Equity Management

[lebleu]

@primordialaa

@lebleu

If anyone buys a house and within a decade of ownership doesn’t make significant returns I can’t help. But I will say that the only thing I have ever done is look at location, what’s around and purchase when % interest are low and over only 7 years of ownership one property more than tripled in value due solely to the area it’s located in.

It’s like any market, do your research before buying!

At the end of the day whether you only make 50k or 20k return, it will always be better than paying for someone else property. And I say that as someone who is currently renting a place that the tenant pays me more than I need for payment on it.

This just isn’t true though… and the math is pretty clear on it. I mean you’ll make $, but you certainly won’t make MORE money than you would have in the alternative scenario.
Typical situation (obviously contrived) is something like – I’ll leave out utilities for both sides for now:

Buy - $200k house, $40k down.
Expenses per year (30 year mortgage, 3.5% interest):

Mortgage: $898 x 12 = $10,776Property Tax: ~$4,000 (New Hampshire)Maintenance (typically 1% value): $2,000
Renting: $0 down, $40k to invest
Expenses per year:

Rent: $1,000/mo

10-year outlook, we go to cash in both scenarios

Owner spent: $167,760Owner’s home appreciated 2.5%/yr (above national avg 2.2%) = 1.025^10 = 1.28 = 28%28% of $200,000 = $56,000Owner’s home is now worth $256,000Owner has earned $45,146 in principle ($62,624 went to interest)Owner now has $40k + $45,146 + $56,000 in principle in their home, i.e. $141,146 and still carries a $114,854 mortgageOwner sells home for now largely increased value of $256,000!
Owner pays 6% to realtor, and receives back 256000 * 0.96 - 114,854 = $130,906
Owner started with $40,000, spend $167,760, and ended with $130,906. They profited (final - initial) $130,906 - $40,000 = $90,906 and spent $167,760 meaning their net was 90,906 - 167,760 = -$76,854.

Renter:
Invested $40k in a reasonably conservative 8.5% blend40k grew to 1.085 ^ 10 = 2.2609x = $90,439
Renter spent $1,000 x 12 x 10 = $120,000Renter started with $40,000 and ended with $90,439. They profited (final - initial) $90,439 - $40,000 = $50,439 and spent $120,000 meaning their net was $50,439 - $120,000 = -$69,561
Renter spent LESS over this time period and maintained total flexibility… allowing them to move/adjust expenses easily when needed (manage tail risk), potentially pursue life improving opportunities (job, travel, etc.) often aligning with significantly higher trajectory in pay (i.e. move 1 city over and get a 40% bump in income), etc., etc., etc.

I think home ownership is fine if/when you run the risk of being PRICED OUT of an area you love and want to stay. The area I live in is quite expensive, median home is prolly $900k and most in my direct area are $3m+. This is AFTER an about 50% correction down (many quality cities are like this Melbourne, etc.). Many of the home owners here bought there houses for like ~$50-200k 20 yrs ago, this allowed them to stay, where it not for that they almost certainly would have been forced out of the area as they couldn’t have afforded the pricing adjustment upwards. If that is a major concern for you, buying early if you can afford it in an area you are certain you want to stay can be practical.
as a vanilla piece of financial advice home ownership is a trainwreck and usually one of the largest that people make (along with spending 30%+ of their income on cars). They constrict you opportunity wise, are sub par financial vehicles and people almost ALWAYS stretch themselves way too thin and expose themselves to way too much tail risk. If you want real estate exposure buy a rental property and keep renting yourself. Many friends of mine did this prior to having much $. One of my best friends who was one of the quickest from $0 → 7 figures did this during college. Bought a house in university area (Waterloo), rented 1 room from himself for 4 rooms to others. Paid off large chunk of mortgage during college while living rent free, sold house after.
Seriously… don’t buy a house to live in if you’re trying to optimize financial gain

Although I like the analysis, I believe the market where you live largely differs from where I am. I am extremely fortunate that I cannot relate to those numbers or scenario!

The only thing I will share from my personal experience is that my Timmy’s pays more than they would if they owned it themselves. I am simply the guy who collects the extra. As for the one I live in, the extras and my basement dwellers are largely paying for it.

Even without the timmy’s, doing proper research on the equity, inspections, looking at crime rate, what’s around, general market growth, interest as close to 1% as possible, I could go on and on. You will never lose if these are all a check in the box. It’s almost the same principle as my earlier comment on stocks in this thread.

Neurofinance plays a major role in most peoples financial decisions, which would be too long to get into.
But most people spend little time around the housing market. Base their decision on size/look/backyard, ignore the bad inspection points and only really listen when the realtor says its good and birds are singing every morning.
Some will hear a tip on a bus and put their life savings on a stock they know nothing about before sunset.
Others will have a youtuber tell them how much value a card will have in 6 months and fully invest based on that.

I know these are extremes, but unfortunately very common scenarios. The analysis you put in prior to any investment will almost always correlate with the end result. And I only say ‘‘almost’’ because of course a Black Swan can always happen whoever you are.

Since I feel like we’re taking over this thread (lol) I will finish by saying this; In any financial markets having the knowledge, being your own best wealth manager and doing the proper research on the asset you are purchasing will always be your greatest power. If somewhere along the returns are small or even negative, it almost always points to the initial investment.

(This was really fun, I always enjoy friendly debate on the topics of finance. Always nice to hear different views on the subject )

[mitty]

@lebleu

@mitty

Going to be real with you, living in expensive single family homes aren’t good investments. They hemmorage money to repair (even if I did the repairs myself) and maintain(lawn, pressure washing, yard, gutters) and have property taxes($7k/yr). My current house I bought for 550k in 05, and now its worth 600k. I won’t get back the pool or upgrades that I put into it. I was much better off renting for $3k/month and investing the rest. However, my section 8 portfolio continues to deliver with appreciation and cashflow. All 1 bd/1bath so maintenance is non existant, all old people that keep to themselves, and the rent is more or less guaranteed because the gov pays part of it. And section 8 is really really easy to scale, I just need to keep buying condos in the same complex whenever they hit the market.

If anyone buys a house and within a decade of ownership doesn’t make significant returns I can’t help. But I will say that the only thing I have ever done is look at location, what’s around and purchase when % interest are low and over only 7 years of ownership one property more than tripled in value due solely to the area it’s located in.

It’s like any market, do your research before buying!

At the end of the day whether you only make 50k or 20k return, it will always be better than paying for someone else property. And I say that as someone who is currently renting a place that the tenant pays me more than I need for payment on it.

oh btw, it was in the fastest growing city in the country at one point, so its not like the location was bad. Financially its not a big deal for me but I know for other people it could be devastating.

[lebleu]

@mitty

@lebleu

If anyone buys a house and within a decade of ownership doesn’t make significant returns I can’t help. But I will say that the only thing I have ever done is look at location, what’s around and purchase when % interest are low and over only 7 years of ownership one property more than tripled in value due solely to the area it’s located in.

It’s like any market, do your research before buying!

At the end of the day whether you only make 50k or 20k return, it will always be better than paying for someone else property. And I say that as someone who is currently renting a place that the tenant pays me more than I need for payment on it.

oh btw, it was in the fastest growing city in the country at one point, so its not like the location was bad. Financially its not a big deal for me but I know for other people it could be devastating.

Results will always be proportioned to what kind of investor you are. Most people only look at prices/physical looks or listen to someone else without second guessing at all.

The equity market or stocks are not a lottery. Only too few truly do put enough research in.

The last I’ll say on that topic, if someone in his 20’s can do it, so can anyone. Just don’t leave the results of your investment up to faith.
Relying on sheer luck won’t lead you to produce fruitful results. Massive amounts of buyers find themselves in this category unknowingly.

[trainerdlyellow]

@mitty

Going to be real with you, living in expensive single family homes aren’t good investments. They hemmorage money to repair (even if I did the repairs myself) and maintain(lawn, pressure washing, yard, gutters) and have property taxes($7k/yr). My current house I bought for 550k in 05, and now its worth 600k. I won’t get back the pool or upgrades that I put into it. I was much better off renting for $3k/month and investing the rest. However, my section 8 portfolio continues to deliver with appreciation and cashflow. All 1 bd/1bath so maintenance is non existant, all old people that keep to themselves, and the rent is more or less guaranteed because the gov pays part of it. And section 8 is really really easy to scale, I just need to keep buying condos in the same complex whenever they hit the market.

The housing market was reaching its peak around '06. Bad timing may be an issue here, not poor returns

[mosstastic]

@trainerdlyellow

@mitty

Going to be real with you, living in expensive single family homes aren’t good investments. They hemmorage money to repair (even if I did the repairs myself) and maintain(lawn, pressure washing, yard, gutters) and have property taxes($7k/yr). My current house I bought for 550k in 05, and now its worth 600k. I won’t get back the pool or upgrades that I put into it. I was much better off renting for $3k/month and investing the rest. However, my section 8 portfolio continues to deliver with appreciation and cashflow. All 1 bd/1bath so maintenance is non existant, all old people that keep to themselves, and the rent is more or less guaranteed because the gov pays part of it. And section 8 is really really easy to scale, I just need to keep buying condos in the same complex whenever they hit the market.

The housing market was reaching its peak around '06. Bad timing may be an issue here, not poor returns

That’s correct.

The big thing about housing is that most times you’re talking about leveraged returns. That’s why in certain situations it’s generally better than renting

[mitty]

@trainerdlyellow

@mitty

Going to be real with you, living in expensive single family homes aren’t good investments. They hemmorage money to repair (even if I did the repairs myself) and maintain(lawn, pressure washing, yard, gutters) and have property taxes($7k/yr). My current house I bought for 550k in 05, and now its worth 600k. I won’t get back the pool or upgrades that I put into it. I was much better off renting for $3k/month and investing the rest. However, my section 8 portfolio continues to deliver with appreciation and cashflow. All 1 bd/1bath so maintenance is non existant, all old people that keep to themselves, and the rent is more or less guaranteed because the gov pays part of it. And section 8 is really really easy to scale, I just need to keep buying condos in the same complex whenever they hit the market.

The housing market was reaching its peak around '06. Bad timing may be an issue here, not poor returns

obv it wasn’t at the bottom, but it definitely wasn’t at the top either. Same copy of my house sold in the same suburb in 07 for 900k.

[trainerdlyellow]

@mitty

obv it wasn’t at the bottom, but it definitely wasn’t at the top either. Same copy of my house sold in the same suburb in 07 for 900k.

A lot can change in two years. Just look at Pokemon prices from 2019 to now.

[sgpokecollect]

Actually housing is a pretty crap investment. I took a real estate investment module at Wharton and the professor’s introduction during the first 2 mins was that retail investing in housing is a bad investment, and that she would be retired if she bought property stocks rather than a house during the 08/09 crisis. The rest of the class was focused on commercial property investing like office buildings and stuff.

The issue is housing is always the first thing people think of when it comes to investing - which makes pricing very efficient and competitive. So returns are bad, unless you buy them in a country where the economy will boom over the next few decades. it’s very tied to GDP.

[nickofturl]

www.wsj.com/articles/SB991681622136214659

[teamrocketcollector]

Mostly all in bitcoin. Have been diversifying out of it with the recent price movement and moving into equities, art, and now pokemon cards.

[justinmew]

401k, Roth IRA, taxable account and real estate. I have a three fund portfolio and follow the FIRE movement. Keep it simple

[andrewvt36]

10% collectibles (initial- I don’t readjust this figure. I roll the profits over.)
90% low fee whole market index funds (I recommend Vanguard)

I contribute directly from my pay (pre-tax. woo-hoo!), before I even see it, so psychologically none of my raises have ever really “registered” with me.

An interesting video to watch:

Buy everything and hold it forever - Jack Bogle

[dblast]

High level talks.I would like to partake. LF portfolio advice for your: % ETBs, Modern sealed, wotc sealed, 3blister packs, uncut sheets, loose packs, <.005% graded card, etc… And Side Collections ? Which poke stonk/side collection did it for you last year? Thanks

[shadowless]

@dblast

High level talks.I would like to partake. LF portfolio advice for your: % ETBs, Modern sealed, wotc sealed, 3blister packs, uncut sheets, loose packs, <.005% graded card, etc… And Side Collections ? Which poke stonk/side collection did it for you last year? Thanks

Here is a detailed breakdown of my personal stonker portfolio:

ETB (Champions Path) 5%
Modern sealed (only stonker sets like shining fates, sm is shit) 65% (getting more tomorrow from target restock)
WOTC sealed (this is for the elites) 0%
3 blister packs (aside from evolutions irrelevant) 1%
uncut sheets (highly recommend mcdonalds sheets) 2%
loose packs (mcdonalds and champions path mostly) 7%
graded cards (PSA 3-5 wotc unlimited commons) 10%
side collections (waifu fullarts) 10%