Virgin post! Calling all finance geniuses/trolls

to echo bjw: "...w67th, that's all well and good, but where do you put your cash?..." Seriously - so if one agrees with your rental vs. buy pov (and many do), then where DOES one put all that cash? To get that 10% per annum compounded return?

if youre "good at math as an engineer" please dont consult to any buildings i may enter

FLMAOzzzzz. Your a landlord/owner/engineer Fking figure it out.

Bjw/virginposter/Vic. What is your rate of return on your education? I'm hoping it's more than 10% of diapers/breast milk/baby clothes. If you can't take a hugely levered asset and can't earn 10%, then shoot yourself.

Vic, think of it as me whipping you with a fishing rod rather than giving you a fish. Find your own mistakes, proof your calculations, that will learn you.

I am totally independent and do not do house inspections. I still like to see what big mistakes that I have made.

I stand correct until proven otherwise.

"start a company. Cure cancer, make better dildos. Ppl that sit around deserve 1% on their cash."
"Bjw/virginposter/Vic. What is your rate of return on your education? I'm hoping it's more than 10% of diapers/breast milk/baby clothes. If you can't take a hugely levered asset and can't earn 10%, then shoot yourself."

w67th, THIS is all you can offer? Where's that incredible financial advice you supposedly have?

W67:

I'm having trouble making 5% in relatively risk-free munis (okay, I'm scared but what else can I buy)?
I would like to know where to get 10%.

c'mon w67th!!

Trust fund.

I grew up in a low income family and attend public University. I guess the rate of return for my education is tremendous.

The takeaway from this thread is very simple.

Some evaluate a RE purchase in strict financial terms. They, most likely, will make the best investments at the most precise moment. Most are under no pressure to make a move and are comfortable in their current situation. In most cases it is a below market rental or an apartment purchased before the epidemic mental illness that swept through the population creating the mass delusion that the value of RE was limitless. The doctors failed to make the diagnosis and by the time the disease was recognized it was too late. They were all under water. Most realize that the aftermath will take more time to resolve.

Some look at RE, especially a primary residence, as an extension of themselves. They way other suburban brethren view their vehicle. I am not a Camry, I am a land rover, I am a Lexus, I am not a jalopy. Car leasing played heavily to that exact psychological preference. Like pox blankets to the native Americans, our government handed us, in the form of bizarre interest rates and a laissez-faire attitude, What looked like an essential gift which turned into a booby prize. That does not change the fact that I am not a 1 bedroom rental. I am the owner of a chubby sexy apartment...that is who I am and all that enter here shall know. It is the prize that most of us seek and desire. It's the desire that inflates the price more than the supply demand reality.

"Seriously - so if one agrees with your rental vs. buy pov (and many do), then where DOES one put all that cash? To get that 10% per annum compounded return?"

Go double long on the S&P, over the life of the mortgage, you'll beat the 10%, likely by far. With the expanded time horizaon, the dow is very consistent.

And before anyone tries to say "but that's risky"...
what do you think a 20% mortgage is?

Thats a 5x leveraged bet on a non-diversified investment.
2x S&P is likely less risky.

"So, which factors that I have forgotten. My calculation actually gives me a lot of rooms for unexpected costs"

Uh, like that huge wad of cash you need to put down?

falco, great post. I think you nailed the psychology of it.

Some people, $$, comfort, value is the goal. Some folks, being able to say "I own" IS the goal, and they are often willing to pay more for that.

The large down payment is not a mistake, it is the capital of this investment.

I do stock too, but only on cash account. A margin account cannot protect you from short term shock waves. Your leverage progresses (from 2X to N times) when the value of your security drops, and you will get a margin call.

"Go double long on the S&P, over the life of the mortgage, you'll beat the 10%, likely by far."

Just as with housing, luck and timing matter immensely. If you had parked your cash in SSO (an ETF that goes double on the S&P) back in July 07, you'd be out half your money right now, even after a very nice run up since the most recent bottom. Beating that 10% per annum "by far" is more difficult than some here make it out to be.

When someone claimed that they can make a 10% return on an investment, it may refer to an pre-existing investment that may not be repeatable now.

For example, if you bought Chevron in 2002 for $32 a share, he was collecting dividends all along. Now, the stock almost tripled at $96 and is still paying 3.1% dividend. Which is $2.88 per year.
or about 9% return just on dividends for the initial $32 investment, not even counting the capital gain.

However, you cannot gurantee an 9% return when you reinvest your dividend income now. I would not call this a 10% in return. It was still a good investment nevertheless in 2002, possibly even now.

I love owning this stock

FLMAOzzzzz. Investors like myself r like pro athletes. To a lay person, you take the 10mm kids that play pick up and say statistically, your chance of making $10pm playing hoops is .000000001%. To that .0000001% kid, you crush all comers. You crush them at the local y, you crush them at the city level. State level, college level, pro level.

So for THAT dude, it's a 100% guarantee they'll make 10% returns. But you guys just keeping jerking off into that cup. Btw I double guarantee this is NOT the decade for real estate.

w67th, sorry, I thought you actually had halfway decent advice. My apologies for the confusion. Flmaoz.

"I grew up in a low income family and attend public University. I guess the rate of return for my education is tremendous."

no, your math is awful, and your writing is worse than my 5th grader's

maybe your fingerpainting is excellent, but fingerpainting's not a taught skill--you're a natural

Someone has insecurity issues.

Which part of my math is awful? This is the second time that I have asked.
Besides, have I offended anyone in any way? What kind of sin was that when you did not proof read a pretty long post? Why am I being potraited as a fingerpainter?
I was only offering my advise to the OP and elaborated further when asked.
Love to know what kind of family you grew up with.

w67: ah, sorry. I thought it was an easy 10%. So what's the special beef with the RE "investor" making 2% or 3% if he/she isn't going to get the 10% anyway?

get out of Midtown for heaven's sake!

Plus alan is right, you need a terrace. We have a small 1-BR with a terrace that seats six for rent for $3,300.

If you want something bigger, upping your rental budget will allow you to get your urban gardener on while you wait to feel better about buying.

ali r.
DG Neary Realty

I really enjoyed reading this thread. I think that streeteasypost should buy. Buying for investment is not the same as buying for your primary residence where you spend a great deal of time. Yes, you can travel and maybe go out but ultimately your primary residence is "your very own home."

If he was thrilled or at least happy at his rental then maybe staying makes sense. After all, he is 43years old, has savings, has a good job...but ultimately is not so...so happy. There really is a different feeling when you go home to your "own" place that is decorated the way you want it...it can be as "cool" or "hip" as you want it to be.

I think that streeteasypost should look for an area that he not likes but "loves" then maybe buy a one bedroom. He should not rush and he should buy a place that is not just a good price but a GREAT price because he is not in a rush. This place should be easily "rentable" (eg maybe a condo instead of a coop....so that when he outgrows it in 2 years or 5 years or 10 years...he can then have the option of making it an rentable investment property.)

When he meets a significant other....or...if he has children...or....if he decides he needs more space, he can always sell or rent(for extra income) this first place to upgrade to a larger (therefore more expensive place.)

1) Primary residence mortgage loan interest are tax deductible
2) He can afford to buy a home
3) There is no guarantee that real estate will go down more and in fact if it does go up 2% per year....then it will keep up with inflation so at worse, he did not lose money.
4) He has other investments so why not diversify with some real estate
5) He will be happier going home...and how much is that worth?? No one lives forever...so...when should one "start" to make oneself more comfortable.

> The large down payment is not a mistake, it is the capital of this investment.

Which, as I noted, is a mistake to leave out of the equation. It a company left out capital investment in defining the return goals of projects, it would go bust very quickly.

> A margin account cannot protect you from short term shock waves.

ETFs can. There are double-long S&P ETFs (hell, triple, but I don't think thats a good idea).
No margin calls.

> When someone claimed that they can make a 10% return on an investment, it may refer to an pre-existing
> investment that may not be repeatable now.

Sounds a lot like.... uh... well... real estate in the past, no?

Btw, I'm not saying this is what one should do.

I'm just point out that folks saying that 0% should be the rate applied to your down payment in a 5x leveraged investment is LUDICROUS. There is inherent risk there - many actually - and comparing it to a CD just makes no sense.

> 5) He will be happier going home...and how much is that worth?? No

If that's the case, double his rent and get a better place. You're confusing paying for consumption, with what is the best way to pay for the consumption you want.

Two VERY different questions.

"After all, he is 43years old, has savings, has a good job...but ultimately is not so...so happy. There really is a different feeling when you go home to your "own" place that is decorated the way you want it...it can be as "cool" or "hip" as you want it to be."

is it mean or constructive to suggest that this lonely middle aged man's unhappiness may not be a result of not being able to decorate his place the way he wants?

Are you lucille 1 or 2? Because depending, you could make him very happy.

Buster!!!

I made my suggestion to streeteasypost because....

streeteasypost said to vic:

"I'm someone who just really likes (loves) living in a place architecturally designed to my tastes and specs because I guess, at the end, I'm an aesthete. Nothing brings me more pleasure than the enjoyment of my surroundings, since I spend the majority of my time/life there. I will add, however, that I also enjoy putting my head on the pillow every night and getting a great night's sleep because I have no anxieties about my financial situation.

And that's the balance I'm trying to achieve, in the end. Both are equally important to me. I would prefer not to have to give up up one to achieve the other."

Streeteasypost.... did not say that he is only, only interested in the investment of money. In that case, my answer to him would be different.

"> 5) He will be happier going home...and how much is that worth?? No

If that's the case, double his rent and get a better place. You're confusing paying for consumption, with what is the best way to pay for the consumption you want.

Two VERY different questions."

exactly. he might find his customized home more aesthetically pleasing, but what would make him happy, actually happy, is sharing his home, rented or owned, with someone who gives a shit about him. at least get a dog, man!

SkinnyNsweet
4 minutes ago
ignore this person
report abuse Are you lucille 1 or 2? Because depending, you could make him very happy.

Buster!!!

buster only loved his one true loose seal.

You know ....streeteasypost's thread is very politely asking for opinions. I sometimes do the same thing. I write/post on streeteasy myself with inquiries to get other people's opinions and suggestions as well.

I am just giving my opinion which streeteasypost.

"I am just giving my opinion which streeteasypost. "

as am i. he needs to get a life. he sounds lonely.

Also, streeteasypost states:

"Your numbers are right. I plan to work until I die. I'm in a field that would allow for this, though I am sure as I got older, I would do less business and earn less, but still - I would never be one to just coast on my savings"

Therefore, streeteasypost has a good job and has quite a bit of savings...I am truly happy for him. However, he is 43 years old and he did not say that he is lonely so I have not comment about this. However, why not have him buy a nice place for himself that he can "fix up" because he did say earlier that he would enjoy doing this.

Even if he does not make a lot of money with this primary residence....at least "fixing up" his primary home would have him fill up his time doing something that:

at worst...
1)he would enjoy designing the place the way he wants
2)be happy to go home to
3)be happy to sleep in

at best...
1)end up appreciating alot in value especially if he bought it cheap and then "fixed it up" real nice...
2)hopefully appreciate in pace with inflation which some economist predict will skyrocket

Afterall, streeteasypost doesn't seem that "into" stocks...so where should he park his money anyway???
Besides, he states that he has no anxiety about his finances plus he plans to work ???forever at a job that seems to be in a field that allows this so is very stable.

Therefore, since streeteasypost can afford to buy and fix up a place...why not at least indulge in a place that is asthetically pleasing to himself? Fixing your "own" place has a completely different feeling from fixing up a rental where a landlord can choose "not to" renew your lease after "all that work" that you put into the place. Unless of course, he finds a rent stabilized apt or rent control apt.

Also, buying a place is not like throwing away his money....and could in the future end up being a GREAT investment at best and at worst a tax deduction that made him not necessarily "happy!!" but at least more comfortable.

But of course, he could rent a nicer place.

Yep...he could rent...but he states that he doesn't feel like paying that much rent. Therefore, he probably won't be able to rent a astethically pleasing place for cheap rent. But he doesn't sound like he wants to pay more.

Buying a cheap place from a desperate seller and then fixing it up may be a better or easier option.

But all of the above is just my opinion. Streeteasypost can read this thread and decide for himself. I am sure that streeteasypost can make his own decision. I only wanted to give my opinion to help because others have helped me with my dilemmas on streeteasy.

By the way, I gave my opinion based on what streeteasypost said in this thread about himself. But again, this is only my opinion and I don't expect anyone to agree.

In fact, I like when people disagree on these threads because I see how others feel and I have learned a great deal about real estate, finances, taxes, and investing from reading the various different queries and about how different people come up with different solutions.

"Even if he does not make a lot of money with this primary residence....at least "fixing up" his primary home would have him fill up his time doing something that
at worst...
1)he would enjoy designing the place the way he wants
2)be happy to go home to
3)be happy to sleep in "

so...we agree. the purchase would be an expensive distraction from the apparent lack of human connection in his life.

"Yep...he could rent...but he states that he doesn't feel like paying that much rent. Therefore, he probably won't be able to rent a astethically pleasing place for cheap rent. But he doesn't sound like he wants to pay more."

ok, fair enough. i think he needs to clarify what exactly makes a space aesthetically pleasing for him, and then there can be a legitimate debate about cost differences, which would have to include renovation costs, since he would be buying the tear down bare bones of what might one day become aesthetically pleasing to him.

You know LucillelsSorry, streeteasypost did say:

"I'm 43. 7-10 year goals are keep working, keep earning money, keep saving. No bucket list. As I said, marriage maybe one day, Kids (very) doubtful. And do kind of feel like I'm treading water and living like a monk, which could be worse, but i can't say I love, either."

So I can see why you think that he is lonely. However, streeteasypost did not say he is lonely, nor did he ask advice about this. However, I personally think looking for your very own place is exciting. I also think designing your own place is fun. I also think inviting friends to a place that you design is a wonderful experience.

A happy person who sleeps well and who is content with life is more likely to meet people....but again, this is only my opinion.

People are ***terrible*** at predicting what will make them happy.

Lots of people think buying a house or sports car will make them happy. There are actually pretty good studies on this -- and these things do not make you happier. Obviously, the sports car loses novelty effect within weeks. And people dramatically overestimate the amount they will entertain in their new place (particularly if it is in a different place than their old one). One of the life events after which people are much less happy is... buying your dream house.

The almost one thing that consistently makes people happier, aside from avoiding a major disease, is decisions which enrich their social bonds.

Ali -- Don't talk smack about midtown! Just kidding; I don't live there. And I was just trying to move the discussion away from the pyschoanalyzing of poor streeteasypost.

SkinnyNsweet: I don't know why life's event after which people are much less happy is buying your dream house.

All my friends have been much, much happier after buying their condos/coops. However, I do know of people who are miserable because they are overextended from buying houses that they can't afford. However, streeteasypost was thinking about putting a large amount down and borrowing a smaller mortgage.

Anyway, I agree that buying/investing does "not" make one happy. I have always felt that one measures one's wealth not by how much wealth one has but by who will miss you when you are gone. Family and friends are more valuable than money. However, living comfortably in one's home can make "living" easier.

Also, I agree with midtownereast...I just wanted to offer streeteasypost my opinion about buying vs renting. Also I just wanted to give my reasons why I think he should buy.

I really don't want to spend time pyschoanalyzing streeteasypost.

Streeteasypost asked very, very politely on this thread for opinions....and...I just wanted to be helpful.

1) streeteasypost admited himself that he can crunch the numbers and what he is seeking here is other types of input. he painted a very honest portrait of himself, admiting he is a workaholic who doesn't get out much. he is 43 years old and single. because of his work ethic and sensibility, he has accumulated a very serious chunk of change.....which he now wants to waste on buying himself an arts and crafts project that he hopes will bring him happiness. a man like this deserves a much more fun way to waste his money, is all i'm saying.

b) he specifically specificated that he welcomed trollish content, so i don't think anyone is warping his fragile mind here.

"However, I do know of people who are miserable because they are overextended from buying houses that they can't afford."

that is a smug and grossly disingenuous thing to say. most overextended did not believe they were overextending at the time of the overextension. they were just buying a house, like everyone around them.

"The almost one thing that consistently makes people happier, aside from avoiding a major disease, is decisions which enrich their social bonds."

since streeteasypost has definitively ruled out the charms of a russian lady love, i think he should at least acquire a respectable coke habit. that way he can waste his money, have fun, and make lots of friends. live it up, streeteasypost. you've earned it!

LucilleIsBlathering

Wow. You go out to dinner, and the joint goes nuts!

w67: OK. First, it's any knucklehead ought to be able achieve a 10% annual return. Then, it's "...Investors like myself r like pro athletes..." So hardly anybody in the whole world can do it. I'm still waiting for the incredible financial advice you supposedly have!

frontporch: I've really enjoyed all your posts on other threads! I know it's weird, but I kinda like midtown. I prefer downtown, though, for sure. I really like terraces, but sadly, have no green thumb/urban gardner to indulge...

somewhere: "...You're confusing paying for consumption, with what is the best way to pay for the consumption you want..." Very astute observation. And very true.

Lucille: I can be alone, and yet not be lonely. By nature, I'm not all that social, anyway (except tonight!). I'm pretty fortunate - I have a pretty great life - social when I want to be, and not when I don't. Otherwise, WAAAY too much character dissection for me, though!

swim: one observation regarding your remark "...I have always felt that one measures one's wealth not by how much wealth one has but by who will miss you when you are gone..." I completely disagree. The capital 'T' truth for me has has always been that one should always consider life before death, rather than being concerned about life after death.

alright, fiiiiiine, you don't HAVE to do coke

but can you please explain what exactly you are looking for in a living space? i think that might make it easier for people who love this stuff to help you out.

Alright, I'll say it. Streeteasypost and Lucille should definitely go out. Okay, it's out there.

um, ok

What do I want?

I'm somewhat loose on location, but prefer downtown up through Chelsea/Flatiron.

I want the apartment to have good basic bones in terms of its layout, such as where the stacks are located, and good light - but am willing to gut the interior design, kitchen, bathrooms, closets, floors, etc. Mind you - not thrilled to do all that work, but willing and able.

I would like the unit to have one feature which makes it a bit special and elevates it above 'cookie-cutter' standard. That could mean a fireplace, or a terrace (NOT a balcony), or something like that.

I would like a two bedroom (where the second smaller bedroom would function as a guest bedroom and/or small office/library), but would consider a commodious one (master) bedroom as long as there was also a powder room in that case.

Prefer an attended building, but would certainly consider an unattended building (particularly to garner more square feet in the trade-off such as a loft).

I could go easily go on, but that's a good short list.

FLMAOzzzzz. Is there only one pro basketball player?

Here is the snapshot. Most people think themselves geniuses cause they made some coin out of the greatest credit bubble in history....... Well big player, why don't you come and play some ball with some real competition.

Go ahead buy some nyc re. Try the old moves against the new team. Go ahead. Do that double fake pump

w67: still waiting for the incredible financial advice you supposedly have!

(*chirping crickets*)

...s-t-i-l-l w-a-i-t-i-n-g...

http://streeteasy.com/nyc/rental/728928-rental-330-west-22nd-street-chelsea-new-york

Sure beats spending an extra $700,000 over the next 20 years!

maly: Ya got a great point! And that's why I'll just stay put here for now..... and wait for w67 to tell me what I should do with that cash....

"and wait for w67 to tell me what I should do with that cash...."

streeteasypost, I like you and don't want to see you needlessly holding your breath. You've probably figured out why his writing is so grey and tiny by now.

Lucilleissorry: You missed my point about people being miserable after being overextended from buying houses that they can't afford. Of course many of these people did not think that this would happen or that they were overextended. My point is that streeteasypost was thinking about putting down a large down payment and getting a smaller mortgage...and so my point was that this would minimize the risk of this happening.

streeteasypost: My point was that to me wealth is not just about money....it is also about enjoying life...and to me (and I am talking about "me" and no one else)....having friends and family(that I enjoy spending time with.) However, you made a good point about considering life before death and not the other way around. That's why I try to live each day to its fullest....cause no one lives forever.

I also see your point about being alone is not the same as being lonely. I can agree with that totally.

>"I am just giving my opinion which streeteasypost. "
>as am i. he needs to get a life. he sounds lonely.

No shit. Guy is 43, living in a smallish 1 bedroom at 3200 (at that price it means he's probably around midtown east or hell's kitchen, though I'm guessing midtown east), thinks he'll get married "some day", brand new to streeteasy and already so familiar.

By the way, this thread is now 162 posts long, and not a single post by MidtownerEast?

ok, forget getting the f outta the house--spend the next year buying and fitting out a new apt--then stay home and bask in the new place, putz on the web in front of the tv---walk out on the terrace now and then---alone, not lonely, but alone

whatever your sensual/sexual proclivities; get outta the damned house and get some, with other people----- now, before youre fitting out walkers (pun intended)

Hey Wbottom, how is your "girlfriend" in Brooklyn?

> somewhere: "...You're confusing paying for consumption, with what is the best way to pay for the
> consumption you want..." Very astute observation. And very true.

Thanks.

Yeah, this is a mistake I see all over the place when folks discuss real estate.

Want the "feeling" of owning? Want "permanence"? Want to be able to say you own?
Sure, great, I get that these things are benefits for some folks... hell, maybe most folks.

But understand that some things you value cost money. It seems like when the word "investment" is incorrectly used with RE, it seems to become this blanket allowance for a lot of people to consumer more.

But it consumption one way or another. Not saying its bad. But calling it an "investment" doesn't make it true.

Very much have enjoyed the dialogue..

I can understand the OP's reluctance to buy. From financial point of view, there's an implicit cost of liquidity risk that doesn't seem to be discounted into Manhattan real estate. There is "tail risk" in Manhattan that is severe and unique to this market (when compared to Philadelphia, Miami, Peoria, Kansas City). It is likely that over the course of a 30 year mortgage there will be another security incident in Manhattan, probably a terrorist attack, and potentially on a large scale (this is unlikely put possible).

The recent events in Egypt show how a volatile region could foment situations that can spiral out of control. Don't underestimate the growing strength of Iran and what might happen if the Middle East Cold War with that country turned hot. Yeah, I sound like Chicken Little but I would tell you that I have a Master's in International Affairs from a great school and work for a large oil company with operations in the Middle East, so I'm not just spouting off what I read in the NY Post.

I don't know how to quantify the liquidity risk and would welcome your thoughts. First, you have the opportunity cost of the down payment. On a $400K down payment, that is about $2000 a month assuming 6% interest.

As for that 10% rate of return that w67 doesn't want to identify, you simply can't earn it without assuming some risk. But you could certainly put together a portfolio of high yielding stocks and bonds that would get you close to 6% and are totally liquid.

For the finance geeks out there reading, I have been thinking hard about buying shares in this large Mortage REIT called Annaly Capital. Basically, they buy a bunch of Fannie Mae, government guaranted bonds on 5x leverage and pay out a 14% yield. There is your 10% after tax return.

They fund their portfolio using short-term debt. NOTE - this type of trade is probably one of biggest money losers during the financial crisis. Since the mortgages are guaranteed by the government, and the Federal Reserve is pumping / printing ridiculous amounts of money into the system, their short-term funding is basically guaranteed by the government too. I'm not the only one who likes this - Bill Gross at PIMCO recommended it in his 2011 outlook.

I point out this investment because it looks and acts a LOT like buying a condo in the current environment - except it has no liquidity risk, less geopolitical risk and is diversified across residential real estate. So, and this is an extreme example, why not buy $400,000 of shares in Annaly Capital, which will earn about $3,000 a month on an after tax basis.

'I'm still waiting for the incredible financial advice you supposedly have!'

Go long on BJs, their rare, they never go out of style, demand always out-weighs supply and once you've had one you're a new man. And that man needs a BJ. Theres 10% right off the top!

'No shit. Guy is 43, living in a smallish 1 bedroom at 3200 (at that price it means he's probably around midtown east or hell's kitchen, though I'm guessing midtown east), thinks he'll get married "some day", brand new to streeteasy and already so familiar.'

huntersberg...you are so right...

Just saw this thread.

Really interesting. falco, wtf is your problem? OP seemed pretty open to your opinions and input earlier in the thread. All the psychotherapy is a bit weird, too. Musta been a slow workday, huh?

>huntersberg...you are so right...

True

matsonjones
you got that right!

very entertaining :)

hey streeteasypost / New_to_Re / MidtownerVirginEast.