All Forum Posts by: Account Closed

Why not ask the listing agent how the value was computed? When you asked who do they think will purchase their properties did you listen to their answer? What'd they say?

Ali, you seem to totally misunderstand investing in high appreciation areas. Do you know of any area where rents stay stagnant over time while prices increase dramatically? Rent growth and appreciation go hand in hand. My 9-11% appreciation comes with rent growth of 6-7%. So when my property doubles in value every 10 years I can take out a couple of hundred of thousand in equity and pay it off with the now positive cash flow.

Even with steady cash flow in Podunk how much can you pull out in say 10 years time of little to no appreciation? If you want to make this a game at least make it a math game and see what your total profitability is over your holding period. I invest for APPRECIATION and RENT GROWTH. They generally come as a package. It's like you buying an uninhabitable house. You can't make any money until you invest more.

I do live on the slope of a volcano. And my 2008 purchase was over $1,000 sf and my bath remodel (only sink moved and new spot backed up to the kitchen sink) added another $463 sf for the bathroom area! Yikes! Wait, my volcano has been inactive 150,000 years.

Yeah, that's not how you would compute land value. Show me a $500, 000 res lot in your NBHD. Also costs do not equal value although I'd love to see a builder that will build on my lot for $130 sf. I did a study on SF costs. Builders wouldn't even break ground if they were not getting $250sf in entrepreneurial profit. That's on top of their profits as contractor. I'd hate to see what someone is providing at $130sf. Hell, Home Depot sheds run half that just for materials.

This is an old wives tale. You are paying too much in taxes. Check the actual land costs in your area. You'll probably be surprised to see that the land value is closer to 30-40%. This is based on actually determining land value in the Bay Area for people that thought the same as you.

People don't buy $500,000 lots to build $200,000 homes. If a neighborhood is changing and tear downs are common THEN you might be in a situation where the land is worth more that the improvements but NOT more than the NEW improvements.

Obviously not! Where were the epicenters of disaster, Vegas and Florida? Those are areas that don't have long term high appreciation rates. Yet thousands flocked in to be plucked because of a spike.

The people that I know that KNEW their appreciation rates and long term rent growth stayed with the areas that "investors" shy away from because of INITIAL lack of cash flow and misunderstanding of what an appreciation rate is.

Some were convinced to 1031 to the "cash flow" locations and saw their money go down the drain while their properties and rents in Hawaii and California lost little value and rebounded very quickly.

The lesson to learn is to KNOW all the financials of the area you are investing in and don't buy cheap for cheaps sake AND immediate cash flow is not a predictor of profitability.

But then you'd have 10 tenants, toilets and trash (roofs, HVAC'S, interior & exterior painting etc. . Ten trips to Ohio. Ugh, don't kill the golden goose.

People that invest in CA are doing it to "make" money. If your definition of "returns" is a couple of hundred a month of cash flow then you are missing out on the couple of hundred of thousands of appreciation. Kind of penny wise pound foolish. What exactly is your definition of "returns"?

$1775 X 12 X the GRM for similar properties in the area.