Property/Investment Chat

[SmallerBaller]

*Moderator note: These first 21 posts were moved to this dedicated Off Topic thread. Please continue the property/investment discussion here.

I have the perfect solution. Keep both! My R8 has aftermarket suspension and the handling is exceptional. The V10 with a aftermarket exhaust screams. It still puts a smile on my face. The gated shifter takes some getting used to and you can not rush shifting. I plan on keeping both and see if one wins me over.

Wouldn't that be awesome! That is not in the cards for me, and that is totally okay. More than okay! A lot of people don't think about it, but if you make $40k USD annually you are in the 99th percentile of earners on the entire planet. For perspective, the US poverty line of ~$12,800 is about $500 above the average global income. More telling yet, the median household income (not average for a single person) is about $9k per year. The fact is that if anyone is even considering a car like this, or pretty much any car, period, they are very well off! I am thankful to God that I live in a powerful, wealthy nation with opportunity to work my way up.

To be clear, this isn't me saying wealthy people shouldn't do what they want with their money, or looking down on you for having multiple high performance vehicles! I think it is amazing!

 

[Cachaco131]

Wouldn't that be awesome! That is not in the cards for me, and that is totally okay. More than okay! A lot of people don't think about it, but if you make $40k USD annually you are in the 99th percentile of earners on the entire planet. For perspective, the US poverty line of ~$12,800 is about $500 above the average global income. More telling yet, the median household income (not average for a single person) is about $9k per year. The fact is that if anyone is even considering a car like this, or pretty much any car, period, they are very well off! I am thankful to God that I live in a powerful, wealthy nation with opportunity to work my way up.

To be clear, this isn't me saying wealthy people shouldn't do what they want with their money, or looking down on you for having multiple high performance vehicles! I think it is amazing!

Very true. Although most Americans are fully levered and they technically don't have any equity. I'd be curious to know what is the average loan to value of residential real estate. Must be in the 70-80pct range. Back in my home country mortgage rates are 15pct so you only buy what you can afford.

 

[SmallerBaller]

Very true. Although most Americans are fully levered and they technically don't have any equity. I'd be curious to know what is the average loan to value of residential real estate. Must be in the 70-80pct range. Back in my home country mortgage rates are 15pct so you only buy what you can afford.

A great point! My home is very small compared to most of my peers, but that has never been a priority to me. It is actually mostly a garage! I know many, many people who left college, got a job, and immediately signed a 20 year mortgage on a 400k house with their parents giving a down payment... on top of their fresh student debt.

 

[Foxy87]

Wouldn't that be awesome! That is not in the cards for me, and that is totally okay. More than okay! A lot of people don't think about it, but if you make $40k USD annually you are in the 99th percentile of earners on the entire planet. For perspective, the US poverty line of ~$12,800 is about $500 above the average global income. More telling yet, the median household income (not average for a single person) is about $9k per year. The fact is that if anyone is even considering a car like this, or pretty much any car, period, they are very well off! I am thankful to God that I live in a powerful, wealthy nation with opportunity to work my way up.

To be clear, this isn't me saying wealthy people shouldn't do what they want with their money, or looking down on you for having multiple high performance vehicles! I think it is amazing!

Hmmm okay but this 40k comparison is basically pointless, because there are a lot of countrys where you basically earn next to nothing. And if you earn 40k annually in the US I highly doubt that you can (should) afford an Emira…

 

[Porter]

Very true. Although most Americans are fully levered and they technically don't have any equity. I'd be curious to know what is the average loan to value of residential real estate. Must be in the 70-80pct range. Back in my home country mortgage rates are 15pct so you only buy what you can afford.

The idea of having 70% loan to equity on a house and yet being perceived as not having any equity is quite confusing.

If I own a $1m house with 70% loan to value, I have $300K in equity. And I accrue 100% of the home's increase in value over time to myself.

 

[Silver Storm]

The idea of having 70% loan to equity on a house and yet being perceived as not having any equity is quite confusing.

If I own a $1m house with 70% loan to value, I have $300K in equity. And I accrue 100% of the home's increase in value over time to myself.

Agree. The real problem is when unqualified people buying more house than they can afford. The sub-prime mortgage crisis of 2007-2008 highlights the danger of over extending oneself to buy a house they have no ability to pay.

 

[Cachaco131]

The idea of having 70% loan to equity on a house and yet being perceived as not having any equity is quite confusing.

If I own a $1m house with 70% loan to value, I have $300K in equity. And I accrue 100% of the home's increase in value over time to myself.

I could not disagree more. My personal view is that your own home is a consumption item rather than an investment. Unless you relocate from an expensive area to a lower cost area, or downsize significantly, a primary home is not really an investment.

 

[Porter]

I could not disagree more. My personal view is that your own home is a consumption item rather than an investment. Unless you relocate from an expensive area to a lower cost area, or downsize significantly, a primary home is not really an investment.

That's a pretty weird take but no problem, you're free not to buy a house. The $250k in value that my house has gained in the last 4 years is an upside you're absolutely free not to participate in. 🤣

 

[Cachaco131]

That's a pretty weird take but no problem, you're free not to buy a house. The $250k in value that my house has gained in the last 4 years is an upside you're absolutely free not to participate in. 🤣

Tell me how is that upside? Are you moving to a cheaper part of town to cash out? Have the houses around yours not appreciated but your house has?

A secondary home or rental is an investment. Ones primary residence? I beg to differ.

 

[SmallerBaller]

That's a pretty weird take but no problem, you're free not to buy a house. The $250k in value that my house has gained in the last 4 years is an upside you're absolutely free not to participate in. 🤣

Tell me how is that upside? Are you moving to a cheaper part of town to cash out? Have the houses around yours not appreciated but your house has?

A secondary home or rental is an investment. Ones primary residence? I beg to differ.

Apologies, I didn't mean to spark an argument here, my point was just that we are all super blessed to be in this sort of position! Different money methods work for different conditions and lifestyles!

 

[K_Squared]

Tell me how is that upside? Are you moving to a cheaper part of town to cash out? Have the houses around yours not appreciated but your house has?

A secondary home or rental is an investment. Ones primary residence? I beg to differ.

I think what @Porter is saying is that buying a real estate property (even a primary residence) is arguably a valid investment if it appreciates in value over time (which they tend to do, especially as of late). The fact that OTHER houses are also appreciating doesn't eliminate the added value when you compare it to renting where you get nothing in return for your monthly payments apart from a place to dwell. It may mean you don't actually have any additional home-buying power moving forward in the same area, but you are still effectively building wealth as compared to renting. You have to live somewhere so it's really one or the other and that's really the crux of the argument. I don't think anyone here is saying that buying a primary residence is THE ultimate path to wealth building, but renting forever certainly isn't.

My, we are way off topic

@SmallerBaller, I completely get your intent and I think you're right on with taking the time to appreciate our blessings. That fact that most of us on this forum are awaiting the arrival of a car like the Emira or have the ability to buy something comparable does mean that we are all blessed. On that I couldn't agree more.

 

[Porter]

Tell me how is that upside? Are you moving to a cheaper part of town to cash out? Have the houses around yours not appreciated but your house has?

A secondary home or rental is an investment. Ones primary residence? I beg to differ.

I'll bite. An investment and a get rich quick scheme are not the same thing. You seem focused on the latter. I'm thinking on a 30-year time scale, not a 6-month or 2 year time scale. With a mortgage locked in at 2.5% fixed for 30 years, I have a clear runway to the future I want for my family, and I'm not vaporizing thousands of dollars a month in rent to pay for somebody else's kids to go to college. A 2 bedroom apartment around here costs about $3000 a month. Why would I hand that to a landlord, rather than owning my own 4br home for the same money and keeping all the principal I pay into the loan as equity? It's a payment to my future self. And down the road if I need security against unforeseen crisis or needs, I can easily borrow against that equity to soften the impact to cash flow or reserves.

Regarding value, there is natural inflationary movement in currency value over time, particularly at long time scales. Real estate historically holds value while currencies numerically devalue. So in an area that maintains high real estate demand, homes appreciate at a pretty even rate that is notionally predictable as a lower trend slope against the rate of expansion of the economy.

So yes, it's theoretically possible to make more money in the stock market or with another traditional investment by investing the same funds. But it's not a delta of change enough to offset the inherent value-add of having a place to house your family, to invest socially in your community as a permanent resident, and a sink of value upon which it's possible to draw financial stability and security whenever needed.

So rent if you want to. That's your prerogative. But don't act like there aren't significant benefits to owning your own home. There objectively are.

 

[Silver Storm]

That's a pretty weird take but no problem, you're free not to buy a house. The $250k in value that my house has gained in the last 4 years is an upside you're absolutely free not to participate in. 🤣

My house has gained over $500k in the past 6 years. And I know my house is in demand, lots of realtors knocking on my door and emailing me, asking if I want to sell for top dollar. 😆 Real estate market is still strong despite the higher interest rates and slowing economy.

And if I do sell, it’s all tax free. No capital gains tax (there are certain stipulations tho). So when it’s time to cash out and downsize, it’s 💰 in your pocket. There are very few investment options out there where you can earn tax free money legally.

 

[John777]

That's a pretty weird take but no problem, you're free not to buy a house. The $250k in value that my house has gained in the last 4 years is an upside you're absolutely free not to participate in. 🤣

Pull out the equity and invest it. Otherwise you equity isn't' working for you.

 

[John777]

I'll bite. An investment and a get rich quick scheme are not the same thing. You seem focused on the latter. I'm thinking on a 30-year time scale, not a 6-month or 2 year time scale. With a mortgage locked in at 2.5% fixed for 30 years, I have a clear runway to the future I want for my family, and I'm not vaporizing thousands of dollars a month in rent to pay for somebody else's kids to go to college. A 2 bedroom apartment around here costs about $3000 a month. Why would I hand that to a landlord, rather than owning my own 4br home for the same money and keeping all the principal I pay into the loan as equity? It's a payment to my future self. And down the road if I need security against unforeseen crisis or needs, I can easily borrow against that equity to soften the impact to cash flow or reserves.

Regarding value, there is natural inflationary movement in currency value over time, particularly at long time scales. Real estate historically holds value while currencies numerically devalue. So in an area that maintains high real estate demand, homes appreciate at a pretty even rate that is notionally predictable as a lower trend slope against the rate of expansion of the economy.

So yes, it's theoretically possible to make more money in the stock market or with another traditional investment by investing the same funds. But it's not a delta of change enough to offset the inherent value-add of having a place to house your family, to invest socially in your community as a permanent resident, and a sink of value upon which it's possible to draw financial stability and security whenever needed.

So rent if you want to. That's your prerogative. But don't act like there aren't significant benefits to owning your own home. There objectively are.

Where did you get 2.5% fixed for 30years? I think the longest with an A lender in Canada is 10years and that was nowhere near 2.5%.

 

[Cachaco131]

My house has gained over $500k in the past 6 years. And I know my house is in demand, lots of realtors knocking on my door and emailing me, asking if I want to sell for top dollar. 😆 Real estate market is still strong despite the higher interest rates and slowing economy.

And if I do sell, it’s all tax free. No capital gains tax (there are certain stipulations tho). So when it’s time to cash out and downsize, it’s 💰 in your pocket. There are very few investment options out there where you can earn tax free money legally.

You said it, "downsize". That what I mean, it's the only way to free up equity

 

[Cachaco131]

I'll bite. An investment and a get rich quick scheme are not the same thing. You seem focused on the latter. I'm thinking on a 30-year time scale, not a 6-month or 2 year time scale. With a mortgage locked in at 2.5% fixed for 30 years, I have a clear runway to the future I want for my family, and I'm not vaporizing thousands of dollars a month in rent to pay for somebody else's kids to go to college. A 2 bedroom apartment around here costs about $3000 a month. Why would I hand that to a landlord, rather than owning my own 4br home for the same money and keeping all the principal I pay into the loan as equity? It's a payment to my future self. And down the road if I need security against unforeseen crisis or needs, I can easily borrow against that equity to soften the impact to cash flow or reserves.

Regarding value, there is natural inflationary movement in currency value over time, particularly at long time scales. Real estate historically holds value while currencies numerically devalue. So in an area that maintains high real estate demand, homes appreciate at a pretty even rate that is notionally predictable as a lower trend slope against the rate of expansion of the economy.

So yes, it's theoretically possible to make more money in the stock market or with another traditional investment by investing the same funds. But it's not a delta of change enough to offset the inherent value-add of having a place to house your family, to invest socially in your community as a permanent resident, and a sink of value upon which it's possible to draw financial stability and security whenever needed.

So rent if you want to. That's your prerogative. But don't act like there aren't significant benefits to owning your own home. There objectively are.

I think you need to have a glass of wine.

I own two properties and my LTV is 30pct. So not sure why you mention renting vs owning. 🤔

What you are referring in your lengthy response is building equity. Building equity is not the same as a good investment. Let's say I own an apartment in SF that I rent out. It's rented for 30y, the rent covers mortgage and opex and then in 2053 I own it outright. I've built equity. But my IRR could be 5pct. That's not a good investment.

To free up the equity you have built ,you need to downsize or move to a cheaper location.

That's all I meant. Have a 🍷.

 

[Porter]

You said it, "downsize". That what I mean, it's the only way to free up equity

Guess what? That's exactly what people do when they retire and their kids have left home, they downsize. Or in some cases they move to a beautiful place with a low cost of living to enjoy the fruits of their long and careful planning. Either way, the equity is freed at a time when it's very appropriate, and ensures they don't have to touch a dime of their retirement savings in order to afford a place to live.

 

[Porter]

Where did you get 2.5% fixed for 30years? I think the longest with an A lender in Canada is 10years and that was nowhere near 2.5%.

The US is a messed up place in a lot of ways, but at least we've ensured that banks are structurally incentivized to support home ownership by regular people.

 

[Cachaco131]

Guess what? That's exactly what people do when they retire and their kids have left home, they downsize. Or in some cases they move to a beautiful place with a low cost of living to enjoy the fruits of their long and careful planning. Either way, the equity is freed at a time when it's very appropriate, and ensures they don't have to touch a dime of their retirement savings in order to afford a place to live.

No kidding, I thought people upsized upon retirement. 🙄

Let's see. Buy apartment for 100 with loan of 70. Wait 30y and pay off loan. Covid 2053 crushes condo values so you sell it for 100. Yes, you "created" 70 of equity but what is your IRR? Let's not confuse investment with building equity.

Not sure why I hit a nerve. Not trying to say owning is bad. Anyway, let's move on to cars. I'm curious what @VL3X is getting!