Oct 24
Despite my belief that the dollar will continue to fall I don’t think now is the time to pull the trigger and buy real estate.
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October 30th, 2009 at 10:42 am
Keep in mind that there is also the first-time homebuyers tax credit that expires at the end of the year (though I imagine they will create a new tax credit when it expires).
Homebuyers need to weigh the 8k tax credit (and other homebuyers buying their desired houses in desired locations) vs. the potential for a further decrease in prices.
October 30th, 2009 at 2:23 pm
I have heard they will extend the government incentive.
November 12th, 2009 at 4:33 pm
I sometimes go to Pre-seminar sale events. What I mean is I go and see what the group has to offer. The sales pitch is classic…either way, has anyone heard of or been to “Rich Dad Poor Dad” by Robert T. Kiyosaki? He puts on several types of “Get Rich” seminars in this country and others. The one I just came from was about the housing market and how “to jump on board now!”. Of course, this was to get you to go to his pay for ($950..but if you act now $450)3 3-day seminar. Has anyone used his books or seminars?
November 12th, 2009 at 6:09 pm
I have read the book and agree with the principle but the book is actually fictional and I have also learned that any time you are required to make a decision quickly in order to “save” a bunch of money. It’s usually not a good idea. I would personally stay away from it.
Basically to get rich you need to collect assets and reduce liabilities. A house is NOT an asset unless you have renters that actually give you a positive cash flow.
November 12th, 2009 at 11:49 pm
Thank you for your input, Dave.
February 2nd, 2010 at 9:15 pm
I generally agree, but don’t think you need positive cash flow for real estate rental property to be a good deal.
I’ve got several rental properties, and they are making/saving money for me 4 different ways:
1. My mortgages on them are at fixed rates. This makes inflation my friend, since even if I currently have slightly negative cash flow on some properties, in time the rents I’ll be abloe to collect will go up, while my mortgage payment won’t. Yes, property taxes and insurance may increase, but they are a small percentage of my overall payment on the property. So, inflation will eventually give me ever-increasing positive cash flow, even if it’s slightly negative to start.
2. Each month, sveral hundred dollars of my mortgage payment go towards the principal. It doesn’t show up in cash flow, but my debt is declining steadily on the properties.
3. In time, maybe 10 years, the properties will all be worth more than they are today, as real estate long-term always trends upward (if you buy in good neighborhoods.) Yes, some of that increase is inflation, meaning the dollars I would get on a sale 10 years from now are worth less than dollars today, but remember, with a fixed-rate mortgage, the dollars I owe are worth less each year too.
4. Depreciation. The way I understand it, you take a rental property’s value, divide by 27.5 years, and that dollar amount is what you can claim on your income taxes as a “loss” due to depreciation. If you eventually sell the property, your cost basis is the depreciated amount, which hurts because that shows a bigger taxable profit, so instead of selling, you refinance. This accomplishes the following:
A. When you re-fi a rental property and take cash out, that cash isn’t income. It’s borrowed money. No income taxes are due on it.
B. You still have the property and all its benefits. Just start the cycle all over again.
February 3rd, 2010 at 10:00 am
Good points but I still think positive cash flow is important. I have heard 10% or $100 a month is a good rule of thumb.