All Forum Posts by: Ben Duq

IMO I think you would have to review both pre and post tax benefits/deteriments as taxes are part of every (legal) financial deal. I think most investors are conservative and place less weight on tax effects, but to completely ignore them would not provide the most clear picture about an investment decision.

The biggest problem is the HOA fees. These can increase dramatically from year to year, my fees increased 17% this year and 47% since I purchased my condo 3 years ago. Additionally there could be special assessments for unforeseen repairs or inadequate budgeting/building reserves by association members. Not to mention missapropriation and theft of dues etc.

I think the answer depends on your strategy. I would consider your economic cost, what would be the future value of your downpayment in 10 years at a set compounded rate of return? What would be the future value of cash outflows? I think you bring up an interesting point especially with the uncertainty of the stock market in recent months, is real estate a better storage of wealth/savings than the bank or the stock market even. I think at a small cash outflow or breakeven you are banking on the favorable tax treatments and potential speculative appreciation on the property.

I currently reside in Honolulu, and compared to some of the prices quoted in other posts I think this market is very expensive. On average I have calculated price per sq foot to be in the $360+ range, resulting in a studio/1Br condo costing about $180-200k. I think that most properties here would result in a net cash outflow.

What are your thoughts on investing in more expensive markets such as this one? How would you go about analyzing and deciding on investing here, i.e. would you pass on investing if the investment resulted in a small cash outflow, or take the small cash outflow in the short term, refinance to a better position and take advantage of appreciation in market value in the long-term future? What about investing abroad?