6 ms·

I bought my first very similar house in 2005 and experienced this exact thing. Fresh out of college, moved to South for a promising job, and bought something sm

by chime 9y ago

I bought my first very similar house in 2005 and experienced this exact thing. Fresh out of college, moved to South for a promising job, and bought something small I could easily afford. I even wrote about the potential of a housing crash in Oct 2005 ( http://chir.ag/200510301225 http://chir.ag/200510301225 ). I lived there through the housing bubble, saw my 145k house go up to 200k and then down to 75k, rented it out after I got married and moved away, and kept losing thousands each year for 5-6 years. Last week someone offered to buy it for just a bit over my mortgage pay off balance. I will lose a few thousand but at least I will be out of the landlording business. I have my fingers crossed that the inspection goes well but I'm not holding my breath. > From the original purchase in 2005 to last year’s sale, I lost $25,500. My losses as a landlord? At least $35,000. Whatever the sum, it no longer mattered. I was free. It's scary how similar even his figures are to mine. I bought a much more modest house than I could have bought in a prime location, I fought hard to get a great deal on my mortgage, I paid bills on time and kept up with maintenance, and I've kept up with the market trends so as not to miss my chance to refinance/sell. Time and again I asked myself what I did wrong to lose 60k+ of my hard earned money over a decade. But after an investor friend of mine discussed his plans to buy numerous distressed properties to fix and rent them, I realized what had happened. The Great Recession had turned affordable residential real-estate into a zero sum game. I, along with millions of others had to lose 10k each per year to make it worth it for him to be a residential real-estate investor. My piggy bank investment was competing in the same arena has his tooth-and-nails livelihood. The big lesson is that market manipulation can convert a non-zero sum activity into a zero-sum activity. It used to be that your small family home was a safe, gradually appreciating asset. Most everyone won, few lost. > In 1944, John von Neumann and Oskar Morgenstern proved that any non-zero-sum game for n players is equivalent to a zero-sum game with n + 1 players; the (n + 1)th player representing the global profit or loss. https://en.wikipedia.org/wiki/Zero-sum_game#Extensions https://en.wikipedia.org/wiki/Zero-sum_game#Extensions Just need one new player to turn the game around. Enter my friend and a few thousand others like him with resources to buy out every third upside-down house in the neighborhood with cash, upgrade bath and kitchen, and then rent them out long-term with a team of property managers. It's a sellers market but very few homeowners are bidding up sub-200k houses. Instead it's the cash investors low-balling the price until owners such as myself and the author just break down and say 'Screw it! At least the 60k loss will save me some taxes next year.'

Gibbon1 9y ago
> My losses as a landlord? At least $35,000 My dad remarried after my mom died and moved into his wife's house. He rented it to me for a few years at below market rates. A felt a little guilty about that, all and all it was a cut of $25k in four years. Next guy he rented it to stopped paying rent after a year and took another six months to evict. Guy trashed the house. Cost my dad $60k.
- squiggleblaz 9y ago
  I was a good tenant, always paying on time at market rates and got reports at inspection. But the landlords kicked me out and replaced me with their son. About a month later, one of my former neighbors told me the police literally kicked the door down and took him away.
- EADGBE 9y ago
  You can lose your head in rentals with bad tenants and an otherwise good house. It's key to screen and filter candidates or else you're not going to make anything at all, especially SFRs.
  - Gibbon1 9y ago
    Guy I know was in a bind and rented a house to a undocumented family from Mexico. No credit, no papers, no nothing. 12 years later they moved out (bought their own place) and the house was spotless. Rented it a pair of married lawyers, gentrification yo. Two years later they up and vacated the place with no warming. They'd let their dogs pee and shit inside and he had to remove the carpets and sub floors. You probably don't want to be a landlord. I don't.
chis 9y ago
In 1944, John von Neumann and Oskar Morgenstern proved that any non-zero-sum game for n players is equivalent to a zero-sum game with n + 1 players; the (n + 1)th player representing the global profit or loss. https://en.wikipedia.org/wiki/Zero-sum_game#Extensions https://en.wikipedia.org/wiki/Zero-sum_game#Extensions I think you're slightly misinterpreting this although I could certainly be wrong. The idea here is that you can add a n+1th player to a game who captures the excess profit or loss, but that player isn't allowed to influence the game. In this case, the n+1th player would be the net change in the economy. It's an interesting idea though. The only real source I found discussing this was the original book: http://jmvidal.cse.sc.edu/library/neumann44a.pdf http://jmvidal.cse.sc.edu/library/neumann44a.pdf page 528.

by chime 9y ago

Gibbon1 9y ago

> My losses as a landlord? At least $35,000 My dad remarried after my mom died and moved into his wife's house. He rented it to me for a few years at below market rates. A felt a little guilty about that, all and all it was a cut of $25k in four years. Next guy he rented it to stopped paying rent after a year and took another six months to evict. Guy trashed the house. Cost my dad $60k.

squiggleblaz 9y ago
I was a good tenant, always paying on time at market rates and got reports at inspection. But the landlords kicked me out and replaced me with their son. About a month later, one of my former neighbors told me the police literally kicked the door down and took him away.
EADGBE 9y ago
You can lose your head in rentals with bad tenants and an otherwise good house. It's key to screen and filter candidates or else you're not going to make anything at all, especially SFRs.
- Gibbon1 9y ago
  Guy I know was in a bind and rented a house to a undocumented family from Mexico. No credit, no papers, no nothing. 12 years later they moved out (bought their own place) and the house was spotless. Rented it a pair of married lawyers, gentrification yo. Two years later they up and vacated the place with no warming. They'd let their dogs pee and shit inside and he had to remove the carpets and sub floors. You probably don't want to be a landlord. I don't.

chis 9y ago

In 1944, John von Neumann and Oskar Morgenstern proved that any non-zero-sum game for n players is equivalent to a zero-sum game with n + 1 players; the (n + 1)th player representing the global profit or loss. https://en.wikipedia.org/wiki/Zero-sum_game#Extensions https://en.wikipedia.org/wiki/Zero-sum_game#Extensions I think you're slightly misinterpreting this although I could certainly be wrong. The idea here is that you can add a n+1th player to a game who captures the excess profit or loss, but that player isn't allowed to influence the game. In this case, the n+1th player would be the net change in the economy. It's an interesting idea though. The only real source I found discussing this was the original book: http://jmvidal.cse.sc.edu/library/neumann44a.pdf http://jmvidal.cse.sc.edu/library/neumann44a.pdf page 528.