Search results

Yeah, but they are a minority compared to folks who work in similar sized companies who do the same thing. You make a good point, but bear in mind I tempered my position by saying it depends on your age. Folks who were in their 20's, 30's, and early 40's who were betting big on Enron weren't...

I think you're saying that the capital gains rate is lower so the gain on the CD might not apply? If so, thats a good point. But if you pay down the mortgage, you're paying with earned income, so I think its appropriate to look at the discounted interest rate.

If your tax bracket is over 25%, paying down a typical 30-year mortgage makes no sense right now. Your cost of capital after taxes is less than 5% on the note. You'd pay less than 75% of a rate of 6.375% which clocks in at less than 5% net. But if you put those funds in CDs, you'd make your...

I don't think its as simple as that. You just need to compare the interest rates that you're paying to your return on investment on an after tax basis. Individual circumstances will vary and you also have to factor in whether additional investment will create or destroy diversity. FWIW, I...

***Ok, let me throw out my two cents. I'm not a professional economist, so I'm allowed to be wrong. :) Please cite faults in this (seemingly circular) logic contributing to my long term view: 1) National debt service issues will not be a problem if inflation or hyperinflation occurs, as...

I remember reading a story about a factory where cheap labor was being utilized in the form of (predominantly) female minors. Political pressure in the U.S. caused the U.S.-based company to close the factory. A follow-up story showed that most of those girls ended up involved in prostitution.

OK, so Gordon Gecko gets out of prison today, makes a few phone calls to get some of the off-shore money he stashed. Then what? Does he start doing insider trading? Does he hunt down Bud? Does he try to frame him for insider trading? SM

Hey, I'm a bull and I can tell you that it doesn't surprise me that some markets are out of whack. It is as surprising as being told that a certain stock is overpriced, even during a bull market. Now if someone goes out and borrows a crapload of money, perhaps their entire life savings and...

Hey an interesting aspect to this is that whenever you hedge, it hurts your profits. The net result is that loans will get more expensive in the form of higher rates above and beyond market forces. If I said I was predicting this, I know ya'll will call me a liar, so I won't. :) SM

Good point. Hmmm....well housing does poorly in a high interest rate environment. So what investment does "OK" enough to return 7% during "normal" times, but kicks butt during high interest? Banks? Utilities? SM

Scria, Ok, since you put together that spreadsheet for me I'll play nice and concede that the opportunity cost of money tied up in property is more important later on in ownership. However, as I'm sure you know, I don't let that happen. In real estate investing, if you want to make a...

Ok, I'm still confused. Is the reason that the model showed rent increasing only 1% a year because the model was supposed to be discounted back to today? In that case, shouldn't the payments for the owner payments decrease over time in the model because the net present value of each...

Are you serious? Two years ago, I purchased a townhouse for $10,000 down plus closing costs of $4000. It is now worth $35,000 more than when I bought it (not including the downpayment). So you're saying that I'm unfortunate because I wasn't getting a return on my $14,000? My home equity WAS...

Ok, I reworked the model (see attached) assuming 3.5% inflation on rents. But since I'm lazy and didn't want to spend a lot of time with the spreadsheet, I also subtracted out the increase in property taxes from the rent increases. I also had the rents rise every month instead of every 12...

Not what I'm saying. I'm saying that the owner of the $600,000 house that is being rented out for $1500 may very well be renting it out for a profit if they purchased it 2 or more years ago. They have lots of equity and monthly profits from their rent. The folks who decided to rent...

I like it the model, but I'm confused why you have rents increasing only 1% a year? Rents generally increase at the inflation rate. Property taxes probably increase at close to that rate too, but they are a small fraction of the overall escrowed payment (like 10% in my neck of the woods). So...

Owning the house and renting it out for a profit.

Good points all. Is Calgary where the oil tars are? That could be a good place to own property. One other thing he needs to consider is hanging on to the old house and renting it out. Here in the U.S., you can hang on to it for almost 3 years after vacating, and still sell it without paying...

How many people here who (now) feel renting long term is a good idea also cashed in on a large increase in home equity during the price run on housing?