In Which the Author Discusses Real Estate
What do we think this real estate market is doing? I have personally benefitted from the boom, having purchased a house several years ago and cashing out by selling. I was motivated by job-change so I did not do this purely out of financial gain. But to give you an example, I sold my two-story on-the-golf-course house for $420,000 (double my purchase price) and about 8 months later, I drove by and saw a for-sale sign on it for $495,000. That's nearly $10,000 per month. Why even bother to work at a boring old "job" at this pace?
Now I rent, with the intention of taking the cash and run, run, running away. Was this wise, and is it favourable for others? I think so. If you are living in a home currently, then the wise thing is not to sell and move. If you need stability for your family and kids, then continue to own. But if you are on the cusp of moving or looking for a new job, for example, then you should definitely sell and consider renting if property values are way out of whack.
There are some benefits to owning. Mortgage interest is one of the few remaining deductions against income (as long as you aren't hit by the Alerternative Minimum Government Handgrab Tax). However, unless you own the proverbial "new home in new development on the golf course", you are probably suffering from a creaking and leaking roof, no central air/heat, old fixtures, small kitchen, single bath, bad foundation and other assorted horrific human living conditions. On the down side, renting has no deduction, thus costing about 33% more (by using post-tax dollars), and also not producing any capital growth.
I personally prefer only to own financial instruments that grow through reinvestment of generated earnings. Real Estate is a depreciation-full, capital intensive investment. You can create earnings by managing real estate (say, by being a landlord), or as a REIT, but for this slothenly author, having someone else do my earnings is always preferable. So I am buying stocks with my Real Estate windfall and I am loving every minute of it.
On a slightly different subject, I also got notice that our landlord is raising our rent by $110 per month. So woe unto renters who follow the scourge of my advice. But I have a simple answer. This is a market economy. If I don't like the rent, I can move. And I will. I have been renting apartments and homes for over 20 years, and I have never, ever, once, accepted a rent increase. I may have moved into a bigger apartment or nicer area and paid more rent. But I will not accept a landlord's increased rent on an existing property.
If you were to, say, knock out a wall and extend my living room or bedroom, then I will pay more rent. If you move your house into a nicer neighborhood, then I will pay more rent. If you build a new extra bathroom for me, then I will pay more rent. Otherwise, if you hand me a rent increase notice, I treat it as an eviction. It makes no sense to me to raise rent when you haven't offered any benefit or increase in value.
Consider this: Landlord calculates that she can gain $1320 per year by raising rent $110 per month. Rent is currently (let's say) $1600 per month. If the tenant moves out instead of paying increased rent, and the apartment sits idle for 3 weeks (which it almost certainly will - one week to clean, one week to show, one week to move in), then the benefit of the $1320 per year is gone. If the apartment is idle for longer than that, you're screwed. Not including management overhead and other fees, this is not wise for a landlord. What a stupid, bone headed, moronic move that is.
To all you landlords and real estate barons I say as I have always said, "Bye bye, bitches." You lost a lot of income.
Now I rent, with the intention of taking the cash and run, run, running away. Was this wise, and is it favourable for others? I think so. If you are living in a home currently, then the wise thing is not to sell and move. If you need stability for your family and kids, then continue to own. But if you are on the cusp of moving or looking for a new job, for example, then you should definitely sell and consider renting if property values are way out of whack.
There are some benefits to owning. Mortgage interest is one of the few remaining deductions against income (as long as you aren't hit by the Alerternative Minimum Government Handgrab Tax). However, unless you own the proverbial "new home in new development on the golf course", you are probably suffering from a creaking and leaking roof, no central air/heat, old fixtures, small kitchen, single bath, bad foundation and other assorted horrific human living conditions. On the down side, renting has no deduction, thus costing about 33% more (by using post-tax dollars), and also not producing any capital growth.
I personally prefer only to own financial instruments that grow through reinvestment of generated earnings. Real Estate is a depreciation-full, capital intensive investment. You can create earnings by managing real estate (say, by being a landlord), or as a REIT, but for this slothenly author, having someone else do my earnings is always preferable. So I am buying stocks with my Real Estate windfall and I am loving every minute of it.
On a slightly different subject, I also got notice that our landlord is raising our rent by $110 per month. So woe unto renters who follow the scourge of my advice. But I have a simple answer. This is a market economy. If I don't like the rent, I can move. And I will. I have been renting apartments and homes for over 20 years, and I have never, ever, once, accepted a rent increase. I may have moved into a bigger apartment or nicer area and paid more rent. But I will not accept a landlord's increased rent on an existing property.
If you were to, say, knock out a wall and extend my living room or bedroom, then I will pay more rent. If you move your house into a nicer neighborhood, then I will pay more rent. If you build a new extra bathroom for me, then I will pay more rent. Otherwise, if you hand me a rent increase notice, I treat it as an eviction. It makes no sense to me to raise rent when you haven't offered any benefit or increase in value.
Consider this: Landlord calculates that she can gain $1320 per year by raising rent $110 per month. Rent is currently (let's say) $1600 per month. If the tenant moves out instead of paying increased rent, and the apartment sits idle for 3 weeks (which it almost certainly will - one week to clean, one week to show, one week to move in), then the benefit of the $1320 per year is gone. If the apartment is idle for longer than that, you're screwed. Not including management overhead and other fees, this is not wise for a landlord. What a stupid, bone headed, moronic move that is.
To all you landlords and real estate barons I say as I have always said, "Bye bye, bitches." You lost a lot of income.
posted by T. Pascal | 7:34 AM
0 Comments:
Post a Comment
<< Home