NYT Article: In the Long Run, Sleep at Home and Invest in the Stock Market

Quote from Kicking:

OldTrader,

you maybe a veteran RE investor but I am sure the example you gave is one of an exceptional deal, the type of deal you find once every few years and you are still taking advantage of a red hot sizzling market even though you say you don't look for price appreciation. People who do this on credit are taking a big risk . It's difficult to know if there is something really wrong with the house, something that would make the cost of fixing it much higher. In your ex you did not mention how you were going to fix the odor problem. This could cost a lot more than you think. When you have experience in the construction and RE industry and have cash nothing bad can happen to you. But a lot of people without such experience think they can make easy money this way. And most of the real estate individual investors are the least sophisticated investors. My landlord in London chuckled when I said I was very happy if I made 30 % per annum, he could make 100% on a ahouse easy he said. I have friends investing in properties who had never
heard the term "bubble".

Plus and this is my personal opinion , the business of landlord in the residential market comes with a lot of hassles- and moral issues although I am sure not for most landlords. In a strong property market a landlord is always tempted to raise rents helping squeeze a little more working class people and this is how good returns are made isn't it? milking it as much as you can .

You are not hurting anyone buying and selling stocks and bonds. You don't have to throw anyone in the streets to get a good return on your investment.
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Kicking:

Sure I am "taking advantage" if you will when real estate appreciates. (By the way, in my area we peaked a 1 1/2-2 years ago.) Nonetheless, I don't buy for appreciation. Remember, make your profit going in. I either make my profit by reselling as in the example I gave, or by holding and renting as in all of the properties I currently hold.

I did say it takes knowledge. I wouldn't expect that someone with no knowledge to jump out to rehab a property. There are many pitfalls. But again, there are ways to obtain the knowledge, many excellent books and courses to take. I'm not going through how I solve the problems with this property...but this part of the knowledge I talked about. If you can't solve the problems you don't buy. Pretty straightforward.

And of course there are some hassles in landlording. It's not for everyone. Moral dilemna? Not in my mind. In my mind it's real simple...the tenant pays or he leaves. About what you would expect from any business isn't it? I don't call that a moral dilemma. Do I raise rents when given the opportunity? Of course. This is one of the disadvantages of renting. But if I raise them too high I lose the tenant...so I have to stay competitive. If the tenant doesn't want his payments to increase over time he has a simple remedy...he can buy a house. Can't have your cake and eat it too. But certainly not a moral dilemma.

OldTrader
 
Quote from OldTrader:

Kicking:

Moral dilemna? Not in my mind. In my mind it's real simple...the tenant pays or he leaves. About what you would expect from any business isn't it? I don't call that a moral dilemma. Do I raise rents when given the opportunity? Of course. This is one of the disadvantages of renting. But if I raise them too high I lose the tenant...so I have to stay competitive. If the tenant doesn't want his payments to increase over time he has a simple remedy...he can buy a house. Can't have your cake and eat it too. But certainly not a moral dilemma.

OldTrader
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This is what I am saying if rents are going up in general you will raise rent as well as much as you can probably. You say people have the alternative to buy. In pricey areas most people can no longer afford to buy a home. This is not a business like any other, rent is the biggest expense for most people, they are stuck with a job a family in the area and can't do anything about it and by raising rates to stay in line with the insane "market" you are taking advantage of them and contributing to make society worse not better. That is why I am in favor of rent control, I am a free marketer but when it comes to housing things are different. In continental Europe it's difficult to raise rent and housing has remained affordable whereas everywhere there is no rent control, UK, US etc. the market has reached insane levels .
 
Oldtrader said a key point. If your area that you wish to purchase real estate in nets out mortgage payments the same as rents...then if you find value after repairs then its easier than a run away market that is out of balance with rents...

Michael B.

P.S. Down payment is a cost too....so its just not a financing point, Oldtrader brought out
 
How do you feel about Health Care? Should Doctors be Social Workers?


Quote from Kicking:

This is what I am saying if rents are going up in general you will raise rent as well as much as you can probably. You say people have the alternative to buy. In pricey areas most people can no longer afford to buy a home. This is not a business like any other, rent is the biggest expense for most people, they are stuck with a job a family in the area and can't do anything about it and by raising rates to stay in line with the insane "market" you are taking advantage of them and contributing to make society worse not better. That is why I am in favor of rent control, I am a free marketer but when it comes to housing things are different.
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Yes, I am aware of that. Earlier in my career I ran the Business office for one. He spent tens of thousands on his education and continuing education. Malpractice insurance is more per year than most traders make here in ET.




Quote from Kicking:

well a lot of doctors are just running a business I hope for your own sake that you are aware of that
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Quote from Kicking:

This is what I am saying if rents are going up in general you will raise rent as well as much as you can probably. You say people have the alternative to buy. In pricey areas most people can no longer afford to buy a home. This is not a business like any other, rent is the biggest expense for most people, they are stuck with a job a family in the area and can't do anything about it and by raising rates to stay in line with the insane "market" you are taking advantage of them and contributing to make society worse not better. That is why I am in favor of rent control, I am a free marketer but when it comes to housing things are different. In continental Europe it's difficult to raise rent and housing has remained affordable whereas everywhere there is no rent control, UK, US etc. the market has reached insane levels .
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Kicking:

If you are in favor of rent control you are anything but a "free marketer". Socialist, yes. Communist, yes. Free marketer? Give me a break.

I can recall the "People's Republic of Santa Monica, California", where a form of rent control existed at one time. (I don't know if it still does or not). Rents were held arbitrarily low relative to surrounding areas, such that there were few, if any vacancies ever. But if one did come up, there was a healthy black market which required a large cash payment to obtain these arbitrarily low rents. These cash payments were in essence a payoff to the current tenant, thus bypassing the law. Not to mention landlords with no incentive to continue to improve their properties due to an inability to set a proper rent.

Rent control taken to it's logical conclusion results in a lack of rental housing, since the profit motive is removed for the landlord. In addition, the criminal elements always crop up surrounding these types of controls....and there are many examples of the same.

Let's face it, rent only rises to a level where the existing properties are full, where vacancies can easily be rented. Landlords don't exist to take care of you and/or your friends when you cannot afford to buy a property. People have always afforded to buy...they do it by working and saving. For those that can't seem to work and save, they rent. If the rents are high, they take two jobs so that they can afford. But trust me, no landlord ever sets a rent in isolation...they set it in response to the market itself at a level where they can easily rent the property.

The day that I even get a hint that rent control is coming to my area will be the day I sell all my rentals, so that my tenants will no longer be able to rent anything at all from me, at any price.

OldTrader
 
Regarding the topic of this thread, I'd say that comparing real estate to the stock market in many ways is a lot like comparing apples to oranges; two totally different asset classes each with their own distinct qualities.

One thing for sure, given the enormous tax advantages of owning rental property, I think every trader earning a high income would be a FOOL not to own some (OWN, not necessarily MANAGE).

Anyone else concur or disagree?
 
Quote from Hamlet:

....

One thing for sure, given the enormous tax advantages of owning rental property, I think every trader earning a high income would be a FOOL not to own some (OWN, not necessarily MANAGE).

Anyone else concur or disagree?
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RE investments have unique tax implications. I definitely would never remove it from my investment portfolio.

A good quote to remember - which in Southern California anyway is still very true but may not be over the next 5-10 years - was from Bob Hope. He often said that he made more money by accident on real estate in southern california than he ever made from show business. At the end of his life most people put his net worth at something like 150 - 300 million, most of it from real estate investments....
 
OldTrader

the fact is wherever landlords are precluded to do just about anything they want housing is more likely to remain relatively affordable. I lived in today's most expensive SoCal's community where I shared an apartment in a working class neighbourhood. The rent since I left in 2002 has gone up more than 25% and I hear new owners plan to raise it another 15% as soon as they can. This is simply outrageous.
I have known landlords who hardly ever raise rents sometimes because they want to offer accomodation at a cost they estimate to be fair, sometimes because apparently they didn't care about the money. But the way you sound you must part of the greedy landlords.
 
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