how did people get it in their heads that long housing is an investment

Quote from myoffices:

When your rental property goes from 125 to 300k in 10 years as the neighborhood improves. Thats a good investment.
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Please make sure to factor in inflation, taxes, insurance, repair, maintenance and other costs, then do the math.

On average housing appreciates 2-3% a year. What we experienced from 2000-2006 (especially in the bubble areas) was completely ludocrous and will never happen again in our lifetimes.

Multi-unit buildings have the best cash flow potential and can be very good investments.
 
i do a lot of real estate investing and i can tell you that just like the market, it's all about buying at a discount. the reason this is a mess is because everyone purchased homes too high. the biggest property owners (people that have 100+ rental) are buying as many homes as possible right now because they can get them so cheap. 5-10 years out they will be that much richer.
 
Quality of life. Just do not buy a bigger house that you need or can afford.

In mid class area within tri state area NY, NJ and CT a decent house rental will be roughly equivalent to buying, but once all deductions are factored in, buying is for the most part cheaper.
 
Quote from KINGOFSHORTS:

First the margin loan rate of 6% lets say for 30 years.

Second is the cost of insurance,taxes,fees,etc. another 3%

Maintenance/upkeep (ie: repairs) 1%

Total carrying cost over 30 years = 10% annually.

And I am not including the wide bid/ask spreads and fees etc.. when taking on a long position in housing.

Someone putting down 10% towards a 200,000K long position in housing will have taken a 10:1 leveraged position without the upside potential you get with a 10:1 leverage.


So you take the risk of 10:1 and you have to return 20% annually on your long position to at least break 10% a year.

And at the end if you want to unlock value on your equity you have to borrow on it and pay who knows what. So you get screwed anyhow.

You cant sell a position and cash in or hedge with calls or collect dividends etc.., its either sell the whole house or borrow against it.



Buy a home because you like it. ie: beachfront,nice place etc... and take a 15 year loan or less.
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All good points. In addition to the cost of during business in this market, you are taking on an enormous amount of liquidity risk.

Once an already illiquid market like real estate starts to plunge, liquidity dries up and you get slipped big time.

Most folks are sitting out there with sell limit orders on their homes that will never get hit...
 
Quote from xburbx:

i do a lot of real estate investing and i can tell you that just like the market, it's all about buying at a discount. the reason this is a mess is because everyone purchased homes too high. the biggest property owners (people that have 100+ rental) are buying as many homes as possible right now because they can get them so cheap. 5-10 years out they will be that much richer.
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We'll see. Nobody has a claim on predicting where the market will go (and if it can go further down).

Right now, I don't see how value investing is possible in real estate. Prices are still out of wack.
 
Quote from morganist:

plus it is security so even if there is less return it makes people feel safer.
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Alleged owners love that feeling of false security. It's secure until you stop paying your property tax or some well connected developer gets eminent domain to build his shopping center. Then you find out who the real owner is, hint = it's not you. The government loves to promote home ownership because it funnels money to the government's owners in the finance world, it puts people on the hook for shit loads of taxes and fees, and I think most importantly because it promotes social control. If you have a mortgage you're not going to be quitting that job to travel for a year or whatever, you're under control.
 
Here's a few reasons why buying real estate is an attractive proposition for many:

1. Fundamentals: Since land is a finite resource, it tends to increase in value during inflationary periods. Unlike stocks, real estate cannot be worth zero (excluding situations such as environmental contamination, etc...). For many people who have to work fulltime, they cannot afford to spend hours watching stocks. However, with real estate, an investor can make it a weekend only endeavor.

2. Inefficient Markets: Unlike stocks, where one person cannot buy at a significantly better price than other participants, real estate investors can more often than not find opportunities where the property they are purchasing is below market value. If you can buy MSFT stock at $10 when it is trading at $20, you don't need any price appreciation to show a capital gain.

3. Tax Advantages: For a married couple, I believe the first $500,000 of capital gains from the sale of your primary residence is tax free. For investors who choose a 1031 exchange, they can also defer taxes on real estate. This is not all that different from being able to have an IRA with unlimited contributions.

4. Rental Income: As many posters have stated, unlike stocks, real estate in many cases can be rented out to help cover mandatory expenses and even leave a profit for the owner.

Even though many of the things I described above are advantages, they are also doubled edged swords in a sense. An inefficient market means that you can be stuck in a home because it cannot be sold without a huge loss. In spite of that, I would argue that real estate is a solid investment as it has probably created more millionaires than any other type of business venture (including trading and investing in stocks).
 
My outlook, you own a home for the dividends. Whether it turns out to be a gain or a loss, ehhh, in the meantime, you do not have to contend with the many problems of living in multiple family housing and these are the dividends.
 
Quote from TGregg:

Wifey. Get married and the Mrs. wants a house for her kids. Men will live in a cardboard box. But not if they are married.
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lol. Let me add to that. men will live in a cardboard box, the problem is- men cannot get laid living in a cardboard box.

Whoosh, just had a thought, cash for refergerators, the supply of large cardboard boxes should be a benefit.

Ahh, what this country needs is a good 5 cent cigar, nope, a nice waterproof cardboard box.. nice carbon footprint ya got there homey.

Knock knock
Who's there?
A new box for ya
quit living in a tent.:D

hard to do knock knock jokes with someone living in a tent.
 
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