NOW, Amazon is adding ANOTHER 500,000 building, it just never ends the new investments here.

I would say the priced in Las Vegas are reasonable but also a ton of inventory going on the market daily . We are in escrow there and got the buyers to come down 45k since there original asking price . Our home in Los Angeles sold the first week 32k over asking and is the new high per square foot comp for the area . Two totally different markets

 

[LargeOrangeFont]

I do not thank anyone. I earned my cash and invest it on my own.
Amazon has been good for years.

So you are thanking Jeff then

 

[Racey]

I would say the priced in Las Vegas are reasonable but also a ton of inventory going on the market daily . We are in escrow there and got the buyers to come down 45k since there original asking price . Our home in Los Angeles sold the first week 32k over asking and is the new high per square foot comp for the area . Two totally different markets

Sounds like you made a good move at a good time!

 

[TCHB]

So you are thanking Jeff then

Jeff should thank me for investing in his company when he was selling books.