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The Single-Family Home Tax Shelter Myth
- Thread starter Martin Gale
- Start date
Quote from Maverick74:
Oh gee, you really won me over with all your anecdotal evidence. LOL. No idiot, those people with 500k probably have investment property. You know, people can be renters and have investment property. Funny how you can't put together any numbers to back up your argument. I'm suppose to take you at your word that buying property right now in this overheated market is a bargain to renting. LOL. OK Goldilocks, whatever you say. Thanks for making it so clear with all your precise math and number crunching. Wait, hold on, Carlton Sheets just called, he wants to know if you will be attending his seminar this weekend? Hahahahahaha.
At least his facts were correct....you should definitely invest in a home because I am certain that your return investing in the market will be negative. (you can't even admit when you are wrong, how could you ever honor a stop?) This way you are ensuring that you will have something in 30 years, that's yours, has some value, and you can't screw it up.
The one thing that no one (you're not the only guilty party here maverick) factors into their return assumptions is the fact that when life throws you a curve ball, it is more than likely that it came at a time when things were not going well economically, and you are forced to liquidate your investments at a discount. Common sense dictates, you are more likley to need access to cash in tough economic times, and you likley have money to invest during times of economic prosperity.
Quote from mschey:
At least his facts were correct....you should definitely invest in a home because I am certain that your return investing in the market will be negative. (you can't even admit when you are wrong, how could you ever honor a stop?) This way you are ensuring that you will have something in 30 years, that's yours, has some value, and you can't screw it up.
The one thing that no one (you're not the only guilty party here maverick) factors into their return assumptions is the fact that when life throws you a curve ball, it is more than likely that it came at a time when things were not going well economically, and you are forced to liquidate your investments at a discount. after all, you are more likely to need access to cash in tough economic times, and you likely have money to invest during times of economic prosperity.
Could you please copy and paste something I said that was not accurate. And don't exaggerate or use semantics. Point me to a statement that I was factually wrong on.
Another point here, I don't know why you talk about investing. The example I used was investing in an index like the SP 500. There is no trading involved. You simply hold on to it for 30 years. You can't get stopped out. Not sure where that came from.
Nothing I have said on this thread was wrong. Some people have put words in my mouth, but nothing that I actually posted is incorrect.
Furthermore, my argument about getting long real estate now is a sound argument and I actually backed up my ascertations with facts and numbers. When you factor in inflation, real estate prices have been steadily declining as a whole since the 1950's.
When you factor in interest cost, property taxes, insurance, co-op fees when applicable and home repairs, you are locking in losses on your investment. Not a single person has been able to refute this on this thread. The only people that have made an honest attempt where those that pointed at the possibility of high appreciation gains in a bubble market like the one we have now.
Without these bubbles, not only would real estate be a poor investment, it would be a catastrophic one. It takes these massive bubbles just to get the long term mean return equal to the rate of inflation before you factor in all the costs associated with owning a home.
Please keep in mind, my argument has been explicit in the distinction between owning investment property and owning the home you live in. And the only reason investment property is lucrative is because of the hyper leverage it affords the owner. Without the leverage, there is no money to be made there. Without the leverage you will not have any bubbles. And without the bubbles, you have no zero chance of outperforming inflation over the long run.
If you want to call me names like oldtrader or anyone else, feel free. If you want to post facts or refute my statements feel free. Not one single person has been able to effectively argue these facts. You are more then welcome to try. But there have been studies upon studies upon studies that back up my claims.
I find it funny that the real estate boom is marketed right along side the boom in forex products. Telling people about how easy it is to trade FX. I also notice the hyper leverage in those products as well. Is it not a coincidence that late night infomercials are split 50/50 between getting rich in forex and getting rich in real estate? Are we really this dumb and gullible to fall for this shit. Do we not see the fallacy that over the last 2000 years, the only variable that has moved land and real estate prices higher is real inflation? Think about it.
Don't get me wrong, I'm all for the ownership society and owning assets. I'm just more analytical about the assets I own. I look a little deeper behind the numbers. All real estate is is one giant derivative with the underlying product being inflation. In order to value a derivative you must be able to break down it's pricing components. There is a rich volatility premium in real estate right now. And if you get long here, you run the risk of having the juice sucked out even if the underlying component stays unched. It's analogous to a stock whose option premiums rise dramatically going into an earnings announcement only to have those premiums crushed after the report.
The premiums are just way too rich with no fundamental reason to be long here. I have waited patiently for someone to show me some hard numbers where I am wrong. Unfortunately those numbers are no where to be found. Yet there appears to be a surplus of ad hominem attacks which is certainly par for the course for this message board.
So once again, I patiently give the floor to anyone that wishes to stand up and present their numbers.
I disagree regarding this statement:Quote from Maverick74:
Nothing I have said on this thread was wrong. Some people have put words in my mouth, but nothing that I actually posted is incorrect.
It may not be critical to the overall thrust of this thread but it certainly would be nice if you would just admit you were wrong on that one point rather than trying to defend a blatantly wrong assertion like that.Banks usually require a mortgage to stay above a certain equity line (loan to value ratio). In other words, your loan value cannot exceed usually 100% or 90% of the value of the home. If it does, you are then required to pay up and get the ratio back in line. If you can't, you are forced into foreclosure.
Quote from Maverick74:
Could you please copy and paste something I said that was not accurate. And don't exaggerate or use semantics. Point me to a statement that I was factually wrong on.
From your post on page 8:
Banks usually require a mortgage to stay above a certain equity line (loan to value ratio). In other words, your loan value cannot exceed usually 100% or 90% of the value of the home. If it does, you are then required to pay up and get the ratio back in line. If you can't, you are forced into foreclosure.
Completely wrong.
You're wrong on the rent vs buy numbers as well. I'll put that together later on when I've got some time.
OldTrader
Quote from OldTrader:
From your post on page 8:
You're wrong on the rent vs buy numbers as well. I'll put that together later on when I've got some time.
OldTrader
That is not wrong. I followed up in a later post that these provisions are written into the loan agreement. It is 100% true. You need to have your loan to value ratio brought up to a certain level. This has now been indoctrinated on many new loan structures. I only have about 40 friends that are in the business. Many high risk loans, including interest only and variable loans carry these provisions. I further stated that if these provisions are not in your loan contract, then the bank cannot re-write the terms of the loans. Next....
Quote from winter:
I disagree regarding this statement:
It may not be critical to the overall thrust of this thread but it certainly would be nice if you would just admit you were wrong on that one point rather than trying to defend a blatantly wrong assertion like that.
Oops...sorry to duplicate your post....I guess we posted at the same time.
OldTrader
Do you know there are now loans out there that actually give the lender the ability to call in the loan for any reason they want? It's true. Granted these are not convential loans by big banks. But there are plenty of them out there. Look around.
I'm still waiting for these rental vs ownership numbers. This should be really good.
What percentage of loans do you believe have this provision? Unless you can answer >50% then you statement about "usually" is false. I strongly doubt that >50% of loans have such a provision.Quote from Maverick74:
That is not wrong. I followed up in a later post that these provisions are written into the loan agreement. It is 100% true. You need to have your loan to value ratio brought up to a certain level. This has now been indoctrinated on many new loan structures. I only have about 40 friends that are in the business. Many high risk loans, including interest only and variable loans carry these provisions. I further stated that if these provisions are not in your loan contract, then the bank cannot re-write the terms of the loans. Next....
You seem to be arguing (now) that such provisions exist at all while what you need to demonstrate is that most loans have such a provision in order to support your previous statement about "usually".