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Old 19-06-2010, 04:48   #16
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Hi NotJustDreaming!

I am blown away by so many on this forum who want to sell the house for a boat. A house is an appreciating asset. A boat depreciates. If you sell the house for a boat, you may be stuck with the boat when you physically need to go back to a house because the price differential between an appreciating house and your depreciating boat will be widening each year.

I actually think climbing up and down companionway steps probably keeps old folks limbs moving and prolongs their mobility but none of us knows when it will be that necessity dictates a move back to land. Would it not be a better idea to plan to keep the house for later and still get your boat in 5 or 6 years time as planned. What if you used the equity in your current house which you own to borrow for two more which you rent out. If you buy well & in the right location, maybe you can sell the two investment properties in 5 years time and the increase in value of the investment properties will buy your boat without selling your home. Then go sailing and you can draw on the income from renting out your home while sailing.

Many of us on this forum are working out this sort of a plan while others are saying it can't be done.

Greg
I'm not saying this can't be done, of course it can if the stars line up but I do have a couple problems with it.

1. Homes do not always appreciate as many are finding now in the US and other parts of the world. In fact, a lot are looking at homes that have depreciated in value recently. There was a recent period of incredible appreciation in some areas, but historically homes have not been unusually good investments.

2. To buy a couple investment properties in hopes that you picked well and they appreciate enough in 5-6 years to buy a boat is very risky. Now you have all your eggs (3 properties) in one basket, the real estate basket, and that's never a good investment strategy.
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Old 19-06-2010, 07:27   #17
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I am blown away by so many on this forum who want to sell the house for a boat. ..
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Greg
Hi Greg,

The USA is very different to Australia with Real estate.
I haven't worked out all the reasons why Real Estate there is not a good investment, but I am intrigued by it and will sort it out in my mind once I go there and have a look.

I think there is an extra tax annually on real estate they Australians don't have and its in the range of 4%.
Unit / Apartment /condos have levies like Strata levies as well as a government tax that makes the ownership costs double Australia.
I don't know if there is a tax allowance for Negitive Gearing.
Also the don't have planning controls to contain cities in small area as we do so there is little restraint on extending further out from the city centre. Thus no pressure on land means lower prices.
There seems to be no designated rural/primary porodcers lands. So you can buy 1 acre of land as a residential block that may have used to be a farm. Thats not allowed, or much more difficult in Australia.
Little public transport means cars have always been a necessity so living further out is fine.
There are few toll roads.
Petrol is cheap (even though they complain about it!)
Most Australian cities are bounded by mountains so can't grow.
Americans move outwards leaving the inner city as poor areas. Australia poor people move outwards and richer people live in the inner city.


The only property I think is really worth it in the USA would be on Manhattan Island. Contained area; good public transport; affluent locals; transient population; close high white collar employment.

Investment in Australian real estate has virtually always assured good profit. In the USA I don't think it is so.




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Old 19-06-2010, 08:02   #18
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Most real eastate historically has grown on par with the stock market in the US but ussually has been less suseptible to large fluxuations. If you are careful you can do quite well.

The generalizations you make, Mark, are pretty sweeping and in the US it is anything but. Each town in each state sets the taxes and there is a large difference between them. Some states don't charge income tax so the property tax is ussually monumental for instance...As far as NYC goes, a few years ago (remember 9/11) was a great time to buy-many were moving out! As for farm protection and real estate developement, again it is all controlled locally. The general recent decline (and one that I fear will continue for some time) is pretty much related to economy and fear.
Yet there are always areas that are far safer than others for investment purposes although they may not return as much in the long run. An area that has a broad range of employment (Not like detroit with the auto industry for instance) will always be a good place for modest single family homes to either rent or sell. Vacation hotspots will fluxuate but the potential for large proffit are there to a much greater degree. I think the reasons that the US is "down" now are also related to growth. I wonder what the opportunities are in places like China where the standard of living is increasing with their "industrial revolution"??
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Old 19-06-2010, 08:51   #19
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Sounds like you fall into the same catagory as many.. you live to what you make and its not easy to save.. did it for a long time, and found that with a new car and payments, or without, house payments or without, we still ended up with the same amount of money.. So we financed.. and we always had the same amount after the bills......
As for the house.. we had already bought the boat (cash) and still had the house and rental.. wish we would have kept it..... not to live in but to give us the added monthly income to stay on the water "without" spending the savings..
We had heard all the "horror" stories of keeping rental property when out of the country, dealing with evections, repairs, renters comming in and so on... so we sold the house and rental.....
We now work from time to time and still have a big chunk in savings to support our cruising, BUT if we would have kept the house, with it being paid off, turned it over to a rental agencey, We would have a monthly income comming in to add to our spending ability..
Spending the funds in the savings or the "kitty" is OK but it would have been nicer to have someone else support our Cruising.. like renters.......
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Old 19-06-2010, 09:18   #20
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Real Estate

My wife and I began investing in real estate several years ago. As our economy has slumped so has our ability to sell a property. With more unsold houses on the market many owners have decided to rent rather than leave a house empty. More rental units means more competition and lower rates.

We had some good years but now even renters feeling the financial pinch are more aggressive in their approach to independent investors. This is not a friendly environment. It can work out but unless you take the long view, like the stock market it may take some time to break even.

It would be tough for us to buy additional properties now. And the additional management and stress is often not worthwhile when the return is marginal or non existent. Patience is the only thing that helps.

We are not waiting though and are actively pursuing a live aboard boat. Having a friend in real estate who can market and manage the rentals like we do is a plus. We had bad experiences with the expenses and fees submitted by management companies. Selling a house is no picnic either. Buyers assume you are in trouble and add to it by low balling offers. Everyone has a right to fish for a deal but what happened to Win Win.

On the other hand we have had to make some low ball offers on boats. Unfortunately this is due to the cash we have left after taking all the hits and expenses with real estate. Perhaps we are meant to share the pain or perhaps the playing fields have moved and the charts have not been updated.

It is all hard work but we try to have fun anyway. JMHO.
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Old 19-06-2010, 10:24   #21
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Can I identify with Notjustdreaming. We are just finishing our "dream sailing adventure". We had always bareboat chartered but in Sept decided if not now when. We bought a Seawind 1000 spent some time getting her ready, took off work (didn't sell a thing) left Kemah, Texas in January and spent 4 months in the Exumas. I thought maybe we would get it out of our system. We bought a lake house a couple of years ago thinking that would cure our blue water fever--NOT!. Now we have hard decisions to make. I have been in my home for over 20 years, I raised my children in that home plus it is on 5 acreas in the city. If I sale, there will never be another property like my home (not one I can afford anyway). I am in my early 60's so my time to sail is not a long one, again a reason I hate to sell. I know I will be looking at being on land in the next 6 or 7 years. I don't know how you make this decision. It is a hard one.
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Old 19-06-2010, 10:51   #22
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My 2cents. I've studied the economy for a dozen years now, and yesterday was a good time to sell real estate. Today will be better than tomorrow. The reason is that we are entering a deflationary depression. The last 15 years we've lived through a bubble economy, one bubble after another. The bubble/crash cycles are about over since there is no larger areas to inflate to a bubble to replace the ones we are finishing. Tech bubble, housing bubble, worldwide credit bubble, government debt bubble....

Our financial elites have decimated our manufacturing sector by shipping jobs/production offshore to eek out those extra profits, a move in favor of pure speculation. The stock market is a rigged casino. Without manufacturing we have expanding unemployment and those jobs aren't coming back soon. The service economy has been increasing it's % of the whole gdp output for several decades and now accounts for over 70% of total output while manufacturing is only about 12%. We cannot survive on wages coming from giving each other haircuts, massages, and financial advice. The only professions left in America that produce lasting value are plumbers, electricians and garbage collectors.

Folks without jobs do not pay taxes, do not buy houses, do not consume the latest gizmo and constitute a drain on the treasury, which has a diminishing taxpayer base. Our gov'mint continues to borrow to fund operations and the social safety net and a bloated military/corporate establishment. All of this is unsustainable.

IMHO, property values will continue to fall for some years to come since the big banks are trying to clear the backlog of foreclosures they have on their books now, in order to begin foreclosing on a whole new layer of non-performing mortgages. People are now living a year or two in their houses without paying on the mortgage because the banks can't handle more foreclosures and in some cases can't even find the title to the property, as it has been repackaged and resold to investors multiple times. That new supply of foreclosed houses will keep depressing the markets.

The caveat to the above, is the notion of some future inflationary cycle from the government's printing so much more currency backed by nothing but promises and their future tax receipts. But apparently they can continue printing with little or no overall inflation as long as the deflationary cycle of debt destruction continues to play out. How long with that take for most of the debt to be paid off, defaulted on and written off? Who knows. Japan is still deflating 22 years in. There has never been a worldwide synchronous debt bubble'n'crash before. We are in uncharted territory in our brave new world.

I would/have already, sold property with the belief I will be able to buy it or something else cheaper in the years to come should I want it. And I would not give any proceeds of sale to the Fraud Street crowd, neither stocks nor bonds. In deflation, the value of cash is an appreciating asset.

It's a good time to live on a boat and go cruisng me thinks. I'll try to moderate my irritating cheeriness in the future. And my financial speculating here is probably worth exactly what you pay for it.
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Old 19-06-2010, 11:15   #23
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Hi, My husband and I are also in Ottawa. We have currently just signed the papers for our dream boat, planning to leave next Spring! Damn, one more winter in Ottawa...
We are planning to sell! I don't want the worries of a house when out of the country.

Good luck with the plans!
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Old 19-06-2010, 11:17   #24
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. I don't know how you make this decision. It is a hard one.

That is a tough decision.

Hey, you know cruising is fun, but its not the be all and end all. I don't know if I would destroy my future for 6 years on the hook.
Its fun, its good, its great.... but some twat had a go at me for being negative about some part of it on this forum the other day.... it got me thinking... is cruising so wonderful that only a goose will say one negative thing about it? No. Its not that wonderful. Its fun, its good, its great..... but.....?

Keep this stuff in perspective.

Question yourself: Is that home your future or just a house? Do your kids need that house, and you, now, or is space what they need? etc etc

As you say its a hard one




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Old 19-06-2010, 11:39   #25
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We are in uncharted territory in our brave new world.
Yeah

My bet is that Euroland will join the US (and UK) in hitting the printing presses on an industrial scale. Might not cheer up the Chinese and those with Western Debt, but as long as no alternative currency folks will just have to suck it up I find it interesting that Obama not only squeezed BP for $20 Billion but wants it now. and in cash. Historically chump change for the US, but now

I suspect though that the Chinese may manage in the next couple of years to get the World currency into play (it does already exist!). And for them to write the rules on a "he who pays the piper" basis. As the Americans knew (and the Brits before them) if you can write the rules of the (economic) game the level playing field works better for you Just need to be able to back things up with cash and boots on the ground. The British empire ran out of both. The Americans are short of cash and their ability to deploy boots on the ground ain't what it used to be - Iraq and Afghanistan have not gone un-noticed around the world.

A (borrowing) currency a country can't print / debase without the approval of Creditors.........that would hurt in the next crisis. (their is always a next crisis ).

The trouble with the unimaginable is it is hard to imagine We're either doomed or we will muddle through.

House? Boat? Nah, I'm building a bunker in the hills
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Old 19-06-2010, 11:58   #26
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Hey, you know cruising is fun, but its not the be all and end all. I don't know if I would destroy my future for 6 years on the hook.

Its fun, its good, its great.... but some twat had a go at me for being negative about some part of it on this forum the other day.... it got me thinking... is cruising so wonderful that only a goose will say one negative thing about it? No. Its not that wonderful. Its fun, its good, its great..... but.....?

Keep this stuff in perspective.
I guess you are messing with folks' dreams - never to be done lightly.

Me not gone anywhere extended period by boat. and may never do so. But having grown up in and around boats don't really see them as "special". The phrase "It's only a boat" springs into my mind in a few threads.......albeit rarely hits the keyboard.

Certainly would never spend 5 / 10 / 20 years working & saving hard to buy into that dream - floating around a foreign country in a boat? Mostly fun for sure (especially the independence - hey, I've done the floating around foreign countries for extended periods thing. just sans boat ), but why not enjoy life now where you are? or move? To me, it's a puzzle why cruising on a boat seems to be the answer...........

But everyone's dreams are different. Which is how it should be
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Old 19-06-2010, 12:08   #27
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I guess you are messing with folks' dreams - never to be done lightly.
Yes, good point. I didn't mean to do that.


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Old 19-06-2010, 14:56   #28
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Yeah

My bet is that Euroland will join the US (and UK) in hitting the printing presses on an industrial scale. Might not cheer up the Chinese and those with Western Debt, but as long as no alternative currency folks will just have to suck it up I find it interesting that Obama not only squeezed BP for $20 Billion but wants it now. and in cash. Historically chump change for the US, but now

I suspect though that the Chinese may manage in the next couple of years to get the World currency into play (it does already exist!). And for them to write the rules on a "he who pays the piper" basis. As the Americans knew (and the Brits before them) if you can write the rules of the (economic) game the level playing field works better for you Just need to be able to back things up with cash and boots on the ground. The British empire ran out of both. The Americans are short of cash and their ability to deploy boots on the ground ain't what it used to be - Iraq and Afghanistan have not gone un-noticed around the world.

A (borrowing) currency a country can't print / debase without the approval of Creditors.........that would hurt in the next crisis. (their is always a next crisis ).

The trouble with the unimaginable is it is hard to imagine We're either doomed or we will muddle through.

House? Boat? Nah, I'm building a bunker in the hills
I quite agree with all you have said but I have to ask, why should the Chinese be immune from the Capital Monster let loose by Maggie Thatcher and Ronald Reagan? China is not the last redoubt of cheap labor on the planet.

We will know the worm has turned when deflation ceases and the Central Banks raise interest rates to begin withdrawing currency from the system.

A poster above said it's a good time to be on a boat. I agree with him as well. Besides it's fun.

Todd
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Old 19-06-2010, 17:25   #29
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Most real eastate historically has grown on par with the stock market in the US but ussually has been less suseptible to large fluxuations. If you are careful you can do quite well.
Just not true with home values in the US. The leading authority on the subject is Robert Shiller of the S&P/Case-Shiller indexes. His analysis over the past 100 years shows ...."From 1948 to 2007, annual home appreciation rate is 4.87%". And if you look at the entire period its worse ...its like .4% for 1890-2004. Take a look at the graph under the background information ...United States housing bubble - Wikipedia, the free encyclopedia
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Old 20-06-2010, 23:07   #30
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In my previous post I talked about houses not doing anything or going any where, but I admit they do 'do something' for a cruising kitty if approached the right way.

I struggle at times with buying another house to live in so I can lower what I pay for rent, or buying a house at a good deal to rent out...either way a way to increase the cruising kitty. I've come to the conclusion that buying a house at a reduced price in a retirement community might be a good idea, because the 55 and older crowd that can live there are on guaranteed fixed retirement incomes. I already own one inherited house in California free and clear in one of these retirement communities, so naturally the rental income is much better than I can make on my money any where else now. If I bought another house in one of these communities (cheapest homes around because of the age requirements), I figure after the mortgage payment I probably could still make $300 to $500 a month...still better than I can make on my money with traditional investments. Another thing about retired people is they tend to pay their bills (old school), don't move around as much (no pun intended), and they don't beat their homes up as much as younger renters...so maintenance is less. These houses may not appreciate for a long time because of the economy, but they will or should bring in income. So this might be a good way to cruise, and still keep a place for later years after the cruising bug wears off.
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