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I just bought a house and it will cost half as much to own vs rent same house

By PockyClipsNow   Follow   Fri, 12 Oct 2012, 3:54pm   27,763 views   600 comments
In Los Angeles CA 90044   Watch (1)   Share   Quote   Permalink   Like   Dislike  

I hope this is a real world math lesson for some of the 'should I buy now' crowd. Its a tough decision.

Price: 875k
$ Financed: 700k

Loan: 5/1 Interest Only ARM at 2.875 with .25 points (union bank)
Payment: 1677
Prop tax: 912
total: 2588
(im in 28% effective tax bracket so 2588 * .72 = 1863 'after tax write off payment')
Add fire ins of 129 per month and total pmt after tax write off = $1992

This is a custom built, recently remodeled huge estate home on acreage and zoned for horses - would rent for 3800 to 4200 based on craigslist comps.

If I change jobs I can make 1k per month easy in profit when renting it out. Its not a great rental though, but an awsome to live in property.

I sold four homes off in 05/06 and the plan was wait for 50% drop then buy back in. Well prices only came down to 70% of peak fraud prices - close enough with the low intrest rates (which I am betting are permanent, as in the rest of your life. If rates spike in 5 years I will simply pay off the loan, refi, or get a loan mod - no worries here.)

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1. Reality Follow Befriend 2 threads 1,645 comments

   561   11:48am Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   The Professor says Banks have done the math. In their calculus not only can they go without collecting mortgage they will also pay a delinquent loanowners taxes and insurance. Banks do that in order to avoid recognizing losses on bad loans. It's a form of fraudulent book keeping. The hope is to punt to the next bank manager or wait for taxpayer bailout. The typical housing service provider however have no such luxury. He/she would have to eat the lost revenue by him/herself.

2. The Professor Follow Befriend (5) 24 threads 1,306 comments Premium

   562   11:57am Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   Reality says The Professor says Banks have done the math. In their calculus not only can they go without collecting mortgage they will also pay a delinquent loanowners taxes and insurance. Banks do that in order to avoid recognizing losses on bad loans. It's a form of fraudulent book keeping. The hope is to punt to the next bank manager or wait for taxpayer bailout. The typical housing service provider however have no such luxury. He/she would have to eat the lost revenue by him/herself. There is the problem. Our taxes and the secretive Fed has propped up the fraudulent banks. The bigger problem is the entire FIRE industry and the lawyers and politicians they finance. Too many counterproductive people.

3. Reality Follow Befriend 2 threads 1,645 comments

   563   11:59am Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   To the original poster's numbers: At 1% annual repair reserve, the $875k house needs a $730/mo repair and "honey-do" reserve (most home improvements demanded by the wife will have very little resale value in the future). So between the $3800 rental potential and $2588 PIT, there's only less than $500/mo left for insurance and water/sewer bill, which just about cover the $500/mo for such a house. So the original poster is getting almost 0% return on his $190k or so down payment and purchasing/closing cost, as far as cash flow is concerned. The only gain since buying would have to come from home appreciation. What's there to be jealous about again? Just as I suspected, the "rent being double the ownership cost" is pure figment of imagination. The doubling can not possibly be there when the house' rental yield is so low.

4. PockyClipsNow Follow Befriend 19 threads 1,534 comments Los Angeles, CA

   564   12:02pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Well 20% price appreciation is pretty sweet. I will let you all know what my best offer is - plan to sell in June.

5. The Professor Follow Befriend (5) 24 threads 1,306 comments Premium

   565   12:19pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   Reality says It's a two-way negotiation for service at pay, not overlordship. I am gonna lose Reality with some conspiratorial theory. The real owners don't work at all. The oligarchy has minions that are constantly coming to them with schemes and profit splits. They, the powers that be, are constantly scheming and playing with the muppets. The right hand knows not the orders to the left. The overlords perpetuate war, class, race, real war. They care not the suffering their machinations cause. Landlords are not the overlords. The keeper of the house is smarter, or luckier, than the tenant. They posess the real estate. They earn their money. Many of them, like Roberto and Iwog, have been quite successful in gaming the system. They work. The oligarchy wants us to hate the player. They rig the game. Back to Reality.

6. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

   566   2:20pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Reality says At 1% annual repair reserve, total crap thinking... a water heater costs the same if you put it in a 1.2 million dollar house, as if I put it in a $100,000 home. ditto paint... we have the homeowner on the thread, he can tell you what he paid for repairs, instead of you making up ridiculous numbers to try to make buying look bad. he is going to make a lot of money on this home, so give up rationalizing anything else...

7. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

   567   2:21pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Reality says The Professor says Banks have done the math. In their calculus not only can they go without collecting mortgage they will also pay a delinquent loanowners taxes and insurance. Banks do that in order to avoid recognizing losses on bad loans. It's a form of fraudulent book keeping. The hope is to punt to the next bank manager or wait for taxpayer bailout. The typical housing service provider however have no such luxury. He/she would have to eat the lost revenue by him/herself. more lousing thinking. Banks have to file SEC reports of how many loans are 30/60/90 days late or in foreclosure. SO, they simply are not sitting on homes, especially not in trust deed states...

8. Reality Follow Befriend 2 threads 1,645 comments

   568   9:27pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Roberto, Budgeting 1% of house value as annual repair reserve is fairly standard practice for basic home ownership financial planning. Water heater replacement is a miniscule cost in the scheme of things. The more expensive items are like roof etc. More expensive houses tend to have bigger more expensive roofs and are located in areas with higher cost of labor. In the cases similar to the original poster, where the house price to rent yield ratio is close to 20:1 (both of us would probably pause at somewhere close to 10:1), I was also counting the typical wife's demand on frivolous home improvements towards that 1%. Improvements that will add very little to house value at sale time. It's just a matter of keeping up with the Joneses in those neighborhoods and keeping a wife. As for banks being slow at recognizing losses, what I wrote was not a statement on whether they are doing it, but a reason for why they did it once upon a time (if they did), as The Professor raised the issue.

9. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

   569   9:41pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Reality says Budgeting 1% of house value as annual repair reserve is fairly standard practice for basic home ownership financial planning. Water heater replacement is a miniscule cost in the scheme of things. The more expensive items are like roof etc. More expensive houses tend to have bigger more expensive roofs and are located in areas with higher cost of labor. the home owner is on the thread, why not ask him what he spent in his 9 months of ownership? Reality says I was also counting the typical wife's demand on frivolous home improvements towards that 1%. Improvements that will add very little to house value at sale time. It's just a matter of keeping up with the Joneses in those neighborhoods and keeping a wife. My girlfriend leaves all home improvement decisions to me, since I'm the expert...

10. Reality Follow Befriend 2 threads 1,645 comments

    570   9:53pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   robertoaribas says the home owner is on the thread, why not ask him what he spent in his 9 months of ownership? What he has done in 9 months in anticipation of selling after less than a year of ownership is not necessarily reflective of the long term ownership cost. A roof has to be replaced after a couple decades. The gradual deterioration takes place over time, not in the single year prior to replacement. robertoaribas says My girlfriend leaves all home improvement decisions to me, since I'm the expert... That's why you and I keep girlfriends instead of wives. OTOH, girlfriends have their own problems due to lack of commitment from us. There is no perfect solution in life. Sometimes we can be slaves to what we own.

11. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

    571   9:58pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Reality says What he has done in 9 months in anticipation of selling after less than a year of ownership is not necessarily reflective of the long term ownership cost. A roof has to be replaced after a couple decades. The gradual deterioration takes place over time, not in the single year prior to replacement. yes, however, a roof on a 2000 square foot home that costs 1.5 million is not going to be 15 times as expensive as one on a 2000 square foot home for 100,000. Maybe 3 times as expensive, switching to spanish tile or whatever from composition shingles. Ditto flooring. I can tile a cheap home for under $3 a foot, but half of that cost is install, it won't cost me any more to lay expensive tile, so at $6 or $7 a foot I'm matching million dollar homes. In fact, I have some 20 by 20 ceramics that look freaking awesome and I get them for under $1 a foot. see my point? yeah a cheap home you can put a $200 stove in, an expensive home you may drop $1000 but that is every 20 years or so... Not really going to matter. Paint costs the same in a 5 gallon bucket at homedepot, no matter how expensive the home you are going to slap it on the walls...

12. The Professor Follow Befriend (5) 24 threads 1,306 comments Premium

    572   10:03pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   robertoaribas says Banks have to file SEC reports of how many loans are 30/60/90 days late or in foreclosure. SO, they simply are not sitting on homes, Because you say so? Are you saying all of the Zillow pre-foreclosure listings are bogus? Isn't the SEC the bureucracy that is supposed to stop banking fraud? There are houses sitting empty and delinquent loanowners whose insurance and property tax are being paid by the bank.

13. Reality Follow Befriend 2 threads 1,645 comments

    573   10:07pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Roberto, We are not talking about a million dollar two BR condo in NYC, but in the original poster's words a "huge estate home on acreage, zoned for horses" There are probably substantial on-going landscaping and grounds keeping expenses in addition to maintaining the "huge estate home" house structure itself.

14. The Professor Follow Befriend (5) 24 threads 1,306 comments Premium

    574   10:31pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   The fringe neighborhoods of the San Francisco Bay Area are among the most troubled real estate markets in the country. The bank is sitting on thousands of homes. They are paying for insurance and property taxes while letting the underwater loanowner occupy the house for free. Following are a couple random examples of loanowners not being foreclosed. http://www.zillow.com/homes/Antioch-CA_rb/#/homedetails/2626-Leopard-Way-Antioch-CA-94531/50916510_zpid/ AUG 30 2005 Loan issued $520,000 FEB 19 2013 Home in default $22,387 past due Foreclosure Est: $271,841 http://www.zillow.com/homes/Pittsburg-CA_rb/#/homedetails/750-Central-Ave-Pittsburg-CA-94565/18315173_zpid/ MAY 24 2012 Loan issued $210,587 NOV 29 2012 Home in default $10,882 past due Foreclosure Est: $104,262 http://www.zillow.com/homes/vallejo_rb/#/homedetails/3423-Edgewater-Pl-Vallejo-CA-94591/51602865_zpid/ AUG 6 2001 Previous sale $435,000 SEPT 1 2005 Loan issued $628,000 JAN 23 2013 Home in default $61,908 past due Foreclosure Est: $310,931 http://www.zillow.com/homes/vallejo_rb/#/homes/make_me_move/pf_pt/days_sort/38.376654,-121.736069,37.800561,-122.455673_rect/9_zm/ Try your own random click.

15. Philistine Follow Befriend 487 comments Los Angeles, CA

    575   11:15pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Reality says in the original poster's words a "huge estate home on acreage, zoned for horses" There are probably substantial on-going landscaping and grounds keeping expenses in addition to maintaining the "huge estate home" house structure itself Not even sure where in LA such a house for $875k would exist. This sounds more like a Valley-or-north area, or, worse, Inland Empire. This is like bragging you bought 30 acres in Gainseville, FL. Big whoop.

16. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

    576   11:26pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   Philistine says Reality says in the original poster's words a "huge estate home on acreage, zoned for horses" There are probably substantial on-going landscaping and grounds keeping expenses in addition to maintaining the "huge estate home" house structure itself Not even sure where in LA such a house for $875k would exist. This sounds more like a Valley-or-north area, or, worse, Inland Empire. This is like bragging you bought 30 acres in Gainseville, FL. Big whoop. "big woop" hey , he just noted a smaller, less improved property selling for something like 1.2 million... so, you don't get to say "big woop" unless you maed more than 300,000 in the past six months... I'll take a wild guess: your just a dipstick!The Professor says The fringe neighborhoods of the San Francisco Bay Area are among the most troubled real estate markets in the country. The bank is sitting on thousands of homes. They are paying for insurance and property taxes while letting the underwater loanowner occupy the house for free. Following are a couple random examples of loanowners not being foreclosed. Hey thanks, I guess that explains why prices ARE NOT going up! thanks for clearing that up for me!!! 2.5 years and counting of me being right, and everybody arguing with me being completely and utterly wrong.... It's ok! I'm taking this victory lap on your faces forever.... Six months from now, prices even higher, you guys spouting even more "but what about the foreclosures the banks are sitting on...", "but it is a manipulated market, I'm too scared to touch it...", "but what about cyprus, or venus? what if they default..." and I'll just keep on making money, and you'll keep on posting all the reasons it shouldn't be happening!!!

17. Philistine Follow Befriend 487 comments Los Angeles, CA

    577   11:38pm Mon 25 Mar 2013   Share   Quote   Permalink   Like   Dislike   robertoaribas says he just noted a smaller, less improved property selling for something like 1.2 million.. I have no problem with this as a mere business transaction. My problem is with saying this property is in LA, when I know for a fact that 900k-1.3 mill barely buys you a 4/3 2500 sqft house on a 10,000 sqft lot. Unless you want to live in Crenshaw. The Valley and Inland Empire are not LA. You can buy spacious "estates" out there for $875k no problem. But that's like buying a house in Elizabeth, NJ and saying you bought in NYC.

18. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

    578   6:56am Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Philistine says I have no problem with this as a mere business transaction. My problem is with saying this property is in LA, when I know for a fact that 900k-1.3 mill barely buys you a 4/3 2500 sqft house on a 10,000 sqft lot. Unless you want to live in Crenshaw. The Valley and Inland Empire are not LA. nobody gives a rat's tail with what you consider to be LA, nor needs your permission to call their home in LA. When I'm going to visit friends in Thousand Oaks, I tell my friends I'm going to LA, they wouldn't know where the hell thousand oaks is... so, go ahead and have all the problems with it you want, their your own personal problems.

19. PockyClipsNow Follow Befriend 19 threads 1,534 comments Los Angeles, CA

    579   10:58am Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   I'm not in the IE.

20. PockyClipsNow Follow Befriend 19 threads 1,534 comments Los Angeles, CA

    580   3:16pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   KarlRoveIsScum says 28% tax rate and you can afford a $1M home and multiple properties? Sounds fishy! If your income is that low how the hell did you qualify? I put down 20%. Make 100k a year. Got an IO ARM. Pretty much maxed out what they would lend me. At first they denied the loan, then saw my major cash position in the bank and approved it. What would be fishy - I'm making shit up? lol

21. BoomAndBustCycle Follow Befriend 28 threads 351 comments

    581   3:52pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Philistine says The Valley and Inland Empire are not LA. You can buy spacious "estates" out there for $875k no problem. But that's like buying a house in Elizabeth, NJ and saying you bought in NYC. The Valley is definitely part of Los Angeles... It may not be Beverly Hills.. but it's not Crenshaw either. LA is made up of a bunch of rich and poor areas.. But it's still all Los Angeles.

22. PockyClipsNow Follow Befriend 19 threads 1,534 comments Los Angeles, CA

    582   4:56pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   KarlRoveIsScum says it's your marginal rate, i understand. Do you know how much you could get a loan for in the UK on $100k a max of $350k Wouldnt that vary wildly with the variable intrest rates? I mean with 2.8% IO loan that is a wildly different payment than the same amount financed at 7.25 30 year fixed( i had a loan like that in 2001). So now I should be able to finance double the loan since rates are half what they were in 2001. This is how they let us have 'affordable housing' - prices are not allowed to go down for long.

23. Philistine Follow Befriend 487 comments Los Angeles, CA

    583   5:11pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   robertoaribas says nobody gives a rat's tail with what you consider to be LA, Actually, Redfin and Zillow do. So does the state government. Between zipcodes and real estate maps, nobody considers Thousand Oaks to be Los Angeles. BTW, Thousand Oaks is a good 90 minute commute to most work centers in LA, and is a paradise of '80s stucco box living and chain restaurants. Now I see why you are so fit for Phoenix.

24. PockyClipsNow Follow Befriend 19 threads 1,534 comments Los Angeles, CA

    584   5:19pm Tue 26 Mar 2013   Share   Quote   Permalink   Like (1)   Dislike   Thousand Oaks is pretty much LA....but way nicer. Half the town is actually in LA county I think.

25. lostand confused Follow Befriend (9) 165 threads 1,549 comments Premium

    585   5:27pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   PockyClipsNow says Thousand Oaks is pretty much LA....but way nicer. Half the town is actually in LA county I think. I think Thouand Oaks is in Ventura County. I used to live in Westlake Village which straddles both sides of the county. I love that whole area of the Conejo valley-got a very nice feel to it and the beach is a short hop away. Lovely hiking and plenty of activities. But the commute can be a pain if you have to commute to say downtown or Burbank etc. But know a few people who do it and love it. It has a nice feel to it.

26. BoomAndBustCycle Follow Befriend 28 threads 351 comments

    586   5:41pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Philistine says Actually, Redfin and Zillow do. So does the state government. Between zipcodes and real estate maps, nobody considers Thousand Oaks to be Los Angeles. BTW, Thousand Oaks is a good 90 minute commute to most work centers in LA, and is a paradise of '80s stucco box living and chain restaurants. Now I see why you are so fit for Phoenix. Thousand Oaks is quite a commute away during rush hour.. Only 30-40 minutes on off peak times to Hollywood.. And yes, i believe it's Ventura County.. a neighbor county of LA. But it's a pretty UPPER middle class area from when I've visited. I'd actually love to live there if it weren't for the commute on the 101. Homes are still pricey though...

27. Philistine Follow Befriend 487 comments Los Angeles, CA

    587   5:44pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Thousand Oaks is fine if you are not a city person. I just find it ironic all the people that live in LA and hate city living. LA is a sprawling mess, and the least urban of any city I've lived in. My entire point is not "what is LA", which is a nonstarter. My point is a place like Thousand Oaks (to run with this example) is 20 miles away. We are talking the suburbs. Trying to compare a suburban real estate market with a major city market is apples-to-oranges.

28. Philistine Follow Befriend 487 comments Los Angeles, CA

    588   5:46pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   BoomAndBustCycle says Only 30-40 minutes on off peak times to Hollywood Yes, maybe to H'wood off peak. I live in Mid-Wilshire, which is more central, and it takes 90 minutes to get to Topanga on a Saturday afternoon. It's the traffic, not the distance (26 miles).

29. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

    589   6:14pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Philistine says Now I see why you are so fit for Phoenix. see this is the point douche bag: I have never ever lived a f*ing day in my life in Phoenix... I live in Scottsdale, before that I lived in Tempe. you don't see me getting my panties in a pathetic twist like you over it... the metro area is phoenix, the metro area is LA. Only a pathetic whiny bitch who just broke a nail, like you doesn't understand that talking to people from another town, they will never know where the hell you are if you say "i live in thousand oaks" rather than "i live in LA" now, when you get back to your pathetic whining again...

30. Philistine Follow Befriend 487 comments Los Angeles, CA

    590   6:41pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Again, you miss the point. All real estate is local. I know you like to be insulting, but really you should be more interested in advancing the conversation.

31. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

    591   7:24pm Tue 26 Mar 2013   Share   Quote   Permalink   Like   Dislike   Philistine says gain, you miss the point. All real estate is local. I know you like to be insulting, but really you should be more interested in advancing the conversation. the guy said he lives in LA on a freaking national forum, same way I say I'm in phoenix... when technically I'm in Scottsdale...so people will have a general idea where i am. give it a rest, you are boring... what the hell is he supposed to do, every time anyone asks where he lives, give out precise latitude and longitude?

32. Philistine Follow Befriend 487 comments Los Angeles, CA

    592   1:17am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   robertoaribas says what the hell is he supposed to do, every time anyone asks where he lives, give out precise latitude and longitude? Nope. I merely asked Pocky where in LA he bought (a long while back in this thread). LA is a pretty spread out area, and where you buy here makes a pretty huge difference in price/quality/amenities. It's still valid: Thousand Oaks is 40 miles from LA. So is Malibu. Two completely different kinds of markets. You have my permission to call them both "LA" if you like.

33. E-man Follow Befriend (31) 34 threads 2,549 comments San Jose, CA Premium

    593   1:40am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   PockyClipsNow says Well 20% price appreciation is pretty sweet. I will let you all know what my best offer is - plan to sell in June. Already? You just barely moved in. Imagine after you cashed out and we get hit with hyperinflation. Isn't that going to wipe you out? :) Why sell now and pay capital gain? Wait until you hit the 2 year ownership mark and get $250k capital gain exclusion. $500k if you're married or your significant other is also on the title.

34. bdrasin Follow Befriend 6 threads 490 comments Alameda, CA

    594   4:18am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   PockyClipsNow says Price: 875k $ Financed: 700k Loan: 5/1 Interest Only ARM at 2.875 with .25 points (union bank) What is the fully indexed rate? Like 8.874%?

35. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

    595   11:16am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   Philistine says Two completely different kinds of markets. You have my permission to call them both "LA" if you like. thank you, I appreciate that. I go to Orange County all the time, but if I tell my mom that, she'll probably think I'm in Florida. E-man says Why sell now and pay capital gain? Wait until you hit the 2 year ownership mark and get $250k capital gain exclusion. $500k if you're married or your significant other is also on the title. This is actually very good advice! 1. since you live in the home, if the market were to change, you could respond quickly and sell, unlike if it is rented. 2. with inventory this low, heck even if inventory went up for a while, the market is so imbalanced right now, that you are much more likely to see higher prices today + 17 months, versus today. 3. at your income, avoiding even the long term capital gains tax of I think 20% these days is a significant delta to your net worth!

36. SFace Follow Befriend (2) 61 threads 1,306 comments Premium

    596   11:28am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   robertoaribas says 3. at your income, avoiding even the long term capital gains tax of I think 20% these days is a significant delta to your net worth! The difference is closer to 33%. 20% long term fed, 3.8% Medicare (depending on income but your 400K gain will put you in special category) and 10.3+% CA. Long term and short term gap is not that much. Unless you plan to 1031 the property (and buy something just as expensive), and since you live in the damn house, making the 250K/500K exemption is critical and pays.

37. PockyClipsNow Follow Befriend 19 threads 1,534 comments Los Angeles, CA

    597   11:33am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   Yes I have contemplated waiting until the 2 year mark for taxes. BUT I am still going to get the remodeling done and put it on market in June to see what its worth. This will motivate me to gitter done (mostly all painting/tile I'm doing myself). Then if I get a 1.2m offer I will take it, anything less I would think about and probably wait a year. One issue is I closed escrow in late november. SO if i want to hit the 2 year mark for tax selling that means closing in december 2014 - have to basically list it in September..... 6 months after the spring rush when you normally get top dollar. This market is far from normal now though. So in theory probably best to wait until spring 2015 to sell if prices keep rising and in regards to minimize taxes/maximize sales price. Thats pretty far off.

38. robertoaribas Follow Befriend (23) 55 threads 3,802 comments Scottsdale, AZ robertoaribas's website

    598   11:37am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   PockyClipsNow says One issue is I closed escrow in late november. SO if i want to hit the 2 year mark for tax selling that means closing in december 2014 - have to basically list it in September..... still, 30% on 400K gain is $120K free and clear... And, if I'm wrong, and the market turns south, you'd likely have time to sell. it would take a while for inventory to add up from today's paltry levels...

39. SFace Follow Befriend (2) 61 threads 1,306 comments Premium

    599   11:50am Wed 27 Mar 2013   Share   Quote   Permalink   Like   Dislike   Protected   Porky, the risk vs. reward tends to favor holding til Nov 2014 or even Spring 2015.

40. PockyClipsNow Follow Befriend 19 threads 1,534 comments Los Angeles, CA

    600   11:59am Wed 27 Mar 2013   Share   Quote   Permalink   Like (1)   Dislike   All good points. Well if i dont get a fat offer then my choice is made for me. Also probably a good idea to list your house every spring to 'see what its worth'. The only reason i bought this damn thing was to make money/keep up with inflation in housing. I was actually happier in a 1 bedroom apt bubble sitting. Now my weekends are home depot and lowes...used to be at the beach and travelling or finding cool bars.

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