A question for a realtor or investor

1/16/2021 | thescourged1

[cgbg]

It sounds like you followed the old rule of real estate (still valid imho).

It is better to buy the worst house in a great neighborhood than the best house in a bad neighborhood.

Then any repairs you make over time are more likely to be rewarded with a higher value.

[locofoco]

Wait until forbearance season ends. The election is over and the natural cycle should begin soon.

Read this: https://www.forbes.com/sites/jayadkisson/2020/10/29/the-serious-disconnect-between-a-hot-residential-real-estate-market-and-the-coming-tsunami-of-foreclosures/?sh=3ad2816667eb

it’s from October but it is eye-opening

Also, go to wolfstreet.com Here is an excellent article: https://wolfstreet.com/2020/12/22/housing-market-goes-crazy-everyone-sees-it-can-last-and-then-the-first-dip-appears/

[Kevmo]

So, the answer to the question is that you have NOT done your home work on Tenancy In Common (TICs).

But your humor is top notch. DEET DEET says the road runner.

[GOYAKLA]

First rule for Robert Kiyosaki, in real estate” I won’t buy in Communist countries such as New York, California and Minnesota!”

[con-surf-ative]

I don’t think you can go wrong owning real estate unless you pay way too much. Even then time will bail you out.

[Restless]

Depends where you are. We are trying to sell our house in Illinois, and it’s definitely a buyer’s market. Because more people are leaving than moving in, houses are priced below their market value. Our home’s assessed market value is $150,000, but we’ll be lucky to get $110,000 out of it. I just saw a nice house, for example, that was purchased in 2010 for $200,000 now priced at $160,000. That’s the case all over our community. Our house is in a nice residential neighborhood, and it’s had only 7 showings in 4 months. As our realtor told us, “It’s not a good market here right now if you’re selling.”

[bankwalker]

The easy way is to buy good REITs.

[spokeshave]

If its your residence than probabLy a good deal

If you use it as a rental...all sorts of issues arrive.

When you want to sell you can only purchase another like building..1031 exchange

If you want to cash out there is state and federal taxes

And the amortization tax,

That is you pay a tax on the total amount that you have amortized over time,

[Bell Bouy II]

OP needs to talk to many others

[devane617]

"Think that out."

So, either buy now or wait for the bottom when interests are high? It will workout the same as I see it, and we can only speculate on the future...Higher rates or not. If this guy can get the property now with low rates it sounds like a good move unless you think the unknown is worth something...

[Vermont Lt]

Location matters here. In my town we have good homes and great schools. Homes don’t stay on the market for more than a weekend. So prices have risen a ton this year.

In other parts of the country, there are a lot of empty homes.

So the answer is, do you want to be a landlord? You may have noticed, people are not paying rent.

Maybe buy some land? Rent it out to farmers or grazing?

[locofoco]

Also, supply is low, prices are high. So builders are flooding the market to sale. When forbearance ends at the end of this month the market will begin the flooding of inventory.

This is not a local real estate market boom, this is national, and it is b.s. artificially yanked higher because of low interest rates and forbearance.

What happens when interest rates rise? The price goes down and equity dries up. What happen when forbearance end? Land lords banks try to collect- banks foreclose, landlords lose.

[Freeman1969]

Hello, I have been in the Real Estate industry since 1996 and I work in one of the hottest markets in the country, Phoenix, AZ. I can tell you that the market that you are buying in will tell all. If you are looking to buy a home to live in, it is not an investment in the same way that a rental or fix & flip is going to be. We all must have a place to live and owning still makes more sense in most markets right now because of equity and appreciation. Even if the market tanks, it is temporary and the property is still a hedge against inflation. You cannot go wrong as long as you are sensible, and treat the property as a HOME and not a cash out ATM.

Now, if you were looking to buy a rental property or a fix & flip, that would be another, completely different, conversation.

[BiglyCommentary]

No, think of what happened in 2009 + 2010. There was a wave of foreclosures, a buyers market on steroids. Properties could be bought at half their current prices.

[thescourged1]

I'm planning on living there, I don't ever wish to be a landlord. My BS threshold is too low for that.

I live in Missouri. Sorry if the flag in my profile wasn't a giveaway. ;)

[RC one]

If you have money and you want to put it to work, you basically have two options at this point: Stock market or real estate. there are a few other options but these are the big ones. I put about $50,000 to work in the stock market at the beginning of the pandemic last year and made $18,153 in profit when I cashed out last week. for most of the year, I never risked more than $30-40,000 but for the last 2 months, I had $65,000 on the table.

The pandemic was a unique opportunity and I was well positioned to exploit it having cashed out out of the market in August of 2018. I was sitting on cash that was looking for an opportunity and the pandemic provided it. I cashed out in August of 2018 because there were multiple signs that the business/investment cycles were looking "peaky" i.e. the yield curve inversions, the irrational exuberance, the maximum employment. I feel like if it wasn't the pandemic that crashed it, it would have been something else. I, of course, had no idea that the pandemic would come but I knew something would-some "black swan" event. So, I made over 18 grand on this pandemic just buying and selling the same stocks over and over again. I'll have to pay taxes on a lot of that this year of course but so what?

Now then. My wife and I (and the bank) also own a rental property. Thankfully, the renter was deemed "essential" when all this crap started so she has been employed throughout the pandemic and she has made her rent payments every month. We make $312 profit off of $720 rent and we have to pay taxes on the entire $720. So, since last March, we have made $3,112 in profit and $7,200 in taxable earnings.

to summarize:

Stock market: $18,153

Rental property: $3,112

If I paid off the bank on that property and didn't have to pay the bank anything:

Stock Market: $18,153

Rental property: $7,200

Keep in mind, I have to pay taxes on both sources of income AND I have to pay property taxes on the rental property. What's more the local government is democrat and democrats HATE landlords. The city council is constantly looking to F landlords one way or another.

BUT

, there's something else to consider here, something big IMO. When Obama came into office he was given a GIFT by George Bush. That gift was a crashed stock market. Think of it as a flat tire. Why is a flat tire a gift? Because a flat tire is easy to inflate. It takes barely any effort to pump air into that tire. To a politician, that's gold. recall all the comments from Democrat pundits about how much air Barack Obama pumped into that flat tire.

Well, Donald Trump, being the stable genius that he is, did not leave Joe Biden with the same gift-far from it. He left him with an overvalued stock market. It has to crash. It will crash. It's current value is not supported by the fundamentals, especially with another year of Covid looming in our future.

The thing about democrats though is that they're real good at producing BS economic statistics and that is what they're gonna have to do. But before Joe Biden has gotten a chance to get in there and start blowing smoke up everyone's ass, we have seen that retail sales are tumbling and unemployment is rising.

The stock market, meanwhile, is focused on the next stimulus bill. There's not much else propping this market up.

So, I guess the question to your question is: Can Joe Biden continue to pump air into this already overinflated tire for the next 4 years? It is clear to me that the stock market is a MUCH better investment than real estate IF you get in and out at the right times. if you are uncomfortable with the risk associated with investing in an overvalued market, then real estate is probably safer but it is not risk free when democrat's feel that landlords are bad people who don't deserve to be paid.

And if you decide that you're going to take your chances in the stock market, be prepared to invest in companies that you probably despise.

[bella1]

We own several rental homes. My first question to is how old are you? Will this be for long term retirement plans or short term profit? We invested in rentals our early 30’s as part of our retirement plan. Also, are you handy with repairs or will you need to hire work done? These all factor in to the decision. Where we live real estate is selling fast and prices are high, but rent has gone up as well. We have no regrets (that is until the phone call about the furnace dying during the night).

[BiglyCommentary]

If buy at 50% lower, your property taxes are half. If less than 20% down and paying PMI, that requirement kicks out much quicker since their is usually a v spike up. Could have 20% equity in a year or two. Much better than being under water for a long, long time, having bought at or near the top.

[posterchild]

If you buy for a low price with high interest rates and finance it you can refinance when interest rates go lower.

If you pay a high price when interest rates are low you have only downside if interest rates go back up regardless if you used leverage or not.

[Vermont Lt]

Sorry ‘bout that.

Mortgage rates are great. Buy it. From a tax basis, owning is always better.