Misc Aquatera

[dsilvar]

And the fact that the recent growth in prices is unsustainable, by any measure and study. I would say her statements are more accurate than anything in the above scenario ...

I agree with much that has been said..and I would not invest $700K in the current real estate market. However, historically real estate has done well over time and there is no reason not to take advantage of these statistics. Ergo.

"From the start of 1980 to the end of 2004, home sale prices increased 247%. "

http://www.forbes.com/realestate/2005/05/27/cx_sc_0527home.html

..there is also some risk involved with index stocks, much greater than real estate, despite the quoted appreciation.IMHO.

SHELLY...my "tar" is the only bad investment I have in my life (a no brainer, really)...but at 350HP its a satisfying blast for a 45 year old trying to relive his youth.

 

[Smiling JOe]

SHELLY...my "tar" is the only bad investment I have in my life (a no brainer, really)...but at 350HP its a satisfying blast for a 45 year old trying to relive his youth.

I am disappointed. You were supposed to buy this Hennessey Venom 800 Dodge Viper which produces 830 HP

for your mid-life crises.

 

[John R]

I
"From the start of 1980 to the end of 2004, home sale prices increased 247%. "

http://www.forbes.com/realestate/2005/05/27/cx_sc_0527home.html



SHELLY...my "tar" is the only bad investment I have in my life (a no brainer, really)...but at 350HP its a satisfying blast for a 45 year old trying to relive his youth.

with the economy the way it is, i bet the price of widgets increased the same amount over the same period. and real estate around here has increased 130%+- over the last 5 years, no?

i too am 45 but relive my youth in

 

[Smiling JOe]

I love it! Is it 4wheel drive?

 

[John R]

I love it! Is it 4wheel drive?

the syncro and 4wd stickers didn't give it away? ;-)

 

[SHELLY]

However, historically real estate has done well over time and there is no reason not to take advantage of these statistics. Ergo.

"From the start of 1980 to the end of 2004, home sale prices increased 247%. "

Let's all get together in a circle and chant:

Past performance is not an indication of future results UM...UM...UM...

"One of Warren Buffett's early partner letters (with updated numbers) provides a great example of the irrational returns of today's real estate market. Back in 1636, the Dutch purchased Manhattan Island for $24 worth of glass beads. In 2004, the assessed value of all the properties on Manhattan was $186 billion. What a steal, right?

Well, hang on a minute. Do you have any idea what kind of annualized return you'd need if you wanted to turn that measly $24 into $186 billion? Just 6.37%. Real estate, or any other investment for that matter, will not increase at 20% per year for very long. Eventually, reversion to the mean kicks in."

(TF Tampa was spot-on: The math and assumptions used in the "feasible scenario" for 700K condo were far from feasible)

 

[Pirate]

I don't know where you guys are coming up with 20 percent a year or 130 percent in 5 years but most properties I have watched in this area had increased more like 50-70 percent per year for the past 5 years, some properties much higher. This is the reason for the adjustment that is currently taking place. I know some of you were in the area in the late 70's when you couldn't give condos or even houses away. Prices dropped and stagnated for years then finally rebounded. The prices were then fairly constant (average increases) from the early 90's until around 99. If you're happy with 6-7 percent a year and agree thats the expected increase in value you should be ready for a rough ride to get back down to those levels.

Mortgaging a beach property with no money down isn't an investment by the way, it's like buying stocks on 100 percent margin. :scratch:

 

[dsilvar]

Past performance is not an indication of future results UM...UM...UM...

Do you have any idea what kind of annualized return you'd need if you wanted to turn that measly $24 into $186 billion? Just 6.37%.

(TF Tampa was spot-on: The math and assumptions used in the "feasible scenario" for 700K condo were far from feasible)

Well..I don?t know really, but..its OM...OM...OM.. haven?t you tried transcendental meditation? chant to calm your soul after a wee bit o' weed? Well now..

The drama and magic of compounding is pretty trite anymore..true but nevertheless trite. A little bit different with real property valuation.

Agreed that real-estate will not sustain itself at 20% appreciation rate ad infinitum and agreed that past performance is no indicator, but from what I've seen, for me, real estate has done better than 11% return for the last 25 years, consistently.

We can use a more real scenario..A Condo for $300K..3 bedrooms 2.5 baths can earn as a rental quite easily $36,000 a year..that?s more than a 11% return not even talking equity appreciation however small.

C'mon Shelly..there is money to be made here..and with values getting lower it may be time to load the truck up again...and if one thinks widgets can appreciate just as fast.. one should give them a try!

I have never seen any real estate holding become a 'penny' stock and fall off the face of the earth in terms of valuation.

 

[Pirate]

36k rental minus:

12k management
5k property taxes
3k insurance
24k mortgage (no money down of course)
2k utilities
3k maintenance

I am being generous but you are huge negative cash flow if you mortgage and the return on cash is ridiculous. Biggest problem is a 300k condo probably will generate more like 20k in rental. 36k is more like a 550k condo then the cash flow gets nasty. I haven't seen anything in quite a while that will provide any rental return on the sowal market and I look alot. This really looks bad if there is no increase in value.

 

[dsilvar]

36k rental minus:

12k management
5k property taxes
3k insurance
24k mortgage (no money down of course)
2k utilities
3k maintenance

I am being generous but you are huge negative cash flow if you mortgage and the return on cash is ridiculous. Biggest problem is a 300k condo probably will generate more like 20k in rental. 36k is more like a 550k condo then the cash flow gets nasty. I haven't seen anything in quite a while that will provide any rental return on the sowal market and I look alot. This really looks bad if there is no increase in value.

Woah..just a bit.. You are INVESTING $300K of your money..not borrowed and manage and maintain the unit yourself. Rent for 12 weeks at a minimum..not hard to do. IMO.