Even with that 10% drop, I would assume by now that those properties have picked that 10% back up... or will in the near future.

Alex one very important thing: If you are buying a house to live in yourself, and you stay there more than two years, all of the money you get when you sell it is tax free (provided it is a single family home, not a duplex or other form of revenue property). Capital gains on stocks if you were to sell 300k worth of stocks in a year would hurt.

At bare minimum, make sure you own where you live, even if it is a condo or whatever. That is effectively a free investment that will pay you in the end. Most "old family wealth" comes from the asset of the family home and revenue properties.

absolutely, that is given, but it is a rigourous experience nevertheless...

See Donald Trump.

I have a place to live, a nice yearly tax write off, appreciation, no idiot neighbors that trash the apartments in which they lease, and there were no renovations which I had to make, as I bought it 2 years old and it was completely upgraded from the floors, to the paint,the upgraded cabinets, to the back yard.

Sure I pay a little more than I would if I lived in an apartment, but the perks outweigh the downfalls in my case. I love my home, and investing in the happiness of myself and my wife is good enough for me. Selling at a profit in 5-10 years is also a nice perk, and I wouldn't necessarilly have to buy up. I'd probably actually move from Vegas to a smaller city, thus making my real estate money work for me.

very interesting thread

actually buying a Land/house is always a win win situation. As mentioned in Superman: The return, land is more valuable than gold because its constantly shrinking. No one's manufacturing land.

I remember here in Asia before a certain volcano errupted last 1991 and the price of land in nearby area of the volcano dropped to $.10/sq meters (not sq/ft!) guess what, after only 15 yrs and commercialization, the price of land fly to around $500/sq feet. Wow.

How about if you bought land in Tokyo in 1990?

dunno... but i still think the price of land in tokyo last 1990 will be lower than the price on 2020 :winkwink:

Cost for me to rent, $2500 a month at $30,000 a year.
Cost for me to buy this same house, $3500 a month at $42,000 a year.

For the first 5 years all of the money goes towards interest only.

So while the market is stagnant or dipping I am screwed. Had I bought in 2003 my monthly would have been $1800 and the price would have appreciated 2 and 1/2 times. Which means, I would have made a lot of money on paper (or if I sold it)...

So buying for me would be stupid.

Is that the criteria for a "win/win" investment? That the price is higher by any amount 30 years later?

Alot of people thinks that buying assets other than real estate (i.e. a house to live in) is gambling! Real estate also fluctuate in price, not always positively too; and the reason people don't notice it, is because it's not as liquid as other investment vehicles.

I'm not saying you shouldn't buy a house if you can afford one. I just think it's not as good an investment as people think it is.

No, a house is not a good investment at all. Just keep on spending your money at the strip club and eating the buffet at the tittie bar. That's the way to go!

In the same 40 years, Berkshire Hathaway shares have been increasing annually at 24%. A stock bought at 8$ back in 1962 would be worth $96,000 per share. Imagine if they bought just 100 share instead of a house how well off their children would be today:winkwink:

I do own a house and have other "real" and "IOU" investments (as DareRing would put it) but none of it bring me as much pleasure than spending some of my leasure time at strip clubs:winkwink:

Sorry, it's just that you talked about strip clubs so much in previous threads that I will forever automatically associate your nick with strip clubs, it's ingrained in my brain and won't get out. So every time you post it's hard for me to resist
adding in a sarcastic remark about strip clubs and eating the buffet there. I really can't help myself.

F-A-C-T. Time spent at strip clubs has good ROI.

The answer to the question is "it depends". It depends on a lot of things. In which market at what time? Do you have a mortgage? Will your house appreciate faster than your mortgage rate? How much would you have spent on rent elsewhere? What other opportunities do you miss?

How much SATISFACTION do you get? If I were willing to rent a smaller place and invest the money in my home elsewhere I would probably end up with greater monetary wealth in the long-run but would lose a lot of satisfaction. The cost of satisfaction with my life is not worth that.

That a very good justification and the main reason for buying a house.:thumbsup

I'm glad you realise you are paying a bit more in owning a house than renting, alot of people can't see that. They think that with rent they are throwing money away altho part of the expenses spend on a house is also thrown away money (i.e. closing costs, interest on mortgage, realty taxes, insurance, mortgage insurance, maintenance, etc.) and they could invested the difference in rent and house cost in other investments.

Another person that understand the real reason in owning a house:thumbsup

Tell that to Mr Trump ^^

I bought some land in Missouri 5 years ago close to Branson and now I could get 3 times what I paid for it. To me that's a pretty good investment.

Gary

Location, location, location.

If you're in a bad location (i.e. bad part of town or even a great part of town where the prices are inflated) you could be in trouble.

The way you finance can also cause you problems, witness those in pain now with their ARMs.

Over the past 25+ years I've been living on my own I've rented if I've KNOWN I was going to stay somewhere less than 3 years. I've heard the "experts" have extended that to 5 years. I do know my house just appraised for more than twice what I paid for it 6 years ago. That makes me happy :)

It always amazes me that when GFY folks (I swear I don't see it other places) talk about real estate, it's always a house. I've done VERY well on my land purchases, especially those I picked up at auction. I made a sale a few months ago that was 20X what I paid for the property 2 years ago. Yeah, I'm going to get nailed on taxes, but it's still SOME money in my pocket :)

Buying a land is not exactly the same as a house.

I agree with most people here. Buying your own home is not an investment as such. You'll spend a lot of your income decorating, redecorating and on bills and everything else. But its much better to buy your own house than rent from someone else. In the long run your house will eventually be paid off. Therefore the actual "house" you bought becomes worth the time and money. Everything else connected with it is just a lifestyle choice.

Yes it two completely different things. I was referring to the guy that said there's no money in real estate. I should of done a quote.

I bought my place I live in now at the same time I bought my land in missouri and the value of it hasn't changed very much but over time I expect it will.

My dad bought his place in 1965 for $5000 and in the 70's he spent roughly $25,000 to remodeling it and since then he's probably spent around $20,000 in upgrades and what not. Today he could get roughly $200,000 for the same property which he has lived in for over 40 years. To me that's not a bad investment at all. If he wanted to he could sell it and buy some land and build a new house on it for $200,000 that would be bought and paid for. So I would have to yes buying a house would be a long term investment.

Gary

True, the vast majority of RE is long term - that's what people have to accept. Yes, we know about the guy who bought a house, put $X into it and sold it for 100 times $X 6 months later, but that's not the norm. If you're going to move every 3 years, renting is a better bet, IMO. But at some point you have to grow up and not move every 3 years, lol.

Personally (knock on wood) I've never lost money on RE. Even the 2nd house my ex-husband and I bought that I had to sell at a bargain price to get out of when he left after 6 months of buying it in my name, I broke even on - and that's including all the work we did on it.

That's is barely a 10% in annual return, and I didn't even consider the $45,000 he spent in renovation, nor the annual taxes, insurance and maintenance cost he spent throughout the years. If I where to had these expenses, his return would be alot less. He could have easily gotten that 10% return in stocks without paying all those expenses....

You're forgetting he would have had to pay rent if he didn't own his own home. Add that into the equation. Even if he was paying an average of $500 a month over 40 years (40 years ago it would have been less and now it would be more) - that's $240K he would have spent out of his pocket. And 10% return backed up by RE instead of stocks a year ain't horrible. :thumbsup

You're right. people tend to bring up success stories to justify their purchase of their house. And is funny how these same people all know someone that lost all their saving "gambling" in stocks:1orglaugh

That $5,000 in Berkshire Hathaway shares would have made him a multi-millionaire 40 years later and that $240k in rent would have been chump change for him. :winkwink:

Yes, if only we had all had a crystal ball 40 years ago :thumbsup

how can anyone say that real estate is not a win/win? A very ilogical answer to an obvious question, yes, there is money in real estate, but be WISE. It is really simple, be realistic, weigh up where you are financially and where the marketplace is. Have as big a deposit as you can, and budget for rate rises and maintanance. You will be a winner if you choose the most run-down house in a good street, a sign of immediate capital gains, and if you notice certain trends in social movements, ie. an area may be bringing itself out of "Bronx" status, and not only value for money, but a true investment. There are so many things to take into account, and I couldn't be bothered typing any further.

No offense but most of the people posting in this thread are clueless. Your home should be your most prized investment. Perhaps not your most profitable one, but still.

Breaking news: Neither your TGP or your PS3 are considered a serious long term investment.

Bought a brand new home 5 years ago, spent about 5k in appliance and blinds, sold it 3 years later for 85k more than I paid for it, bought a much bigger brand new house 2 1/2 years ago, spent about 15k in apliances, blinds and shit, it's about 100k up now.. am thinking I can now sell this and move an hour drive from the city buy a nice house for about 300k and still have 450in my pocket with 165 total profit rest savings, however, I won't do that instead prolly go for a custom house on a bigger lot this time twice the price of current home. But the thingie is, it's mental peace knowing that I could do it plus that I am not wasting any money renting a place to live in :2 cents: Montreal housing market ain't so great, move to real Canada and you'll start to think differently :winkwink:

I spend a LOT of time on real estate sites. I track properties in my area on how much they've sold for, if they sell again, how much for then, how long they were on the market, etc. I started doing this when I planned to move out of state and was looking for condos in the ATL area as a 2nd home 7 or so years ago - it's easy if it's something I can do :winkwink: .

Just blindly walking out the door and putting 5% down on the first house you like and doing something crazy like getting an ARM and unless you're VERY lucky, you're not going to do well.

Houses are the biggest purchases most of us will ever make - but I'm amazed at how little research so many people put into it when buying.

The montreal market may not be that great but in some area, prices have tripled in the last 10 years and doubled in many many other boroughs. :winkwink:

With todays low mortgage rate, why wouldn't you put in downpayment the minimum you can get away with, and invest the rest of your money elsewhere!

My wife and I plan on buying some rental properties this year in our small college town. Close to the college, and 2-3 bedrooms do well in our area. Research your area, get good inspections. Become friends with the local realitors and banks and you can do just fine. Be smart and do your research though!

from a person who was accomplished in the industry, you are dead right.:thumbsup

Most people don't account for inflation and the cost of your mortgage (assuming you have one)

If you buy a house (sorry, Peaches) and:

Get a mortgage at 6%
Your home appreciates at 5%
and there is inflation of 3% per year

You have lost real spending power even though your house is worth more money in the end. When the average person has a mortgage rate of 6% and goes against inflation of 3% they have a decent hurdle to beat in actual home appreciation. I do agree with Peaches you should consider what you would have spent on rent.

In the end, some of those people will do well and some won't. Robert Shiller did a study that considered the REAL (accounting for inflation) change in home prices for the entire 20th century. Basically, you would have broke even purchasing a house in an average US market in 1950 and selling in 1995. Your house would be worth a lot more but you'd end up with the same purchasing power. In some markets (California) you would have done great. In others you would have lost purchasing power.

I would say a home is a much better hedge against inflation than, say, gold. Gold has lost tons of purchasing power the past 25 years. Houses just kept pace with inflation from 1950-1995 or so.

Is a house (or RE in general) a "great" investment? I think it is a fair investment and like most things your mileage may vary. Buying in overheated markets right now entails mor erisk than if you bought in 1994. Is porn a great business? Is for some. Sure isn't for others.

YMMV.

I honestly have to say that I have never seen a thread with more idiotic posts than this one.

Someone should get an xbox.

Correct, RE is way less of a gamble than almost anything else. Many ppl could have been millionaires if they had invested in Microsoft in the early 80's but that comes with the crystal ball, hindsight, 20/20, pure luck factor.

A home may not be the "best" investment if we focus strictly on money, but not everything is about maximizing your dollar. It's still an investment that can be financially rewarding in the long run, but it is the peace of mind, comfort, pride of ownership, that is half of the benefit. You want to be able to enjoy life while living it. You may make slightly less than you theoretically could if you 1) gambled in stocks or 2) were so financially savvy/responsible that while renting you invested that extra money you had (that would otherwise be spent on utilities, mortgage interest, property taxes) most wisely over the course of 40 years. It's not worth it IMO and it's so unlikely.

It reminds me of those compound interest calculations where you have something like $10k in your bank account and every day you put in $10 and after 40 years you have a million dollars in the account. How many people do you suppose have or will do this? None. People just don't live like that. We eventually spend that $10 on other things throughout our lives, lose sight, are irresponsible, lack the will, etc etc.

I don't even think of my home as an investment. I think of it as a small percentage of my net worth that will hopefully keep pace with my mortgage and if I'm lucky will beat inflation too. Will it's nominal value increase at more than, say, 9%? Well, that is the long term appreciation in this area (about 10%) but we also just had a few 30% years so IF that now represents a misalignment between price and intrinsic value then probably not.

Why should my home be my "most prized" investment? I am much more confident in my stock portfolio in the next 10 years and that is larger than what I have in my home anyway.

"enjoy life". I agree with this and that.

buying a house is only an investment if you plan on renting it out or reselling it for a profit.

Owning a house offers you some of the greatest simple pleasures in life. Like being able to light up your barbecue in the privacy of your own backyard and being able to shout at the neighborhood kids to "get the fuck off MY property!" or your in-laws to "get the fuck outta MY house!" or your own kids to be obedient because "MY house, MY rules!"

add up all your taxes, insurance, and interest and i bet you wont make much of a profit if any. and remember a house is only worth as much as people are willing to pay, not the state equalized value or what its appraised at.

Buying a house is an investment because 90%+ of people who do not buy a house do not invest properly so when they are 50-60 years old they have nothing (or not enough). If they had bought a house it would be paid off and they'd at least have that.

Sad fact is most people spend what they make and save very little. A house for some i sat a least a guarantee of "saving".

If you are single or have no kids then rent saving $500 a month compared to owning with taxes and everything and invest that $500/month and in 25 years it will be worth a hell of a lot more if invested properly than any home would have been.

Most people only remember the price they paid for the house and how much they resold it years later, they suffer from alzheimer when it comes to adding up all the other expenses....:1orglaugh