I have a colleague at work. He and his wife bought big an apartment about a year ago in a neighboring city when his wife got a new job there. Now he mentioned that they are buying a house close to the apartment and moving there. I think that they will sell the apartment. I got the feeling that both the apartment and house were bought very spontaneous initiated by his wife. I did not say anything, but I was thinking about insanely bad deals and that only the transaction costs will be big.
My colleague often visit sport events, never bring lunch to work and seem to be broke at the end of the month. He also sometimes mentions that his grown children are broke at end of month, so they seem to be learning from their parents. His wife seems to be his boss.
What do you think about this kind of real estate deals?
Spontaneous real estate deals
Re: Spontaneous real estate deals
IF you're paying retail, it's pretty rare to find a house that's a yields a fair amount of rent savings EXCLUDING transaction costs. Once you factor in transaction costs, your returns can be zero or even negative.
Around here they can approach 10% of purchase price (split between buyer and seller). And if you assume that you're putting 20% down, that's 50% of your investment! Frequent real estate purchases @retail prices simply destroy capital.
Around here they can approach 10% of purchase price (split between buyer and seller). And if you assume that you're putting 20% down, that's 50% of your investment! Frequent real estate purchases @retail prices simply destroy capital.
Re: Spontaneous real estate deals
@JL13 - really - that seems quite excessive!
It's a good bit lower in the UK. We had an expensive move 6 months ago and transaction costs (including estate agent/lawyers/removal firm/land tax) were perhaps 4% or slightly under.
That said, I very much agree that frequent moves can destroy capital. While our 4% might be low by your values, we only put 10% down, so it was 40% of our home equity.
Quite sobering when thought about like that and my NW charts show a sharp downwards drop as a result.
It's a good bit lower in the UK. We had an expensive move 6 months ago and transaction costs (including estate agent/lawyers/removal firm/land tax) were perhaps 4% or slightly under.
That said, I very much agree that frequent moves can destroy capital. While our 4% might be low by your values, we only put 10% down, so it was 40% of our home equity.
Quite sobering when thought about like that and my NW charts show a sharp downwards drop as a result.
Re: Spontaneous real estate deals
I remember reading the book Blink and thinking I'm a bit like that. In Australia I had only ever inspected three houses in my life, and bought two of them...
Re: Spontaneous real estate deals
I recall now the third had a huge floater in the toilet that had us all scurrying out past a smug looking tenant who obviously didn't want a sale to happen.....
Re: Spontaneous real estate deals
That's inspired!Did wrote:I recall now the third had a huge floater in the toilet that had us all scurrying out past a smug looking tenant who obviously didn't want a sale to happen.....
