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I don't know where you live. But buying houses (as investment) is top priority for most people I know in my area (Boston). I would imagine the same goes for th
by CreepGin 9y ago
I don't know where you live. But buying houses (as investment) is top priority for most people I know in my area (Boston). I would imagine the same goes for the Bay area.
In areas close to the city (Somerville, Belmont, and Cambridge), every new house listing is a bidding war. All contingencies waived. Because the demand is so high, a lot of people don't sell houses as a whole anymore. But instead opt to sell multi-family houses as condos. And these condos still sell quickly.
The reason for the demand is that house buying is actually a very stable investment. Rent money covers the mortgage. Remodeling cost always repays itself (and in most cases actually give you a net gain). House itself appreciates year over year. Even the last recession did not slow down the appreciation much.
The risks you mentioned actually only apply to people who are new to all this.
- yeukhon 9y agoI feel a lot of people disagree with us. Unexpected, but too bad. We live in our subjective fantasy.
- CreepGin 9y agoHaha yes. I was a little surprised too. I guess a lot of people here just don't like the hassle involved with house buying.
- jimmies 9y agoThe problem is you have to put in the effort to maintain/repair/rent out the property you have. If an effort is needed to maintain profits then I could as well do many other things that bring better returns than properties. The idea of an index fund is that you don't have to do anything for it to bring relatively reliable profits.
- CreepGin 9y agoAgreed, investment house does involve some hassle =) I was posting mostly to counter the argument that buying investment house is risky.
- sokoloff 9y agoBuying a house that you live in is an act of consumption more than an act of investing, IMO. I also don't subscribe to the idea that remodeling pays for itself either (partly because it's also an act of consumption IMO), but I also don't believe that most remodeling results in a >60% return of investment, let along consistently at/over 100%. PS: If context matters, I own and live in Cambridge, MA.
- CreepGin 9y agoI'm not sure what you mean by "act of consumption". Aren't we strictly talking about buying investment houses and not primary homes? Remodeling houses in Cambridge has been very lucrative for some time. One of our family friends bought a small 2-family house in Cambridge (his 2nd property there) for just under 700K. This was a little over 2 years ago. He got a good deal for buying directly from a neighbor (market price was probably 800K to 900K). He spent the subsequent 2 years remodeling (while working at a full-time job). Now the estimate on the house is 1.7M to 1.8M. And he spent a little over 200K on the remodeling cost. This includes building an extension to the house. The reason the cost is so low and it took so long was because instead of hiring a general contractor, he took his time finding different contractors for specific jobs and let them compete over price. His example may sound a little extreme, but I don't think I've ever heard about someone renovating an investment house in Cambridge ended up with a net loss.