patrick.net

BoomAndBustCycle says

Easy come, easy go! A blind monkey could have made money in the stock market over the last 4 years. Nothing to brag about!

You just made my point. The debate is whether you money is best in housing equity or the stock market. The later has been rewarding for many renters these last 4 years. And it will just get better...

CDon says

For them, what was the harm in listening to the bulls and buying at the bottom?

As long as they don't take every cent they got and become landlords with multiple million dollar homes that rent for only $2500/mth each. Believe me, fools are doing just that around here.

Buying a residence with the intent of staying there is always admirable. However, most people buy because they think it will be the road to riches.

RentingForHalfTheCost says

However, most people buy because they think it will be the road to riches.

Perhaps in some circles, but certainly not in Patnet. If anything, most people here, hated the "rentier" class who bought houses and enslaved them to a lifetime of renting.

For them, and for those who wanted to simply buy at or near the bottom and get on with life, ignoring the bears who were certain of another massive leg down in prices was the right thing to do.

RentingForHalfTheCost says

in the last few months my equity investments have jumped savagely on increased earnings.

LMAO wait for the crash. all "earnings" will be wiped out overnight. that's how the stock market works.

RentingForHalfTheCost says

At the rate so far this year, my stocks have appreciated enough to cover 5 years rent. Sucks I missed the big real estate hoopla that everyone is talking about. I feel horrible not listening to all the real estate bulls around here.

Congrats, but it ain't official till you sell and lock in the winnings . . . .

I don't get why these arguments get so intense, especially between landlording and investing in equities. They have different risk/reward profiles, different volatilities, different long term expected rates of return and different avenues for leverage. It's like arguing whether stocks or bonds are better investments. Maybe we should bring in 3 game parlays - pays 6:75 to 1. What does that annualize to?

dublin hillz says

RentingForHalfTheCost says

At the rate so far this year, my stocks have appreciated enough to cover 5 years rent. Sucks I missed the big real estate hoopla that everyone is talking about. I feel horrible not listening to all the real estate bulls around here.

Congrats, but it ain't official till you sell and lock in the winnings . . . .

True, sold 1/4 of my holdings at 24 today. Staying long with the rest. Another run and I'll just be playing with the houses money, which is the best way!

Mark D says

RentingForHalfTheCost says

in the last few months my equity investments have jumped savagely on increased earnings.

LMAO wait for the crash. all "earnings" will be wiped out overnight. that's how the stock market works.

And housing is risk free?

APOCALYPSEFUCK is Shostakovich says

RentingForHalfTheCost says

most people buy because they think it will be the road to riches.

Well, it is, isn't it?

If Rich is defined as being enslaved for 30 years by the bank and infinity by the city. I'd rather define it by travel, no real financial reason to work, and time to devote to family and yourself. Owning a million dollar hut in the SFBA doesn't let people get near that dream.

RentingForHalfTheCost says

APOCALYPSEFUCK is Shostakovich says

RentingForHalfTheCost says

most people buy because they think it will be the road to riches.

Well, it is, isn't it?

If Rich is defined as being enslaved for 30 years by the bank and infinity by the city. I'd rather define it by travel, no real financial reason to work, and time to devote to family and yourself. Owning a million dollar hut in the SFBA doesn't let people get near that dream.

I don't believe that renting in SFBA can accomplish this objective for most folks. A decent 2 BD apt goes for $2300 at least nowadays. A decent single family home is close to $3,000 at least if not more. That's between $27,600 to $36,000 for decent properties. Assuming one invests for dividends at 4.75% yield, we are talking about needing a nest egg of roughly $590,000 to $760,000 depending on the rent to ensure that one does not have to work to pay the rent. Then there are other expenses that still require additional savings. Most people will never save this much. Even an extraordinarily thrifty person will have serious difficulty accumulating this sort of loot. It is much easier to buy a house below your means and prepay the mortgage. Then, you need to only accumulate enough to cover property tax and HOA which are way way less compared to rent on equivalent properties.

dublin hillz says

I don't believe that renting in SFBA can accomplish this objective for most folks. A decent 2 BD apt goes for $2300 at least nowadays. A decent single family home is close to $3,000 at least if not more. That's between $27,600 to $36,000 for decent properties. Assuming one invests for dividends at 4.75% yield, we are talking about needing a nest egg

That is the thing lately though. 4.75% is nothing compared to the runup in the last 4 years. I mean we are talking 20% YTD apprecation and that is in solid stocks that pay good dividends. The huge amount of cheap money out there is feeding this PIG. In the Fed's efforts to keep everyone in the dark about how bad the housing situation has become, they have pumped up stocks to no end.

If I could afford a house priced at X 4 years ago, I can now afford a house priced at 2X. Did we get 100% house price appreciation in the last 4 years? Nope. So, as much as the real estate bull will beat their chest with every 2-4% move, the smart money is not in housing. Unless, you want to do the no money down, and risk everything you own, as some do. That is akin to playing naked options or betting all on black IMHO. I have never taken credit, never going to need credit and just downright have a hatred for credit. If you can't afford it then don't get it.

dublin hillz says

It is much easier to buy a house below your means

Bingo! Only if people actually did this.

RentingForHalfTheCost says

APOCALYPSEFUCK is Shostakovich says

RentingForHalfTheCost says

most people buy because they think it will be the road to riches.

Well, it is, isn't it?

If Rich is defined as being enslaved for 30 years by the bank and infinity by the city. I'd rather define it by travel, no real financial reason to work, and time to devote to family and yourself. Owning a million dollar hut in the SFBA doesn't let people get near that dream.

I own a home in Monterey. I'm going to Bali for 3 weeks this summer, followed by 6 weeks in Japan. What are you doing?

Bigsby says

RentingForHalfTheCost says

APOCALYPSEFUCK is Shostakovich says

RentingForHalfTheCost says

most people buy because they think it will be the road to riches.

Well, it is, isn't it?

If Rich is defined as being enslaved for 30 years by the bank and infinity by the city. I'd rather define it by travel, no real financial reason to work, and time to devote to family and yourself. Owning a million dollar hut in the SFBA doesn't let people get near that dream.

I own a home in Monterey. I'm going to Bali for 3 weeks this summer, followed by 6 weeks in Japan. What are you doing?

Hmm

Italy , Brasil , Dominican Republic, Hawaii, Alaskan cruise, Australia. And that is just in 2013 that is booked!

RentingForHalfTheCost says

Hmm

Italy , Brasil , Dominican Republic, Hawaii, Alaskan cruise, Australia. And that is just in 2013 that is booked!

And I've been to England, Paris, Dubai, Jordan, Lebanon, Oman, Sri Lanka, and California (which is not my place of residence) so far this year. What is your point? People who have homes travel you know.

Bigsby says

RentingForHalfTheCost says

Hmm

Italy , Brasil , Dominican Republic, Hawaii, Alaskan cruise, Australia. And that is just in 2013 that is booked!

And I've been to England, Paris, Dubai, Jordan, Lebanon, Oman, Sri Lanka, and California (which is not my place of residence) so far this year. What is your point? People who have homes travel you know.

See how that works. Someone calls a challenge. I respond with an answer, and then my answer is then somehow a challenge? Follow the thread properly or please don't comment.

RentingForHalfTheCost says

Bigsby says

RentingForHalfTheCost says

Hmm

Italy , Brasil , Dominican Republic, Hawaii, Alaskan cruise, Australia. And that is just in 2013 that is booked!

And I've been to England, Paris, Dubai, Jordan, Lebanon, Oman, Sri Lanka, and California (which is not my place of residence) so far this year. What is your point? People who have homes travel you know.

See how that works. Someone calls a challenge. I respond with an answer, and then my answer is then somehow a challenge? Follow the thread properly or please don't comment.

It wasn't a challenge. The point was that you've frequently posted that you are leading this amazing life and boast about travelling here and there because you are free from a mortgage. My point was that it has nothing to do with the mortgage and a lot more to do with whether or not you have one you can afford. Your life is not suddenly put on hold just because you buy a house.

Anyone posting with personal insults will always be deleted in my posts. Don't like it, then don't post. PERIOD!

Bigsby says

It wasn't a challenge.

You specifically said you own a home and are doing an 3 week travel. Then asked what I was doing? You don't remember that? Scroll up. Then when I answer and it isn't to your liking then you post as if I was challenging you. Makes no sense.

Also, my point is that if I extended myself to buy in the SFBA like most, then I wouldn't be able to travel. I would need to work full-time all the time just to cover the costs which are over double what I pay now. I am not saying everyone is like that. If you own and can travel then amazing. Most SFBA people buying now or anytime in the past 10 years can't.

RentingForHalfTheCost says

You specifically said you own a home and are doing an 3 week travel. Then asked what I was doing? You don't remember that? Scroll up. Then when I answer and it isn't to your liking then you post as if I was challenging you. Makes no sense.

That wasn't the point. It was a rhetorical question. I couldn't care less what you are doing. The point was as I expressed in my previous post.

RentingForHalfTheCost says

Also, my point is that if I extended myself to buy in the SFBA like most, then I wouldn't be able to travel. I would need to work full-time all the time just to cover the costs which are over double what I pay now. I am not saying everyone is like that. If you own and can travel then amazing. Most SFBA people buying now or anytime in the past 10 years can't.

Really? Every single person I know in the area goes travelling and they've nearly all bought in the last ten years. Do you see how generalising works?

Bigsby says

That wasn't the point. It was a rhetorical question. I couldn't care less what you are doing.

Then don't ask the question. Asking a rhetorical question is lost in email communication. Even face-to-face most times it doesn't work.

Bigsby says

Really? Every single person I know in the area goes travelling and they've nearly all bought in the last ten years. Do you see how generalising works?

Not in the SFBA proper. Ask around.

RentingForHalfTheCost says

Bigsby says

Really? Every single person I know in the area goes travelling and they've nearly all bought in the last ten years. Do you see how generalising works?

Not in the SFBA proper. Ask around.

Except most of my friends live in that area...

RentingForHalfTheCost says

Bigsby says

That wasn't the point. It was a rhetorical question. I couldn't care less what you are doing.

Then don't ask the question.

And you can think about the point I was making.

RentingForHalfTheCost says

Also, my point is that if I extended myself to buy in the SFBA like most,
then I wouldn't be able to travel. I would need to work full-time all the time
just to cover the costs which are over double what I pay now. I am not saying
everyone is like that. If you own and can travel then amazing. Most SFBA people
buying now or anytime in the past 10 years can't.

My travel habits have stayed the same in owning as in renting. Average 2 long vacations per year to foreign countries with each vacation averaging between 9-10 nights each. Additionally, every year take domestic side trips. My constraint on travel is vacation time that I can accrue from work not rent/own. I will be eligible for an additional week of vacation in 2015 and will definitely utilize it.

Bigsby says

RentingForHalfTheCost says

Bigsby says

That wasn't the point. It was a rhetorical question. I couldn't care less what you are doing.

Then don't ask the question.

And you can think about the point I was making.

You can have your view, as I can have mine. That is what makes us original. I stand by what I said.

dublin hillz says

RentingForHalfTheCost says

Also, my point is that if I extended myself to buy in the SFBA like most,

then I wouldn't be able to travel. I would need to work full-time all the time

just to cover the costs which are over double what I pay now. I am not saying

everyone is like that. If you own and can travel then amazing. Most SFBA people

buying now or anytime in the past 10 years can't.

My travel habits have stayed the same in owning as in renting. Average 2 long vacations per year to foreign countries with each vacation averaging between 9-10 nights each. Additionally, every year take domestic side trips. My constraint on travel is vacation time that I can accrue from work not rent/own. I will be eligible for an additional week of vacation in 2015 and will definitely utilize it.

That is the difference. Only because I stayed a renter have I been able to take leaves from work, transitions to other jobs, and downright sabbaticals for months on end. I am not talking about the traditional 2-4 weeks/year. I've been there and done that, but now I enjoy a lifestyle as a renter. I am not saying every renter is in this boat, but I am. For me there is a big difference. The flexibility of just getting up and moving for a few months is awesome. I have done it a few times now and don't want to give that up for anything, especially decaying wood and nails that has everyone doing orgasms about virtual wealth.

robertoaribas says

RentingForHalfTheCost says

Only because I stayed a renter have I been able to take leaves from work, transitions to other jobs, and downright sabbaticals for months on end. I am not talking about the traditional 2-4 weeks/year. I've been there and done that, but now I enjoy a lifestyle as a renter.

I spent a cumulative year in thailand, 3 months in china and 2 months in brazil over the past 15 years as an owner... gotta love summer break, the month off at christmas!

Now that is what I am talking about. That is the goal, if you can get there any way, then do it. I get there my way. If I had bought off the county steps at the bottom then I might have been able to keep it, but I didn't. I use my job and investments to keep it moving. Eventually the purchase of a house will be an afterthought financially, even for the SFBA. I will not risk my lifestyle to get there though. Just me.

And the gifts keep giving. How is that hot water heater doing?

http://www.reuters.com/article/2013/05/24/procterandgamble-brief-idUSWEN0094Q20130524?type=companyNews&feedType=RSS&feedName=companyNews&rpc=43

donjumpsuit says

dublin hillz says

don't believe that renting in SFBA can accomplish this objective for most folks. A decent 2 BD apt goes for $2300 at least nowadays. A decent single family home is close to $3,000 at least if not more.

There is a little sensationalism in these prices, huh?

I rent a 3/2 for $1900. I can find another for between $1800 to $2300 in a heartbeat.

I share with two others, so my rental cost is actually ~$700

Shh, don't tell the owners that if you look around rents are more than reasonable. We need people to overpay for housing so the rental market stays so cheap relative to owning. Keep it on the down low.

BUY BUY BUY people. Don't worry about the math.

dublin hillz says

I don't get why these arguments get so intense, especially between landlording and investing in equities. They have different risk/reward profiles, different volatilities, different long term expected rates of return and different avenues for leverage. It's like arguing whether stocks or bonds are better investments. Maybe we should bring in 3 game parlays - pays 6:75 to 1. What does that annualize to?

Where are you getting +675 on 3 team parlays??

Traditionally, locals use 5:1, because locals tend to utilize their costumer bases inability to shop around for anything better (typical of black markets)

Most internet shops offer 6:1, because they need a draw, and that's much closer to the mathematical odds payout of 3 wagers @ -110 each

I've found that using fractional Kelly staking system, in a good season one could expect north of 20% annual returns

robertoaribas says

donjumpsuit says

There is a little sensationalism in these prices, huh?

I rent a 3/2 for $1900. I can find another for between $1800 to $2300 in a heartbeat.

I share with two others, so my rental cost is actually ~$700

an owner can do the same. my mortgage is $1175 a month, but two cousins and one of their girlfriends live here too. they pay $480 a room... So my net mortgage is a negative number! [well, including internet, utilities, pool service, I actually pay a very small amount to live here]

A mortage payment of $1175/mth will get you a 1sqft waiting spot at a bus stop in the SFBA. You'll probably have to present the title each morning to roll away the homeless people that have setup shop. And that obviously doesn't include the 12K taxes and $850/mth HOA for cutting the small piece of grass 4 miles away from your home once a week. All is good in the SFBA.

robertoaribas says

Call it Crazy says

Now that's funny.... You think you're such a big shot, yet you have to taken in boarders so you can pay your bills... what a joke....

I didn't like living alone. I can easily handle my mortgage with nobody helping, you are the only person so stupid as to try to turn that into an insult.

Not the only. I was kinda thinking the same. ;) Just didn't have the heart to hit you on it.

RentingForHalfTheCost says

At the rate so far this year, my stocks have appreciated enough to cover 5 years rent. Sucks I missed the big real estate hoopla that everyone is talking about. I feel horrible not listening to all the real estate bulls around here.

Let's do the math. If your rent is $2,000/month, then 1 year's rent is $24,000. So, (assuming no increases - I know, your rent never increases) five years rent would be $120,000. The DJIA is up just over 17% this year, but we will say 20% to make the math easier. If a 20% return on your portfolio = $120,000, then you started the year with a portfolio of $600,000 fully invested in the stock market, and it rose in line with the stock market (big assumption). Also, we need to assume that you didn't sell any covered calls, because then you would have missed most of the appreciation, and that you had none of your money invested in gold (which in previous threads you claimed was why you got the market beating returns you did). And, you didn't have your money in MCD, because that was only up 14%. And, of course, none of this includes taxes assuming you sell to lock in games.

Anyway, good for you if you had $600K allocated perfectly to capture the entire rise of the stock market this year, but it's hardly a realistic prescription for most people.

RentingForHalfTheCost says

dublin hillz says

RentingForHalfTheCost says

At the rate so far this year, my stocks have appreciated enough to cover 5 years rent. Sucks I missed the big real estate hoopla that everyone is talking about. I feel horrible not listening to all the real estate bulls around here.

Congrats, but it ain't official till you sell and lock in the winnings . . . .

True, sold 1/4 of my holdings at 24 today. Staying long with the rest. Another run and I'll just be playing with the houses money, which is the best way!

Sold what at 24?

housing after taking into consideration taxes, maintenance ..etc was usually giving 8% to 12% in most areas. in bay area , it was mostly 8%. and this was in 2011. now its lower.

best case math in bay area : 300k condo generating $2000 income which is equivalent to 8% return without maintenance and property tax. If i include that , returns are lower.
I don't think pure cash flow investment in bay area was ever a good idea.
Most of the investment here is speculative and for capital appreciation.

Stocks are more liquid and might actually generate more returns than 8% for some time to come. easy to sell and low maintenance.

JFP says

Anyway, good for you if you had $600K allocated perfectly to capture the entire rise of the stock market this year, but it's hardly a realistic prescription for most people.

True, because most people take the bait and buy into overpriced housing. With mortage, taxes, insurance, upkeep, it is very hard to sock any money away and play the market. I've had 10 years of renting savings plus 5 year of house owning appreciation. Lets just say I play with more than 600K so your numbers are close but I never fully invest in the market. Also, I have been able to fully funnel all my savings into a ROTH IRA so I am not taxed on gains. Nice! There are ways to sock over 50K into a Roth IRA each year for those inclined. Not many owners have 50K to play with unfortunately. They rely on house appreciation which is fine and has played well, but me, I just don't trust it.

BTW, my rent is $3k/mth so you can adjust the math. Nice last couple years sitting out the real estate hype around here. I hope it continues with the help of the free money market. Although, I have been slowly unwinding my market percentage, so I doubt I'll get the same gains. I'm happy just taking the money and waiting at this point. Back to looking for just 6%/yr and waiting for some big downswings.

chanakya4773 says

housing after taking into consideration taxes, maintenance ..etc was usually giving 8% to 12% in most areas. in bay area , it was mostly 8%. and this was in 2011. now its lower.

Stocks are more liquid and might actually generate more returns than 8% for some time to come. easy to sell and low maintenance.

Or, you could have bought REITs. Get the best of both worlds recently :)

There's really two different scenarios - primary residence and investment real estate. Given the available leverage and the fact that you have to pay for housing anyway, it's easy to make the argument for buying a primary residence in the bay area. Investment real estate in the bay area is a harder argument to make.

JFP says

here's really two different scenarios - primary residence and investment real estate. Given the available leverage and the fact that you have to pay for housing anyway, it's easy to make the argument for buying a primary residence in the bay area. Investment real estate in the bay area is a harder argument to make.

I agree with you. since you have to pay for rent anyways, for primary residence, the comparison should be with rent. is it cheaper to rent vs buy.

for investment , you have to compare with returns from other markers as well. housing didn't fare well in that regard ( cash flow). capital appreciation was anybody's guess so that was pure luck and luck is not a strategy.

RentingForHalfTheCost says

True, because most people take the bait and buy into overpriced housing. With mortage, taxes, insurance, upkeep, it is very hard to sock any money away and play the market. I've had 10 years of renting savings plus 5 year of house owning appreciation.

Actually, if you do the math for most people, owning comes out cheaper than renting. But, regardless, most people cannot build up a portfolio of $600K even if they rent. Never mind the $900K you are now claiming (just for the portion invested int the stock market) based on $3k/month rent.

Anyway, I don't know why I indulge your fantasy investing track record. I did the math for you in a previous thread and pointed out how unrealistic your claimed returns were.