41–50 of 110 posts
Earlier quoted context omitted.
*with 1975 property tax locked in thanks to prop 13
Is that accurate? Property taxes can change
1. Interest rates are at historic lows. Real interest rates have recently been negative. When this changes in the next decades, interesting things will occur.
2. It is time for the baby boomers to leave their houses and move into smaller digs. There is a demographic shift on the horizon.
3. The Republican tax legislation just hammered home deductions in many areas.
There are interesting times ahead.
- Massive tax subsidies provided by the government. Seriously apalling if you think about it hard enough, but since they're available, you should try to take advantage of them.
That list is sufficient.
I really fail to see how most of those points are relevant when you consider that a home is an investment you can, you know, live in. The alternative would be to rent indefinitely, which apparently we're ok with even though its not just a 0% return on investment, its an infinitely negative percent return on investment. Even if your house breaks even over 10 years, you still got to live in it for ten years for what is…
I really fail to see how most of those points are relevant when you consider that a home is an investment you can, you know, live in. The alternative would be to rent indefinitely, which apparently we're ok with even though its not just a 0% return on investment, its an infinitely negative percent return on investment. Even if your house breaks even over 10 years, you still got to live in it for ten years for what is…
Earlier quoted context omitted.
You do both to diversify (equity and real estate). Having the property as a rental is very tax efficient as well (you get to depreciate a property that appreciates in value). Also, no one is going to let you leverage equity purchases with debt like you can with real estate. Disclosure: I own several rental properties to round out my investment portfolio.
You don't really need to do both to diversify. There is a lot of exposure to real estate in the stock market (rental companies + commercial real estate + construction), and REITs can be used to gain more exposure if desired.
1. Your house is usually generating income (for a rental property) or offsetting the rent you would otherwise have to pay. Saying "you have to pay a lot of taxes" doesn't mean much unless you compare the numbers.
2. He mentions that property value is tied to a specific geographical area (and that's a bad thing), but then contradicts himself by calculating appreciation based on the national average. If you live in a fast-growing city then it's pretty certain that you're going to make more than inflation.
I really fail to see how most of those points are relevant when you consider that a home is an investment you can, you know, live in. The alternative would be to rent indefinitely, which apparently we're ok with even though its not just a 0% return on investment, its an infinitely negative percent return on investment. Even if your house breaks even over 10 years, you still got to live in it for ten years for what is…
> which would often easily amount to less than rent. Hang on a minute there. Big citation needed, or caveat for which locality you're talking about. In LA or SF, for example, the interest + property tax + upkeep + HOA fees + closing costs + etc. very often run significantly more than rent on an apartment. And that's after the huge assumption that you can even afford the up-front cost needed to buy a house in the firs…
Yes, but rental prices also change over time, whereas your mortgage payment doesn't (although the tax deduction falls over time, and your locality may up your property taxes, but these are fairly minor components).
If you have reason to believe that rent will continue to increase (either around CPI, or in the case of the Bay Area, 10%+ per annum...), then by all means buying a house now (which produces an infinite stream of rents) allows you to profit off that view.
Another way to view this is that you are acquiring an rental inflation-indexed asset and a nominal liability, so you will profit if inflation is high enough.
I bought a house in 2015 (at 32) and it was the best thing I ever did. Even though I had to move away, I turned it into a rental property, and it’s earning $380 a month in profit. I’ve been using that profit to pay down the principal and add to my 401(k). My only regret is that I didn’t buy a lot sooner.
However, that does not mean I made a wise financial decision. I made a lucky financial decision, which is very different. This article is about making wise decisions, and it's very hard to reason about this from results in a single investment.
I just want to add that a lot of people account very poorly for their real estate profits. Whether that number is good depends on how leveraged you are and the value of the property, and many other variables, like your costs and (unknowable) future vacancy rates. (If you have a lot of leverage and the property is only worth a little, that's great! It would not be very good in a scenario where the the property is paid off and worth $2M.)