My first flip comment is "GenX grabbed the bottom rung of the property ladder and pulled it up with them." The going rent for the current place is $3k a month and it's a damn starter home in a not-great neighborhood. My less-flip comment is "property ownership is, historically and geographically speaking, an anomaly." That doesn't make it better; it means that the guys who grabbed the last rung are enshrining their economic superiority. My least-flip comment is "but it's all policy-driven." 2008 was about the financialization of home ownership; 2022-on is about the financialization of rentier home ownership. Rent controls, first-time homebuyer incentives, urbanization programs, there's several ways to bend the arc, it's just that this incoming administration won't do any of them. I'll say this. For everyone "waiting for something to break" the next four years are going to be a torture test in countless ways.
holy crap hubski did not want me to reply to you, the comment box kept disappearing. yeah, right? the troubling part is housing is really, really expensive right now as someone who has to front it with a partner and no family help, right? but then rent prices also keep increasing and creeping higher and higher which is like...well, if i bought a house...at least i'd be building equity? so currently in the "fuck it imma just throw my savings into maxing out retirement funds and putting the rest into index funds" mode which...i guess isn't the worst option?My least-flip comment is "but it's all policy-driven." 2008 was about the financialization of home ownership; 2022-on is about the financialization of rentier home ownership. Rent controls, first-time homebuyer incentives, urbanization programs, there's several ways to bend the arc, it's just that this incoming administration won't do any of them.
My first rogue thought is things are so fucked ATM that your move might be to buy a shitty duplex and rent out half of it. Business finance has so torqued that SBA(7a)s are better than conventional loans; you can't buy an apartment building with an SBA(7a) but you could buy a live/work space. you didn't know you wanted to make snowboards on the side, did you? My second rogue thought is that the paradigm is probably shifting. Much of Europe doesn't own and never did, it's not a part of how they live but then, they have a social safety net. Houses in Japan only last 30 years because Japanese cities were victims to fire, earthquakes and hurricanes so why get wrapped up around something that Curtiss LeMay is going to reduce to ashes anyway? Commercial leases in France are nothing like commercial leases in the US; they can kick you out whenever they want and you pretty much have to front the entire lease period as cash (no wonder the Cartiers sold the plants some pearls). I don't know what that looks like short term or long term but it will persist in being advantageous to own real estate. My third rogue thought is Zillow ate absolute shit trying to flip houses which is really funny because (1) fuck Zillow (2) no seriously, fuck Zillow (3) so much for your Zestimate bitchez. This only matters because all the single-family homes being snatched up by REITs are every bit as algo-fed as Zillow's bullshit. The system is due for a kick in the nuts. An investing anecdote: I've been using a thing called Autopilot because, thanks to my checkered financial past, I manage seven or eight scattered 401(k)s, SEPs, Simples and other random funds above and beyond my pension. I threw some money at Warren Buffett back when TD Ameritrade still existed, and then Schwab ate them, and that took forever, and Autopilot didn't work with Schwab. Then Autopilot worked with Schwab and I had to clear out what I had to readapt to what I didn't and in the process of doing that I took a long, hard look at everything I owned and you know what? Everything is doing well. This is one of those eras where you have to be a dipshit to lose money. Most people think it's because they're clever but fuck you NVidia has a three trillion dollar valuation even though they're out here saying dumb shit like we must strap a hundred thousand GPUs together to eliminate six-fingered memes and the market claps like a fuckin' walrus at Sea World. BUT Paying a percentage to a robot that can ape Warren Buffet or Nancy Pelosi or whoever 24 hours after they execute their trades? is doing REALLY well. Don't hate the playa hate the game, and the game is rigged, and I think there's a lot more protection for financial shenanigans in the stock market than there is in single family homes. Something like 5% of the country owns stock but everyone within US borders wants a roof over their heads. I don't care how malfeasant you are, the low-hanging fruit is housing not finance and if the Justice Department is already going after rental orcs, Trump ain't gonna fuk widdat without a reason.
ive been looking very casually at duplexes and triplexes recently and the odds and ends on market and definitely feel like im missing something. in the < $1.5 million range in seattle, on redfin, there’s: - twenty four homes listed total of which - five homes listed less than 30 days of the remaining nineteen - eighteen have been listed for more than 90 days - ten have been listed for more than 180 days im assuming something is pretty fucked with the houses, zoning, or they’re just way, way overpriced for what they are (i have no idea what im doing)
A lot of houses went pending in December, not sure why. Rates going up? Prices going down? December is usually dead so surprising to see some of the long duration inventory clear. The multi family market is f-ed , the smart forks are exiting duplexes, triplexes and airbb as treasuries pay essentialy the same amount without the associated pain in the A. That’s why so many converted duplexes show up. Who in their right mind would buy a 1.2m house and share it with a tenant for 2k a month out of a 7-8k total payment. Seems hardly worth the effort.
Let's math it First rental I found on Craigslist is $2100/mo. That gets you 1100sqft in Shoreline. Duplex it's in is $900k on Zillow. Put $180k on it at current rates and you're looking at $5500/mo - or $3400/mo once you knock the rental off. As a rental you can depreciate the structure on a 15-year tax schedule which is probably good for $10k/yr so that knocks another $800 or so off the price; you're at $2600/mo. That mortgage payment allows you to borrow about $300k - which would be a 700sqft condo except no it's not because everything in that price range also comes with $700/mo in HOAs. So. If you can scrape together a down-payment on a duplex, you can get your payment down below what is even possible in the current real estate market. And if you did that in 1993, like the first rental I found on Craigslist, your mortgage got paid off last year anyway. or maybe it didn't, it might have gotten rolled into some ridiculous rate back in 2000 or 2010 or something. But sure, go buy some treasuries. Nothing quite like six figures of t-bills when the incoming president has gone bankrupt four times.
You aren’t doing the rest of the math. That duplex has maintenance, taxes and lost occupancy during rental transition. Once you factor in all the shit you missed you end up with either a break even or more likely cash flow negative position. At that’ point all you are just gambling on continued appreciation of the property, and hoping you can make up the 10% in transaction costs. In the past that’s been a decent bet but who knows. Current interest rates and demographic are working against you at some point affordability might come to bite. Or it might not and more people will just have to cram into tighter spaces. If you were to just rent that 2200$ unit you would save 2-3k a month and you could invest that instead. Overall the risk of investing the savings in diversified equities is lower than that of buying into a single housing asset, but of course there are no guarantees.
You're right, I'm not - because unlike you, I've actually been a landlord. "Lost occupancy" is a month every two or three years around here. "Maintenance" is a thousand a year tops. If you're going to get that stupid about it you're smart if you give a rental agency first's month's on every new tenant for the eviction protection alone. Doesn't change the fact that the equation goes from "700sqft condo for $3400/mo" to "1100sqft in a mult-tenant for $2600/mo" through the liberal application of downpayments. But here's the basic problem - you listened to a podcast. I had tenants for ten years. Am I happy I didn't have tenants during COVID? Yer damn skippy. But none of your podcasts brought that up either. "Affordability might come to bite" is Suze Orman-speak for "I'm the one giving the advice here" - we're talking Seattle, where the population has increased by 50% in 20 years, the only metropolitan area with not one trillion-dollar company but TWO, the place where the hoi polloi whiplashed from "why are you building so much parking around light rail" to "why didn't you build more parking around light rail" in exactly one weekend. The neighbors across the street sold. A REIT bought their place and immediately listed it as a rental for the monthly mortgage rate. The rental agent told me they had 130 applications; made sense because the neighborhood was impassable for an entire goddamn weekend. This in the zip code that had 70% of new senior housing NATIONWIDE in 2018 and who moved in? retirees. What "affordability" are we talking about here? Because I have employees commuting from Marysville. I have employees commuting from Lake Stevens. I have employees commuting from Tulalip. These are things I know, which you're dismissing because of things you've heard. "Things you've heard" is how Zillow ate shit - as discussed above. No need to know anything in particular when you can just learn things in general! If you were to rent the duplex for $2200 vs buy it and rent half of it for a net of $2600 you're right - you've got an extra $400 a month to go play the ponies with. That's a whopping $4800/yr! Of course you aren't getting $15k off your taxes in mortgage interest deduction - it's the biggest white-family sop in the entire tax code and while it doesn't always apply, it's not nuthin'. But more importantly, when you muck about in "diversified equities" these are the guys on the other side of the trade: We're in one of those stupid markets where everyone is making money so everyone thinks they're smart. They're not - they're making less money than the monsters because unless you've got a server colocated with NYSE in a dark pool you're just order flow. It's all you've ever been, it's all you'll ever be. Sure - pick stuff correctly and you'll come out ahead but you will never come out as ahead as Goldman. And for Goldman to come out more ahead you have to come out behind and they will absolutely make that happen. And yet. You persist in presuming I'm the guy who doesn't know what he's talking about. Why is that?You aren’t doing the rest of the math.
If you were to just rent that 2200$ unit you would save 2-3k a month and you could invest that instead.
Yeah I was noticing some of that re: December too. Was wondering if it could be bonus / vesting / etc. related timing around here.
THING 1: nobody wants to be a landlord except people with enough money to buy an apartment building and in general, those are all REITs at this point. THING 2: most people can barely scrape together enough money to buy a place to live, let alone a place for others to live. The Warren Adler quote I love - "A man tells the world who he is four ways: his house, his wife, his car and his shoes" - is not favorable towards a d00d who shakes down his neighbors for money rather than blow his entire wad on a more-impressive single family home. THING 3: In general the people who bought duplexes for income were the strivers with small families who were trying to put down roots. Nobody under 40 wants to put down roots anymore. THING 4: If you're a REIT, you get better performance out of multi-family than you do out of individual homes. Check INVH vs Blackstone. THING 5: multi-family is pretty wretched right now because of rates. here's an apartment with a cap rate lower than current commercial mortgage rates. It's the only one listed right now in a 50 mile radius from me. I'm not saying there's a world full of bargains out there. I'm saying that you aren't competing with as many people as you think. I own an architecturally-significant mansion on two thirds of an acre within the greater metro designed by two Wikipedia architects. I paid a third what it's worth because the pricetag was outside of conforming loan territory, because nobody knew the heritage and because your average flipper didn't see anything but a weird footprint and deferred maintenance. So across five months and twelve open houses, mine was the only offer they got (and it was 20 percent less than their ask). Now granted. I first started looking at the real estate market in 2006. I've been keeping my powder dry for nearly two decades. And I'm in a world'o'hurt right now; water has been off for two weeks and the renovations seem endless. But objectively speaking I got a photon torpedo into the exhaust vent of the Death Star. It's going to be an incredible house that would be miles out of my budget if I had to buy it finished. I guess what I'm saying is that maybe you aren't missing something. Maybe everyone else is. MAYBE.
lol ive been thinking about the pelosi tracker and autopilot thing! im in schwab, fidelity, and some cds with goldman (oops)…so that could be a nice way tie everything together yeah somehow a friend bought a new build in madrona area where their first floor is zoned for mixed use? so shit i could go make snowboards over there, too? fun fact, they had to sue the builder for not laying the water bill before they closed on the place