Owners No More

"It may be liberating at first, because you come with no baggage, no one knows you, and you have no responsibilities, but that gets old fast when no one greets you by name."

Leave it to a broker to peddle something worthless as a must-have. BARF.

Haven't read this thread and I'm going to be slightly insulting: the majority (not all) of whines I hear about not wanting to rent seem to be superficial, psychological hang-ups (I'm just talking about the statements, not the people, so take a deep breath :). Such statements typically include phrases such as "mine", "aestetically pleasing", "do what I want", etc... Fine if that's your priority, but I think many people (not all) opt for what they think they should have instead of making a more fiscally responsible choice. Hey, we aren't all conservative when it comes to cash. no biggee! Amount of space is an issue for us. We can rent far more space in manhattan than we can own. We also don't know if we're going to be here long-term. I'm always shocked by the people who buy before having both feel firmly planted. it's all very interesting...

hindsight brilliance? oh my. maybe a few years ago i was exchanging thoughts on this board with a different juiceman.

and i've never linked the stock market to the real estate market. i thought it might have a slightly greater relationship to economic reality, which was wrong, but investments in liquid assets are a much different beast than real estate investments.

^sorry for typos. that would be "aesthetically pleasing" and "feet firmly planted".

and all that being said, there may come a time when, although it's still cheaper to rent, we'll decide to buy. this city is a beast. thank god we can at least afford to rent at this point in time b/c owning is out of the question for the amount of space that we desire.

"You were off by 25% yet you still claim to be right? LMAO"

No. I said prices were down by 30% in Manhattan, Corcoran says 25%. Not that much of a difference, but if need be I can find where I got the 30% figure.

Miami is down by 50%.

Is this hard for you to understand, Juicy?

"All this hindsight brilliance is admirable."

No. I predicted it nearly 2 years ago, Juicy. You're the one who denied it - we've reprinted your quotes - even though you insist it was all Lehman and THAT's why you were wrong. Lehman only sped up the inevitable.

uwsmom, so few people even mention the fact that a decent amount of space is still affordable to very few. many people rent because they feel they have to, or as was my case until very recently, what they could afford seemed to be a terrible compromise for the money spent.

AR - absolutely! why compromise for silly reasons.

Aboutready, I agree with you.

However, I still prefer owning to renting for its permanency. It's hard (at least for me) to psychologically feel totally "at home" and "grounded" in a dwelling that is only mine from lease term to lease term. Add in the uncertainty of rent hikes (it always goes up), and the absolute pain in the ass it is to pack up one's entire world every couple of years like a gypsy just to go through the horrendous experience of spending both time, energy, and money to find yet ANOTHER apartment.

"and i've never linked the stock market to the real estate market."

That's not my point. How many renters put their nest eggs into other investments that evaporated with the economic crash? Are they more fiscally savvy because they didn't buy a place to live? You make no sense.

wouldn't it be lovely if we had normal interest rates and could earn money without everyone having to gamble excessively? that's my point. it was all a gamble, and the odds were stacked against us. but to tie yourself to a long-term commitment in the midst of that would be, to me, one of the worst possible investment decisions.

and i got out right before the crash. but i'll confess that was just luck.

matt, i understand. i liked owning on many levels, particularly in Seattle where i had a beautiful pre-war one bedroom condo that suited our needs for a mere pittance. if you can afford it without any strain it's lovely. it's just that owning without any strain hasn't been the norm for many buyers the last 8-10 years. even if they bought a coop, the price of everything else has been galloping along out of control, and most people's incomes haven't been galloping along at the same pace. that's kind of hard to plan for.

"I don't get that logic nyc, what we had was an economic bubble fueled by real estate (among other things). If RE was fundamentally bad before it crashed than so were all of the business decisions based on never ending economic growth. Retail and manufacturing business plans were based on unsustainable growth trajectories so, according to your and AR's logic, it was a bad time to buy retail stocks and you were foolish for doing so."

It was somewhat foolish, yes, but not nearly as foolish as RE. Stocks and the economy were part of the fallout. But RE could have crashed alone and kept those in much better shape, but RE crash was SO bad it took the rest down with it.

Plus, add in the bank leverage. Without that, we would have had RE crater but not nearly the same economic effect.

So, putting a lot in stocks in 2007 wasn't so smart, but doing it in RE was even dumber.
And, doing it leveraged... thats just compound stupid.

> How many renters put their nest eggs into other investments that evaporated with the economic crash?

There were some idiots, I'm sure. Difference is, you had to be a super idiot to lose all your $$ in stocks - going leveraged, not diversifying, etc, - all the things you're told not to do.

To lose 100% of your "investment" in RE was par for the course, and doing all the things they told you to do.

The big difference is leverage. This make dumb moves horribly insane.

> "You were off by 25% yet you still claim to be right? LMAO"

Juiceman... are we talking about Steve now... or you?

If you lost 100% of your return in real estate you were over-leveraged.. by definition.

"However, I still prefer owning to renting for its permanency. It's hard (at least for me) to psychologically feel totally "at home" and "grounded" in a dwelling that is only mine from lease term to lease term. Add in the uncertainty of rent hikes (it always goes up), and the absolute pain in the ass it is to pack up one's entire world every couple of years like a gypsy just to go through the horrendous experience of spending both time, energy, and money to find yet ANOTHER apartment. "

I agree, moving stinks. But what are the odds you're going to afford the apartment you want at 40 at 25? 35?

I figure, you'll likely be moving anyway. MUCH easier to do it with renting, not selling, getting another mortgage, closing costs, etc, etc.

If you know where you want to live forever, great, awesome for you. But how many people is that realistic for in NYC? Even the folks who bought, most I know moved within 5 years. The majority of folk I know who bought were looking to trade up almost right away. If you've got a free $20 million, sure. But for those who can afford $2 mil, you think they're really getting the apartment of their dreams? The folks who spend $5 mil eventually want the $10 mil. Its not the suburbs, where you can get closer to that (at least the land). People move here much more often.

And finding a rental is easier than finding a buy.

Of course, I just pay somebody to move me now. IN the end, it more than pays for itself with the cost of renting being so much cheaper.

So, yes, benefit to staying in one place. But I think folks WAY overpay for that privilege.

"I agree, moving stinks. But what are the odds you're going to afford the apartment you want at 40 at 25? 35?"

If you have a fixed-rate mortgage, the lion's share of your monthly housing outlay won't change for 30 years.

"I figure, you'll likely be moving anyway."

Why?

I prefer owning over renting but wouldn't buy a primary residence where (and i ignore down payment.. i just do.) rent < ( after tax cost of mortgage + common charges + after tax cost of r.e. tax).

matt, most people do. very few people buy their forever apartment when they are young.

"How many renters put their nest eggs into other investments that evaporated with the economic crash" - the beauty of growing up poor and ignorant: cash is all you understand :)

This goes without saying, but the mortgage payment can also go down. Ours is two-thirds of what it was when we bought.

keep it simple and stupid. this board often makes me feel like i'm making out like a bandit.

NWT, in the last 8-10 years interest rates have generally been very low. little room for refi, but common charges and maintenance have pretty much uniformly increased. not universally true, of course, but generally so.

"matt, most people do. very few people buy their forever apartment when they are young."

When I was looking to buy, a 50-something colleague of mine gave me this sound advice for buying in Manhattan: "Buy an apartment you'll be comfortable dying in."

"No. I said prices were down by 30% in Manhattan, Corcoran says 25%. Not that much of a difference, but if need be I can find where I got the 30% figure."

Yes, but you predicted 50% which makes you 25% off.

it's great advice but most people feel they have to get in the real estate game so they can make profits from one unit as part of the down payment for the next. the relentless upward spiraling of prices recently only added fuel to that belief. few can afford the 2-3 bedroom before they actually have the children, so many start with the starter unit. others simply miscalculate their needs.

"Juiceman... are we talking about Steve now... or you?"

it is cute that you stick up for steve nyc

AR, true, not an argument for buying now, but theoretical. Our ~9% in 1992 seemed low then, since we remembered double-digit rates. Now we're at ~6%, having refi'd in 1998 and 2004.

Maintenance has doubled in those 17 years.

"Yes, but you predicted 50% which makes you 25% off."

First, were your logic correct it would be 33.3% off: $100 - 25% = $75. $75 - 33.3% = $50.

Despite your inability to do rudimentary maths, I said that prices are still falling, and they are.

The correction is not yet over.

"hindsight brilliance? oh my. maybe a few years ago i was exchanging thoughts on this board with a different juiceman."

lol

"If you have a fixed-rate mortgage, the lion's share of your monthly housing outlay won't change for 30 years."

What does that have to do with being able to afford the apartment you want at 40 at 25?

Your point doesn't help the case.

> it is cute that you stick up for steve nyc

Its cute that you're still trying to make arguments about "accuracy"

lol

That is some sound advice, Matt. Many people can limit their moving to once or twice in a lifetime if they don't have too many life changes. I know a woman who rented one apartment for the past 20 years, then she bought her forever co-op in 2007 at the market peak. She argues it's a prewar in an exclusive neighborhood. And she also says she would have lost money anyway since she would have invested more in the stock market, had she not bought her home.

"When I was looking to buy, a 50-something colleague of mine gave me this sound advice for buying in Manhattan: "Buy an apartment you'll be comfortable dying in."

So, I'm assuming he means you should rent until the time you can afford that?

This is very simple. Everything was too expensive because there was a credit bubble/orgy. Nothing met its first most basic absolute hurdle of risk/reward. Those lucky or smart were in cash. Any way you slice it you are better off in almost any bond porfolio, funding your rent payments, then buying a Manhattan apartment. History has demonstrated that it lags the stock market off the bottom (even the most recent history!). The equity cap rate should be much closer to the mortgage rate...and mortgage rates have more of an upward bias than down...and rents have a more downward bias than up. What more do people need to fucking know? This pussy crap about the joys of ownership are what foreclosures are made of.

Back in the 1990s, people could afford to buy their last apartment. My two most successful hedge fund friends from business could also... and now they regret it. There attitude is they paid for the places with the same "stuff" that drove the prices up...so if and when they sell to move out of the city, they see their losses as bygones.

> That is some sound advice, Matt.

Isn't that the "sound advice" that screwed America? Buy the biggest house you can (almost) afford?

that worked out real well.

People in this article get very confused about want vs. need. The guy who installed the walnut floors and viking stove, among other improvements is an example. He probably spent over $100k in upgrades to flip for less than $90k profit, which was taxed. If he had not spent the extra money, maybe he could have held onto his home for the longer term. He would always have retained the opportunity to upgrade later if he was flush with money, or to trade for a larger place. But now he's renting the same sized unit without the upgrades. Does his action or his lust for finer finishes make sense?

It has made sense to rent since 2003. Soon it will have made sense further back in time. Expensive finishes never pay back.... other than maybe getting you liquidity in a shit market like this where unattractive product is sitting upsold (or would require a much lower price than the owners are willing to accept to sell).

4% is still a crappy cap rate.

"It has made sense to rent since 2003. Soon it will have made sense further back in time."

That is impossible to tell unless you can see into the future and gauge the market in 2033.

Matt a better opportunity is such, regardless of 2033. And many have told you, child, that its the rare person who can buy their last stop family apartment in Manhattan.

PMG - I just sold a lot of the short term bond funds I own because technically I thought yields looked like they could spike up (and had started). I had owned ADFIX, JAFIX, TGMNX...& a couple others and wanted to lock in most of the profits I made in them since June (about 5% give or take). I will probably average into TIPS over time. 4% is a crappy cap rate... And I would not compare it to savings accounts, I would compare it to bonds...which are almost universally, from treasuries to high yield, a better risk/reward even after the run they have had. I'll also start shorting this stock market between 1080 and 1120 if you want to know the whole truth. I even sold my gold because I thought it was over bought.. Would buy that back at various logical points of support on the GLD basis like 100, 98, 97, etc.

Rhino,

Expensive finishes never pay back? Funny you made the exact opposite argument in a previous thread when I was calling you incorrect for including those costs in your cap rate. I also notice how the rent for a well finished place, which you agree isn't even rentable, is now 5k vs. 6k. You seem so desperate to talk yourself out of buying a place, even though its what you really want. Add in the violence of your reactions to people who disagree with you, and its not a pretty picture. Maybe you should divert some of that $1k a month book habit to some counseling, or finding a Guru who will make you a little more content with your lot - for someone purportedly so successful, you harbor tremendous self hatred.

Printer, you are a huge douchbag. Its a different discussion when we talk about buying a place with nice finishes and what they are worth (in a rental or purchase), than it is as a owner installing them and how much 'payback' to assume on them. It is well recognized that renovations to an apartment, from an owners perspective, do not pay back 100% on sale.

My rent is $5000. Those places in that other thread have nicer finishes, so I made an estimate of market value in a rental of those finishes. I would love to buy a place at a reasonable valuation. The problem, is that there was a credit bubble. You might have read about it. It distorted the valuations of all kinds of things, but most of all, Manhattan real estate.

Why do I hate myself because I think a cap rate of 3-4% reflect too small a payment on capital. You are all up in my business. I spend $150 on books a month tops and its the last thing I'd cut. Look at you. All kinda ingnant.

And don't forget the U6!!!

> It is well recognized that renovations to an apartment, from an owners perspective, do not pay back
> 100% on sale.

I watch waaay too much DIY network, and all the stats say thats true. The best "investments" (i love how they use the term) pay back 80% of the cost.

I missed you guys

Right, and some pay much less than 80% back. Therefore, I'd rather be the buyer of a mint renovation than the maker....unless I was really certain I was getting paid for the effort and slippage of a renovation.

Sitar music plays in the background as the throngs surround the stage. Soon a hush comes over the crowd. The lights dim as a silhouetted figure shrouded in a white robe emerges from off stage. The smoke machines bellow opaque white fog over the floor. A spot light fixes on center stage. There standing before you is the great Swami falcogold. Strings of flowers adorn his neck and a purple dot is plain to see in the center of his forehead. He calls Rhino to the stage. After a little chanting of: Avyāpannacitto hoti appaduṭṭhamanasaṃkappo,
'ime sattā averā
avyāpajjā anīghā
sukhī attānaṃ pariharantu'ti.
(quick translation)
May these beings be
free from animosity,
free from oppression,
free from trouble,
and may they look after
themselves with ease!
A bright light appears over the heads of Swami falco and Rhino
There is a thunderous 'CRACK' and Rhino and the Swami are gone!!!
As if out Atman has met our Brahman and we have vanished in the great flame which is Nirvana.
The crowd roars as the house lights come up.
Over the PA system comes a strong voice,"Swami falco has left the building"!
"you may all pay the cashier!!!"

Rhino and falco split the proceeds of the T-shirt sales and all is right with the world.

And SE vibrates in peace and goodwill

"Right, and some pay much less than 80% back. Therefore, I'd rather be the buyer of a mint renovation than the maker....unless I was really certain I was getting paid for the effort and slippage of a renovation"

Agreed 100%.

I was saying the same thing a couple months ago, the best luck is to find the renovation you wanted, and someone else paid for it.

"the fact is that it makes no sense in owning in NYC right now. prices would have to be about 20 percent lower to buy for it to make sense again."

I think you need to change that "owning" to "buying". I have not seen a cogent argument that EVERYONE should be selling who currently owns (at least not yet).

"Right, and some pay much less than 80% back. Therefore, I'd rather be the buyer of a mint renovation than the maker....unless I was really certain I was getting paid for the effort and slippage of a renovation"

A lot of this comes from people overpaying and making poor choices. If you really want to, it is certainly possible to make money in terms of adding more value than the cost. I've been doing it for over 15 years. The single biggest thing is staying away from whatever is "trendy" at the moment (my biggest "hate" in the last few years is these "bowl" bathroom sinks).

I think thats what he means. Although, with prices only down roughly in line with rents, with a big gain potentially available for alternative investments and rents cheap...there is a pretty cogent argument to step out and rent for a couple years.

Agree with 30yrs. Many who own are being quite logical by maintaining long position. Especially if cost of carry vs rent is favorable.

very few people who bought in the last 5 years (some this past year might have done it, but very few)have favorable rent/buy situations. as long as they don't need to sell for any reason, fine. but many who wind up selling don't have a choice. and they, by definition due to buying during a bubble, made a poor choice.

you can't really plan for a protracted period of severe unemployment, if you're one of the ones who is hit badly. and before JM jumps down my throat, i realize that you never can plan for such things, and life has its many vagaries. but sometimes those negative potentials are more obvious than others.

When valuation is off the chart, you dont buy. Like real estate now, and stocks in 1998/1999. Its not impossible to avoid obvious red flags. Maybe real estate will bottom here. I'd rather see rents rise and interest rates rise first and see how that shakes out.

i'm so ready for an interest rate increase, i'm hyperventilating with anticipated excitement. luckily i'm patient, because it's unlikely to happen in any meaningful way before 2011, and possibly 2012.

That would jive quite nicely with a normal three year downcycle.

The problem with real estate is the better the economy gets, the more the govt will withdraw support for low interest rates... so upside is muted. I'd enjoy late 1990s conditions. I'd like to see high rents and higher rates, hopefully meaning more normal ratios and cap rates.

"I'd like to see high rents"

they are right there, next to the blue unicorn...

Mine's pink.

There's a big difference between buy, sell and hold. For many who are in for low numbers, selling now and paying transaction costs and cap gains taxes (even with the exemptions), would be the equivalent of the market going down another 25% to 30%, while at the same time paying MORE to rent than they are currently paying to hold.

mine's a rainbow.

care to give us some examples of the arithmetic that leads to 30% add'l loss by selling now?

ohhh rainbow... 6% sell, 6% buy, 10% to rent.... -shrug- very round very in the clouds #s

30yrs is not accounting for the leveraged aspect of most of these transactions.... i.e. $100K loss is more like a 100% equity toilet wipe... IMHO...

'there is a pretty cogent argument to step out and rent for a couple years.'
for a couple of years? do you mean 2 years? What would that argument be? The spector of inflation is clearly not upon us but, ultimatly thing will improve, production will increase and employment will follow along with.......inflation. Packing your money into commodities is a reasonable notion. Who wants to hold onto dollars when the US does it's impression of Argentina. RE is a good place to keep your money with a fat fixed rate mortgage. You can convert $$$ to RE, live in it and fix your costs (to a degree). I'm not talking about every bit of investment $ you have but, a reasonable amount.
Is this plan too simple?

"What more do people need to fucking know? This pussy crap about the joys of ownership are what foreclosures are made of."

Good to see Mr. Sensitive is back

"My rent is $5000"

and what do you get for that Mr. Sensitive?

things will improve? why? other than because they always have (at least in the last 70 yrs or so)? other than the stock market, what current indicators are positive?

falco, unless there is some really tremendous development that requires american brainpower, i don't see it.

brainpower elsewhere is cheaper. everything elsewhere is cheaper. and the american consumer is literally tapped out. go elsewhere to find your income, i'm sorry to say, has become the american way.

jm, mr. insensitive gets mobility. priceless.

So, why stay an American? As an immigrant, and child/grandchild/g-grandchild of immigrants (can't remember the last time a direct ancestor was born & died in the same country), I feel that if you are adaptable enough, you should consider emigrating.

but 10023, my point is that there isn't really an employee friendly environment, with decent real estate options, other than for those employed in financials, anywhere.

of course you wouldn't advocate for the detroit auto workers to migrate to a chinese province.

that's a bit harsh. how about tenured professor at any major college? government workers? teachers in exurban locales? doctors, dentists, even lawyers!

"jm, mr. insensitive gets mobility. priceless"

Sorry AR, I'm lost on that one.

"my point is that there isn't really an employee friendly environment, with decent real estate options, other than for those employed in financials, anywhere."

So move to China and take a job manufacturing shoes by hand for $8 a day and stop your bitching. Just don't inhale all day.

AR: from a historical perspective, most of humanity has been exploited by a much smaller fraction of humanity, overworked beasts of burden who have rarely possessed anything of permanence. Okay, at least since we started living in settlements tied to agriculture.

nyc10023... but I just learned english...damn!! You guyz are kicking out already.... i thought when i signed for selective service I was guaranteed McD for life!!!!

somewherez between JM (right wing rhetoric (you sound like my older bro)) and aboutready (you sound like my english teacher from sutton place who taught us english more bc she felt sorry for us than as a career ; ) ) = > therez I iz......

seriously i go by my dad's ethos... everyone deserves home, food and education.... you don't need to drag up everyone to a car, vacations, and a new rolex...

i better duck... : )

If I sold today, I would pay approximately 15% of market value in commissions, transfer and capital gains taxes. It would cost about 4% of the purchase price to buy back in and there is no guarantee of securing a comparable unit. So now, I'm at a 19% round trip cost to try to time the market. What's more, I estimate it would cost 187% more to rent a comparable unit vs. my carrying costs. If it took two years of renting, and waiting for the market to bottom, that would add up to an additional 6%, ignoring the costs and hassles of moving. There you go, an estimated 25% cost to selling and buying. I agree with 30yrs. Holding is not irrational.

W67: World is a shitty place, few people get what they deserve, and it's always good to have multiple exit plans. Guns help too.

Glad that's settled. I think 30 yrs picked apart a phrase. No one said holding is irrational.

w67th, I just seem right wing because AR is left of a French Michael Moore.

a little bit of voodoo arithmetic. what happens to the number if values go down another 20%?

true, posters said owning was irrational, compared to renting

JM, i think what bothers you is that i'm NOT a left of french MM. not in the slightest. i believe in this system, IF IT IS ALLOWED TO WORK. this is not a capitalist system, in the slightest. this is a system that grants all socialist benefitst to corporations, and little to none (and certainly as little as possible) to individuals.

you seem intelligent, upon occasion. do you have a vested interest in elevated real estate prices?

not irrational, just potentially costly depending on where the market goes.

true story. when i was a kid my oldest sister brought home a .22 with some friends. My sis was goofing around after taking out the cartridge. my older brother was like are you nutz? My sis was like no -biggie, not loaded... my bro took the gun wrapped it up in some towels and pointed to a wall - ya know what... YOU GOTTA CLEAR THE CHAMBER!!!! There's a .22 lodged in the dry wall of a Goodstein Mgmt bldgs.. I believe it was a B line 2 bdrm. GUNZ SUCK, and i'm married to a family of duck hunters, and big game hunters.. do you know it costs $45K to kill an elephant?

but back ontopic.... PMG what if you sold in 2007? it's only now that the market's already tanked you could say that... and what's to say that in 2 yrs you couldn't pick up an extra bedrm or even 2??? That's a w67th guarantee.. if you sell within the next 6 months you will be rewarded with an extra bdrm if not 2.

let me modify.. gunz suckz in urban settings.... ya wanna kill something... guarantee they'll have a gun for you at the lodge...

Guns only suck when other people have them too. They don't suck if I'm trying to blast my way out of Manhattan.

10023,that image was priceless. thanks.

Enough with the defense of holding. The problem is with buying and it has been for six years easy.

Want another one? Rules only do me good if other people follow them.

At this point, I've written down my RE equity to zero mentally. Owning is no different from renting in terms of cash flow - if things go to sh*t, well, I don't think the banks will be pursuing me for $. Don't need to move for space or location reasons until the brood starts leaving for college. Agents know me and know that I will always be amenable to moving if they know someone who wants a place like ours.

"i'm NOT a left of french MM. not in the slightest."

Yeah, but can you imagine? That is pretty f*cking left!

"this is a system that grants all socialist benefitst to corporations, and little to none (and certainly as little as possible) to individuals"

Why do individuals need socialist benefits?

"you seem intelligent, upon occasion."

What occasion is that?

"do you have a vested interest in elevated real estate prices?"

No, I have a vested interest what is real vs. what is internet induced malarkey

unless, of course, you have your own personal sense of morality

thatz rich OJ (left of frenchie).... nyc10023 grow up mid-west much? yeh aboutready.. nice image... will you be bjorning your children as you shoot the under-water Ibnkers in suits with their tin cups out?

Give me another one nyc10023.. you look like a gun toting mom with a few zingers for your husband and fellow nycers as you pass them by on the streets ; )

JM, you have been dispensing really bad advice for years. really. so feel free to disparage my politics which i would be happy to separate out from my advice regarding purchasing.

but feel free to go back one, two or even three years and link to posts where you were right. regardless of politics.

'World is a shitty place, few people get what they deserve, and it's always good to have multiple exit plans. Guns help too.'

A better plan might be to have a raft. this is an easy island to seal shut. If you trust your government to make good calls in an emergency you can forget it.
Hey Rudy, do you think we should put the emergency command center in the same building that the terrorists just tried to bomb?
I believe you all know how that worked out.

internet induced malarkey = Paris Hilton porn?

SE threads are the gold std of goodness in America!!!!

I just blame it on growing up in the shadow (not literal) of the Cold War. Watch enough post-nuclear holocaust type documentaries coupled with reading every sci-fi futurist fantasy you can imagine, and you can see why I might want to sleep with a gun under my bed and an antibiotic stockpile.