All Forum Posts by: Bill B.

Ps. More people have been moving out of California than in for more than a decade. But they keep banging out new babies. That, and “international” population growth  

Pps  the population growth was 400k per year a decade ago, for the last 10 years its been 300k, for the last 3 years its been under 200k. So it is slowing, down 50% in 10 years  

“International migration to California has remained strong over the past 10 years: But about 1.2 million more people left California for other states than came to California from other states. Natural increase—more births than deaths—added 2.8 million residents. Overall, California gained 3.1 million residents over the past 10 years.”

Don’t forget simple compounding magic. A 61% gain in 10 years isn’t 6.1% per year. It’s only 4.9%. So if the historical average is 5.4% for RC, the last 10 years have actually been under average. 

Just like Las Vegas’ 150% return over the last 10 years is only 11.5% annually. :-)

Thanks for the info guys, never heard of that. But 2018 taxes should have been a k own amount with an official invoice from the state? I assume in 2019 hey can’t just make up a number for the taxes in 2018 that you already owe. 

Good luck sorting it and making it work in the future. 

I’ve never heard of a property tax being paid after the period it was allocated to. Are you trying to say they are just now collecting property tax for 2018? You’ve owned it for 6 months. I would assume any property tax they are collecting now would be for 2019. 

@Jeffrey Grieshop

Sorry if I got off in the weeds. I was trying to say that you can live a comfortable life with 4 paid off rentals and 12 will bring in more money than I can spend without wasting it. 

Very long story short I was also saying I gave up cash flow for 15 years with short amortization loans so I could retire early. 

I chose having paid off properties over having a couple hundred in cash flow per property per month. I tried to explain why with my aversion to debt and paying interest. It was part of my long winded explanation why I couldn’t care less if a property was positive or negative $200/mo. It just isnt/wasn’t life changing money. Having paid off properties is. 

Your mileage may vary. 

@Jason D.

Hey Jason. I was considering the $30k in commissions a pretty massive loss.

But, on top of that he has to sell to an investor as he has a new renter living there. I assume a year lease. So he can’t sell to anyone that wants to live there  

So if it’s a $500k rental with negative cash flow, as an investor, how much will you pay for it?  $400k? Maybe less maybe more? That’s a massive loss. He basically loses his $125k downpayment between commissions and lower price and walks away with nothing. So he has nothing to invest in this new cash flowing property everyone’s suggesting. 

He could always try to buy the tenants out but in California he certainly will be in a weak position. If I was paying $2200 in rent and just moved in it would take at least $20k to get me to move, maybe more, depending if the spouse loved the place and what I made at work. 

@Jason D.

I agree. There’s lots of unknowns. But you need to back your numbers down. You’re counting reserves (somehow of $6k per year for 10 years) and extra negative cashflow sent to pay down the mortgage as money that’s been spent. Neither of those 2 amounts are being spent. 

One’s being held to pay future expenses, and certainly not $60k in reserves on one property, and the other is paying down debt and lowering interest expense. So he’s getting a guaranteed return on that extra money.

So the real difference is between $36k and maybe $100k on the high side. But yes I would put the odds at $200k (40%) appreciation in 10 years as pretty likely. Certainly I would expect a double in 25 years. (Less than 3% per year.). Of course they aren’t guaranteed but I’d say likely. 

It’s not an optimum strategy, but neither is selling and taking a massive loss to invest in an area he knows nothing about. He’d be better off with a stock index fund. 

Thanks for at least listening. Neither of us has a dog in this fight, I don’t win if he stays, I assume you don’t win if he invests out of state. Just hoping to provide a counter balance. 

1/2 bath is sink and toilet only. (no tub or shower) for future reference. 

@Tom Albares

Tom, I’m sorry for your loss.

I would talk to a local cpa/attorney. As a non-cpa/attorney, I believe, because you live in a community property state, you can sell both properties at a stepped up basis tax free. There’s certainly no way I would keep a $200k condo to make $2,000/year. 

YURT !!!!