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I didn't see this covered in the original post, but it is worth mentioning that the concept of real estate appreciation tends to be rather one sided in that you are constantly hearing "Hey, my grandpa bought this place back in the day for some absurdly low number and its worth $texas today!" Lets use the example of my parents house. My mom and dad bought in 1984 when amotorization tables didn't come in less than 10.5% because it was impossible to get any less than that. They paid $79,000 - I ran 30 years at 5% through the amotorization calculator. Total interest paid works out to $73672.07, plus the cost of the house - yields 152672.07. So, for you to "make" any money you have to sell the house for more than 152,000 which simply isn't going to happen in this market. Interest over 30 years adds up to a significant expense, which should be taken into account when looking at a profit/loss perspective. Another thing that is commonly overlooked is the impact of inflation. If costs for materials and commodoties and labor go up with inflation, pretty soon it becomes attractive to buy an existing house because it is cheaper than materials/labor to build a new one. So, when you take a 3% annual inflation figure into account, again using my parents house - 79,000 to build after 30 years becomes 191,753.74 to replace, in theory. In practice, I spoke with two general contractors because I'm revieing the homeowners insurance and they both agree that a figure of 170-190 is about right, should a hurricane come through and level the place. Appreciation in real estate isn't all its cracked up to be taking all these factors into account.
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Jun 5, 2009 14:10
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Dik Hz posted:Yeah, classic example there of how houses pretty much match inflation over time. I live in Florida. If you own a house in the state, by virtue of having a zip code that starts with 3, you got hosed. To be perfectly honest, I just inherited it and even though I grew up there its nothing special. Just another regular house in a regular neigborhood, with regular neighbors who have kids that are smarter than me and my brother.
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Jun 5, 2009 16:11
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joebuddah posted:How does a tax lien sale work. After I pay off the delinquent taxes what do I do next? Tax lien sale can mean two things. 1. Selling of ONLY the tax liability, meaning you pay the government and you get to put a lien on the property OR 2. Selling of the property to SATISFY a tax lien, meaning the owners havent paid the taxes and their property will be sold at auction to satisfy the lien. My dad looked into this a number of years ago and it can get very murky, he had a real estate lawyer look into some property he wanted and they advised him to run away from it. I wouldn't look at any type of tax lien auction property without hiring a lawyer and in addition to that getting a title search done.
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Jun 10, 2009 04:20
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