Want to Move to Las Vegas?

[notes1]

the debate is about whether renting is better than buying, over the 3 year time period you choose to rent. not about investing in other alternatives.

if r/e increased 30% over 2 years, i would guess, it went up even more over 3 years. these gains could be tax free. and, you paid $32k in rent.

it is admirable that you donate 50% of your gambling earnings to charity. is this a substantial amount?

[billryan]

I get the feeling some don't understand how mortgages work. A 30 year mortgage is broken down into 360 payments. Payment one consists of 359 parts interest and one part principal. Payment 2 is 358 and 2.
After fifteen years, the payments are 180 parts interest and 180 parts principal. Payment 360 is no interest and 360 parts principal.
So if you take a 200,00 mortgage and pay 1,000 a month for three years, you had laid out $36,000 but only paid about 1,000 in principal.
Some mortgages also contain early payoff penalties so if you sell after a couple of years you will have a fee you need to pay off.
My friend in Summerlin bought his house in 2006, with a horrible mortgage that let him pay interest only for ten years,double payments for ten and a balloon at the end of 15. His plan was to refi before the ten year mark but his house was underwater. He's some twenty months from his balloon payment and it's still underwater. His kids have grown and mostly moved out but he is stuck there, unable to refinance or downsize. He is hopeful the bank will renegotiate rather than foreclose. These mortgages were very popular pre2008 and many are starting to come due.

[billryan]

the debate is about whether renting is better than buying, over the 3 year time period you choose to rent. not about investing in other alternatives.

if r/e increased 30% over 2 years, i would guess, it went up even more over 3 years. these gains could be tax free. and, you paid $32k in rent.

it is admirable that you donate 50% of your gambling earnings to charity. is this a substantial amount?

No, you are missing the point. The question, to me, is what is a better use of $200,000. My return, (money earned minus rent spent, ) is real and is fungible. It is real and higher than the 6.5% a year you keep talking about.
As far as my donations go, St Judes won't be using my donations for a new wing anytime soon.

[notes1]

the debate is about whether renting is better than buying, over the 3 year time period you choose to rent. not about investing in other alternatives.

if r/e increased 30% over 2 years, i would guess, it went up even more over 3 years. these gains could be tax free. and, you paid $32k in rent.

it is admirable that you donate 50% of your gambling earnings to charity. is this a substantial amount?

It is real and higher than the 6.5% a year you keep talking about.

point out where i EVER mentioned a 6.5% return rate on anything.

[notes1]

seems appropriate that during this dem debate season, where each candidate is trying to one up the other, over how much free stuff they can give away, that our resident liberal, would try to rehash the mortgage loan problems of the early to mid 2000's.

i do not believe almost any of the stories that home buyers/borrowers tell about the go-go days of home buying. most of these are just lies. many home buyers were greedy, they spent more than they could afford, they borrowed more than they could afford, they lied on their mortgage applications. they wanted the lowest payment possible, they opted for interest only loans. they were greedy and/or stupid and many are lying to cover up their mistakes. maybe, your friend falls into this category.

the banks were also greedy, but no one held a gun to anyone's head to apply for a mortgage. all of this happened under the watchful eyes of the federal reserve, which kept interest rates too low (just like now) and did not regulate the banks, which are under their mandate.

the left and the media have been trying to sell the idea that most borrowers were mislead. they are only ones who believe this garbage.

[billryan]

What do you think a 30% return in three years minus commissions and expenses comes out to?
200,000 house increases 30%. So if you get top dollar you will get $260,000. Did you pay taxes those three years? One percent is $2,000 a year for three years. That leaves you with $254,000. You didn't sell the house without real estate agents so let's knock off $13,000. Now you are at $241,000. You can't own a house without some out of pocket expenses so let's say $2,000. Leaving you $39,000.
$39,000 on -200,000 in three years equals $13,000 per year.
$13,000 on $200,00 equals 6,500 per year on each 100,000 invested.
What is the rate of return on those numbers? 6.5 annually.
You keep talking about a hypothetical 30% increase. I'm showing you how that gross number becomes a net number. Did the stock market return more than 6.5% per year for the last three years?
In real estate, you want a one percent a month return. That covers your expenses and gives you a small profit. I'm greedy. I like a two and a half percent return per month on real estate, since they don't pay dividends. A few great investments beats a bunch of mediocre ones.

[billryan]

seems appropriate that during this dem debate season, where each candidate is trying to one up the other, over how much free stuff they can give away, that our resident liberal, would try to rehash the mortgage loan problems of the early to mid 2000's.

i do not believe almost any of the stories that home buyers/borrowers tell about the go-go days of home buying. most of these are just lies. many home buyers were greedy, they spent more than they could afford, they borrowed more than they could afford, they lied on their mortgage applications. they wanted the lowest payment possible, they opted for interest only loans. they were greedy and/or stupid and many are lying to cover up their mistakes. maybe, your friend falls into this category.

the banks were also greedy, but no one held a gun to anyone's head to apply for a mortgage. all of this happened under the watchful eyes of the federal reserve, which kept interest rates too low (just like now) and did not regulate the banks, which are under their mandate.

the left and the media have been trying to sell the idea that most borrowers were mislead. they are only ones who believe this garbage.

Does this rant have anything to do with anything? Has anyone broached the subject of greedy bankers?
I brought up the interest only loans to remind people that many of those toxic mortgages are still out there and are a ticking time bomb.

[OTABILL]

To put things in perspective. My wife and I bought a house in metro Phoenix in 2007 and sold it in 2018. We lost a significant amount of money. Of course we sold our houses in 2007 for a profit though both of us would have done better selling in 2005. In 2008, 2009 folks were abandoning houses, foreclosures skyrocketed, etc. in this area. How you made out financially depended upon when you bought or sold. My dad once told me you buy a house to live in, not as an investment. My dad's philosophy was spot on for me. Incidentally, wife and I know folks who got clobbered in metro Vegas as well. It's one thing if you buy a house and stay in it for decades. It probably will appreciate depending on where it is located. In the past I have had my differences with BR but generally agree with him in this instance. Glad it has worked out for him.

[billryan]

The problem with Vegas is it had a unprecedented boom followed by a horrendous crash. Houses that in 1999 had been under $100,000 were pushing $300,00 and everyone who lived here was trading in their smaller houses for McMansions. Even people who had long owned free and clear started using their houses for ATMs. Banks were offering no down payment loans, which means people had no dog in the fight and just walked away when things went bad. Turns out insisting people put down significant amounts of their own money was a good idea after all.
I'm against mortgages in most cases, but buying a house wasn't the right move for me. I'd have loved to lease the place in Bisbee instead of buying it but the owner didn't go for it. Ironically, I first saw it advertised as available for lease and the photos were several years old, as it was from the previous sale. The new owners put a lot of money into it and it was much nicer than the old photos.

[notes1]

oatabill, i agree with your father's philosophy. it was sound advice back when he gave it to you and it still is. unfortunately, during the go-go years, it was not headed, too many thought they were r/e experts and prices would go higher forever. what bothers me is that for the past 10 years or so, the story that has been written was that buyers/borrowers were mislead. rather, many folks used their homes as piggy banks to fund lifestyles they could not afford, they refinanced at every opportunity and spent the paper gains on cars, vacations, home improvements, over priced college tuition, etc.

if society is to ever learn from this, the true story must be told. if not, it will happen again.