MattLikesAnalysis Wrote: ------------------------------------------------------- HELLO! sell your > house and rent for a year and then buy the same > house for 20% less and have a smaller mortgage at > a lower rate. duh. > The transaction costs will kill you. I was looking to buy a small apartment for a flip and did the math on how much it would cost me if I bought and sold it at the same price in the same year. For an apartment that costs $350,000, if I sold it 6 months later at $350,000, I would incur over $37,000 of realized losses via closing costs, broker’s fees, mortgage interest, maintenance/HOA fees, flip tax for certain Manhattan apartments, and other miscellaneous fees. And that doesn’t even factor in the uncertainty of how fast you would be able to get your house sold. At that cost it doesn’t make sense to sell, rent, and re-buy in a short period of time.
The transaction costs are brutal. I just sold my manhattan apartment and the brokers, lawyers, realtors and co-op took a little over 10% of the sale price. Plus, I spent some $ cleaning it up and prepping it for sale… still… it was a 7 bagger. I bought it at the ripe old age of 27. Could the same thing happen for one of you 27 year olds on this message board? With the gov’t printing money like mad I don’t see why not.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > MattLikesAnalysis Wrote: > -------------------------------------------------- > ----- > HELLO! sell your > > house and rent for a year and then buy the same > > house for 20% less and have a smaller mortgage > at > > a lower rate. duh. > > > > The transaction costs will kill you. I was looking > to buy a small apartment for a flip and did the > math on how much it would cost me if I bought and > sold it at the same price in the same year. For an > apartment that costs $350,000, if I sold it 6 > months later at $350,000, I would incur over > $37,000 of realized losses via closing costs, > broker’s fees, mortgage interest, maintenance/HOA > fees, flip tax for certain Manhattan apartments, > and other miscellaneous fees. And that doesn’t > even factor in the uncertainty of how fast you > would be able to get your house sold. At that cost > it doesn’t make sense to sell, rent, and re-buy in > a short period of time. just a reason to never buy, UNLESS you’re never going to move again.
Real estate is a market that has been dominated by realtors because they could withhold information from the market participants. The internet is rapidly changing that. I think the next cycle for real estate sees a lot lower transaction costs, now that its pretty easy to market your house online (craigslist, flat-fee MLS access, your own website). Also, there are services that make all the paperwork much easier.
By the way… serious thread-jack. Does NOBODY else think that giving responsible borrowers incentives to upgrade is a good way to put money into the economy and dilute bad loans with good ?
I saw one idea regarding a proposal where home buyers would get a tax holiday on a portion of income taxes matching some multiple the purchase cost for a fixed time period. IE buy a place for 500k and don’t pay fed taxes on up to (.5) 500k income for a year. Rewards those who were responsible and are in the position to bolster the mkt and therefor helping support px’s.
All these tax-refund/rebate proposals that you (and Obama) talk about will ultimately be structured to only flow through to “middle class” households, so I wouldn’t even bother thinking about how you’re going to benefit from new housing legislation unless you make less than $75,000 a year.
Yhea, because at $75 k you are freakin’ loaded.