Real Estate Archives - Page 24 of 24

Why I Won’t Pay Off My Mortgage Until I Retire

Party at my house!

Having a mortgage is a wonderful thing. In fact, I owe much of my work longevity to my mortgage. When I was 24, I came across a lot of cash due to a couple good stock picks. I was just lucky, because goodness knows I can’t pick stocks for doodoo. I never really told anybody how much I had, but it was enough to put 25% down on a median priced home in San Francisco and still have several years of mortgage payments left over.

By my mid 20s I began questioning the meaning of work. Perhaps I was simply suffering the lesser known “quarter life crisis.” Because I had arrived at what I considered to be too much money too quickly, working to make more money lost its appeal. It didn’t matter if I added another thousand or ten thousand to my savings, making money was so uninspiring. I was demotivated because of a couple chance trades that required very little skill, just a lot of balls.

The great irony is that I don’t need much of anything to live a comfortable life. Give me some clean clothes and a place overlooking the beach with a hot tub off the bedroom balcony and everything will be OK!

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Renters Should Pay More Taxes To Fight For Equality

Posted by Financial Samurai 310 Comments

Every winter and spring, millions of homeowners across America pay their property taxes. In California, homeowners have to fork over roughly 1.2% of the assessed value every year to the local government. Put it another way, in 83 years, a homeowner will have paid 100% the value of his or her home in taxes! How sick is that?

It is the American way for all citizens to pay their taxes, except for the many who don’t. We know by now that the often cited “47%” are the elderly or those who make under $20,000 so that’s fine. If you are one of them, just don’t vote to raise taxes on the 53% who already pay 100% of all federal income taxes please! Let’s all pitch in or starve the beast instead.

So why is it that homeowners, many of whom initially struggle to pay their mortgages, have to pay extra taxes while renters don’t? Let’s explore and discuss, shall we?

RENTERS VS HOMEOWNERS: A WRONGLY PERCEIVED CLASS DIFFERENTIAL

The clearest reason why homeowners have to pay property taxes while renters don’t have to pay renter taxes is because the government perceives homeowners as Lords! The word “landlord” makes it very clear that homeowners are considered the superior class. Back in the old days, peasants had to toil in the fields to pay for shelter. They couldn’t even afford regular food, let alone pay extra in taxes to help build schools and maintain roads.

Hundreds of years later, it’s odd that this archaic term and concept still holds true, even though America has grown to become the wealthiest nation in the world. For anybody to equate renter to poverty is just ludicrous. Sure, there are some studies that show that the average net worth for a homeowner is 40X greater than that of a renter ($160,000 vs. $4,000). But overall, many more Americans nowadays rent out of choice, not out of insufficient funds.

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Where Americans Pay The Most To Live And Why

Posted by Financial Samurai 71 Comments

high costs of living and sunshine — Samurai On Waialae Beach At Sunset

As one can guess, higher paying jobs leads to higher costs of living. In fact, more than half of the 20 cities surveyed by the US Census Bureau are based in California.

How is it that California is so dominant in the expensive costs of living category? The mass of settlers first arrived on Plymouth Rock 300 years ago. And 3,300 miles is a long way to travel, especially on horse and foot! Besides the gold rush, the main reason for the unfettered move out west is warmth and sunshine!

High Costs Of Living And More Sun

Every time I vacation in Hawaii, I always ask myself, why the heck ain’t I here for good. Let’s face it, more sunshine equals happier people. Sunshine is the classic zeitgeber to help us wake up and get us motoring in the morning. No sunshine leads to no photosynthesis, which means no plant life, and therefore no ecosystem.

After 10 years of living on the east coast, I can still feel the grey skies weigh down my soul every winter. Don’t get me wrong. I love the winter snow during the holidays. But I just love being in a cheerful mood more. Here are America’s most expensive places to live based off median monthly housing costs.

Top Cities Where Americans Pay The Most To Live

1. San Jose, Calif. Median Monthly Housing Costs: $1,828

2. Bridgeport, Conn. Median Monthly Housing Costs: $1,793

3. Oxnard, Calif. Median Monthly Housing Costs: $1,780

4. Washington, D.C. Area Median Monthly Housing Costs: $1,706

5. San Francisco, Calif. Median Monthly Housing Costs: $1,660 (Here!)

8. Honolulu, Hawaii. Median Monthly Housing Costs: $1,532 (There!)

15. Trenton, New Jersey. Median Monthly Housing Costs: $1,401 (So not there!)

19. Seattle, Washington. Median Monthly Housing Costs: $1,368 (On the West Coast, but not as expensive likely due to rain)

Source: Forbes

Go To Paradise

So there you have it. Did the cities with the highest costs of living surprise you? Would you be willing to pay $131/month more to live in Honolulu, Hawaii than Trenton, New Jersey? You bet your buns of steel I would!

The next time you are feeling a little glum, look outside and see if the weather has anything to do with it. And if so, come back to this post and plan your move out west.

If you’re paying high costs of living might as well be in the sunshine.

300 years ago, it would have taken you months to come out west. Now, all it takes is a two week bus ride at most. Don’t be afraid to pack up your bags and move, even with a family.

Leo from Zenhabits, with his 6 children are moving to San Francisco from Gaum, and Ryan from Planting Dollars left Wisconsin for Hawaii, why can’t you? After experiencing 10 years on each coast, there is no doubt in my mind that living in a warmer, sunnier place is the way to go. See you on the beach this winter!

Recommendations

Shop around for a mortgage: Mortgage rates have collapsed after Brexit, and US assets are aggressively being bought by foreigners due to our stability. Check the latest mortgage rates online through LendingTree. They’ve got one of the largest networks of lenders that compete for your business. Your goal should be to get as many written offers as possible and then use the offers as leverage to get the lowest interest rate possible. This is exactly what I did to lock in a 2.375% 5/1 ARM for my latest refinance. For those looking to purchase property, the same thing is in order. If you’ve found a good deal, can afford the payments, and plan to own the property for 10+ years, I’d get neutral inflation and take advantage of the low rates.

Explore real estate crowdfunding: If you’re looking to buy property as an investment or reinvest your house sale proceeds, take a look at Fundrise, one of the largest real estate crowdfunding platforms today. They allow everyone to invest in mid-market commercial real estate deals across the country that were once only available to institutions or super high net worth individuals. They are the pioneers of eREIT funds and they are creating an Opportunity Fund to take advantage of tax-efficient Opportunity Zones. Thanks to technology, it’s now much easier to take advantage of lower valuation, higher net rental yield properties across America.

Fundrise Due Diligence Funnel — Less than 5% of the real estate deals shown gets through the Fundrise funnel

Updated for 2020 and beyond.

Book Review & Giveaway: The New Rules For Mortgages

Posted by Financial Samurai 28 Comments

“The New Rules For Mortgages” by Dale Siegel provides a fantastic understanding of everything you need to know about mortgages. For many, a home is the single biggest purchase of their lives, and the mortgage is a necessary instrument for making homeownership dreams a reality.

Qualifying for a mortgage is daunting, but it doesn’t have to be under Dale Siegel’s guidance. After all, who’s better to give instructions than the president of her own mortgage company? It’s important to highlight that Dale truly tries to provide readers knowledge about mortgages and doesn’t use her book as a sounding board for her company. The book is like a secret weapon for first time home-buyers who dare tip-toe past enemy landmines. The enemy is the industry which has adeptly blown off many appendages via exotic liar loans and oh-too-high fees.

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How To Lower Your Property Taxes – Adventures In Assessor Land

Posted by Financial Samurai 26 Comments

FACT: The goal of local governments is to get every single penny in tax revenue from you! When I got my property tax bill in 2009, I was astonished to see that the City is taxing my primary residence based off an assessed value 7% HIGHER than in Armageddon 2008! In the biggest economic downturn ever, the San Francisco assessors office believes my property actually increased?! What a sham!

Like clock work, assessed values increase 2-3% higher every year, regardless of the economic environment. It’s as if the City is punishing me for succeeding to lower my assessed value last year by 3%. Too bad for the city, because they are messing with the WRONG person. The tax collectors office counts on citizens to roll over and listen to their every whim, but not me, and certainly not you!

I want to share some tips on how you too can fight against the machine.

5 STEPS TO REDUCE YOUR PROPERTY TAX

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Zillow Says I’m $400,000 Wealthier! Why Net Worth Is Rubbish

Posted by Financial Samurai 15 Comments

Primary Residence Zestimate

To prove our point regarding “Your Net Worth Is An Illusion” I took a look at Zillow’s latest zestimates of my primary residence and rental property. Apparently, in a span of 3 months, my primary residence gained a whopping $300,000! I’m popping open a bottle of Crystal, buying a rose gold Patek Philippe Calatrava at Tiffany’s, and ordering the Audi R8 on as we speak. Just kidding, especially since September is frugality month. Besides, Zillow isn’t writing me a check for $300,000!

The dollar sign shows the purchase price after a 4 month escrow that began in late 2004. In other words, the purchase price was $250,000 below what the zestimate measured as fair value in the middle of winter. You’d think that after 4+ years of existence, Zillow’s price algorithms would be more refined. Perhaps the data is legit, but I’m not buying it. Since net worth calculations don’t include one’s primary residence, let’s strike this example and look at a rental property.

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Family Gets Award For Paying Off Debt & Jumps Right Back In!

Posted by Financial Samurai 6 Comments

Paying off debt should be straight forward. Yet so many people fail to pay off their debts? If you go $106,000 into personal debt, and pay it off in 5 years, you apparently get the Professional Achievement and Counseling Excellence (PACE) 2009 Graduate Client of the Year Award. I was hoping for a longer award name, but what a great nugget to put on their resume!

The kicker? The Hildebrandt’s decided to dive back into debt with one year left on their pay back plan by buying a house! Furthermore, they took advantage of the $8,000 first-time home buyer tax credit. The article ends with sage advice from the Hildebrandt’s saying, “Get out of debt, it’s a choke-hold.”

We should be paying off debt

One of the greatest things about America is free speech. It’s never been paying off debt! Good or bad, we are a society that coddles fragile self-esteem and rewards people for situations they shouldn’t be in from the onset.

Although The Hildebrandt’s aren’t practicing what they preach, they’ve got their award and are living the American dream. Congrats guys! We can’t wait for your next award.

Meet The Hildebrandt’s and read about their great achievement.

Improve Your Wealth And Pay Off Debt

To better manage your wealth, you need a plan to pay off debt and save. First, check out these top financial products. Next, try using Personal Capital’s free financial tools. Personal Capital helps you track your net worth, control your cash flow, and growth your wealth on stealth mode for free.

One of their best features is their Portfolio Fee Analyzer, which runs your investment portfolio(s) through its software in a click of a button to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was hemorrhaging!

Their second amazing tool is their Retirement Wealth Planner which is the best on the web because it pulls in real data you’ve linked up, and runs thousands of algorithms through a Monte Carlo simulation to give you a financial picture of your future. You can run multiple different scenarios with different spending, income, and life events to help anticipate your future.

Why I Can’t Bank At Wells Fargo

Posted by Financial Samurai 6 Comments

A Wells Fargo Senior VP, Cheronda Guyton moved into a foreclosed $12 million mansion with her family and hosted extravagant house parties. Meanwhile, her job is to figure out how to profit from foreclosures (well done!), but she didn’t allow brokers to show the Wells Fargo-owned place because her family was squatting!

I knew there was something funny a couple years ago, when I was talking to one of their mortgage brokers and the rates he was quoting were 50-100bps higher than everyone else. Bank of America got my business instead. Too bad Ken Lewis was so empire-building driven and panic bought Merrill at the market open, instead of after the close. What’s $25 billion more between between shareholders?

Given we live in bizarro world, don’t be surprised if Wells Fargo goes ahead and promotes her to lead up a different department. After all, Wells Fargo does technically own the foreclosed home, and can do what they will. Their $60,000/month vacation rental asking price might sound excessive, but not as excessive as Cheronda Guyton not letting anybody rent it out because she wanted to pump up the base herself!

Great to see our $25 billion in tax payer bailout money be put to good use. Thanks for everything Cheronda. Tell you what guys, since we are PR experts here at Financial Samurai, why don’t you Cheronda donate the $240,000 in lost rental income to the LA firefighter’s fund, and ask your employer to match it. Here’s your article with further details.

Wealth Building Recommendations

Less than 5% of the real estate deals shown gets through the Fundrise funnel

Shop around for a mortgage: Check the latest mortgage rates online through LendingTree. They’ve got one of the largest networks of lenders that compete for your business. Your goal should be to get as many written offers as possible and then use the offers as leverage to get the lowest interest rate possible from them or your existing bank. When banks compete, you win.

Updated for 2019 and beyond.

Property Makes People Think Irrationally

Posted by Financial Samurai 18 Comments

Over at a new found site called ” The Writer’s Coin,” the 28 year old personal finance writer questions whether he should buy this house if he only has 13% down. Mind you, he has been giving personal finance advice for a couple years now, and is even a guest poster on mega-site Wisebread, which Financial Samurai may one day contribute to. Honestly, I felt like I was watching one of those Holiday Inn commercials reading his post. A guy would provide some great advice and become a medical doctor because of his one night stay at the hotel chain. But what about the next night when he has to sleep at home?

WC’s question got me thinking. If someone who has been disciplined enough to write about money matters still can’t see the fallacy of buying a house with only 13% down, why are we so weak when it comes to housing? Do people just blindly fall in love with something and disregard every financial principal? Doesn’t seem like WC has much more saved up than 13%, because who says “13% down” anyway? Why not 10%, 15%, or 20%? Heck, back in the good old old days, people paid 100% down.

How did we come to this pitifully low downpayment standard in America? Probable explanation #1) It’s the Madoff Syndrome aka greed! “I want this, and I want it now!” and #2) The Nesting Syndrome. There is a tendency for those in a long term relationship who want children to buy a place. I don’t even have to read WC’s about page to guess he’s planning on getting married or having kids. For the guy specifically, the itch seems to start at 30, if not sooner. The desire of owning our own castle and showing we’ve “arrived” is strong.

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BusinessWeek’s 10 Best Places To Own Property

Posted by Financial Samurai 6 Comments

Business Week comes out with a Top 10 list of best places to buy vs. rent. This is their formulation in their words:

“To create a fair match-up between owning and renting, we calculated ownership costs assuming a fixed 30-year loan for 100% of the purchase price with no down payment. If they had instead decided to factor in a 20% down payment, owning would have been the cheaper option for the top 10 metros on our list.”

The problem I have with this list is that I don’t see the words “Honolulu”, “Newport Beach,” “Malibu”, “San Francisco”, or “Paradise”! Everywhere one wants to live is expensive, and everywhere one doesn’t really prefer to live is cheap. Things are cheap for a reason, and real estate is no different.

Think about prime real estate sitting a top a triangle. The triangle’s base always gets wider as demand continues to grow. Meanwhile there’s only one prime location. Is it no wonder why Realtors always talk about “location, location, location”? You can also think of your sub-prime location as an inverted triangle ready to topple over. Only a very few want to buy, and the supply is overwhelming.

During this real estate correction, you’ve seen expensive areas such as San Francisco correct 15-20% from the peak, however, drive out 1 hour east and places such as Antioch and Pittsburgh have gotten crushed by 40-60%. If you’re an investor, focus on places where you’d actually see yourself willing to live in. After all, if you wouldn’t want to live in your property, why would someone else?

A similar purchasing analogy can be made with cars. You may think that someone buying a limited production Lamborghini Gallardo Spyder for $210,000 is foolish with his money. But, after one year later, he’ll sell that Lambo for more, or at the least recoup more than if he had bought a brand new Ford Expedition for $48,000. Obviously this example is extreme here, given most don’t have $200K to splurge on a car, but you get my point.

Things are cheap for a reason. Only if you have the financial means, and are already living in one of these 10 cities should you consider buying. Otherwise, just focus on buying or renting in that tropical paradise in the best location possible.

Read more to see what paradise cities lie in BusinessWeek’s Top 10 list!

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