- quote -

In 1996 I rented a 4BR 3 BA townhome in potomac (MD) for around
$1200-$1600. I think $900/person for being closer to downtown sounds
right, but could also see paying more.

Paul Michael Brown wrote:

- quote -

Just playing devil's advocate here. Is it possible the rent is actually
too low? 3BR/3BA implies to me a good apartment for roommates. Is
$900/person high for that setup on Capital Hill?

JOE

- quote -

Here on Capitol Hill, the 3BR/3BA condo across the hall from mine is
renting for a whopping $2,700. But that's still only 0.43 percent of the
$625K selling price. That's about half of the ratio quoted for a "balanced
market."

Cash on cash, that's a measly 5.2 percent annual rate of return -- which
you could get with zero hassle and zero risk in a CD. But who has $625K
in cash? Borrowing $500K at six percent costs about $2,300 per month in
interest for the first five years or so. And if the owner pays down the
principal the monthly payment jumps to $3,000. Then there's the $329 condo
fee, $479 a month for real estate taxes, insurance and the miscellaneous
costs of upkeep.

Yeah, yeah, I know that a rental property throws off some serious tax
deductions. And in theory, the property will appreciate. But net, net, net
I estimate this owner is lucky to make four percent after tax. That's
about what you'd get in a municipal money market fund.

Just goes to show you how bubblicious real estate prices are here.

John A. Weeks III wrote:
- quote -

Who pays in the event the developer declares bankruptcy? I can see that
in a failed construction the pre-construction buyers may reasonably
expect refunds, at best, but in a conversion, how does that work for a
resident?

The sales(?) contract said the developer would pay fees on unsold units
but it was qualified for, I believe, three years. I didn't read any
further - the CD was sloppy, documents shown at 5% slants, no
brochure-type summaries of the data legalitata - maybe I'm all wrong
and stupid and whiney and critical and just plain anti-social, but it
seemed to me the costs of re-doing a flawed CD to at least show the
documents upright on the page before grinding out 500 - 700 of them for
all the properties they proudly re-painted would be worth the effort in
the cost-benefit analysis, and the fact that they didn't quality check
the CD's indicated to me that they also were likely to do the same kind
of job on their condo-conversion community. They planned to sell the
units out; they didn't; now what?

At a social level across a broad spectrum, I see a progressive and in
my mind horrifying deterioration of responsibility. It goes from people
not returning phone calls to people not knowing what sex they are to
people folding entirely and relinquishing motivation for their behavior
to some odd god's will. Included in that broad spectrum are foolish
participants in the real estate boom now gone bust!! They should get a
BUI !!! (Buying real estate while Under the Influence.)

In article <1157168895.609913.9340[at]b28g2000cwb.googlegroups.com> ,
"dapperdobbs" <GeorgeCFL[at]hotmail.com> wrote:

- quote -

In projects that I have been associated with, the developer
pays the common fees on any unsold units. The developer normally
gets a break in the fee, however. Since the unit is vacant,
the unit is not using some of the services that are included in
the common fee, so paying the full fee is not a fair deal.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

rick++ wrote:
- quote -

The place I USED to rent for $1035 mo. "went condo" asking 215k. With
association fees, that would be about $1500 mo. The conversion
announcement was made in March. Last I heard a couple of months ago 60%
were vacant. Out of 130 units, at average rentals of $900, that's 70k a
month in foregone rents. The outfit (from another city) that bought the
complex probably figured on a big profit, and were very decent about
giving renters plenty of time to move (six months), but refused to
extend leases. One of the factors I considered was the inadvisability
of buying into a complex that apparently was going to be mostly vacant
- who pays to maintain the property?

The same outfit also bought a nearby complex at the same time. There, 0
(zero) units sold, and after three months half the renters had moved,
and they reversed themselves on that one and offerred lease extensions.


Signs of a bubble? If that's NOT signs of a bubble, then would someone
please clarify what WOULD be signs of a bubble for me?

burbed wrote:
- quote -

Thats usuaully a sign of Bubble markets.
In a balanced market monthly rent is about 0.8% price.
In coastal areas rents are half or third normal.
Either the price shouold fall or rents increase.

Sometimes renting is dramatically cheaper than buying.

Check out this example:

http://www.burbed.com/2006/06/05/829...-2550-a-month/

This condo was being offered for $829,000. But just 2 years ago it was
only $2550 to rent. Does that make sense to you?

RigasMinho wrote:
- quote -

Money is exchanged for products and services. Find something you enjoy
doing (or can tolerate until you find enjoyment in it) and get good at
it.

- quote -

RigasMinho wrote:

- quote -

Buying your way into heaven?

- quote -

Nope, getting rich quick takes luck.

- quote -

Crap, there goes my beer.

- quote -

Nope, it was demonstrated in an earlier thread that renting=saving
The corollary of course is that landlording=spending

- quote -

It's worth 50k!

- quote -

Especially if you have to buy your way into heaven.

- quote -

Now you're on to something.

- quote -

I very much want to retire. I'd retire tomorrow if I could (and if I
could still afford to buy beer).

Good luck!
-Will

RigasMinho wrote:
- quote -

That's good, but it can be "fine tuned". If it takes X hours of your
time to get Y dollars of net income, don't buy anything for Y dollars
that won't give you at least X hours of enjoyment. You may be thinking
"but that eliminates most of the stuff I like to buy!". That was my
intention.

John Cowart

I guess - but I feel so behind on life right now thats all.

Thanks guys for the words of encouragement.

I think what helped a lot was:
learn by mistakes - I'm really tempted to buy the condo that I see and
rent it out to people.

Darn - i wish i had 10k for capital to use.


speednxs wrote:
- quote -


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted.

You've got one huge advantage over most of us. You have nearly 40
years to invest even if you retire at 60. If you retire at 67 - 70,
it's closer to 50 years. Forget about those pikers who talk about 7,
10 or 15 year time frames.

Whip up a spreadsheet to see what happens if you invest 10% of your
income for the next 4 or 5 decades. Figure 3% inflation and your
income going up 5% a year for the first couple decades (promotions
etc.). You can figure your return on investment at anything from 3% to
25%. It's a huge amount of money. You living expense 40 years from now
will be frightening as well. What if you invest 0% of your income for
40 years. I can even do that one without taking off my socks.

The big problem with your real estate example was that you had a crappy
CAP rate, around 4%. If you are borrowing money at 6% - 7%, the
problem is obvious. If you could rent out the rooms for about $2500 -
$3000 a month, then the response would have been much more positive.

Landlording is a skill, so even if you get some bruised knuckles, it's
a skill worth learning. You are plenty smart enough to do the money
calculations, so do them. Learn on cheap properties where you can
afford a small loss. Don't start with a million dollar property that
can sink you like an anchor.

Maybe you ought to consider moving to an area where fourplexes are
cheap and you can get a 6% - 8% CAP rate. You might even be able to do
this with a duplex or the roommate thing in the right area. You are
young. Don't be so afraid of making mistakes. That's how you learn.
Work at reducing risk as much a possible by doing due diligence, so
that your losses are small. Back when I was an employee I liked to say
that managers never do anything wrong, because they never do anything.
Employees do things. Forget about the perfection of never making a
mistake because you never do anything. Be happy if you only make the
same mistake once.

Let's say you get break even cash flow with 25% down and an
appreciation rate of 6%. What's your return on equity?

RigasMinho wrote:


- quote -

10-15% savings is a great start, and should lead to a worry free retirement.

- quote -

50K is the median income, you are doing better than half the families in
this country while just getting started. That probably puts you in the
top 20% for your age. This is an important point.

- quote -

The toys cost money. The fun comes from where you find it.

- quote -

Retirement wasn't really your question. So it wasn't the focus of any
answers. See the other posts here discussing the 10-15% savings goal to
have some 20X your final income to replace 80% of that income. A lot of
details and debate in those posts.
JOE

- quote -

"RigasMinho" <minho.cho[at]gmail.com> wrote
- quote -

I think a lot of us sighed way back when.

Chin up: What's your goal? To be retired by... ?

Rational savers keep in mind the ultimate goal is buying
more happiness for a longer time. So what are you going to
by with your savings? The "looking forward to... " sustains
a lot of people as they sacrifice now to have fun later.

- quote -

Not necessarily. Some studies show that renting is cheaper
than owning a house. A house is a lot of work, too.

- quote -

Why do you say this?

I note that the housing link I provided earlier
(http://www.burbed.com/2006/08/26/the...-presentation/)
indicates that $50k a year will buy you a (median priced?)
house in several large cities today (20% down, 6.6%
mortgage.

Omit Buffalo from that list. Ridiculous snow nine months of
the year. No wonder houses there are the cheapest of the
list of cities.

- quote -

Are you serious?

Many of my best times were extraordinarily cheap in cost.
You need to find your inner life and what feeds it.

- quote -

Pretty good, and not the words of a punk nor kid.

Thanks guys,
So what i've learned so far is this:
50k is all relative to some but also not enough for others. Save was a
big topic on all of you guys who responsed back. Most of you suggested
me to save so ill start doing that.

Save 5-10% sounds good to me - but since i can save more now i'll do
more now.

So i was gonna do 1k a month *sigh*

Most of you were against buying real estate to rent out - which made me
decide that it is a risk. Down the road I want to buy some but
definately need more capital.

I guess that about sums up my financial inquiriers.

The way I look at life is this for money:
Tithe to your church because it makes you worry less about it.
Money will come and go but in order to get rich quick - takes work.
Dont buy anything that wont have value in 5 years from now. Something
I recently realized after buying a lot of useless crap last year.
Renting = Money down the toliet
50k aint worth crap in this country
Anything good in life cost money - the more fun/ good it is - the more
it costs

Find ways to make money w/o working is the key I think.

One thing i realized is this as well - none of you mentioned retiring
or anything of that nature. So its interesting to notice even now -
the people who dont want to retire usually succeed in life better then
those who look foward to it.

Just something i noticed.

Thanks