Mr Mogul owns too many properties in Jackson MS for too long so he has to fix some of his property (this is where the cap ex bites on houses that costs less to buy than to build) vs Mr Newbie which is still in his honeymoon period and makes a tidy profit. Just pure speculation from a moron that knows squat about the real situation
If you bought in Florida between 2005 and 2008 your house is only just now worth what you originally paid for it. Imagine buying a house for appreciation that loses value and rents for less than the mortgage payment. Now imagine being stuck in a capsule, slowly sinking to the bottom of the ocean.
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Excellent description!!!
This happens even in “recession proof” markets.
Lesson is: try to buy stuff that cash flows, AND be prepared to hold for 15-20 years. For 40 years people pretty much didn’t lose money in real estate in most areas; if you bought it the 04-08 time period... your life was ugly. Buying a house was a conservative thing to do; yet, even being conservative and financially prudent, you could lose a few hundred K (30-50%) in a year. It was unthinkable until it happened.
Being underwater AND losing money on cash flow if you have to rent it... sucks. If you cash flow, you can hold and wait it out.
The difference between real estate and the stock market is that the average person can get a LOT more leverage at a lower cost in real estate.
Real estate can go bad like any other investment. No free lunch. Lots of crooks in property management and repairs, etc.(e.g. kickbacks to take advantage of out of state owners.) Lots of renters who absolutely know how to scam the system, even in high end markets. Have to have the cash and time/patience to ride these things out when they happen. Else buy an ETF for whatever risk profile you want exposed to real estate.
I don't know about the "just do it" advice? Buying more house than you can afford is a costly mistake, or so I've read.
Mr Mogul owns too many properties in Jackson MS for too long so he has to fix some of his property (this is where the cap ex bites on houses that costs less to buy than to build) vs Mr Newbie which is still in his honeymoon period and makes a tidy profit. Just pure speculation from a moron that knows squat about the real situation
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If you bought in Florida between 2005 and 2008 your house is only just now worth what you originally paid for it. Imagine buying a house for appreciation that loses value and rents for less than the mortgage payment. Now imagine being stuck in a capsule, slowly sinking to the bottom of the ocean.
<<
Excellent description!!!
This happens even in “recession proof” markets.
Lesson is: try to buy stuff that cash flows, AND be prepared to hold for 15-20 years. For 40 years people pretty much didn’t lose money in real estate in most areas; if you bought it the 04-08 time period... your life was ugly. Buying a house was a conservative thing to do; yet, even being conservative and financially prudent, you could lose a few hundred K (30-50%) in a year. It was unthinkable until it happened.
Being underwater AND losing money on cash flow if you have to rent it... sucks. If you cash flow, you can hold and wait it out.
The difference between real estate and the stock market is that the average person can get a LOT more leverage at a lower cost in real estate.
Real estate can go bad like any other investment. No free lunch. Lots of crooks in property management and repairs, etc.(e.g. kickbacks to take advantage of out of state owners.) Lots of renters who absolutely know how to scam the system, even in high end markets. Have to have the cash and time/patience to ride these things out when they happen. Else buy an ETF for whatever risk profile you want exposed to real estate.