patrick.net

Nice almost new house. It looks like a zero lot line SFH. So someone bought it brand new 2 years ago for $673k, now marked it up 10% and try to sell it? Not bad.

My fancy calculator says with 20% down @ 3.5% interest rate, your monthly payment is approx.

PITI + HOA = $3,700/month
Principal paydown (forced savings) = $950/month.
Say 28% tax bracket = $770/month saving.
3% loss of opportunity cost on down payment = $375/month.
Net carrying cost = $2,350/month.

If, that's a big IF, housing appreciates at an annual pace of 3.75%, you're living there for free.

How much can that house rent for?

Good luck.

$3,000 per month

robertoaribas says

E-man says

Say 28% tax bracket = $770/month saving.

BS unless you have a lot of other deductions...

:) You forgot we pay almost 10% on State Income Tax. :)

Thanks everyone! As E-man pointed out, it all depends on what is the future appreciation of this house. It is indeed a big IF. Irvington is an okay area.

e-man,
The seller probably will pay 6% as commission. So I do not think he is going to get a 10% return unless I am missing something.

peninsulabuyer says

Thanks everyone! As E-man pointed out, it all depends on what is the future appreciation of this house. It is indeed a big IF. Irvington is an okay area.

future appreciation as researched out by robert shilling comes out to rate of inflation.

any excessive appreciation will eventually correct downwards..

so like its been said many times.. 30-40% above 1996-97 prices gets you to riskless "fair price".

peninsulabuyer says

e-man,

The seller probably will pay 6% as commission. So I do not think he is going to get a 10% return unless I am missing something.

Yes, but 10% appreciation in 2 years is pretty sweet assuming the seller would get the asking price wouldn't say? Historically speaking, the Bay Area has been appreciating on an average of 5% annually. Pretty crazy I know. This is the reason why I believe this is an opportunity once in a lifetime for investors. The acquisition cost NOW is even cheaper than the 90's cycle.

My partner and I did some fancy calculations today. If history is any indication, we will turn our $200k investment in real estate today to $1.2M -$1.4M in 10 years. Although our model is relatively conservative, there were a couple of ASSumptions that went into the calculations. We'll find out in 10. :)

robertoaribas says

E-man says

Say 28% tax bracket = $770/month saving.

BS unless you have a lot of other deductions...

$21k in interest. $9k in property tax. $3.7k/person for exemption. Not including state income tax and local taxes, etc. That's over $37k for deductions for a couple with no kids.

E-man says

If history is any indication, we will turn our $200k investment in real estate today to $1.2M -$1.4M in 10 years.

doubtful... we have been bleeding both growth in new business and jobs. Frankly its far better for employers to move jobs elsewhere. You would have a better chance you made the $200K investment in 1970 and waited, and we are not going to have the same pre-year 2000 economy.

robertoaribas says

here is the best online calculator i can find for it.. 99% of all the REALTOR pages are completely wrong...

http://www.hughchou.org/calc/deduct.php

Roberto,

I just plug in all the numbers in the link you provided. It said $9,727 of savings. That's pretty damn close for government work.

$21k interest
$9k prop tax
$10.5k state & local tax. Say 7% tax rate
This is for a couple making $150k/year.

For a couple making $200k, you're looking at $11.5k of tax savings.

A comparable property (bigger sqft) sold 15 days ago in the same complex for 755K ($337 per sq ft).

http://www.redfin.com/CA/FREMONT/4089-FENNEL-TER-94538/home/26844959

If I apply this (337 per sq ft) the price is coming down to 621K!

How important is per sq ft when comparing two identical houses but with different sq ft?

I am very confused on what is the significance of per SQ FT price?

If it is NOT important why do all real estate listings show it?

2 years ago, this house was sold or $673k & the bigger house was sold for $688k. How did that work out in price per square foot 2 years ago? Based on the same metric, I'd say the smaller house will likely sell for $740k.

peninsulabuyer says

A comparable property (bigger sqft) sold 15 days ago in the same complex for 755K ($337 per sq ft).

http://www.redfin.com/CA/FREMONT/4089-FENNEL-TER-94538/home/26844959

If I apply this (337 per sq ft) the price is coming down to 621K!

How important is per sq ft when comparing two identical houses but with different sq ft?

I am very confused on what is the significance of per SQ FT price?

If it is NOT important why do all real estate listings show it?

These two homeowners are lucky that they're able to sell for more than they bought just 2 years ago. For the one that bought recently and the one that will buy this house, they're not as fortunate because they're paying 10% more. This goes to show timing is so critical. We don't know where the bottom is till it's in our rear view mirror.

We bought around 4 months ago so I have some experience in buying in the Bay Area. My advice would be to talk to your mortgage broker about what the actual costs could be because one thing that can't be understated is property taxes. Every county and city will have different taxes. So your taxes could be significantly higher or lower depending on the area.

At a 20% down payment you're looking at $134,000 right out the door. I came up with a rough estimate of around $2,450 per month total, not including taxes. You will need to add in the taxes and then you'll get a "true" actual monthly out of pocket total.

E-man says

My partner and I did some fancy calculations today. If history is any indication, we will turn our $200k investment in real estate today to $1.2M -$1.4M in 10 years. Although our model is relatively conservative, there were a couple of ASSumptions that went into the calculations. We'll find out in 10. :)

Care to elaborate? $200k investment in a SFH, 4-plex, ... ? What zip? Are you still purchasing things on the courthouse steps or going another route?

Actual value is something like half a million:

/calculator.php?uaddr=%2C+&rent=3%2C500&price=747%2C900

The extra $250K would be just a gift you're making to the sellers and the agents.

Actual value is something like half a million:

/calculator.php?uaddr=%2C+&rent=3%2C500&price=747%2C900

The extra $250K would be just a gift you're making to the sellers and the agents.

BUT WE HAVE TO BUY NOWWWWWW! We will be priced out FOREVER, and condemned to live in rentals with rapists and chronic public masturbators looking in our childrens' windows!

It's all good since my partner and I will always be employed and get 15% raises every year, and if we don't we will just squat for 2-4 years! Borrowing my way to wealth is as easy as 1...2...3!

I'd wait till after the election....period