Doing More With Less Since 1972

Tag: real estate

Comparison of Roth IRAs and Your Current Residence

Assumption: you bought your current residence as an investment with the intent of selling it for a profit at some point.

Paper Street Soap Investment
Paper Street Soap Investment Property

Similarities

  • Both are purchased with after tax money
  • No capital gains taxes due when the gains are realized
  • Not taxable as income when the gains are realized
  • No guaranteed rate of appreciation
Differences
  • Roth IRA has a $5k/year limit on how much you can invest, but your home doesn’t
  • You can’t touch the gains of your Roth without penalty until you are 59.5, but you can get the gains from your residence whenever you choose without penalty
  • While you aren’t guaranteed appreciation in either vehicle, if your home has a mortgage you are guaranteed a percentage of interest savings by paying down (investing) the principal early. True, you lessen the tax deduction on the interest, but does it really make sense to pay the bank $100 so that you don’t have to pay the gov’ment $25 anyway?
  • Any improvement-type investments you make into your home (for instance, a foreclosure that needed a lot of work) can be enjoyed by you immediately while you wait for the market to appreciate and can also help you sell quickly and for a higher price later on.
What am I missing here? I’m not a financial professional…just something I was thinking.

Tormented by the Wall Street Journal

I’ve read two articles in the WSJ this week about the housing market, and now I’m less certain than ever about what’s going to happen in the next year.

Is 2010 the Year of the Short Sale?

If 2009 was the year of the foreclosure (and loan modification), then 2010 may be shaping up as the year of the short sale.

I’d say 2011 is more realistic, unless they are predicting a slew of short sales starting in Q1. Our experience with trying to purchase short sales is that they take a long time. How long? We’re not really sure, because we haven’t made it to the end of the process yet. But five months seems to be a reasonable expectation for a minimum, and that’s just for the bank to get back to you with a yes or no.

I’m interested to see what is going to happen when, by the time the bank responds to an offer with a “yes”, the house is no longer worth the amount that was originally offered. Because, some people think we’re still in a housing bubble:

Rental apartment vacancies are reaching record highs. Many segments of the housing market are still oversupplied. And the core demographic in the country—the baby boomers—are reaching the age where they’re more likely to downsize, buying less house in the years to come.

Throw in the tax credits, artificially low mortgage rates, and the fact that the fed is still buying mortgage backed securities, and it’s hard to make the case that the housing market is not still artificially high.

It seems like the easiest way back to a true(r) market would be for banks to sell off their bad assets as quickly and efficiently as possible through the short sale process. Quick and efficient doesn’t seem to be the order of the day, however.

Please Stage Our House Too…Please!!!

If you offer to buy this house, make sure you stipulate that the seller will leave all accessories!!!!

Seriously, this is some great link bait.

Welcome Home! Home is where you hang your hat. Look closely…can you find the hat in this picture?

Welcome Home!!!

Welcome Home!!!

Having a tough time seeing the TV because the figurines decided to hold a town hall meeting in front of it? Check out the top shelf…you’re covered.

If you look closely you can get a glimpse of the beautiful floors!

If you look closely you can get a glimpse of the beautiful floors!

Luckily, the right side of the photo isn’t blurry, so we can see ALL the doll heads clearly.

I think I see a spot where we could squeeze in a pillow

I think I see a spot where we could squeeze in a pillow

Just follow the links in the photos. There’s more there, and I can’t really do it justice. You just have to see it for yourself. Luckily there is a pool, so if you can find enough heavy knick knacks you could make a belt out of them and possibly escape.

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