Thanks for sharing. Two quick comments for discussion
Good article. Thanks for sharing. Two quick comments for discussion:
1. Economy and Finance are generally two different things. That's why most economists got their "predictions" wrong. In economy case, there is general supply and demand (when price up, demand decreases and supply increases); but in finance (or investment) case, there is no general supply and demand (when price up, demand increases and supply sometimes decreases (since some people will be hoarding hoping a better price)). When tulip was regarded as a flower, it belonged to the usual "economy" category, but once it became an investment, it generated one of the largest bubble in human history. In our recent history, before 2002, most people view houses as an economy item (somewhere to live), but during 2003-2006, many people view houses as finance (investment) item.
2. For the next 20 years, I don't know what the inflation will be (tend to think we will have no inflation or hyperinflation for a long time), but nevertheless, you seem to ignore the Peak Oil effect. No matter you like it or not, peak oil is going to happen in the next 20 years, if not already. This will be probably the single most important effect on housing.
No, I always use 80% FIXED RATE loan. I could use HELOC for down payment though, that would pay it off quickly.
Using 100% HELOC to buy a rental house is not a sound idea. Even if you do this to win the bid for the house initially, you want to convert a HELOC based financing to a FIXED rate financing.
Rental busienss needs stability in financing and in tenant behavior.
说得对!我大多是用Cash买下出租房,然后Refinance, cash out.长期投资用长期贷款,不能用短期。但短期卖掉的除外。不过,现在Cash out恐怕要困难,depending on lender.
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评论与问题:
Very Thoughtful Post, I've already done the researches
for a few very healthy metro areas like DC region, the pricing future for real estate will be even greater than last 30 years. Because metropolitan population growth has reached a critical mass that's going to put a tremendous pressure on urban land supplies. Compounding the shortage of land supplies in the metro area, government zoning laws will be getting more stringent. Next 30 years will see an explosive appreciation of home prices. But it won't happen in a gradual way, but in a stair case pattern. There could be a slow and stagnant growth for many years followed by a sudden escalation of prices. The exact curve won't be predictable at this moment.
Having said that, NOT all areas will experience the same kind of growth potential. Many slow growth areas with relaxed land supplies and relaxed zoning laws may not see a high speed of appreciation.
I read one real estate book last year. There is one chapter about lease to own option. It suggested setting option exercise price as: Current market price + 2 X CPI (because you don’t know when the tenant will exercise the option, right?) Is it a good benchmark?
I have a follow-up question about your previous post. When you build a house from scratch, do you use a GC or you act as a GC yourself? If you hire a GC for the project, how would you find a good one and how much profit margin (in percentage) would you give up for his service?
It might be difficult to most people now. But still have chance depending on your situation (credit, financial and relationship with the banks, especially local banks that they don't need to sale the notes)
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评论与提问:
不好意思, 问一下mobile home is placed in mobile park so no land value at all. I can't understand why you said you like that land.
There are 2 kinds of placing ways for mobile home. One is put in a mobile park, as you said. And the mobile home is a personal property. Another way is put in a land. After you get registed in County, it will be attached to land and becomes a real estate together with the land, which is what I said in my story.
Hi Rusan, one question regarding the reasons to 竞投第二按揭拍卖 since the first mortgage may foreclose the house next month,right? then you will lose the money you used for 第二按揭拍卖.
In your story, you took the risk buying the second mortgage foreclosure. Is this just a story? or there are valid reasons to take risks to buy seond mortgage foreclosure.
Well,这么说吧,我前面的回答是“政治正确”。根据税法,从IRS的角度,你一旦有Rental income,你就应该报成投资物业。你不报你的Rental income,就当你依然还是住在那里,IRS可能也是不容易知道的。另外,作为Rental 物业,你可以有当年物业的折旧的税务优惠。再加上维修费用,利息,就算你在rental income里面不做任何手脚,也大多都是negative income 了。很多人这么做是不奇怪的。当然,这就看你了。我的意见仅供你参考。
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评论与提问:
Hi 如山 What is HELOC? If you pay cash, the rent will be your income and you have to pay tax. but if you get a loan, then the rent will be diminished by mortgage. no income, no need to pay tax, it that right? which way is better? Seasy