"Harry Krause" wrote in message
...
P Fritz wrote:


Why is it liebral types cannot understand the "cost" of money. If you
can
borrow at a net cost of 3-1/2%, and you can invest at a average return of
6-7%, you should ALWAYS have a max. mortgage.


Some of us don't view the house we live in as an "investment." I've
structured my residential financing so that if I FOAD, my wife will not be
faced with much of a mortgage, even though she earns a good income. That
way, she can decide what to do...stay, sell, whatever.

I started out with a fairly typical 70% of appraised value mortgage on
this house a few years ago. Thanks to incredible appreciation, my mortgage
is now about 35% of appraised value.

And my mortgage is 75% of appraised value. Last year, it was 95%. In five
years, it will be 50%...and I will not have spent a dime on Principle.

"NOYB" wrote in message
k.net...

"Harry Krause" wrote in message
...
P Fritz wrote:


Why is it liebral types cannot understand the "cost" of money. If
you
can
borrow at a net cost of 3-1/2%, and you can invest at a average return
of
6-7%, you should ALWAYS have a max. mortgage.


Some of us don't view the house we live in as an "investment." I've
structured my residential financing so that if I FOAD, my wife will not
be
faced with much of a mortgage, even though she earns a good income. That
way, she can decide what to do...stay, sell, whatever.

I started out with a fairly typical 70% of appraised value mortgage on
this house a few years ago. Thanks to incredible appreciation, my
mortgage
is now about 35% of appraised value.

And my mortgage is 75% of appraised value. Last year, it was 95%. In
five
years, it will be 50%...and I will not have spent a dime on Principle.

Harry is proof that liebrals don't get it. There are other vehicles for
protection...i.e mortgage insurance.
THe fact of the matter remains, that if your net "cost" ofr money is only
3-1/2%, and you can invest at a 6-7% return, you are crazy to pay off the
3-1/2%

As soon as my last kid goes to college I will be putting the current house
up for sale and moving into something smaller. I won't need the space and I
don't want to have to cut the grass and all of the other yard stuff, I want
to enjoy my time!


"Starbuck" wrote in message
...
Chuck,
There are many people who do make money by selling their primary residence
and moving to a less expensive area.

I know people who lived in bungalows on the west coast, and then purchased
mansions when they left. If someone lived in Naples, and then retired
elsewhere, they could downsize and make a very tidy profit living
purchasing a home in most other areas of the US.

--

Starbuck

-- Sacha Guitry - The little I know, I owe to my ignorance.


wrote in message
oups.com...

NOYB wrote:
"Starbuck" wrote in message
...
NYOB,
Harry and Kevin are the only ones who are upset that you have done so
well
with the housing market. They are jealous.


Actually, it really seems to bother DSK the most. He has sent the most
doomsday warnings my way...but he is followed closely by Gould.


DSK doesn't have to work hard to beat my number of warnings; I sent you
one.

Get thou to Amazon.com and purchase a book: Extraordinary Popular
Delusions and the Madness of Crowds.

Then sing along:
All Around the Hurricane Zone
Where wages are in trouble
The housing prices rise and rise
'Til "pop" goes the bubble.

You know, NOYB, at one time I was under the impression you had a couple
of bucks or so. People with money don't launch a thread to to announce
"look how well I'm doing financially." Besides, how many houses do you
own in Naples. One?
Que lastima, Doc. That's not an investment- (unless you decide to go
pitch a tent down on the beach and rent it out). If you sell it for
$99999999999999.00, you'll surely have to spend at least as much to buy
another. You're no richer, and no poorer than if your house were worth
$29,000.....you still need a place to live. Until you don't need a
place to live, you can't extract a dime.

Bert Robbins wrote:
As soon as my last kid goes to college I will be putting the current house
up for sale and moving into something smaller. I won't need the space and I
don't want to have to cut the grass and all of the other yard stuff, I want
to enjoy my time!



Better hold off for a few years. My 26 yr old just came back to live at
home for a few months while he was in-between jobs.

On Mon, 19 Sep 2005 15:29:30 -0400, DSK wrote:



So, who is actually the smart one here?

NOYB!

He's the one who will be pocketing the money while the rest of you are telling
him how foolish he is!
--
John H

"All decisions are the result of binary thinking."

NOYB wrote:
wrote in message
...
On Mon, 19 Sep 2005 12:37:26 GMT, "NOYB" wrote:

Or they could do a reverse mortgage and retire off the 1000% increase in
equity that they accumulate over the the next 25 years.

That's not how a reverse mortgage works. The mortgage company pays a
fixed amount per month (usually based on a fraction of the current
appraised worth plotted against an optimistic guess on how long the
person wil live) and hopes to pocket the appreciation.

They only hope to pocket the appreciation beginning from the initial
starting point of the reverse mortgage. Any appreciation that occurs
between now and when the reverse mortgage starts belongs to the home owner.
The homeowner's equity in the house drops as the bank continues to make
payments. But the homeowners reaps the benefits of the appreciation that
occurred before the payments begin.


They also won't
write a reverse mortage unless the owner is pretty old.

In other words...most retirees would qualify.

It is really just a scam that the banks foist off on old folks without
anyone to look out for them.

It's not a scam. It's a process that allows the homeowner to take out the
equity of the home without having to pay monthly payments on the equity
line.

Here's another way to look at it:

Suppose you live in a million dollar home, but have zero equity in that home
(ie--you owe 1 million dollars). In 30 years, that home is worth $4
million, and you owe still owe $1 million on it (ie--you had an
interest-only loan). You have $3 million in equity on the home. You decide
to take out $2 million of that equity, and put it in an investment that pays
a rate equal to what the monthly payment would be on the loan (ie--you end
up with a net monthly outlay of cash of zero). You can then use the $2
million to live on.

You won't live very well on that $2mm if its only worth "half a house."
First thing you know, you'll need to buy a new $250,000 car or a
$500,000 ski boat. You will think twice before taking that $40,000
vacation in Europe. Surely you didn't expect housing prices to go up in
a vaccuum, right?
Heck, you'll be paying your pool boy and gardners $100 an hour (and
getting by so cheaply only because they don't speak English and work
under the table) when houses are $4mm a throw.

You want to make some money and retire off real estate?
Here ya go. This will work for you, particularly because you're in your
early 30's.

Buy up as many rentals as you can find. Yes, they will go up in value-
but although the day will come when there are "do you want to sell
XXX Main Street" letters in the mail several times a month you'll never
consider parting
with them. Money machine. You can have a couple of dozen properties
paid down to zero by your mid 40's if you work at it. Then you can
retire, or not, but you won't ever have to worry about money as long as
people need a place to live.
Not a bad way to go. You will wind up with a lucrative annuity for your
retirement years,and when you and Mrs. NOYB have both kicked the bucket
the little NOYB's can either continue cashing rent checks
("kaching!")or sell off a few of the properties for BIG BUCKS.

If you put all your eggs in one basket, and you have to live in the
basket to boot, that's a lot more risky than owning a variety of
properties in several neighborhoods and price ranges.

So, who is actually the smart one here?


PocoLoco wrote:
NOBBY!

He's the one who will be pocketing the money while the rest of you are telling
him how foolish he is!

If he can really afford a $5000/m home payment on an interest-only
mortgage, and is *gambling* that his home equity will rise fast enough
to both pay off the home and provide a good financial return, wouldn't
he be better off living cheaper and investing that $5k/m?

Hmm, this is one of those times when one should "do the math." It's
clear that you and Nobby haven't.

But then, he'd have nothing to brag about though. For some reason,
"conservatives" aren't impressed by sensible living & money in the bank.

DSK

On Mon, 19 Sep 2005 12:44:45 +0000, NOYB wrote:


I agree. But I don't think prices will "correct". They'll plateau and
stagnate, but not fall significantly. Demand is increasing exponentially
with the baby boom population retiring.

A real estate bust is not like a stock market crash. Any corrections will
not happen overnight, but they will occur. A very general scenario,
right now, your market is overheated, they are building like crazy,
everybody is getting fat, and the market will never go down. But watch,
you see a couple of buildings completed, usually a retail unit, with no
occupants. Same with a house, here or there, completed with no one moving
in. Six months later, it's bust. The switch has been thrown, and there
will be no new starts. The well financed builders will complete their
projects and hope for the best, the less well financed will leave theirs
incomplete. Now comes the corrections.

The prices will remain high, because no one is willing to sell for less
than they paid, but those that thought they were going to get rich,
leveraged to the max, can't make the payments, will either walk or declare
bankruptcy. Those that have to leave the area, for whatever reason, will
have to take the hit. That's the bottom. Then there are those, such as
yourself, who bought a house to live in, they'll ride it out.

I read somewhere
that speculators are a third of your market.

I've read up to 40% in some areas like Punta Gorda. It's much, much lower
in Naples.

Nothing against speculators, but if they are in the market enough to
effect the market, it's a dangerous market. They don't really add
anything to the market, they just take from it.

"DSK" wrote in message
...
So, who is actually the smart one here?


PocoLoco wrote:
NOBBY!

He's the one who will be pocketing the money while the rest of you are
telling
him how foolish he is!

If he can really afford a $5000/m home payment on an interest-only
mortgage, and is *gambling* that his home equity will rise fast enough to
both pay off the home and provide a good financial return, wouldn't he be
better off living cheaper and investing that $5k/m?

Hmm, this is one of those times when one should "do the math." It's clear
that you and Nobby haven't.

But then, he'd have nothing to brag about though. For some reason,
"conservatives" aren't impressed by sensible living & money in the bank.

The conservative live in those big fancy houses, drive big fancy cars, and
own and operate big fancy boats. The liberal/progressives live in trailer
parks, drive ten year old Chevy's, and own rowboats. Oh, when conservatives
retire they usually move to swanky locations to enjoy the rest of their
lives and when liberal/progressives retire they usually buy a new plastic
chair so they can sit out in front of the trailer and watch the world go by.

"DSK" wrote in message
...
So, who is actually the smart one here?


PocoLoco wrote:
NOBBY!

He's the one who will be pocketing the money while the rest of you are
telling
him how foolish he is!

If he can really afford a $5000/m home payment on an interest-only
mortgage, and is *gambling* that his home equity will rise fast enough to
both pay off the home and provide a good financial return, wouldn't he be
better off living cheaper and investing that $5k/m?

How would I pocket $5k/mo if I lived in some place cheaper? Even a cheaper
place would have a mortgage, taxes, and insurance. Perhaps you meant to say
"pocket a portion of the savings"?

A similar home to mine that is *not* on the water would run about
$550-600k. But the ones that aren't on the water are appreciating at half
the rate as the ones that are on the water. I'd wager any amount of money
that I couldn't save enough money living in a house off the water to come
anywhere near the amount of appreciation that I'm seeing by living on the
water.

Here's an example:
Suppose a million dollar house on the water appreciates 10% per year
(they've been averaging more than three or four times that rate over the
last 10 years though). That's $150k. Suppose the $500k home that is not
on the water appreciates 5% (once again, an extremely conservative figure).
That's $25k. So the equity of the guy on the water is outpacing the other
guy's equity by $125k each year. If the mortgage payment on the million
dollar home is $5k/mo. and the $500k home is $2500/mo., then the guy who is
not on the water can put away about $30-40 k more (the extra $5k is for
additional taxes and insurance) each year in savings. But that's still a
lot less than the $125k net advantage in equity growth for the waterfront
homeowner.




Hmm, this is one of those times when one should "do the math." It's clear
that you and Nobby haven't.

See above. And I didn't include the huge tax savings on the interest from
the million dollar home vs. the half-million dollar home.