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Real Estate: 4 lessons from a 97-year-old real-estate agent

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  • Real Estate: 4 lessons from a 97-year-old real-estate agent

    "In this market, any young person that hasn't bought a house ought to buy one," Johnson says. "A buyers market doesn't come along that often … you just can hardly help but make money on whatever you buy today at the prices they are."

    http://realestate.msn.com/article.as...9084&GT1=35006

  • #2
    Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

    Why do I suspect he has never not said that over all those decades.

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    • #3
      Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

      Seriously..... Are we gonna keep running through this? First off....

      1) dont take your buy/sell advice from someone who actually sells what he is pushing...
      2) Pull out a calculator and type in the value of that house payment at current interest rates then plug in 8%-10% interest rates and see how affordable that payment would be...
      3) Leveraged assets are best bought in a high interest rate cycle... As high interest rates kill the value of the asset itself, since money is expensive.... ie. less debt.

      On a long enough timeline you never lose money on any tangible asset... Say 100 years from now, we will be looking at the 06 house prices as bargains, i can guarantee that

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      • #4
        Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

        When you buy a refrigerator, it is the purchase price of the refrigerator plus the cost of the electricity to run it for 20 years plus the cost of financing if it is not bought cash.

        When you buy a house, it is the purchase price of the house plus the cost of "renting" the money (mortgage) to buy it if it is not bought cash plus the depreciation or appreciation adjusted for inflation plus the reroofing, painting, utilities, insurance, property taxes, etc. You gotta live somewhere, and if it is all paid off by retirement when your income drops, that can be another important consideration, but very often it is better to rent and save the difference... although how one is supposed to reliably get that saved money 40 years into the future is beyond me.

        http://www.nytimes.com/interactive/b...alculator.html

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        • #5
          Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

          Originally posted by mooncliff View Post
          When you buy a refrigerator, it is the purchase price of the refrigerator plus the cost of the electricity to run it for 20 years plus the cost of financing if it is not bought cash.

          When you buy a house, it is the purchase price of the house plus the cost of "renting" the money (mortgage) to buy it if it is not bought cash plus the depreciation or appreciation adjusted for inflation plus the reroofing, painting, utilities, insurance, property taxes, etc. You gotta live somewhere, and if it is all paid off by retirement when your income drops, that can be another important consideration, but very often it is better to rent and save the difference... although how one is supposed to reliably get that saved money 40 years into the future is beyond me.

          http://www.nytimes.com/interactive/b...alculator.html

          Yes, its all that combined for the most part in a normal market, but you are forgetting the supply/demand side... Things can go from overvalued to undervalued for quite a while... Its not like prices will stop at the exact ratio of price to rent and all the other criteria you listed.... Housing might look like a good deal now, and 3 years from now it could just as easily be a great deal! Why? Bc, for the most part, investors in a 10% interest rate environment will still want a good yield on newly bought rental props. If they are buying at 10% interest then it better have cashflow.

          But all that aside; in general assets bought with borrowed money are best bought in the high point of an interest rate cycle, not in ZIRP. You buy in ZIRP the only place interest rates go is up (money becomes expensive), debt hangs over the leveraged asset like a dead weight... With the extra supply coming off a bubble level collapse the ONLY thing i can think of that would increase the nominal cost of a house is inflation... At best it will keep up with inflation (and it may not) since the supply demand aspect is way out of whack...

          For the most part the only reason why houses kept going up for the last 30 years are bc interest rates kept going down (from 16% to 0) and inflation was high... For the most part i honestly think RE is not the best inflation hedge, it kind of sucks, since it is also tied to the interest rates....

          And if your looking for an inflation hedge you can make a lot more money in other things and then come back and buy a house when it makes sense to buy... It also depends on where you are in your life cycle... If you're looking for something to live in till you part this world then its not going to matter to you either way...

          If you're young and might end up moving (for work, life, whatever) you will be buying something that will be increasingly less liquid...

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          • #6
            Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

            Originally posted by mooncliff View Post
            When you buy a refrigerator, it is the purchase price of the refrigerator plus the cost of the electricity to run it for 20 years plus ...
            This is off-topic, but where pray tell do you find a refrigerator that will run 20 years <grin>?
            Most folks are good; a few aren't.

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            • #7
              Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

              Originally posted by ThePythonicCow View Post
              This is off-topic, but where pray tell do you find a refrigerator that will run 20 years <grin>?
              is your refridgerator running?


              well you better go catch it!

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              • #8
                Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

                The one in Japan was running fine for 16 years, but I gave it away and got a bigger one.

                The one in Hawaii has been running fine since 1991. Every time I go back, one of my chores is to get a long brush, like for cleaning aquariums, and clean out the heat dissipation grill under the refrigerator for my relatives. Even a little dust drastically reduces efficiency and cuts service life. One of my friends had so much dust down there, he thought it was a felt filter. After cleaning it out, the refrigerator stopped running all the time and his electric bill dropped about $200 per year.

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                • #9
                  Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

                  Clean the condenser fins -- good idea -- thanks mooncliff.
                  Most folks are good; a few aren't.

                  Comment


                  • #10
                    Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

                    One of my friends had a couple of pets, and the fur built up on the heat dissipating coils in the refrigerator, AND THE COMPRESSOR CAUGHT ON FIRE! So that is why this is one of my pet projects, especially for my elderly aunts and uncles and neighbors who cannot do this for themselves... boy do you get dirty and sneeze a lot!

                    Comment


                    • #11
                      Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

                      Originally posted by ThePythonicCow View Post
                      This is off-topic, but where pray tell do you find a refrigerator that will run 20 years <grin>?
                      I'm on my 2nd!

                      Comment


                      • #12
                        Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

                        Originally posted by ER59 View Post
                        "In this market, any young person that hasn't bought a house ought to buy one," Johnson says. "A buyers market doesn't come along that often … you just can hardly help but make money on whatever you buy today at the prices they are."

                        http://realestate.msn.com/article.as...9084&GT1=35006
                        'never ask a barber if you need a haircut'. - buffett

                        'impressive sounding home price increases, such as $30,000 to $300,000 over 30 years only represents consumer price inflation. the trick is make investments that beat inflation. housing doesn't do it. buying a house allows you to retain money otherwise spent on rent minus interest on mortgage debt, plus maintenance plus tax expenses. it is not an investment'. - janszen

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                        • #13
                          Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

                          Originally posted by don View Post
                          Why do I suspect he has never not said that over all those decades.
                          When has any RE agent not said that!?

                          Comment


                          • #14
                            Re: Real Estate: 4 lessons from a 97-year-old real-estate agent

                            Originally posted by metalman View Post
                            'never ask a barber if you need a haircut'. - buffett

                            'impressive sounding home price increases, such as $30,000 to $300,000 over 30 years only represents consumer price inflation. the trick is make investments that beat inflation. housing doesn't do it. buying a house allows you to retain money otherwise spent on rent minus interest on mortgage debt, plus maintenance plus tax expenses. it is not an investment'. - janszen


                            To add on to that... An asset/investment puts money into your pocket either monthly or yearly and a liability takes it away... See which way the money flows on a house you live in and you will quickly realize that unless you buy it way below cost (including, tax, insurance, maintenance, legal, marketing, etc) and rent it at market price, it is in no way an investment or for that matter an asset in that it throws off cash...

                            Also, there could be more problems coming down the pike...

                            http://www.nakedcapitalism.com/2010/...ss-buyers.html
                            Last edited by karim0028; September 18, 2010, 01:59 PM.

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