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The Investment Thread

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Offline  Re: The Investment Thread
Posted: February 18, 2021, 7:57 AM Post
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Fear The Chorizo said:

5 years ago we moved from a pretty well-to-do neighborhood north of Chicago to a far west burb outside MPLS....we wound up making a small profit on our home sale in IL and thought we bought at the right time in our current MN locale. A few weeks ago we just saw our neighbor's house and other nearby homes sell for close to 175% of what their value was back in early 2016, and our old home back in IL is currently under contract for close to 10 percent lower than what we sold it for back then. The housing market is exploding in many places, but it is stagnant to declining in others - and that's even with all the levers trying to prevent a flood of foreclosures from happening right now. Also, rent is getting crazy expensive pretty much everywhere, to the point where it's more financially sound to overpay for a house in a mortgage one can barely afford compared to a similar monthly rent payment for something crummy and you get zero equity from.


Rents are actually going down in a lot of places (presumably the people buying houses are the ones that were renting in the cities).

https://www.cnbc.com/2020/11/05/rents-a ... -rate.html

https://www.zumper.com/blog/rental-price-data/

So for Wallus, you might want to check out the rental rates over time in the area you interested in. Might be getting in on the floor of rents and the ceiling of price.

"Dustin Pedroia doesn't have the strength or bat speed to hit major-league pitching consistently, and he has no power......He probably has a future as a backup infielder if he can stop rolling over to third base and shortstop." Keith Law, 2006


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Offline  Re: The Investment Thread
Posted: February 18, 2021, 10:51 AM Post
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LouisEly said:
Jimbo said:
wallus said:
So is real estate overpriced or really overpriced?

I have been itching to pick up another property the last 6 months and just can't find anything decent. I had one opportunity that I just missed and another that would have been good. (I could have bought it for $175,000 less than what it sold for).

What are the real estate investors on here seeing out there?


I live in a condo community in Waukesha. Last year, I had six neighbors who had lived here fewer than four years sell their property at a gain that computes to an annual 6%-8%.

I will be listing soon, and I would love for my place to have appreciated at an annual 6%. But near north Chicago isn't quite as hot with all of the restaurants shut down and all of the riots/looting last summer. I think I'm far enough away, but 6% ARR from when I bought it four years ago would be an absolute dream... it's what I would need in order to not lose money on it, given all of the repairs.


I just sold a 3 flat in Bridgeport at an annual 11% return. Not apples to apples though as I did some renovations in addition to repairs, but the neighborhood in general appreciated handsomely. I'd imagine the north side is similar.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 9:21 AM Post
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wallus said:
Jimbo said:
I live in a condo community in Waukesha. Last year, I had six neighbors who had lived here fewer than four years sell their property at a gain that computes to an annual 6%-8%.


That isn't surprising in this market. If I were more brave, I would sell all of my properties right now and then look to buy later after the adjustment.


We bought ours for $130K and at one time could have gotten $170K just before the crash, where it dropped to $120K. Now, I could get $200K, if not more. A couple of months ago I mentioned to the wife that if the market starts to drop again, we're selling and cashing in on the profit. I won't make the same mistake twice. She wasn't too happy with the suggestion.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 10:46 AM Post
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Fear The Chorizo said:
CheezWizHed said:
The Twin Cities is nuts. I moved here 4 years ago and houses were being sold the day they were put on the market. I was able to extend up into the $400k range so there was less competition, but the $200-$350k range was fierce. Anything less than $200k and you are buying garbage.

And that hasn't changed in 4 years. A friend of mine just sold their place (to move somewhere warmer like Texas...). They had their house on the market for 2 days - they had 22 showings and 6 offers.


Many homes that aren't dumps in that $300-500K price range are often sold or have offers/inquiries before they every actually hit the market around here - even during dead of winter.


I should've clarified where I live too... I'm about 25 miles south of the metro (Lakeville/Prior Lake). Probably in the last "suburb" heading south of the cities. When I moved in, my neighbor had goats. So the price range I mentioned was for here and south of here - which becomes farm land.

I wouldn't touch anything close to downtown or the nicer suburbs (Minnetonka, Eden Prairie, etc...) for the prices I mentioned. For reference, brand new cookie-cutter 3-4 bed room houses on a 1/4 acre lot run $400-500k in Lakeville, which is why the cap on used is around $350k.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 11:33 AM Post
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As someone who owns one house that I live in, I struggle to see how the 20% price increase since I bought in 2018 helps me in any way. It doesn't help me with my mortgage payment. It doesn't give me more liquidity. It makes my property taxes higher. There's no way to realize that gain in value since I need somewhere to live. My house is not an investment, it's a basic need. If I had a second property it would be different, but I do not.

Not to mention that the huge price increase is making things unaffordable for other people who aren't lucky enough to have a house like I do. Certainly the increase in crime and homelessness over the last year is noticeable. And that's with the eviction/foreclosure bans still in place. So as a whole the price increases are making things worse.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 12:08 PM Post
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^^^

I see your point, but your property taxes probably won’t go up significantly. The fact that home prices have increased doesn’t really change the amount of money municipalities need to cover expenses.

And while you may have no interest in tapping the equity in your home, it’s nice to know it’s there. My wife and I have been fortunate enough to have accumulated some cash during the pandemic (in hindsight, I wish we would have invested it, but there was know way of telling what the future held for us). We’ll probably refi from a 30-year to a 15-year soon and, when we do, we’ll get the biggest HELOC the banks offers. We have no plans to use it, but with a large line of credit for emergencies, we can make better use of our capital.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 2:18 PM Post
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owbc said:
As someone who owns one house that I live in, I struggle to see how the 20% price increase since I bought in 2018 helps me in any way. It doesn't help me with my mortgage payment. It doesn't give me more liquidity. It makes my property taxes higher. There's no way to realize that gain in value since I need somewhere to live. My house is not an investment, it's a basic need. If I had a second property it would be different, but I do not.

Not to mention that the huge price increase is making things unaffordable for other people who aren't lucky enough to have a house like I do. Certainly the increase in crime and homelessness over the last year is noticeable. And that's with the eviction/foreclosure bans still in place. So as a whole the price increases are making things worse.


Not having liquidity is your choice. You could refinance, just like how you could sell a stock to realize the gains.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 7:20 PM Post
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If you have to wait a month or two for all the paper work and send someone else money first that is not really liquid. While it isn't as crazy as how quick in the last housing run-up people were to not pay attention to how much money they spent on realty fees while rapidly turning over houses, paying closing costs again just 2 years into a loan eats into that appreciation. And the amount of closing costs does different rather noticeably based on location. They are definitely higher in MN than WI for example. To say nothing of the dangers of increasing ones own personal leverage especially if you are thinking you 'need' the liquidity your payments are going to go up, assuming you can invest that added liquid income to make-up the difference... Well that works great when your incorporated and can walk away when the bankruptcy happens. For a house of course there are other risks like the danger of ending upside down when you want or need to change jobs and move.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 8:11 PM Post
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We’ve been thinking a bit of how nice it would be to sell our house in Mound (western suburbs) and either move to the east side of the twin cities or wisconsin to get closer to family and cheaper, and pay a big chunk / all of our student loans off. Paid 250k 3-4 years ago and probably would fetch 350-375k overnight. It’s ridiculous. The problem is I think we’d literally be homeless lol unless we just buy another house for the same or more $ than the one we have now. This whole free money thing for mortgages is really making a mess of the housing industry and I don’t think it’s getting better any time soon. I can’t find anything on simple searches an hour of the cities anywhere that’s not already pending.


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Offline  Re: The Investment Thread
Posted: February 19, 2021, 8:55 PM Post
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CheezWizHed said:
Fear The Chorizo said:
CheezWizHed said:
The Twin Cities is nuts. I moved here 4 years ago and houses were being sold the day they were put on the market. I was able to extend up into the $400k range so there was less competition, but the $200-$350k range was fierce. Anything less than $200k and you are buying garbage.

And that hasn't changed in 4 years. A friend of mine just sold their place (to move somewhere warmer like Texas...). They had their house on the market for 2 days - they had 22 showings and 6 offers.


Many homes that aren't dumps in that $300-500K price range are often sold or have offers/inquiries before they every actually hit the market around here - even during dead of winter.


I should've clarified where I live too... I'm about 25 miles south of the metro (Lakeville/Prior Lake). Probably in the last "suburb" heading south of the cities. When I moved in, my neighbor had goats. So the price range I mentioned was for here and south of here - which becomes farm land.

I wouldn't touch anything close to downtown or the nicer suburbs (Minnetonka, Eden Prairie, etc...) for the prices I mentioned. For reference, brand new cookie-cutter 3-4 bed room houses on a 1/4 acre lot run $400-500k in Lakeville, which is why the cap on used is around $350k.


All true - I'm equally as far out west/southwest in Saint Boni (near Waconia). Just west of me is still cornfields and goats.


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Offline  Re: The Investment Thread
Posted: February 20, 2021, 7:37 AM Post
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I'll shamelessly promote The North End and Como neighborhoods in St. Paul. When I moved in 20 years ago about the only thing I could say was that they were safer than North Minneapolis, but they got dramatically better in the early 2000's. Given the access with the light rail coming and the price dip during the housing crisis my area could have easily gentrified and become trendy, but it hasn't yet though there have been nice newer amenities. You won't get suburban size lots of course, but we eventually leveraged the housing savings into a great rural property while enjoying being close to everything.


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Offline  Re: The Investment Thread
Posted: February 20, 2021, 10:06 AM Post

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Jimbo said:
wallus said:
Jimbo said:
I live in a condo community in Waukesha. Last year, I had six neighbors who had lived here fewer than four years sell their property at a gain that computes to an annual 6%-8%.


That isn't surprising in this market. If I were more brave, I would sell all of my properties right now and then look to buy later after the adjustment.


We bought ours for $130K and at one time could have gotten $170K just before the crash, where it dropped to $120K. Now, I could get $200K, if not more. A couple of months ago I mentioned to the wife that if the market starts to drop again, we're selling and cashing in on the profit. I won't make the same mistake twice. She wasn't too happy with the suggestion.


Why sell? I never understood that, but i hear people say it. Unless your plan is to sell now, rent or live with a relative, then wait to buy when the next market dip happens. If not, then you’re just selling your 200k house (that was 130) and buying another 200k house (that used to be 130) or buying a 130k house that used to be 100k. Which presumably is less house than you have currently. If the entire market is going up, unless your plan is to NOT buy a new home, your not really gaining anything besides the headache of moving.


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Offline  Re: The Investment Thread
Posted: February 21, 2021, 9:40 AM Post
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Location: Milwaukee, WI
I taught one year in another state. I have about 4K tied up into their retirement system. I believe I could take it out with a 20% penalty which would be about $3,200 after all is done. Does it make more sense to take it out and invest or leave it for the next 25 years and build? I won't be putting anything more with it so that 4K is basically growing on its own. I'm not great with these types of things so thought maybe there might be someone here with some advice.

"I'm not as good as I was but in big moments I'm still the guy. I want that opportunity." -Ryan Braun


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Offline  Re: The Investment Thread
Posted: February 21, 2021, 11:24 AM Post
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Whoever you're using for your current retirement savings will be able to roll your old one into your new one. That way your money never actually leaves the IRA and you don't pay that withdrawal penalty on it. Your current company's website should have a link that says something like "Roll over an existing plan" or otherwise you can call them with your old company and account number in hand and they'll do it for you. It won't take long to do.


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Offline  Re: The Investment Thread
Posted: February 21, 2021, 2:53 PM Post
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Wondering what the Madison folks can tell me about the Madison housing market. I'll be moving (back) there sometime in the next six months, and just about everything I see is either pending or contingent. The only things I see that aren't under contract are either under construction or obviously do not need to sell and are listing a wishful price that would make it worthwhile to sell (as evidenced by the >150 days on the market). Not much even for rentals (and I have no desire to live in an apartment building downtown with a bunch of 20-something Epic employees). Ideally I'd like to be downtown because that's where the office is. There will likely be more inventory in a month or two when the weather gets better, but right now there is not much.

I don't think there will be much of a wave of foreclosures, at least not for ownership property. The industries that got crushed by the pandemic (travel/leisure, restaurants, retail, hospitality) have a relatively low percentage of jobs that can support ownership; most jobs in those industries are part-time or low-paying.


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Offline  Re: The Investment Thread
Posted: February 21, 2021, 4:50 PM Post
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Location: Milwaukee, WI
GAME05 said:
Whoever you're using for your current retirement savings will be able to roll your old one into your new one. That way your money never actually leaves the IRA and you don't pay that withdrawal penalty on it. Your current company's website should have a link that says something like "Roll over an existing plan" or otherwise you can call them with your old company and account number in hand and they'll do it for you. It won't take long to do.


Teachers pension/retirement is different from what I’ve read and asked about. Basically it is locked into the state that I taught in. It really sucks it’s designed that was as I should be able to move it to my new state.

"I'm not as good as I was but in big moments I'm still the guy. I want that opportunity." -Ryan Braun


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Online  Re: The Investment Thread
Posted: February 21, 2021, 5:26 PM Post
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The first two years of my teaching career, I taught in Illinois. When I came back to WI 29 years ago, I let it sit for a year or two, then just took it out and paid the penalty. I can't remember what I even did with it, but I knew I was never going to teach in Illinois again, so I sucked it up, took what I could and turned the paige.

"I'm sick of runnin' from these wimps!" Ajax - The WARRIORS


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Offline  Re: The Investment Thread
Posted: February 22, 2021, 8:27 AM Post
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My father told me he's getting four calls per day to sell his house in Scottsdale and it's not even on the market. But they don't have any real need for the money, so they won't be selling it despite being able to get a stupid price for it. But it'll be on the market five minutes after they die or else go toward nursing home costs.


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Offline  Re: The Investment Thread
Posted: February 22, 2021, 8:45 AM Post
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Housing inventory will warm up with the weather, but so will interested buyers too. If it is in a good location and is free of major problems they just don't last on the market pretty much anywhere in Wisconsin.

For the reasons you mentioned I don't see the big foreclosure boom many see. They are really trying to help avoid that and even then...not like it will be nice family homes. More likely to be lower end housing that really isn't what is driving the market. Maybe some areas will have a foreclosure problem, but for the most part the housing market is dominated by people trying to buy a home during low interest rates or trying to take advantage of low rates and all their built up equity to upgrade homes.

I saw an article that believed there could be a housing shortage of starter homes in the next 10-20 years as people buy them now, prices skyrocket, and then people won't want to move and have their mortgage rate go up 2%+.


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Offline  Re: The Investment Thread
Posted: February 22, 2021, 9:28 AM Post
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wallus said:
So is real estate overpriced or really overpriced?

I have been itching to pick up another property the last 6 months and just can't find anything decent. I had one opportunity that I just missed and another that would have been good. (I could have bought it for $175,000 less than what it sold for).

What are the real estate investors on here seeing out there?


I'm not a real estate expert, but I'd have probably moved on this deal...


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