Pelican Parts Forums - Forgive me PPOT, for I have sinned

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- - Forgive me PPOT, for I have sinned - Wayne's most humbling post ever... (http://forums.pelicanparts.com/off-topic-discussions/404177-forgive-me-ppot-i-have-sinned-waynes-most-humbling-post-ever.html)

For your home you need to weigh quality of life, vs. the investment. Life is too short, go for it.

I don't know about soil conditions on your coast, but around here you don't want to leave a pool empty. They can (and will ) float with wet soil conditions. They are also probably not strong enough to withstand extended unbalanced fill conditions.

Quote:

Originally Posted by cgarr (Post 3889510)

"I fully expected a bidding war to erupt, but for some reason,"

When you make an offer don't they have to accept or reject it before entertaining other offers? otherwise its like an auction, I didn't think they could just hold your offer out there waiting for others? this could take months!

depends on the market and the details. Usually an offer has a time limit so the seller has to respond.

When we sold our house in Pasadena in '02, we had 15 offers within 48 hours of it being on the market and people literally begging us to counter (all but one offer was above the asking price). We countered to 5 people at $50K above asking, had another 3 who countered higher still.

ahh, them was the days...

Congratulations, Wayne. I think you made a good choice for your family.

I am in a similar situation, and looking for the right ppty at the right price. Have not found it yet, but if I do, I see no reason to wait. Most sellers are still delusional, but it's nice to hear that some are ready to price appropriately

I love PV (as does my wife). Wish I could buy there, but my job is 10-20 miles North of El Segundo. Great idea with the pool!

Everybody's gotta live somewhere. Congratulations, Wayne. May you enjoy your home for years to come...

Wayne... YOUR A BIG POOPYHEAD!

Naw, what everyone else said.... wife and kids need need a home, house is not a investment, blah, blah, blah...

PV definitely does not suck and very likely safe as far as the property holding value.

GOOD JOB!

Quote:

Originally Posted by onewhippedpuppy (Post 3889285)

I own more of my house than you do your rental.:pSmileWavy

Boy aint that the truth. I could pay my house off today, so in my mind I own it. Thing is that I make more than the 5.3% that I am paying for my home loan than I can make on money elsewhere so I keep the loan!

Guess thats stupid economics but its a hell of a lot better than paying off the morgage for someone else.

Quote:

Originally Posted by Joeaksa (Post 3889765)

Yep, where ever you can earn the highest return is your best investment at that time. Finance 101

What is it about the loan product you getting that is better than a fixed 30 year? Wouldn't the rate be around the same for a 30?

Actually Wayne, I echo Kerry's curiousity about your financing. How does that loan work, and how is it better than a simple fixed rate? There's good regular rates to be had, I have a 20 year fixed at 5.75%.

If your plan pans out, it makes sense. I think you're somewhat underestimating the security that is owning your own home, but that might be more important to me than it is to others.

However, I feel that the tax benefits of paying interest are hugely overrated. You pay thousands in interest, money you never get back, and save a fraction of that on taxes. Ultimately, you are still losing money by paying that interest, i.e. paying less interest saves you money. Being able to itemize typically saves you money, but I'd guess that you still are paying more in interest than you are saving on your taxes.

Quote:

Originally Posted by Wayne at Pelican Parts (Post 3889972)

Loan rates are very good right now for conforming loans (under $745K or so here in CA). If you go above that, they are in the 7+% range...

-Wayne

Makes sense, not an issue us common folks have to consider.;)

Email me for a killer deal on a 1% 30 year loan!

I can even do zero down! ;)

rjp

(PS- really don't take this a solicitation, it's just a joke. I don't need the whole board running for cover just because I said that)

Quote:

Originally Posted by Wayne at Pelican Parts (Post 3888937)

No, I have not gone and bought another Ferrari, it's not that bad.

As many of you already know, I have discussed housing and real estate for many years here. I think that the current market is way overpriced, and is still due to fall quite a bit. That said, my wife and I have been looking at houses over the past six months, just to see if we found something "perfect" for us that was semi-reasonably priced. Just about everything that we've seen has been 100% pure crap. There was one house that we looked at that was slightly/maybe what we were looking for, but I estimated it was about many hundreds of thousands of dollars overpriced (at least 20-30%).

Well, to make a long story short, a house came on the market last week, and it had everything we were looking for (I mean really *everything*). Neighborhood, culdesac, lot size, swimming pool (although that's not really on my list), enough bedrooms for everyone + an office for me, 3-car garage, and best of all, priced about 25% lower than the one that I thought was hugely overpriced. In a moment of pure financial stupidity, we placed an offer on the first day it was available - I think it's priced at where I would think the market *should* be right now. I still think it's going to fall, but I'm really out of time with my wife. Pelican did faily well last year, and I'm prepared to stay in the house for 15-20 years. Plus, rates are SUPER low right now, we're at 5.875% on a Union Bank two-tier loan which is fixed interest only for 15 years and then converts into a fixed 25-fully amortized (one time adjust at 15 years). This is a super loan product that just about everyone is clamouring for - my financial advisor says it's a fantastic loan to get right now when rates are low. I agree.

One of the issues I've been grappling with is interest rates. If they climb (and they will in the future), then that may possibly negate the drop in housing value (unless you pay cash), and could create a zero-net sum in the long run. The ideal is low interest rates and lower housing costs. With this house, I firmly believe (after studying about 400-500 homes in our area over the past several months), that this is a "smokin" deal that we cannot pass up. There were multiple offers on the house, our final offer was $5K below asking, and they took it without countering anyone else (that surprised me), because we were very qualified buyers. I fully expected a bidding war to erupt, but for some reason, they weren't into that.

So, I guess I'm a hypocrite. Well, at least I feel that way. I guess that snowman will have to find something else to make fun of me for - I have given up the fight and I have since drank the koolaide. Well, at least I know what's in store for me...

Bring on the flame throwers...

-Wayne

Quote:

Originally Posted by Wayne at Pelican Parts (Post 3889972)

Loan rates are very good right now for conforming loans (under $745K or so here in CA). If you go above that, they are in the 7+% range...

-Wayne

Ahh! I forget about the insane price difference in housing between CA and TX. You'd get that house on 5 acres backing to the 9th tee box at one of better country clubs here for probably the same price.

Quote:

Originally Posted by Wayne at Pelican Parts (Post 3889965)

There are people that disagree with me on this, but me and my financial planner are in agreement that this is a good loan for a few reasons:

1. Fixed rate, not variable

2. Interest Only, so you're not paying down your principle. This has two potentially positive effects. Firstly, your tax benefits will never decrease as they do with a fully amortized loan (you lose your tax deduction as you pay down your balance). Secondly, you lose your leverage in the house (you will fully own the house at the end of a fully amortized loan). While this may be a good thing to many people, from a *pure* financial perspective, it's more prudent to borrow money cheaply and then invest it at higher rates. I firmly believe that interest rates are going to skyrocket in the near future. In the mid-nineties, they changed the formula for inflation (most people don't know this), so comparisons to past years are moot. If we used the old formula today, then inflation would be in the 8-9-10% range! Rates are being kept artificially low by foreign investors (not Bernanke) buying Treasury bonds. As short-term rates decline, the value of the dollar will decline, and the price of Treasuries (and long term mortgage rates) will rise. I consider it a near miracle that rates haven't risen sky-high over the past few years.

So, in summary - borrow as much money as you can for as long as you can at a low fixed rate and then invest it at a higher rate in the future. That's my strategy, we'll see if it pans out...

-Wayne

Wayne,

I had not heard of the changed inflation formula, if this is true I need the facts so I can ask for a pay raise ASAP. :D

Is the CPI different than it used to be?

Can you share any links?

PS Where are those 3-car garage picks?

Looking good Wayne.

Now to the important part, where are the pictures of the garage? How tall are the garage ceilings?

Bill

Keep the pool filled and install a baby fence - all my kids learned to swim by the time they were 4.

Do the garage floor before you move in your junk - trust me on this

I was wondering how long your wifey would go

Quote:

Originally Posted by Wayne at Pelican Parts (Post 3888937)

Pelican did faily well last year-Wayne

I bought a Porsche last year :D
Seriously, congrats on a beautiful home.

U Boyz make me laugh.

Congrats, Wayne. Many years of happiness, there.

From the pictures, it looks great!

I suspect that you are probably just a little "early" (probably by just a few months -- not unlike your closing your short positions on the banking stocks a few months "too early" last year -- but that's looking at your short positions in hind-sight; to have predicted, last summer, that it would have played out in the time-frame it did, wasn't so easy).

As others have pointed out, the place you live in is not an "investment." And any decline in real estate would just be a "general" decline in house prices; it doesn't mean that house, or one similarly "perfect" for you, would have been available at a lower price in the months to come.

And I still see the possibility -- with the government continuing to pump such liquidity into the economy -- that severe price inflation may come with such suddenness, that real estate might "recover" (on a devalued-dollar basis) much faster than expected. A lot of people with low fixed-rate home loans will actually be making money on their loans if the inflation rate is higher than their interest rate!