How have your homes as investments done?

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rgs92
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Re: How have your homes as investments done?

Post by rgs92 » Wed Mar 30, 2016 11:42 am

I don't see how you could have lost money on the 1991 San Diego property. Just curious... Thanks.

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Re: How have your homes as investments done?

Post by travellight » Wed Mar 30, 2016 11:49 am

There was an economic dip in San Diego around 91-97. I bought around 91 which seemed to be a good time because the high was around 88-89 so prices had already come down some. Didn't realize it was going to fall more.... grabbing the falling knife visual. I decided to take advantage of the fall and buy my main house and take the loss on the house I was in.
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letsgobobby
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Re: How have your homes as investments done?

Post by letsgobobby » Wed Mar 30, 2016 11:50 am

housing is a bust for me. Definitely the weak link in my investment lineup.

95 - bought a condo in Houston for $35k. Sold it in 99 for $43k. 5 years later it was worth about $100k. MISSED OPPORTUNITY
99 - move to LA and thought prices were too high. Rented a 3/2 in Redondo Beach rather than buy it for $300k. It is now worth $850k. MISSED OPPORTUNITY
03 - move to small city in Washington. Bought at $232k. 8 years, 1 housing bust, and a kitchen remodel later and I sold for $225k. LOSS
11 - bought a short sale for $495k. Sold 4 years later for $585k, so that one was good, but net of fees I only realized about $30k in profit. GAIN
13 - bought a small home as a rental, $185k, now worth about $230k and renting at $1500 per month, so that turned out well, but total dollars pretty small. GOING WELL SO FAR
16 - paying too much for a home probably at the top of a cycle. oh well. life is short. EXPECT TO BREAK EVEN AFTER 15 YEARS.

Good thing I've saved 40%+ of my income since I was a resident, and don't need my house to retire on.

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HomerJ
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Re: How have your homes as investments done?

Post by HomerJ » Wed Mar 30, 2016 12:34 pm

In the Mid-west... No real boom/bust cycle. Our house hasn't changed much in value at all over the past 9 years.

Wife bought a house in 1996 for $110k. We sold it 1998 for $140k (sold by owner in ONE day). That was the one very good house deal.

Bought a house in 1998 for $225k. Finshed the basement for $30k a couple of years later, so invested $255k in it. We sold it in 2007 for $275k.

Bought a house in 2007 for $500k. Still living in it. We could probably sell it for $500k today.


Housing mostly has been a bust as an investment for us. But we've certainly enjoyed living in them.

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SeeMoe
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Re: How have your homes as investments done?

Post by SeeMoe » Wed Mar 30, 2016 5:00 pm

Not as well as my Vanguard folios by a long shot! But made out better than renting over the years,..I guess. Don't ask about the Marco Island time-shares, please!
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kmurp
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Re: How have your homes as investments done?

Post by kmurp » Fri Jun 14, 2019 5:28 am

Bought at $184,000 in 1989. Worth around $325,000 now. So that’s less than the CPI and ignores the 200,000 we have put into it over the years. :(

protagonist
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Re: How have your homes as investments done?

Post by protagonist » Fri Jun 14, 2019 7:11 am

Western MA:
Bought home in 1983 for, I forgot, maybe $58000? ....sold in 1997 for about $160K I think.
Bought home in 1997 for $200K, put $200K into it, sold in 2009 for about $790K.
Bought home in 2009 for $392K...I think it is probably worth about $500-550K now but unsure.

Florida:
My mom bought home in 1980 for $80K (which is the equivalent of roughly $243K in 2018 dollars), sold in 2018 for $168K

New York City:
GF bought apt. in E. Harlem in 2002 for $200K. Now probably worth $800-900K.

Closing costs and other expenses not included.

MY numbers are in nominal terms. When considering impact of gain, loss you should factor in inflation, which you can roughly do with this: http://www.in2013dollars.com/us/inflati ... unt=100000

Glockenspiel
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Re: How have your homes as investments done?

Post by Glockenspiel » Fri Jun 14, 2019 7:22 am

Bought for $290k nine years ago in a midwestern suburb. Now worth approximately $400-$425k. Added finished basement, deck, landscaping, paver patio, retaining wall, along with several other smaller interior upgrades. Not including property taxes and regular maintenance and supplies, it has probably kept up with inflation. But that’s about it.

To answer your last question, if I had additional cash, I’d throw it into investments instead of towards a home.

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dm200
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Re: How have your homes as investments done?

Post by dm200 » Fri Jun 14, 2019 8:04 am

Home prices continue an upward trend here. The move of Amazon for a 2nd headquarters is adding to the increase in home prices. Our house, purchased in 1978 for $74,000 is now "worth" about $700,000 -- and the majority of the value is the lot. They are commonly tearing down perfectly good houses to build larger homes in the neighborhood.

HomeStretch
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Re: How have your homes as investments done?

Post by HomeStretch » Fri Jun 14, 2019 8:15 am

Our home has not been a good financial investment but, more important to us, it has been a great lifestyle/family investment. We would recoup our original purchase price + renovation costs, adjusted for inflation, but little appreciation if we sold today.

In our area, home prices are still below 2007 highs. Higher sales activity this year than in recent years. But sales of homes > $750k are slower due to (I think) SALT deduction cap and high state taxes.

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dm200
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Re: How have your homes as investments done?

Post by dm200 » Fri Jun 14, 2019 8:43 am

One, financially significant, benefit of owning a home in our jurisdiction is a fairly generous real estate tax exemption of deferral (depending on income) for homeowners over 65. Our annual real estate taxes are about $6,500 per year - BUT in the last 6 or 7 years, we have paid nothing. In some years, no tax is due and in others all or part of the taxes are deferred until the house is sold. This year, the County revised the program - and, for us, it is not quite as good - more deferral and less exemption - but it works out very well for us.

If we were renters in this locality, though, we would not get this significant benefit.

chw
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Re: How have your homes as investments done?

Post by chw » Fri Jun 14, 2019 9:01 am

Sold a home recently in the greater Boston suburbs after 30 years. Some rough math indicated a per annum return of low single figures. This was taking into account original sale price, capital improvements, and estimating general repairs and maintenance.

Intangibles are:
1). Rent on a comparable home would have outstripped our average cost of ownership when the mortgage was paid off about 15 years ago.
2) Was able to itemize real estate taxes and interest, which helped to reduce our tax bill (rent was not deductible). This advantage has shifted a bit with the new tax reforms, which have reduced the deductibility of real estate taxes, and possibly interest if one does not itemize (due to the SALT limit, and higher standard deduction).

Overall, even with the lower rate of return, we still felt owning was a good deal for us. We purchased a modest home home that met our needs as a family, and be part of a great neighborhood, and community.

dknightd
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Re: How have your homes as investments done?

Post by dknightd » Fri Jun 14, 2019 9:24 am

I've been in the same house for 30 years. I doubt its value has kept up with inflation.
Horrible investment. But we needed a place to live.
I'd do it again.

22twain
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Re: How have your homes as investments done?

Post by 22twain » Fri Jun 14, 2019 9:34 am

Small town in the South. No appreciation after inflation.

We paid $70K in 1988; the seller probably could have gotten about $80K but wanted to sell quickly without dealing with a realtor.

Zillow now shows $165K. I'm skeptical, because the house next door sold last year for $164K, and it's bigger, and on a bigger lot. The house across the street, about the same size as ours, sold for $143K at about the same time. In this neighborhood, sales have been in the $140K-$200K range, correlating pretty well with the size of the house and lot. Small subdivision just inside the city limits, mostly 1960s vintage.
My investing princiPLEs do not include absolutely preserving princiPAL.

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Sandtrap
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Re: How have your homes as investments done?

Post by Sandtrap » Fri Jun 14, 2019 9:39 am

As a retired R/E businessman, I don't consider my home and "investment", although I will purchase it with the same criteria.
My existing home was purchased in 2011 at the end of the R/E "dip" on a bank auction and potential "flipper" or retirement home after a complete renovation.
Since purchase it has gone up in value about 3X original or more.

Again, since it is a personal residence, to me, it is not an "business investment" per se.
(Although my other properties have done well since the "dip".).

j :happy

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goodenyou
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Re: How have your homes as investments done?

Post by goodenyou » Fri Jun 14, 2019 9:41 am

Awful. Will probably lose $100K-200K on my house. Thankfully, my home value is less than 10% of my net worth. I have resolved to think of it as imputed rent after 20 years. There should be a provision to take a capital loss on residences.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

AerialWombat
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Re: How have your homes as investments done?

Post by AerialWombat » Fri Jun 14, 2019 9:48 am

Sandtrap wrote:
Fri Jun 14, 2019 9:39 am
As a retired R/E businessman, I don't consider my home and "investment", although I will purchase it with the same criteria.
My existing home was purchased in 2011 at the end of the R/E "dip" on a bank auction and potential "flipper" or retirement home after a complete renovation.
Since purchase it has gone up in value about 3X original or more.

Again, since it is a personal residence, to me, it is not an "business investment" per se.
(Although my other properties have done well since the "dip".).

j :happy
You're one of the folks on this board that I'd want to have a beer with and pick your brain. :sharebeer

I'm actually surprised you don't view your personal residence as an investment property, given your career as a developer. For me, every primary residence will eventually become a rental property, so I go into each purchase with this in mind. Since I'm still generating income elsewhere, my goal on each house is simply breakeven cash flow at current prices and with my small down payments, but it's definitely still a consideration.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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Sandtrap
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Re: How have your homes as investments done?

Post by Sandtrap » Fri Jun 14, 2019 10:40 am

AerialWombat wrote:
Fri Jun 14, 2019 9:48 am
Sandtrap wrote:
Fri Jun 14, 2019 9:39 am
As a retired R/E businessman, I don't consider my home and "investment", although I will purchase it with the same criteria.
My existing home was purchased in 2011 at the end of the R/E "dip" on a bank auction and potential "flipper" or retirement home after a complete renovation.
Since purchase it has gone up in value about 3X original or more.

Again, since it is a personal residence, to me, it is not an "business investment" per se.
(Although my other properties have done well since the "dip".).

j :happy
You're one of the folks on this board that I'd want to have a beer with and pick your brain. :sharebeer

I'm actually surprised you don't view your personal residence as an investment property, given your career as a developer. For me, every primary residence will eventually become a rental property, so I go into each purchase with this in mind. Since I'm still generating income elsewhere, my goal on each house is simply breakeven cash flow at current prices and with my small down payments, but it's definitely still a consideration.
Thanks.
IMHO: the criteria for buying "any" R/E whether personal residence or investment, rental - flipper - or otherwise, is the same.
1. Can I sell it in a couple years and get my money back (exit plan)?
2. Can I flip it and make substantial money to be worth the hassle?
3. Can I rent it out at a minimum net 6% CAP rate if I decide to no longer live in it or, bought as a rental investment?
4. If purchase is intended as a rental investment, then does it have economy of scale (multi unit)? (SFH have the least).
5. Is it in an area of historically high appreciative value with great curb value/appeal?
6. No matter the above, would I and DW mind living in it if we had to? (don't buy what you wouldn't live in yourself).
*I have never been a fan of leveraging. Just a gut feeling. No logic to it.

*Back to economy of scale. After obtaining a number of SFH units and all have appreciated well in value, one can consolidate to a multi unit strategy for economy of scale. IE: the more units under one roof, then costs are minimized and income flow increased per building volume, and the SPF (single point of failure) of SFH rentals is removed. If one can go from 8 single spread out SFH units, for example, to an 8 plex, or 12 unit apartment building under 1 roof, then that's great. And so forth. It's a predictable pattern of expansion.

Aloha
jim :happy

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dm200
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Re: How have your homes as investments done?

Post by dm200 » Fri Jun 14, 2019 10:48 am

I would not view a home purchase as an "investment", but rather a secure place to live - as we might wish. I believe that, in most cases, if you are able to purchase a home - it is wise to do so - both lifestyle and financially - even if the home does not appreciate significantly in value.

I view significant price appreciation as a nice "bonus" if it happens - as it has clearly done for us.

GT99
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Re: How have your homes as investments done?

Post by GT99 » Fri Jun 14, 2019 11:20 am

I'm kind of in the middle in most of the rent vs buy debates on here, but buying has worked great for me.

Home 1: Bought for 205k and sold for 205k 13 years later, BUT I collected over $90k in rent on it and most importantly the first 2 years I lived there I had roommates paying me rent that covered over 100% of PITI and enabled me to pay off all my non-mortgage debts (besides student loans, where were at 2%), saving me from bad financial decisions in my early 20s.

Home 2: Bought for $375k, put about $110k into it, sold after 5.5 years for $610k. Got lucky on the purchase timing and price (short sale that the bank under-priced - could have turned around and sold right away at $425k with minimal cleanup and yard work).

Home 3: Bought last year and plan on staying at least another 17 years (until kid 2 is out of high school).

dbr
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Re: How have your homes as investments done?

Post by dbr » Fri Jun 14, 2019 11:51 am

TomCat96 wrote:
Tue Mar 15, 2016 3:52 pm

I guess the corollary to that would be, if you had cash today, would you use it to finance a home or allocate more to your portfolio?
Owning rather than renting was never a discussion. For us the calculus of rent vs buy does not and did not apply. The corollary to that is we would buy today the same as we bought originally.

Financially the return on owning a home has been mildly positive in real dollars after close to forty years. There is always a risk the market value of the home could nosedive just at the time we or our heirs might want to sell but I think that risk is small in practical consequences.

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JonnyDVM
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Re: How have your homes as investments done?

Post by JonnyDVM » Fri Jun 14, 2019 12:36 pm

I’m kind of surprised more bogleheads weren’t able to capitalize on the must depressed real estate prices in generations.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

Ferdinand2014
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Re: How have your homes as investments done?

Post by Ferdinand2014 » Fri Jun 14, 2019 1:02 pm

TomCat96 wrote:
Tue Mar 15, 2016 4:57 pm
To everyone who responded, I greatly thank you.

To those of you saying my house is not an investment, Let me rephrase:

Would you consider buying a 2nd home for investment or would you rather put your money in your 3-fund Boglehead portfolio.

So far the answers I seem to be getting indicate, in spite of the leveraged gain, after all the numerous expenses, a second home is likely to underperform a well diversified boglehead portfolio.
2 fund boglehead. I see my house as a modest inflation hedge against rising rents. No interest in second home. I prefer simplicity.

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dm200
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Re: How have your homes as investments done?

Post by dm200 » Fri Jun 14, 2019 1:26 pm

JonnyDVM wrote:
Fri Jun 14, 2019 12:36 pm
I’m kind of surprised more bogleheads weren’t able to capitalize on the must depressed real estate prices in generations.
Maybe most of us already owned homes and kept them during that big dip in real estate prices.

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Re: How have your homes as investments done?

Post by alfaspider » Fri Jun 14, 2019 1:36 pm

I've been lucky so far. Of course, we could have a 2008 repeat and it would all be out the window.

Bought first house in Houston for $500k in 2013. It is likely worth somewhere around $650-700k today. It would have been still better had I bought in 2010, when it sold for $350k. Thus far, I've effectively lived in the house for free as appreciation has exceeded my carrying costs by a significant margin.

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snackdog
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Re: How have your homes as investments done?

Post by snackdog » Fri Jun 14, 2019 1:48 pm

We have been lucky (yet) to have not lost money on seven houses in 20 years but I know several otherwise savvy people who have lost $1-200,000 in the last decade or so. I doubt our real estate has done anywhere near what the stock market has done once you factor in all the costs.

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ChowYunPhat
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Re: How have your homes as investments done?

Post by ChowYunPhat » Fri Jun 14, 2019 1:56 pm

We have owned 5 homes thus far. Adjusting for taxes, insurance, offsetting rents, and transaction costs.
#1 - Condo. After adjusting for investments and assessments but factoring in rents, we probably lost 15-16%. Ouch...
#2 - Lived in this 3 years, probably lost 2-3% after expenses and renovations. Lots of sweat equity on this one.
#3 - Lived in this 2 months so were not able to capture cap gains exclusion. However, as a rental we did fairly well and were able to sell 8 years later for a +11% profit.
#4 - Lived in this 8 years. Thought this would be a forever home for us but life sometimes has other plans. Sold for a small loss vs. our purchase price and renovations. Would have been a larger loss but relocation by employer covered large chunk of transaction costs.
#5 - This is our current residence and we've been in this 18 months. Believe we'll do OK on this one but you never know when you'll have to sell.

Altogether, we've done OK but would say we've typically had more personal house than needed and that comes with a cost. Agree with other posters who wrestled with residential/home as an investment. Unless this is a purely a property acquired to provide rents, it's difficult to split the investment vs. consumption baby so to speak.
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FrugalInvestor
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Re: How have your homes as investments done?

Post by FrugalInvestor » Fri Jun 14, 2019 2:16 pm

I've never tracked them closely but for 4 homes that I've owned over a period of 35 years (in the fifth now) I know I've lost money. However, two have been custom and one semi-custom which means not the most cost efficient. Also, I spend more money on my homes than many people because it's where I spend the bulk of my time and I want it to be an enjoyable place. I've never viewed a home as an investment, other than an investment in my comfort and happiness.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

Dandy
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Re: How have your homes as investments done?

Post by Dandy » Fri Jun 14, 2019 3:18 pm

About 5% compounded over 45 years. bought in 1974 for 50k now worth maybe 450K+. 3 bedroom ranch on a modest flat lot in a high cost of living suburb with modest R.E. taxes for the general area.

But what costs to subtract? Mortgage interest?, upgrades e.g. kitchen redo?, siding? landscaping? mower(s)? snowblower? tools?, driveway repaving(s)?, new gutters?, portion of R.E. tax? annual sewer assessment?, replacement windows?, appliance repairs/replacements?, tree removals?, lawn service (non mowing)?, termite insurance?, new furnace(s)?, water heater(s)?, etc.

Hard to treat a home you live in as an investment. It is more a life choice. I've read that with great exceptions homes usually sort of keep up with inflation over the long term.

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Re: How have your homes as investments done?

Post by KlangFool » Fri Jun 14, 2019 3:28 pm

Bought my house with PITI 20% to 30% lowered than market rent. Earn/save $6,000 per year in imputed rent. Do not need or care about house appreciation.

KlangFool

Jimsad
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Re: How have your homes as investments done?

Post by Jimsad » Fri Jun 14, 2019 4:13 pm

enebyberg wrote:
Tue Mar 15, 2016 5:16 pm
Purchase price: $250k 17 years ago
Current value as of last week: $848,775k :D
I bought a house for 470k in 2005.
It went Down to 200k in 2010 and now is worth about 380k

Ragman
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Re: How have your homes as investments done?

Post by Ragman » Fri Jun 14, 2019 4:46 pm

We built our custom home, in LCOL flyover country, in 2005, for about $450,000. Today, after realtor fees we would likely net $350,000. We love our house and wooded acreage but overbuilt.

Fortunately my 3-fund portfolio has done much better. :D

Key takeaway for me - if you do not live in a hot location it is difficult to make money on a house, especially after expenses. However, we love our house and neighborhood. When I factor the $2,500 a month it would cost to rent a comparable property, I feel fortunate my family has lived in a beautiful house in a safe neighborhood over the last 14 years. You need a place to live and you only live once. It’s all about balance.

And justification. :wink:

7eight9
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Re: How have your homes as investments done?

Post by 7eight9 » Fri Jun 14, 2019 5:22 pm

Lousy.

2Br/2Bth condo - bought in 2003 for $97K. Sold in 2015 for $90K,

3Br/2bth condo - bought in 2004 for $160K, Recent comps are selling for $270K. However, bought below market (comps were at $255K) from wife's uncle. Realistically if we paid market we would be barely to the good.

That said, first condo was a rental from day one. Put down $20K. Paid down additional to have it paid off in 2009. Don't really have a good feel for how we did but probably wasn't the best investment.

Current home is just that. Home. Put down 50%. Paid it off within the first year. You have to live somewhere. And when housing expense is HOA and property taxes (capped at 3% per year) it isn't all that bad.
Last edited by 7eight9 on Sat Jun 15, 2019 8:46 am, edited 1 time in total.

mchampse
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Re: How have your homes as investments done?

Post by mchampse » Fri Jun 14, 2019 5:33 pm

TomCat96 wrote:
Tue Mar 15, 2016 6:13 pm
This is a superficial computation of the raw data that everyone provided here.


Thus Far our bogleheads have:

7.60% compounded GAIN
2.48% compounded GAIN
0.00% compounded GAIN
2.41% compounded LOSS
1.87% compounded LOSS
3.89% compounded GAIN
16.36% compounded GAIN
22.4% compounded GAIN
4.99% compounded GAIN
7.45% compounded GAIN

The largest gains however appeared over a short interval. 2 and 4 years.
Our biggest long term gainers averaged about 7.45%

This computation is incredibly superficial however because it does not take into account:
-down payment, the leverage of the mortgage, rent, taxes, maintenance costs.

Let us suppose however that one had the cash to simply purchase the house outright. We can take the mortgage out of the equation leaving:
the compounded gain being equal to the

rate + ((Rental Income - Upkeep Costs(tax, maintenance, hoa)/cost basis).

Using numbers from houses in my area, the second term is a miniscule, leaving a dividend no greater than half a percent.

From this, I conclude that after all costs, a house is likely to underperform a well diversified 3 fund portfolio.
Doesn’t consider leverage. If everyone put 20% down and their carrying costs/maintenance were about the same as renting, those returns should be multiplied by 5. ie, you buy a house for $100,000 putting $20,000 down. It goes up to $105,000 in a year. Your return is 25% because you only put in the $20k down payment.

That said, the losses get amplified too.
Last edited by mchampse on Fri Jun 14, 2019 5:39 pm, edited 1 time in total.

mchampse
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Re: How have your homes as investments done?

Post by mchampse » Fri Jun 14, 2019 5:37 pm

Price appreciation on a primary residence to some degree is funny money. A friends home has gone up from $500k to $1.5M. Made a $1M, except if he sold he would still need a place to live and every other home equivalent to his is worth $1.5M. He could move to another city, but everywhere has seen price increases so he’s still not that far ahead. He could sell and move to an LCOL area and retire, but it does involve leaving everything he’s familiar with.

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Re: How have your homes as investments done?

Post by Yellowhouse » Fri Jun 14, 2019 5:51 pm

Bought my home for 101k in 2003 and put it on the market yesterday for 255k. It looks good but the real numbers tell a completely different story. I paid off the note in 2013 @ 90k. The ten years prior to paying it off, I was paying a $750/mo mortgage payment on it. I figure I've probably sunk 215k into that house if you figure all of the mortgage payments, the one time payoff of 90k and various renovations.

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Will do good
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Re: How have your homes as investments done?

Post by Will do good » Fri Jun 14, 2019 6:26 pm

Brought my house 29 years ago for $235K, remodel $100k, added on $90k.

Today house is worth approx $525K. A tiny gain of $100K after 29 years. Consider inflation, taxes, annual repairs, it's not good.

But my kids did growth up in a nice home and went to one of the best public schools in the country.

johnny
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Re: How have your homes as investments done?

Post by johnny » Fri Jun 14, 2019 9:39 pm

Purchased our house 10 years ago and selling this year. Great place to live and raise a family (and great memories). No major renovations. Appreciation amounts to 1.4% per year in our flat real estate market -- probably covers a little more than maintenance and repair.

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Re: How have your homes as investments done?

Post by Ruger » Fri Jun 14, 2019 11:48 pm

I purchased my home on acreage in 1985 for $82,000. It's worth about $600,000 now.

I also purchased a rental condo in 2013 for $95,000 and put $15,000 into a remodel . The condos now sell for around $235,000.

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JonnyDVM
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Location: Atlanta, GA

Re: How have your homes as investments done?

Post by JonnyDVM » Sat Jun 15, 2019 6:01 am

dm200 wrote:
Fri Jun 14, 2019 1:26 pm
JonnyDVM wrote:
Fri Jun 14, 2019 12:36 pm
I’m kind of surprised more bogleheads weren’t able to capitalize on the must depressed real estate prices in generations.
Maybe most of us already owned homes and kept them during that big dip in real estate prices.

That’s true. It is generally an older crowd here. I was fortunate to be right place right time. That being said, if a significant depression in housing values happened tomorrow I’d be looking hard at picking up an additional property.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

dumbmoney
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Joined: Sun Mar 16, 2008 8:58 pm

Re: How have your homes as investments done?

Post by dumbmoney » Sat Jun 15, 2019 6:12 am

In a stable real estate market (e.g. the Rust Belt), all the "return" comes from the rent you saved. Sure the house goes up in value, a little bit above inflation, but there's no gain after subtracting maintenance and other costs.
I am pleased to report that the invisible forces of destruction have been unmasked, marking a turning point chapter when the fraudulent and speculative winds are cast into the inferno of extinction.

MnD
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Re: How have your homes as investments done?

Post by MnD » Sat Jun 15, 2019 8:08 am

Buy and hold has been outstanding. Value up ~600% since 1991 purchase. Taxes and insurance combined are 0.60%.
I credit luck and DW. She saw the potential in the mostly boarded up (at the time) authentic late 1800's Old Town within easy walking/biking distance as something that would revitalize our 1950's suburban neighborhood. Boy did it ever, and recently opened light rail is juicing things even more.

When we bought, young couples wouldn't be caught dead buying in our neighborhood and most people around us that could afford to sold and moved away to the "way out" suburbs as soon as they could swing it. Now millennials, young retirees ect. view our neighborhood as one of the most desirable in the metro area.

cableguy
Posts: 28
Joined: Thu May 09, 2019 3:34 pm

Re: How have your homes as investments done?

Post by cableguy » Sat Jun 15, 2019 8:19 am

I’ve owned two houses so far. First one bought for $179,000. Sold it in 2008 for $580,000. Bought the house I’m in now for $775,000. Sad to say....probably wouldn’t get $775,000 for it now. Close. But not $775k.

I think about buying second house. Then I think about:
Will I use use it.
How much taxes and expenses go up.
If I’m near the water will it get gobbled up in a storm.
If I’m on the ski mountain will it stop snowing.
I’m a nervous wreck by nature.....so I dpon’t pull the trigger.
I see $1M second homes on the east end of Long Island that are tiny cottages. Just can’t spend $1M on that....

thx1138
Posts: 925
Joined: Fri Jul 12, 2013 2:14 pm

Re: How have your homes as investments done?

Post by thx1138 » Sat Jun 15, 2019 8:52 am

MnD wrote:
Sat Jun 15, 2019 8:08 am
Buy and hold has been outstanding. Value up ~600% since 1991 purchase. Taxes and insurance combined are 0.60%.
I credit luck and DW. She saw the potential in the mostly boarded up (at the time) authentic late 1800's Old Town within easy walking/biking distance as something that would revitalize our 1950's suburban neighborhood. Boy did it ever, and recently opened light rail is juicing things even more.

When we bought, young couples wouldn't be caught dead buying in our neighborhood and most people around us that could afford to sold and moved away to the "way out" suburbs as soon as they could swing it. Now millennials, young retirees ect. view our neighborhood as one of the most desirable in the metro area.
Nice! How much went into taking it from boarded up to where it is now?

Of course for comparison a 70/30 portfolio is up 1200% since 1991.

But you can’t live in a 70/30 portfolio.

Pipes don’t break in a 70/30 portfolio either though.

RobLyons
Posts: 335
Joined: Tue Oct 31, 2017 12:55 pm

Re: How have your homes as investments done?

Post by RobLyons » Sat Jun 15, 2019 8:57 am

North of Boston
My house. 3br 1 full bath, 2 1/2. 1750sq ft plus partially finished basement (total 2200sq ft if finished)
2012 $335k purchase price - currently $475k-$525k (potentially $600k)
My mortgage is cheaper than most 2 bedroom apartments here

Parents home. 3br 1 bath 1150sq ft
1988 - $155k - currently $400k

I'd say our homes are doing quite well as investments, although we don't look at them like that.
"Great parenting sets the foundation for a better world"

thx1138
Posts: 925
Joined: Fri Jul 12, 2013 2:14 pm

Re: How have your homes as investments done?

Post by thx1138 » Sat Jun 15, 2019 9:02 am

We’ve done OK.

First house bought in late 2004 and sold in early 2008 just before the market flopped. That’s a real short time to own a house as far as transaction costs go but there was a huge real estate run up over that time so we came out OK. Factoring in all costs it meant we effectively paid lower rent for a nicer house than we could have done by directly renting. If we hadn’t by luck needed to move in early 2008 we’d have been left holding the bag. That property took about six years to finally sell at a price above where we sold it and the owners had easily put in at least 100k of improvements just to get there.

Current house purchased in early 2010 around the bottom of the housing collapse. Modest price appreciation since then in our region. We are happy with the location and the house and are far mire likely to be in this house for a couple of decades keeping transaction costs better amortized.

I’ve noticed the big problem for us is that we usually rent the “right amount of house” but when purchasing we tend to buy “too much house”. So that actually makes buying probably worse than renting for us but that’s a behavioral thing really!

travellight
Posts: 2829
Joined: Tue Aug 12, 2008 5:52 pm
Location: San Diego

Re: How have your homes as investments done?

Post by travellight » Sat Jun 15, 2019 9:38 am

JonnyDVM wrote:
Fri Jun 14, 2019 12:36 pm
I’m kind of surprised more bogleheads weren’t able to capitalize on the must depressed real estate prices in generations.
I already owned 2 personal homes and bought 6 more homes during the dip as rental property. I also was surprised others weren’t as keen on it even if they had the financial means. My net worth since 2012 has gone up each year by more than my annual salary.
364

Tshaner1
Posts: 1
Joined: Sat May 05, 2018 11:37 am

Re: How have your homes as investments done?

Post by Tshaner1 » Sat Jun 15, 2019 9:40 am

Dumb luck. Bought house for $295,000 24 years ago in San Jose. Remodeled for about $25,000. Worth $1.2 million. I’m married to the weather and hope to let my kids inherit on a stepped up basis however traffic is turning this area into LA.

tlk59
Posts: 30
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Re: How have your homes as investments done?

Post by tlk59 » Sat Jun 15, 2019 11:44 am

We moved to SF Bay Area in 1989. First house, bought for $185k; went down $40k after 6 years (aerospace recession), but we were moving to another house within the South Bay, so no problem.

Second house we bought in 1995 for $230k. Now worth about $1.3 or $1.4 million. Which IS a bit of a problem...a golden handcuffs problem. If we ever want to move for retirement, we'll be facing a hefty capital gains tax on the gain exceeding the $500k exclusion. If we wanted to move to a smaller town say on California's central coast, we could find a house costing less...but still not cheap. And our purchasing power would be reduced.

Throw in the fact that most of the counties outside those in Southern Cal and 3 in the Bay Area don't accept the transfer of your proposition 13 grandfathered property tax assessment, and it seems like we either need to stay here till we die, or retire in another state. I know, I know...first world problems.

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peterinjapan
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Location: Japan!

Re: How have your homes as investments done?

Post by peterinjapan » Sat Jun 15, 2019 11:52 am

My wife is Japanese, and when we bought a house in San Diego for $330,000 in 1998 she was sure its value would fall through the floor, because in Japan no one wants to live in a “used” house but buy land, tear down whatever building is there, and erect a new house for your own family. Happily I overcame her fear and we’ve done nicely. Also bought a condo in San DIego in 2010 which I recently sold for a nice 25% gain.

But this is San Diego. I wouldn’t attempt the above in less awesome real estate markets.

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