Anyone feel like they missed out by not buying real estate?

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TacoLover
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Re: Anyone feel like they missed out by not buying real estate?

Post by TacoLover »

trojans10 wrote: Sat May 27, 2023 9:46 pm As a single male and age 33 - I feel like I missed the opportunity of a lifetime to buy my first home. Today I went about an hour out of town to look at some homes where I can potentially settle down. Prices were 470k, 550k, and 650k. Interest rates hit 7% the other day. So my payments would come out to 3.2-4.3k per month. Meanwhile, everyone who bought a few years back is barely paying 1k a month. It really does feel horrible buying right now - i'm legit scared... but if the rates do go down - its only going to send a frenzy back into the market - and inflating prices again... so i'm not really sure how or when the market could collapse while i wait on the sidelines - could end up waiting too long - once again....
"Marry the house. Date the mortgage."
TacoLover
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Re: Anyone feel like they missed out by not buying real estate?

Post by TacoLover »

NiceUnparticularMan wrote: Tue Feb 07, 2023 4:28 pm
Sax32 wrote: Tue Feb 07, 2023 3:42 pm In 2014, we put down $50k on the duplex, not 180k. The 200k we netted was in 2022, when the Dow lost 20%. If we would have taken that 50k in 2014 and instead invested in the S&P 500, we'd had a return of 10.58% and 121k. So we did much better in real estate on that investment. Also, you missed the fact that tenants paid the principal of the mortgage
I have $50,000 in the S&P 500 at about $130.5K as of now, although I suppose it depends on when you invested in 2014:

https://www.portfoliovisualizer.com/bac ... sisResults

You also didn't mention any closing costs or other transaction costs for the initial purchase, which should be added to your hypothetical stock investment for comparison purposes. Like, for example, if you had 5% closing costs on the $180K, that would be another $9K, and $59K invested in the S&P 500 in 2014 is now about $154K.

https://www.portfoliovisualizer.com/bac ... sisResults

But that said, it appears this was a successful use of leverage to increase your real estate returns above that of stocks. That is definitely a possibility, but of course leverage also increases the downside risk if something goes wrong instead.
Also we had interest tax benefits and depeciation. The Gov't loves to give real estate investor tax breaks, just ask Donald Trump. :)
Also stock investors, of course. Reinvested earnings become unrealized capital gains, which are then not taxed at all until sale, and when finally taxed given favorable treatment. People will note this helps moderate "double taxation" of the pre-tax company revenues, but of course then companies are also frequently able to get all sorts of tax subsidies, credits, deductions, and so on at that stage.

So yes, real estate investors get a lot of tax breaks, but so do stock investors.
Now to be fair...
If you're going to use leverage for real estate it seems fair to use leverage for the market comparison...

UPRO Portfolio Visualizer year to year 2014-2022: 50K goes to 209K.
TacoLover
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Re: Anyone feel like they missed out by not buying real estate?

Post by TacoLover »

NiceUnparticularMan wrote: Tue Feb 07, 2023 10:38 am
Sax32 wrote: Tue Feb 07, 2023 10:20 am 2022, was a terrible bear market year, one of the worst since the Great Recession with the Dow losing over 20%, while real estate flourished, with rents staying very high and home values out of this world with buyers out the door. We sold both rental properties and made a killing. We paid our capital gains and depreciation back and was able to come out ahead 200k. The year we first bought was 2014, the first house for 180k and sold for 375k, it also paid all of the expenses and more.
If you bought $180,000 of S&P 500 in 2014, today it is worth about $470,000. Even back in September it was worth about $411,000:

https://www.portfoliovisualizer.com/bac ... ion1_1=100

But sure, if you get things like the locale and timing right and buy low and sell high, you can get nearly stock-like returns.

If you get anything wrong you can do significantly worse.

A diversified portfolio of properties reduces the chance you will get certain things wrong with all your properties, but a localized portfolio of only a handful of properties exposes you to what is typically known as idiosyncratic risk, for which there is no expected risk premium.

But risks don't always materialize, of course, and specifically people who bought rental residences in 2014 and sold in 2022 usually did OK--not necessarily as well as stocks did, though.
NiceUnparticular - your example is probably better... if you borrowed 180K and got to 470, minus the charge for borrowing (the mortgage if you will)... that's probably the better comparison.
miamivice
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Re: Anyone feel like they missed out by not buying real estate?

Post by miamivice »

I'm late to the party, but...

I was seriously wanting to buy vacant land (large lots of undeveloped acerage) in desireable part of the country for many years. My Dad and I agreed on a particular parcel prior to the pandemic. Due to the rural nature of this property, the desirability greatly grew during the pandemic and the value of the land is 5x today what I paid for it just a few years ago.

I'm not sure today's high price will stick or not, but I plan to build a a forever home on it someday and thus am not greatly concerned about the FMV of the property.
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HanSolo
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Re: Anyone feel like they missed out by not buying real estate?

Post by HanSolo »

Yes. I missed out on plumbing problems, mowing the lawn, shoveling the sidewalk, etc. I'm glad I missed out.
windaar wrote: Mon Jan 02, 2023 8:26 pm I guess that's like missing out on not buying APPL in 1980.
That's AAPL. Unless you own an apple farm or something.
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hudson
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Re: Anyone feel like they missed out by not buying real estate?

Post by hudson »

alex123711 wrote: Mon Jan 02, 2023 8:16 pm As it has gone up so much, a lot of areas are up well over 50%, some over 100% in the last 2-3 years, and due to leverage those cash on cash returns are even higher, much higher actually. Is there a case for real estate as an investment?
Old discussion and it's probably already been said.

A case for real estate as an investment?
Larry Swedroe said yes in his book The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly. https://www.amazon.com/Only-Guide-Alter ... 1576603105
His list from a 2007 discussion: viewtopic.php?p=23364#p23364

Personally I'll pass on all real estate except my house.

I helped take care of three and sometimes more properties over the years. I was usually the go-to guy...unpaid. It was fun while it lasted as I liked the work and I wasn't writing the checks. I learned that buildings and land take a lot of time, and no-fun emergencies pop up at the worst times. I also learned that no good deeds go unpunished. From this, I decided that I would never own any real estate that I wasn't living on.

I have several friends who only invest in real estate....no stocks and no fixed. Sometimes it's tempting to copy them, but they have the personality for it; I don't. I'd rather "rent" my money to banks, credit unions, or the to the US.

Bottom Line: Real estate is a great investment for some. There's one way to find out. :)

There's property tax on real estate; on treasuries; taxes only on the payouts (except for TIPS.)
Last edited by hudson on Wed Nov 29, 2023 8:51 am, edited 2 times in total.
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Gennaro Dillinger
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Re: Anyone feel like they missed out by not buying real estate?

Post by Gennaro Dillinger »

alex123711 wrote: Mon Jan 02, 2023 8:16 pm As it has gone up so much, a lot of areas are up well over 50%, some over 100% in the last 2-3 years, and due to leverage those cash on cash returns are even higher, much higher actually. Is there a case for real estate as an investment?
Not at all. There are times many others feel not being in the market they missed the boat. That's how it goes. There are a GREAT many opportunities I missed, as long as you make a couple right decisions and your comfortable, happy that's enough.
bighatnohorse
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Re: Anyone feel like they missed out by not buying real estate?

Post by bighatnohorse »

"Timing" is everything when buying real estate IMO.
Those who bought in 2006 when prices were ridiculous lived to regret it.
Those who bought in 2010 - happy days! for them.

I bought a foreclosure (as in investment) in 2010 and my wife asked "Are you sure that we're doing the right thing?"
No, I wasn't "sure" but my confidence was strong.
Now I wish that I had doubled down and bought even more.

Many moving parts. Rentals are now under management - totally hands-off - and they add true diversification to a net worth portfolio.
Best of luck to you in your quest.
Marseille07
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Re: Anyone feel like they missed out by not buying real estate?

Post by Marseille07 »

trojans10 wrote: Sat May 27, 2023 9:46 pm As a single male and age 33 - I feel like I missed the opportunity of a lifetime to buy my first home. Today I went about an hour out of town to look at some homes where I can potentially settle down. Prices were 470k, 550k, and 650k. Interest rates hit 7% the other day. So my payments would come out to 3.2-4.3k per month. Meanwhile, everyone who bought a few years back is barely paying 1k a month. It really does feel horrible buying right now - i'm legit scared... but if the rates do go down - its only going to send a frenzy back into the market - and inflating prices again... so i'm not really sure how or when the market could collapse while i wait on the sidelines - could end up waiting too long - once again....
If you say everyone who bought a few years back is barely paying 1k a month, why didn't you buy one then?

7% today is definitely high and I understand your fear, but the high rates would also mean house prices are flatlining or coming down in some markets. And presumably you have accumulated more money to increase the down payment which cuts down your mortgage amount.

At the end of the day, there's no time period when buying a house was easy peasy. If you really want a house, you should buy one regardless of market conditions.
BizarroJerry
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Re: Anyone feel like they missed out by not buying real estate?

Post by BizarroJerry »

I sure hope at some point prices start to come down to reflect the rate increase. At this point, I can only afford a 320k house… and around me those are near impossible to find. I recall reading the markets are still about 33% overpriced, all I am hoping for is a 10-20% correction, but that has yet to be seen. Prices and rates keep rising. Those I know are stretching to buy homes where the monthly payments are 50-60% of their monthly take home pay. I refuse to normalize this.
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Charles Joseph
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Re: Anyone feel like they missed out by not buying real estate?

Post by Charles Joseph »

No I do not.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
runswithscissors
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Re: Anyone feel like they missed out by not buying real estate?

Post by runswithscissors »

hudson wrote: Mon May 29, 2023 8:08 am
Bottom Line: Real Estate is a great investment for some. There's one way to find out. :)

This.

Real estate can be far superior as an investment for those that have personalities that fit real estate investing. For the vast majority of people, real estate investing is work-intensive, overwhelming, stressful and anxiety-inducing to the point it's just not an attractive way to invest. But for those that require (some) control over the performance of their investments, the sacrifice (which ideally would cost just a tiny bit of sanity) can yield returns in spades.
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alex123711
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Re: Anyone feel like they missed out by not buying real estate?

Post by alex123711 »

bighatnohorse wrote: Mon May 29, 2023 10:47 am "Timing" is everything when buying real estate IMO.
Those who bought in 2006 when prices were ridiculous lived to regret it.
Those who bought in 2010 - happy days! for them.

I bought a foreclosure (as in investment) in 2010 and my wife asked "Are you sure that we're doing the right thing?"
No, I wasn't "sure" but my confidence was strong.
Now I wish that I had doubled down and bought even more.

Many moving parts. Rentals are now under management - totally hands-off - and they add true diversification to a net worth portfolio.
Best of luck to you in your quest.
That's the problem, it seems unlike shares where time in the market beats timing the market real estate is the opposite
AlwaysLearningMore
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Re: Anyone feel like they missed out by not buying real estate?

Post by AlwaysLearningMore »

RedDog wrote: Mon Jan 02, 2023 11:07 pm I feel very good about owning a SFH portfolio.

BTW…the concerns expressed by real estate investing naysayers is real but exaggerated.
+1
I come at this from the commercial real estate perspective. Those who are not temperamentally suited or financially equipped to invest in real estate clearly should not do so.
Last edited by AlwaysLearningMore on Wed May 31, 2023 8:24 am, edited 1 time in total.
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DiceGames
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Re: Anyone feel like they missed out by not buying real estate?

Post by DiceGames »

renting in a VHCOL of city as a 35 yo single. 555k retirement, 270k taxable. On a decent path but don’t feel rich. I could cash out most of taxable and get the $1.5m house I want, but wouldn’t be able to save the $70k+ I plan to shovel into taxable this year. House will come when life dictates it (kids?). Otherwise OK renting and saving more for 3-5 more years.
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max12377
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Re: Anyone feel like they missed out by not buying real estate?

Post by max12377 »

I do. But I accept it because it was my choice to rent for longer than I probably should have. In short, I have owned a couple houses over my lifetime and the last one was a money pit that I could not wait to get rid of. It put me off from owning a house as I was spending an inordinate amount of my time fixing things, pulling weeds, ad infinitum. I am single, no kids, 50+y/o male who likes to live as simply as possible.

The last couple years of inflation really hit me financially since, looking in the rearview mirror, I could easily have had a paid off house years ago, a rental or two, or jumped on a 2 percent mortgage when they were all the rage. I held off primarily because I was convinced this housing euphoria was a bubble in the making. I am not so sure that is the case now as I failed to make the connection to inventory being so depleted.

But it is water under the bridge.

Fortunately, I am still financially in good shape. It's just that I could have been in better shape. But I could have went all in on Tesla too..(my friend did that and made a killing.. I don't have the stomach for it)

In sum, I have consistently been investing and saving and still have managed a high enough net worth to retire and/or buy something if/when I want to.

For now, I am just going to keep renting until (maybe) things swing in my favor. I have a realtor friend that I talked to recently that I will check in with but I am in no hurry. Until then, I keep adding my extra $$ to a 70/30 stock bond portfolio and go about my life.

I think the important thing to do is to look for opportunities ahead of you rather than the ones you may have missed in hindsight. So I focus on what I can do now. When my mind starts to thrash me for being "such an imbecile", I nip it in the bud and focus on where my opportunities are now. If you are looking back you too often will miss what is ahead of you.

(For now, my solace is that I have nothing tied up in a house so all my $$ are sopping up those juicy yields :moneybag Just kidding)

-Max
AlwaysLearningMore
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Re: Anyone feel like they missed out by not buying real estate?

Post by AlwaysLearningMore »

alex123711 wrote: Mon Jan 02, 2023 8:16 pm As it has gone up so much, a lot of areas are up well over 50%, some over 100% in the last 2-3 years, and due to leverage those cash on cash returns are even higher, much higher actually. Is there a case for real estate as an investment?
OP, are you referring to commercial real estate, rental single-family homes, or rental apartments complexes? Because those types of investments are a different calculus than simply an investor's home.
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.* | FIRE'd July 2023
THY4373
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Re: Anyone feel like they missed out by not buying real estate?

Post by THY4373 »

TacoLover wrote: Sun May 28, 2023 9:47 pm
"Marry the house. Date the mortgage."
It is a clever saying but honestly nobody has any idea of when mortgage rates may fall. I bought a place last November and while I would love for rates to fall I only bought because I was comfortable with the current mortgage rate/payment.
TacoLover
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Re: Anyone feel like they missed out by not buying real estate?

Post by TacoLover »

THY4373 wrote: Wed May 31, 2023 10:52 am
TacoLover wrote: Sun May 28, 2023 9:47 pm
"Marry the house. Date the mortgage."
It is a clever saying but honestly nobody has any idea of when mortgage rates may fall. I bought a place last November and while I would love for rates to fall I only bought because I was comfortable with the current mortgage rate/payment.
I don’t disagree but I don’t think mortgage rates are going significantly up from here. And if you have a 30 y fixed there’s plenty of time over 30 y to refinance.
Caleb4387
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Re: Anyone feel like they missed out by not buying real estate?

Post by Caleb4387 »

No. But my mom regrets selling a property. In the late 90s we moved near Carrabelle FL. My parents but a modest house for 30k a 3% interest, 3 month grace period for late payment. Few years later after some events, divorce some repairs needed etc, she got fed up with shady contractors etc. Sold it and we moved north to the Alabama line. A few years later it sold for 300k bout 12 years after initial purchase. For whatever reason the house was moved and the property has all grown up now and it remains undeveloped. It sold again last year for a tick over one million.
leland
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Re: Anyone feel like they missed out by not buying real estate?

Post by leland »

As a renter in the PNW while it's worked out well enough for my finances my better half would rather own and that makes me feel like yes, I've missed out as opening prices aren't fun right now. I've also missed out on all the associated ownership headaches and don't mind that one bit.
SGM
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Re: Anyone feel like they missed out by not buying real estate?

Post by SGM »

We have farm property. We are down to one resident im a duplex. For a while we had a criminal move in and could not get rid of him until we condemned the building, It is now used for farm equipment.

We have 3 vacation houses up north and they are unrented. We plan on selling one.

The farm has an issue with a neighbor dumping waste on the property. The farmer who rents our fields is working on this problem.
A tree surgeon owes us and takes care of those problems. A hunter with a seafood business guards a lot of the property free from
trespassing. He brings us a lot of seafood.

Several people do favors for us and we treat them monthly with fried chicken. i don't have to lift window air conditioners. We have no salaried employees anymore which is a blessing. The farmer has an open offer to buy our farms. We have income from a cell tower and a radio tower. We have good well water. Taxes are lower for farm real estate. A friend will plow our driveway of snow, We like to give him a bonus at Christmas. He brings us fresh eggs and wild turkey breasts periodically,

Our vacation homes have lower real estate taxes than our neighbors as it is set up as a condo development... although there are 5 separate unattached houses.
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tony17112acst
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Re: Anyone feel like they missed out by not buying real estate?

Post by tony17112acst »

I DID invest in real estate starting in the late 1990's. Before I went to college, I determined that I'd buy real estate to rent out and retire early. Here are some random thoughts:

* After college, I invested and "retired" at age 33 (I still have 2 properties).
* It has made me about 3 million dollars working only 8 years at a full time job in my lifetime.
* Real estate has produced more millionaires in America than any other sector.
* Real estate has outperformed the market for the time I have been part of it.
* Example: 2 years ago I purchased a townhouse (in Harrisburg, PA) with $127k cash to rent out. It is now worth $175k = $48k increase 2 years later. After all expenses, I profit $850/month, so for 2 years, that's another $20k. That's a $68k increase on $127k in 2 years which is a 54% gain. In those 2 years, I have made one trip to the place for a dryer repair.

It works well because banks lend you money to invest. Wouldn't it be great if a bank lent you $1 million to invest in VTI for 10 years? That's why it works so well. Using the numbers above, your investment might be only $6k down on that townhouse and the rest borrowed, but you'll make $2k in cash in your 1st year after paying the mortgage (5% int rate assumed) too; that's NOT including the inflation rise on the property OR principle pay-down on mortgage payments! So that's 33% CASH RETURN on your CASH investment! Adding appreciation and monthly principle pay-downs, it's more like 55-60%!

Non-financial comments:
* Investing in very nice units attract very nice clientele and problems are VERY minimal - 95% small landlords don't understand this.
* Some personalities are not cut out for R/E investing.
* Learning electrical, plumbing, HVAC, etc. makes you even more $10,000's/year if you fix things yourself, but it's optional.
unwitting_gulag
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Re: Anyone feel like they missed out by not buying real estate?

Post by unwitting_gulag »

Home ownership is not an unalloyed boon. Risks are concentrated and profound. The many criticisms in this thread, are only too reasonable and true. I personally have done badly as a former homeowner, sold at a loss, and now rent.

Nevertheless, envy is acute, especially after recent years. Consider what is likely the plurality BH demographic: older people with considerable portfolios. In America, home ownership in this demographic is almost universal. Those of us in this demographic, who rent, are bizarre oddities. Is that psychologically easy? Not for me.

We debate here about the utility of bonds, whether international stocks will ever come back, what’s the lost-magic of small caps, growth vs. value. I have many regrets about having taken one or another stance, in my own investments, some from recency bias, others from too doctrinaire of an insistence. But in all of these things, one can readily console oneself, that these are esoteric… they only affect, in large measure, those who are already comfortable. This is a small portion of the general populace. But to have screwed up home ownership, and to then find oneself on the outside looking in, feels like an unconscionable blunder… because most people DO get it right. It takes a special kind of stupidity (mine) to [expletive] it up. And for the great many who did it more or less right? Yeah, I envy them!
avburns
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Re: Anyone feel like they missed out by not buying real estate?

Post by avburns »

Oh, I've felt that pang of "what if" about not getting into real estate earlier. Seeing how much the market has soared in the last few years, it's hard not to think about the missed opportunities. A couple of friends of mine made the leap a few years back, and the returns they've seen are honestly jaw-dropping. It's one of those moments where you kick yourself for not doing the same.

But from my own experiences, I've learned real estate isn't always as straightforward as it seems. I remember being really interested in a property a while back, but I hesitated, and then the market in that area didn't take off as everyone thought it would. It's a mix of timing, research, and sometimes, just being in the right place at the right time.

Now, I am researching a few options. I want to get a cottage near Winnipeg as a vacation house. I've got a few options from The Whiteshell Cottages, and they are near the Lake of Woods, a great and beautiful place in the center of nature. Given the fact that the zone there will develop very fast, I think that in a few years, the prices there will blow up.
Last edited by avburns on Fri Dec 01, 2023 7:33 am, edited 2 times in total.
ponyboy
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Re: Anyone feel like they missed out by not buying real estate?

Post by ponyboy »

Hindsight is 20/20. These topics come up all the time. Do you feel like you missed out when tsla was $1, or goog was $10, 2009 real estate crash. Its tiring.

No, I dont feel like I missed out on any investment in the past. I dont care. Its not how things work.
chassis
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Re: Anyone feel like they missed out by not buying real estate?

Post by chassis »

alex123711 wrote: Mon Jan 02, 2023 8:16 pm Is there a case for real estate as an investment?
No. Transaction and holding costs make principal dwelling real estate an unattractive use of capital, for people evaluating the rent-buy question.
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watchnerd
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Re: Anyone feel like they missed out by not buying real estate?

Post by watchnerd »

West Coast real estate in both SF Bay Area and the Seattle area has done very well for us since 2010.

Enough that we now live on waterfront property with beach ownership on Puget Sound with no mortgage.
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swaption
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Re: Anyone feel like they missed out by not buying real estate?

Post by swaption »

So much great advice on this site, but having been involved here from even before the start, this is an area where much so called wisdom has been horribly misguided. For at least a decade plus it was routinely accepted that a house is a bad investment, in fact there were those that went as far as claiming it wasn't even an investment. That was all nonsense. All investments are at their core are an inter temporal store of value for future consumption, either by you or by your heirs. A house merely does that far more directly by investing in prepaid lifetime of shelter. It is an investment that has various tax and inflation protection advantages. One can go on and on about "timing" being everything, but it is worth being reminded of a primary factor that gave rise to the mortgage crisis, the lack of a nationwide decline in home prices spanning back generations. No doubt it can happen, but it is also a mistake to be constantly living in fear of another "bubble". The expected return on capital invested in a house is very positive, but in part due to some level of risk, much of that is idiosyncratic and can't be diversified away via a portfolio. That is simply life.

I'll also add that any calculations related to the above inevitably miss certain intangible factors, which just because they are intangible doesn't necessarily mean they don't have value. I have lived in my house for 20+ years, it has been the home where I have raised my children from babies to graduating college. To many that has value as compared to the alternative of renting, in much the same way that anything that is better has value, be it a nice restaurant or a German sports car. If something has value to you, then by definition it is a part of your return.
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Sandtrap
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Re: Anyone feel like they missed out by not buying real estate?

Post by Sandtrap »

2010 was the last of the "low hanging fruit " for R/E income property. Newly renovate 2 story 12-18 walkups were going for 8-900,000 each in the Scottsdale-Tempe corridor. I was considering buying 3-4 of them. There was also a 31 unit in Tempe 2 blocks from ASU.
Shucks
I took too long to decide and they were all snatched up by Canadian investors.
prices now are 3-4x what they sold for then

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harrychan
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Re: Anyone feel like they missed out by not buying real estate?

Post by harrychan »

Sort of.

We bought our 'dream home' early back in 2010 when many of our peers went the townhouse / condo route as it was slightly cheaper. Many of them have since kept their first home and bought their 'dream home' albeit in not so nicer neighborhoods and at a higher price. It would've been nice to have a 2nd or 3rd property to leave to the kids when they grow up but I am satisfied with our current home.
This is not legal or certified financial advice but you know that already.
capen2468
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Re: Anyone feel like they missed out by not buying real estate?

Post by capen2468 »

Everyone misses out on something at sometime . Be happy about the things you didn’t miss out on
pk_investor
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Re: Anyone feel like they missed out by not buying real estate?

Post by pk_investor »

A couple of points

* More than return aspect, i do it for diversification. I don't trust any mutual fund company (even vanguard) / account security / financial system enough to have 100% of my assets in mutual funds.

* Real estate investment thru rental homes is not passive even with "full-service" property management company. As many said, "it is a business". I expect things to go wrong and let my property management company do their work to help me solve those problems.

* The illiquidity in Real estate has infact helped me with the "Buy-and-hold" discipline :)
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