Real Estate in your city

[dave8721]

Ken Griffin just dropped $125 million for a Star Island assemblage for his mansion (bought a house and 2 vacant lots next door to expand onto) for a new Miami sale record.

[twister244]

Originally Posted by lio45

But if you know with absolute certainty that your RE asset(s) is worth more than your RE debt even in the worst case scenario, can't the logical part of your brain take over and allow you to sleep well?

I owe millions of dollars and see no reason whatsoever that fact would keep me up at night. It's not even on the list of my top 100 worries.

Now, if someone owed money to organized criminals AND weren't in a position to pay, sure, that's a very uncomfortable debt, and a dangerous one; that would keep anyone up at night, trying to think about solutions to the problem.

But RE debt? That's like the healthiest sort of debt there is.

Yep.

I was so nervous when I bought my condo in Denver since it was my first purchase. But I walked in the door with instant equity because it was new construction in a booming neighborhood. I had PMI because I put less than 20% down, but I got out of that less than two years into my mortgage my simply refinancing showing I had 20% equity.

Fast forward to now - I still have that condo with an mechanical 20-something engineer paying my rent on time every month with not one complaint while I continue to build equity.

The thought of taking on a second property now of my own in Chicago seems way less stressful. If worse comes to worse, I cash out my condo in Denver, but I see no reason for that happening anytime soon, even if real estate dips in the next year or two.

[lio45]

Originally Posted by twister244

Yep.

I was so nervous when I bought my condo in Denver since it was my first purchase. But I walked in the door with instant equity because it was new construction in a booming neighborhood. I had PMI because I put less than 20% down, but I got out of that less than two years into my mortgage my simply refinancing showing I had 20% equity.

Fast forward to now - I still have that condo with an mechanical 20-something engineer paying my rent on time every month with not one complaint while I continue to build equity.

The thought of taking on a second property now of my own in Chicago seems way less stressful. If worse comes to worse, I cash out my condo in Denver, but I see no reason for that happening anytime soon, even if real estate dips in the next year or two.

Someone like Crawford wouldn't sleep well in your situation though, because your Denver rent covering your Denver costs is only true under historically low interest rates.

That said, I wouldn't worry at all if I were you, low rates seem here to stay for at least a good while.

In my case, I'm in a safer situation, thanks to most of what I have having been bought a while ago (at much lower prices), so even rents that are really on the low side would still be more than enough to pay principal and interest on what I owe even if annual interest rates were 10%+. So in that case, no reason whatsoever to not sleep well.

Ironically, it was nearly -30C last night and the boiler quit in a 3-story, 23-unit, central (water) heating building, so that did wake me up for a bit. I should be more precise and say it's not the financial side that ever keeps me up at night.

[jmecklenborg]

Originally Posted by Crawford

But yeah, when I hear someone with real assets bought a home, and put down almost nothing, and it's not an investment property, it sounds insane. Debt is Guilt.

I put down 20% on both of my houses, the larger being $45,000 on a $225,000 house. By comparison, my brother recently put down $50,000 on a $1.05 million condominium in Los Angeles. If a collapse occurs and he is forced to move, he might be stuck bringing $100-300k to the closing table just to get out.

The high interest rate environment and the widespread, large-scale abandonment and demolition of single-family homes and multifamilies is the reality I and 100+ million other Americans were raised in and around. The younger generations have no acquaintance with this. Similarly, the younger ages don't remember hi-interest bonds or buying stocks for dividends rather than capital gains.

The 2020 crash could have been a great learning lesson for this new generation. Instead, the stock and RE markets were not only bailed out, but most people who were invested came out tens of thousands, if not hundreds of thousands of dollars ahead of where they would have been if Covid had never happened.

[Investing In Chicago]

RE: Paying off a house vs. highly leveraged, it really depends on each persons financial situation and their tolerance to take on debt.

I certainly wouldn't be where I am today with my rental properties had I not had access to financing. Rental properties are easy to evaluate, as its strictly numbers based, with zero emotion. If the numbers work, and assuming I have the cash for down payment, i bought. I really didn't care what I owed on them.

I look at my primary residence slightly different - it doesn't cash flow, and costs me money every month. I want to get that thing paid off ASAP. We just built a house about 2 years ago, and I put down ~40%. I have a 30yr fixed @ 2.99% on a jumbo, which is crazy, and would make complete sense to just ride that bad boy out until I decide to sell. However, at 38 years old, and wanting to exit the grind by early 50's, I want to get all of my debts paid off as quickly as possible. So my focus now is get the primary paid off, then the rentals, then retire.

[jmecklenborg]

Originally Posted by Investing In Chicago

I look at my primary residence slightly different - it doesn't cash flow,

A primary residence can cash flow if you rent out the spare bedrooms. Unfortunately, this strategy backfired on me twice since I've had to evict two people, each for completely insane reasons.

Eviction #1: was told not to get a cat. Tenant snuck a cat into the house and kept in her room. I knew it was there because my cat started pooping outside that bedroom door.

Eviction #2: hoarding old treadmills. Tenant could not stop buying old treadmills and taking up huge amounts of space in the house with said treadmills. Only heard the treadmills in action 1-2 times.

[Investing In Chicago]

Originally Posted by jmecklenborg

A primary residence can cash flow if you rent out the spare bedrooms. Unfortunately, this strategy backfired on me twice since I've had to evict two people, each for completely insane reasons.

Eviction #1: was told not to get a cat. Tenant snuck a cat into the house and kept in their room.

Eviction #2: hoarding old treadmills. Tenant could not stop buying old treadmills and taking up huge amounts of space in the house with said treadmills. Only heard the treadmills in action 1-2 times.

i've house hacked when I was younger, but my days of renting out a spare bedroom are behind me.

[JManc]

Originally Posted by lio45

But if you know with absolute certainty that your RE asset(s) is worth more than your RE debt even in the worst case scenario, can't the logical part of your brain take over and allow you to sleep well?

I owe millions of dollars and see no reason whatsoever that fact would keep me up at night. It's not even on the list of my top 100 worries.

Now, if someone owed money to organized criminals AND weren't in a position to pay, sure, that's a very uncomfortable debt, and a dangerous one; that would keep anyone up at night, trying to think about solutions to the problem.

But RE debt? That's like the healthiest sort of debt there is.

That would keep me on edge but yeah, if you're equity is worth more than the debt (or even initial loan), that's not so bad. Not like a car which loses 10% of its value the moment you leave the lot. Even then, an auto loan better than paying cash; you can leverage that money into something with higher returns. ..

[jmecklenborg]

Originally Posted by Investing In Chicago

i've house hacked when I was younger, but my days of renting out a spare bedroom are behind me.

I'm not sure when the term "house hack" appeared, but the knowledge that you can lever up using roommates wasn't common knowledge before that term and online stuff like Bigger Pockets appeared, but even with many more people knowing about it today, it still takes a certain sort of personality to tolerate the nonsense that comes with living with a few strangers in a home that you own.

I did buy my first house with every expectation of renting it out. That's one thing I'll never understand - why people don't attempt to keep their previous house as a rental. All of the cross-country moving in pursuit of more income is actually costing them rental income.

One of my friends moved to North Carolina from Pittsburgh and kept his first home near Carnegie-Mellon as a rental. That's a pretty unusual situation.

[Investing In Chicago]

Originally Posted by jmecklenborg

I'm not sure when the term "house hack" appeared, but the knowledge that you can lever up using roommates wasn't common knowledge before that term and online stuff like Bigger Pockets appeared, but even with many more people knowing about it today, it still takes a certain sort of personality to tolerate the nonsense that comes with living with a few strangers in a home that you own.

I did buy my first house with every expectation of renting it out. That's one thing I'll never understand - why people don't attempt to keep their previous house as a rental. All of the cross-country moving in pursuit of more income is actually costing them rental income.

One of my friends moved to North Carolina from Pittsburgh and kept his first home near Carnegie-Mellon as a rental. That's a pretty unusual situation.

Yeah, I knew of the house hack method in College - where I bought a rental property and made money every month with my living situation by renting out the other rooms, but Brandon Turner at Bigger Pockets was the first I heard to use the term "house hack"....I'm now 38 with a Wife, and 2 little kids and dog, no way a stranger is living in our house with us.

[twister244]

Even though I don't live in Denver anymore, I do pay attention to the real estate there with my rental. I saw this article that just came out with home prices now at $700k there on average:

https://www.westword.com/news/denver...pdate-13197594

This is absolutely insane..... I wonder how this can sustain itself. I know Denver is nice with the mountains, but they still have winters.... and fires.....

[Crawford]

A Central Park South apartment that sold for $93 million just prior to the pandemic recently sold for $190 million. Talk about a nice return:

https://www.wsj.com/articles/new-yor...ey-11642098997

Can the "cities are dead" narrative finally be put to rest? Or do we need a thousand more articles mansplaining how Google Teams will encourage everyone to move to rural Kentucky or an island in the South Pacific?

[Manitopiaaa]

Got my first pre-approval! It's crazy sad that I make $120k and can still barely afford a townhouse in the D.C. suburbs. Now to decide whether to buy in the next few months, wait for spring and hope for better inventory, or wait till summer and hope for a Fed-induced housing price decline.

[C.]

There have been some crazy real estate appreciations as of late. I was curious what my old crappy apartment in Atlanta was leasing for and the rent has gone up 30 percent in one year! A $400 a month increase.

There was a displacement of a lot of families with the first wave of gentrification caused rents to rise rapidly, but now those new residents are going to be gentrified out themselves.

I would not be surprised if Millennials start showing up at community meetings for new development and scream louder than the old NIMBYs about the lack of housing available. At least the millennials that took a basic economics class in college. It's already happening to an extent now that public meeting have moved online and are more accessible.

[mrnyc]

i can't get these nitwits out of my new staten condo purchase lol. they are waiting on a certificate of occupancy for their new place in nj. we had to throw money at it to extend the mortgage rate. so we wait. bleh.

[Crawford]

Are you on the North Shore of SI? I bet that whole area is gonna explode in the next 20 years. Really good bones, and lots of city money planned for parks, transit, culture, etc. Also a huge recent rezoning. Probably a great investment.

[Investing In Chicago]

Originally Posted by Crawford

Are you on the North Shore of SI? I bet that whole area is gonna explode in the next 20 years. Really good bones, and lots of city money planned for parks, transit, culture, etc. Also a huge recent rezoning. Probably a great investment.

100% agree. My parents recently moved to SI, on Forest Ave right off the park. SI get's a lot of hate, but I think it's fantastic, access to the city is terrible, but fairly easy to get to Jersey City / Hoboken

[Crawford]

Agreed.

SI generally isn't my cup of tea, but it's still really affordable, some of the corridors are quite nice, almost all the neighborhoods are safe and decent, schools are above average, and now real urban amenities are arriving.

And the topography in many parts is pretty dramatic. You can get an impressive hilltop home, with amazing Manhattan and harbor views, for a not-crazy price.

[mrnyc]

Originally Posted by Crawford

Are you on the North Shore of SI? I bet that whole area is gonna explode in the next 20 years. Really good bones, and lots of city money planned for parks, transit, culture, etc. Also a huge recent rezoning. Probably a great investment.

we are not anywhere yet -- grrr! -- but yes -- although keep in mind staten north shore been going to explode for the past 30yrs.

it likely will though, how can it not? there is already a big development planned for just west of the ferry:

https://www.silive.com/business/2021...-building.html

[sopas ej]

From The Eastsider:

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