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  #141  
Old 10-16-2018, 10:00 AM
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I have sort of a related problem, or maybe you can tell me if it's related - I'm hovering around $100k in cash-like assets (not including Roth) at age 30 (I started maxing out 401k sorta late) and yet I don't own a house at all. My only debt is a $7k car loan @ 1% I'm not paying off.

I invest most of it in the market but part of me thinks I should use credit/income to my advantage and try to get into real estate either for myself or purely for investment as a sort of leverage.

The risk is a little off-putting and as Egghead mentions, the stress as well. I'm not sure I'd clear enough to make the venture worthwhile.

For myself, though, I sure do pay a silly amount in rent.
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  #142  
Old 10-16-2018, 10:46 AM
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I wouldn't want to be buying a house now; house prices have run up a bit and as the interest rates climb, monthly payments are going to climb with them, presumably lowering or suppressing price appreciation - at some point.

How soon before a recession? 2 years? If that's the case I'll bet you get a better deal in 3-4 years. Is there a way to pay a less silly amount of rent in the meantime? I know you aren't exactly in a low COL area.

I wouldn't buy unless I either planned to stay there 10 years or thought the next job would relocate me.
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  #143  
Old 10-16-2018, 11:28 AM
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Originally Posted by mathmajor View Post
I have sort of a related problem, or maybe you can tell me if it's related - I'm hovering around $100k in cash-like assets (not including Roth) at age 30 (I started maxing out 401k sorta late) and yet I don't own a house at all. My only debt is a $7k car loan @ 1% I'm not paying off.

I invest most of it in the market but part of me thinks I should use credit/income to my advantage and try to get into real estate either for myself or purely for investment as a sort of leverage.

The risk is a little off-putting and as Egghead mentions, the stress as well. I'm not sure I'd clear enough to make the venture worthwhile.

For myself, though, I sure do pay a silly amount in rent.
maybe consider REITs? no landlord hassles
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  #144  
Old 10-16-2018, 11:31 AM
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I wouldn't want to be buying a house now; house prices have run up a bit and as the interest rates climb, monthly payments are going to climb with them, presumably lowering or suppressing price appreciation - at some point.

How soon before a recession? 2 years? If that's the case I'll bet you get a better deal in 3-4 years. Is there a way to pay a less silly amount of rent in the meantime? I know you aren't exactly in a low COL area.

I wouldn't buy unless I either planned to stay there 10 years or thought the next job would relocate me.
Cases against waiting to buy:

1.) Real estate is local. The last recession, which brought home prices down across the board, was due to a failure to understand correlated risk. This risk has now been studied for more than a decade.

2.) even in the last recession, it took ~6 years for the Case Shiller index to bottom out. So do we wait 2 years? Or 6-8 years? Such are the perils of market timing. We have to call bottoms.

3.) MM lives in a high demand part of the country.
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  #145  
Old 10-16-2018, 11:33 AM
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maybe consider REITs? no landlord hassles
I got burned holding some cash in a REIT for a couple years. The ones I've seen are largely commercial and some of the biggest holdings were mall companies, etc. which are doing very poorly.

I'll throw it all in Sears, it's a bargain.
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  #146  
Old 10-16-2018, 11:43 AM
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Cases against waiting to buy:

1.) Real estate is local. The last recession, which brought home prices down across the board, was due to a failure to understand correlated risk. This risk has now been studied for more than a decade.

2.) even in the last recession, it took ~6 years for the Case Shiller index to bottom out. So do we wait 2 years? Or 6-8 years? Such are the perils of market timing. We have to call bottoms.

3.) MM lives in a high demand part of the country.
Haha, calling bottoms.

Sorry.

Chicago's CS index is barely at 2008 levels again finally while nationally this has been surpassed ~15-20%. Drilling down to my current neighborhood (somewhat higher-end) this is consistent. Some neighborhoods I imagine did not fully recover (back home, certain lower income places experienced high levels of foreclosure shutting down areas never to recover).

The city has unique problems that make me hesitant. An efficient market would tell me that this extra risk is all priced into rents and whatnot. That I'm not so sure of.

Part of me says "find a condo for $70k, pay cash" haha
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  #147  
Old 10-16-2018, 11:55 AM
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Part of me says "find a condo for $70k, pay cash" haha
$70K!? That must be in the ChiRaq that Kanye was telling me about...
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  #148  
Old 10-16-2018, 12:30 PM
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13 years later the house I sold in 2005 is once again worth what I sold it for. My house is DSM is up 22%.

Wasn't sure how different Chicago would be. Lots of condos to choose from...
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  #149  
Old 10-16-2018, 12:33 PM
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$70K!? That must be in the ChiRaq that Kanye was telling me about...
Maybe 70K is the annual property taxes.
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  #150  
Old 10-16-2018, 01:49 PM
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maybe consider REITs? no landlord hassles
REIT's are essentially a stock and behave accordingly.
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