wrote in message
ups.com...
Here's the real life example:
I paid $825k for the current home on the water.
The last house to sell just like mine sold for $1.225m.
After realty and closing costs, I'd clear about $360k

I sold my old house for $560k last year (not on the water)
The last house to sell like my old one just sold for $625k.
If I bought the new house for $625k, after closing costs, I'd be in it
for
under $650.


So I would net a quarter of a million dollars if I sold my current home
and
bought my old one again.


That's profit, right?


*****************

No, it's merely the reorganization of numbers on the asset side of your
balance sheet. Even if your house was in investment, you haven't
realized a gain until you sell it. Your neighbor's sale didn't put any
money in your pocket. You need the house to live in. The amount of
money the house is worth is meaningless, as long as you are going to
personally consume the asset by taking it for exclusive use.

The good news is that if the average income in Nipples doubles in the
next couple of years, (is that likely?) your $1.2mm pad will be "worth"
$2.4mm. The bad news is that if you sell the one you've got, and don't
elect to lower your standard of housing, you'll simply have a higher
number attached to an asset you don't have the flexiblity to sell.

Now, it you had purchased *two* or more homes for $825k and sold oneof
more of them for $1.225, that $400k spread would indeed be gross
profit. You'd probably walk off with about $300k net after
commissions, cap gains taxes, local conveyance taxes, etc. Selling your
personal house, and immediately replacing it with one costing as much
or more, does not create "profit".


Another example for the slow and/or stubborn:

Chuck has $100k. He buys a house not on the water for $500k, and puts 20%
down. His mortgage is $400k. In one year, he sells the house for $575k.
He pays off the mortgage and the realtor, and walks away with $135k.


NOYB has $100k. He buys a house on the water for $1m, and puts 10% down.
His mortgage is $900k. In one year, he sells the house for $1.5m. He pays
off the mortgage and the realtor, and walks away with $510k.

They both decide to buy a new home next to each other. The purchase price
is $500k. Chuck puts $135k down, takes out a new loan for $365k. NOYB pays
cash...and uses the extra $10k leftover to buy a trailer for his boat...and
a new T-top, kicker motor, and fishfinder. The money that NOYB would
normally pay towards a mortgage on a home now goes towards buying a second
home in the mountains.

Chuck says "How the hell did that happen!?!?"

NOYB wrote:
wrote in message
ups.com...
Here's the real life example:
I paid $825k for the current home on the water.
The last house to sell just like mine sold for $1.225m.
After realty and closing costs, I'd clear about $360k

I sold my old house for $560k last year (not on the water)
The last house to sell like my old one just sold for $625k.
If I bought the new house for $625k, after closing costs, I'd be in
it
for
under $650.


So I would net a quarter of a million dollars if I sold my current
home
and
bought my old one again.


That's profit, right?


*****************

No, it's merely the reorganization of numbers on the asset side of
your
balance sheet. Even if your house was in investment, you haven't
realized a gain until you sell it. Your neighbor's sale didn't put
any
money in your pocket. You need the house to live in. The amount of
money the house is worth is meaningless, as long as you are going
to
personally consume the asset by taking it for exclusive use.

The good news is that if the average income in Nipples doubles in
the
next couple of years, (is that likely?) your $1.2mm pad will be
"worth"
$2.4mm. The bad news is that if you sell the one you've got, and
don't
elect to lower your standard of housing, you'll simply have a
higher
number attached to an asset you don't have the flexiblity to sell.

Now, it you had purchased *two* or more homes for $825k and sold
oneof
more of them for $1.225, that $400k spread would indeed be gross
profit. You'd probably walk off with about $300k net after
commissions, cap gains taxes, local conveyance taxes, etc. Selling
your
personal house, and immediately replacing it with one costing as
much
or more, does not create "profit".


Another example for the slow and/or stubborn:

Chuck has $100k. He buys a house not on the water for $500k, and
puts 20%
down. His mortgage is $400k. In one year, he sells the house for
$575k.
He pays off the mortgage and the realtor, and walks away with $135k.


NOYB has $100k. He buys a house on the water for $1m, and puts 10%
down.
His mortgage is $900k. In one year, he sells the house for $1.5m.
He pays
off the mortgage and the realtor, and walks away with $510k.

They both decide to buy a new home next to each other. The purchase
price
is $500k. Chuck puts $135k down, takes out a new loan for $365k.
NOYB pays
cash...and uses the extra $10k leftover to buy a trailer for his
boat...and
a new T-top, kicker motor, and fishfinder. The money that NOYB would

normally pay towards a mortgage on a home now goes towards buying a
second
home in the mountains.

Chuck says "How the hell did that happen!?!?"

Yeah, how DID that happen, when you've stated here that you have an
interest only mortgage? Not only did you NOT pay cash, you're not even
paying down the balance.

wrote in message
oups.com...

Yeah, how DID that happen, when you've stated here that you have an
interest only mortgage? Not only did you NOT pay cash, you're not even
paying down the balance.

LOL!

You really do get dumber by the day.

"Joe" wrote in message
news:7AnVd.51855$uc.46260@trnddc08...

wrote in message
oups.com...

Yeah, how DID that happen, when you've stated here that you have an
interest only mortgage? Not only did you NOT pay cash, you're not even
paying down the balance.

LOL!

You really do get dumber by the day.

Every time you think asslicker has reached his low point, he goes out and
proves he's got lots of room to spare.

He's the "KING"

Joe wrote:
wrote in message
oups.com...

Yeah, how DID that happen, when you've stated here that you have an
interest only mortgage? Not only did you NOT pay cash, you're not
even
paying down the balance.

LOL!

You really do get dumber by the day.

Really? You don't think that NOYB has an interest only mortgage? YOU
are the dumb one, JoeTechnician. He has stated just EXACTLY that, right
here.

wrote in message
oups.com...

Joe wrote:
wrote in message
oups.com...

Yeah, how DID that happen, when you've stated here that you have an
interest only mortgage? Not only did you NOT pay cash, you're not
even
paying down the balance.

LOL!

You really do get dumber by the day.

Really? You don't think that NOYB has an interest only mortgage?

That's not why he called you stupid. He called you stupid because you
failed to realize that you can build equity in a house even when you don't
pay down the principal...and then turn around and apply that equity as a
downpayment on your next house.

NOYB wrote:
wrote in message
oups.com...

Joe wrote:
wrote in message
oups.com...

Yeah, how DID that happen, when you've stated here that you have
an
interest only mortgage? Not only did you NOT pay cash, you're
not
even
paying down the balance.

LOL!

You really do get dumber by the day.

Really? You don't think that NOYB has an interest only mortgage?

That's not why he called you stupid. He called you stupid because
you
failed to realize that you can build equity in a house even when you
don't
pay down the principal...and then turn around and apply that equity
as a
downpayment on your next house.

Where to hell did I EVER say that you couldn't build equity in a house
with an interest only loan?? BUT, the fact remains, if you pay down the
PRINCIPAL, you are still better off, because interest is just what it
is, your cost for borrowing money. The principal is the net worth of
the house.

wrote in message
oups.com...

NOYB wrote:
wrote in message
ups.com...
Here's the real life example:
I paid $825k for the current home on the water.
The last house to sell just like mine sold for $1.225m.
After realty and closing costs, I'd clear about $360k

I sold my old house for $560k last year (not on the water)
The last house to sell like my old one just sold for $625k.
If I bought the new house for $625k, after closing costs, I'd be in
it
for
under $650.


So I would net a quarter of a million dollars if I sold my current
home
and
bought my old one again.


That's profit, right?


*****************

No, it's merely the reorganization of numbers on the asset side of
your
balance sheet. Even if your house was in investment, you haven't
realized a gain until you sell it. Your neighbor's sale didn't put
any
money in your pocket. You need the house to live in. The amount of
money the house is worth is meaningless, as long as you are going
to
personally consume the asset by taking it for exclusive use.

The good news is that if the average income in Nipples doubles in
the
next couple of years, (is that likely?) your $1.2mm pad will be
"worth"
$2.4mm. The bad news is that if you sell the one you've got, and
don't
elect to lower your standard of housing, you'll simply have a
higher
number attached to an asset you don't have the flexiblity to sell.

Now, it you had purchased *two* or more homes for $825k and sold
oneof
more of them for $1.225, that $400k spread would indeed be gross
profit. You'd probably walk off with about $300k net after
commissions, cap gains taxes, local conveyance taxes, etc. Selling
your
personal house, and immediately replacing it with one costing as
much
or more, does not create "profit".


Another example for the slow and/or stubborn:

Chuck has $100k. He buys a house not on the water for $500k, and
puts 20%
down. His mortgage is $400k. In one year, he sells the house for
$575k.
He pays off the mortgage and the realtor, and walks away with $135k.


NOYB has $100k. He buys a house on the water for $1m, and puts 10%
down.
His mortgage is $900k. In one year, he sells the house for $1.5m.
He pays
off the mortgage and the realtor, and walks away with $510k.

They both decide to buy a new home next to each other. The purchase
price
is $500k. Chuck puts $135k down, takes out a new loan for $365k.
NOYB pays
cash...and uses the extra $10k leftover to buy a trailer for his
boat...and
a new T-top, kicker motor, and fishfinder. The money that NOYB would

normally pay towards a mortgage on a home now goes towards buying a
second
home in the mountains.

Chuck says "How the hell did that happen!?!?"

Yeah, how DID that happen, when you've stated here that you have an
interest only mortgage? Not only did you NOT pay cash, you're not even
paying down the balance.


Appreciation you dimwit.

"NOYB" wrote in message
link.net...

wrote in message
oups.com...

NOYB wrote:
wrote in message
ups.com...
Here's the real life example:
I paid $825k for the current home on the water.
The last house to sell just like mine sold for $1.225m.
After realty and closing costs, I'd clear about $360k

I sold my old house for $560k last year (not on the water)
The last house to sell like my old one just sold for $625k.
If I bought the new house for $625k, after closing costs, I'd be in
it
for
under $650.


So I would net a quarter of a million dollars if I sold my current
home
and
bought my old one again.


That's profit, right?


*****************

No, it's merely the reorganization of numbers on the asset side of
your
balance sheet. Even if your house was in investment, you haven't
realized a gain until you sell it. Your neighbor's sale didn't put
any
money in your pocket. You need the house to live in. The amount of
money the house is worth is meaningless, as long as you are going
to
personally consume the asset by taking it for exclusive use.

The good news is that if the average income in Nipples doubles in
the
next couple of years, (is that likely?) your $1.2mm pad will be
"worth"
$2.4mm. The bad news is that if you sell the one you've got, and
don't
elect to lower your standard of housing, you'll simply have a
higher
number attached to an asset you don't have the flexiblity to sell.

Now, it you had purchased *two* or more homes for $825k and sold
oneof
more of them for $1.225, that $400k spread would indeed be gross
profit. You'd probably walk off with about $300k net after
commissions, cap gains taxes, local conveyance taxes, etc. Selling
your
personal house, and immediately replacing it with one costing as
much
or more, does not create "profit".


Another example for the slow and/or stubborn:

Chuck has $100k. He buys a house not on the water for $500k, and
puts 20%
down. His mortgage is $400k. In one year, he sells the house for
$575k.
He pays off the mortgage and the realtor, and walks away with $135k.


NOYB has $100k. He buys a house on the water for $1m, and puts 10%
down.
His mortgage is $900k. In one year, he sells the house for $1.5m.
He pays
off the mortgage and the realtor, and walks away with $510k.

They both decide to buy a new home next to each other. The purchase
price
is $500k. Chuck puts $135k down, takes out a new loan for $365k.
NOYB pays
cash...and uses the extra $10k leftover to buy a trailer for his
boat...and
a new T-top, kicker motor, and fishfinder. The money that NOYB would

normally pay towards a mortgage on a home now goes towards buying a
second
home in the mountains.

Chuck says "How the hell did that happen!?!?"

Yeah, how DID that happen, when you've stated here that you have an
interest only mortgage? Not only did you NOT pay cash, you're not even
paying down the balance.


Appreciation you dimwit.

Dimwit? That is the understatement of the year.

NOYB wrote:

(elementary level example of leverage deleted)

Your additional properties are investments. Your house is your home.
If you cannot grasp that very simple concept, you likely do not realize
that hyper accelerated real estate markets in many parts of the country
(Calif being a frequent example) are not always one way streets.

When your house that you're choosing not to sell for $1.2 million
possibly corrects to a value of $975k, (and you hold the $1mm mortgage
you mentioned elsewhere in the thread), it won't be Chuck wondering
"How the hell did that happen?" Chuck knows.

BTW, I could write the book on leverage. You don't want or need to know
the details, but write it I could.