Real estate rant..... ************!

[GeauxLSU]

I offered way more than I'd thought I'd ever pay for a home this weekend (which was $32k over asking) and just found out I lost, by $13k. Unfortunately I have to keep trying. It's exhausting.

 

[Alphacpa]

I’m retired from banking career, but have maintained my real estate license for 40 years. I advise friends and family on real estate purchases that will maximize their net worth. Since January 2021, I’ve advised my clients to avoid the resale market and go with new construction. While the most recent property sold took 14 months to build, the buyer was locked in at $429,000 receiving $15,000 in free upgrades. The same house in the same neighborhood is $625,000ish now. That’s right, almost $200,000 in equity at the closing table. Another client will close later this year and benefit from an additional $100,000 in closing table equity. Those that paid over appraisal for resales will lose or have lost the excess paid over appraisal as rates rise.

The market will slow this year due to high prices and higher interest rates. The method above will not work as well. While you will be able to lock in new construction price, you will be subject to higher mortgage rates later this year and into 2023. I still prefer new as new property typically appreciates much faster in the first five years and has almost no maintenance cost.

Good luck to all seeking their next home!

 

[Alphacpa]

Its like the wild west when it comes to trying to find something ….. selling is no problem.
There is a pretty good friend of mine that has a house paid for completely. There have been $350-400k offers and they do not have it listed.
He came to me with this :

Thinking about try to borrow a couple of hundred thou on the place they in….. bank it….and when crap blows over and housing market busts, then ya got the cash to buy whatever , then sell what they have and pay off the loan.
What yall think on that ? ( I told him i was the wrong guy to ask, lol)

Absolute disaster. Do not do this.

 

[Alphacpa]

Yeah we've been looking to get into a downsized one story ranch...possibly a 55+ community...for the last couple months. All cash deal...
And we won't sell this house which is paid until the new one is closed on.

Correct. Prices will trend higher this year at a lower rate, but still up. Working with young couple that decided to sell for $60,000 in higher than expected gain and have a $400,000 cap. They are completely priced out of Forsyth and Cherokee, but may find a nice home in Pauling.

 

[Alphacpa]

the real estate market is going to be ****ting its pants over the next few years

never be a buyer in a sellers market

That line of thinking has cost a lot of people very nice homes. Much nicer than their apartments. There is nothing crazy about this market. It is simply demand exceeding supply made worse by building material inflation and higher labor costs.

 

[Alphacpa]

Sell, buy an old RV and pull a Cousin Eddie until the market improves or you find something. Worst case you end up at an RV park until the market crashes.

That would be a disaster.

 

[Alphacpa]

I've never understood the big house logic. The older I get, the less upkeep and stairs to climb is what I am all about. I couldn't sleepl at night if I owed on my house what some people do today.

Let me explain via example. 3% appreciation on a $300K home is $9,000 per year. That same appreciation on a $600K home is $18,000. Maintenance on the $600K house is slightly higher over 10 years. Add leverage and this formula gets better. I’ve helped make friends and family millionaires with this formula over the last 40 years. It works. Taking advantage of the $500,000 home gain exclusion should be part of your financial plan. You may not get to $500,000, but get as close as you can based on your budget.

 

[Alphacpa]

I know a couple who built their vacation home somewhere down in FL, just like you said. Had their name on the list, got called, had it built...completed a year ago. They're selling it this month, after capital gains/realtor fee/etc, they'll clear over $200K, which means they made $100K/year since this was a 2 year process start to

Looking at houses today. One house was pretty new so I thought that was strange it was already for sale. Now I think I know why.
RR tracks running behind house, which is close to a freight company with a ton of trucks. Elementary school is right across the street from the tiny neighborhood. I'll pass.

The elementary school is an add to value, but won’t offset the RR tracks and truck traffic.

 

[Alphacpa]

Yeah, but can’t sell it for 5 years unless I want to give the federal government a big fat capital gains check.

Two years not five.

 

[hikingthehills]