Booming Havasu Real Estate

[Ion]

I just got my latest property tax assesment and for the second year running, it went up over $100k! I have read posts here where Doubting Thomases believe things here have "leveled off", or "peaked". Here's proof that it has not!

[totenhosen]

that has nothing to do with the current or future trend of Havasu R/E

[Scream]

Where's Howard Jarvis when you need him?

[Havasu_Dreamin]

Where's Howard Jarvis when you need him?
Prop 13, I thought, only has to do with what the property tax rate can be, not what the assessed value is.
It'll be interesting to see what our hosue is assessed at this year. I'm heaing it may be as high as $300k. :eek:

[Ion]

that has nothing to do with the current or future trend of Havasu R/E
Since this assesment is for the year 2006, I'd say that was pretty damn current.

[Keith E. Sayre]

What you're looking at is the county giving themselves a pay raise at our
expense without having to get a popular vote to approve it. If the city
wants more money and wants to raise taxes, we have to vote it in. If
the county wants more money, they simply raise our values and we're stuck
paying it. They get what they want even without our approval.
Keith Sayre

[Ion]

What you're looking at is the county giving themselves a pay raise at our
expense without having to get a popular vote to approve it. If the city
wants more money and wants to raise taxes, we have to vote it in. If
the county wants more money, they simply raise our values and we're stuck
paying it. They get what they want even without our approval.
Keith Sayre
County employees are subject to the same assesment increase as non-county employees, providing of course, they own property. And...I have always viewed a house not only as a dwelling, but as an investment, which beats the crap out of any other investment I can think of. And...I don't know about you, but if I wanted to, for example, add a room to my house, or improve it in any way, I would much rather temporarily take equity out to pay for it, than give it to a bank. It sure is cool to have that option...and substantially more of it each year.

[Essex502]

Prop 13, I thought, only has to do with what the property tax rate can be, not what the assessed value is.
It'll be interesting to see what our hosue is assessed at this year. I'm heaing it may be as high as $300k. :eek:
Prop 13 limits the increase in assessed value as well as capping the tax rate:
Section 1
a) The maximum amount of any ad valorem tax on real
property shall not exceed One percent (1%) of the full cash value of
such property. The one percent (1%) tax to be collected by the
counties and apportioned according to law to the districts within the
counties.
Section 2...
(b) The full cash value base may reflect from year to year the
inflationary rate not to exceed 2 percent for any given year or
reduction as shown in the consumer price index or comparable data for
the area under taxing jurisdiction, or may be reduced to reflect
substantial damage, destruction or other factors causing a decline in
value.
So in California the assessor can only raise your assessed value 2% per year and tax at a rate of 1% of the assessed value.
Arizona dwellers....rise up and smite the government and vote in a Prop 13-like ammendment to your state constitution and be done with it.

[totenhosen]

Since this assesment is for the year 2006, I'd say that was pretty damn current.
As in the current or future R/E market :rolleyes: The assessment can not predict or control that. Much larger factors/issues at hand to determine that.

[Havasu_Dreamin]

So in California the assessor can only raise your assessed value 2% per year and tax at a rate of 1% of the assessed value.
Thanks for the 411. :D

[Freak]

What you're looking at is the county giving themselves a pay raise at our
expense without having to get a popular vote to approve it. If the city
wants more money and wants to raise taxes, we have to vote it in. If
the county wants more money, they simply raise our values and we're stuck
paying it. They get what they want even without our approval.
Keith Sayre
Exactly: As people do not like almost half of their wages being appropriated by government, government resorts to very many deliberately confusing tactics in order to take your wages from you by stealth.
As a politician once said, “the objective is to pluck the geese in such a manner as to obtain the greatest number of feathers with the least amount of hissing”.

[Ion]

As in the current or future R/E market :rolleyes: The assessment can not predict or control that. Much larger factors/issues at hand to determine that.
The continuing increase in property tax assesments is the result of the ongoing upward trend of many things :hammerhead: ...among those that matter are a continual increase in building permits, both residential and commercial. You can attempt to spin things your way as much as you like, but the fact is, all indicators still suggest Havasu is a great place to buy property and will be for the forseeable future.

[Clown Midgets]

I cant beleive you guys can afford those prices :confused: What do you all do for a living :idea:

[totenhosen]

The continuing increase in property tax assesments is the result of the ongoing upward trend of many things :hammerhead: ...among those that matter are a continual increase in building permits, both residential and commercial. You can attempt to spin things your way as much as you like, but the fact is, all indicators still suggest Havasu is a great place to buy property and will be for the forseeable future.
I THINK YOU ARE FAILING TO SEE THAT IT HAS NO BEARING ON FUTURE PRICES OF HOMES!!!!

[Bad Baja]

Prop 13 limits the increase in assessed value as well as capping the tax rate:
Section 1
a) The maximum amount of any ad valorem tax on real
property shall not exceed One percent (1%) of the full cash value of
such property. The one percent (1%) tax to be collected by the
counties and apportioned according to law to the districts within the
counties.
Section 2...
(b) The full cash value base may reflect from year to year the
inflationary rate not to exceed 2 percent for any given year or
reduction as shown in the consumer price index or comparable data for
the area under taxing jurisdiction, or may be reduced to reflect
substantial damage, destruction or other factors causing a decline in
value.
So in California the assessor can only raise your assessed value 2% per year and tax at a rate of 1% of the assessed value.
Arizona dwellers....rise up and smite the government and vote in a Prop 13-like ammendment to your state constitution and be done with it.
Well put. I looks like the Paragraph in my Real Estate Principles Book dealing with Prop 13!
Good Job!

[Ziggy]

What you're looking at is the county giving themselves a pay raise at our
expense without having to get a popular vote to approve it. If the city
wants more money and wants to raise taxes, we have to vote it in. If
the county wants more money, they simply raise our values and we're stuck
paying it. They get what they want even without our approval.
Keith Sayre
I recall reading in the papers out there over a year ago that the assessed values would increase substantially to catch up more to the market values. Apparently reassessment hadn't been done in several years, probably mainly due to little increased market value up until the recent large increase over the last 3-4 years. :rollside: Oh, and I think they were up for raises :D
I got my fingers crossed... :squiggle:

[GHTRIM]

I recall reading in the papers out there over a year ago that the assessed values would increase substantially to catch up more to the market values. Apparently reassessment hadn't been done in several years, probably mainly due to little increased market value up until the recent large increase over the last 3-4 years. :rollside: Oh, and I think they were up for raises :D
I got my fingers crossed... :squiggle:
So, what percent are we to expect? Does anyone know? And as was pointed out above, I thought the housing market leveled.. Is that not the case in Havasu?

[Havasu Cig]

County employees are subject to the same assesment increase as non-county employees, providing of course, they own property. And...I have always viewed a house not only as a dwelling, but as an investment, which beats the crap out of any other investment I can think of. And...I don't know about you, but if I wanted to, for example, add a room to my house, or improve it in any way, I would much rather temporarily take equity out to pay for it, than give it to a bank. It sure is cool to have that option...and substantially more of it each year.
You can't treat the equity in your house like a bank account or stocks though. I hear so money people talking about " cashing out some equity" like they don't have to pay it back. IMO it is risky to keep using the equity in your home to get money. If the market takes a hit ( which a lot of experts think it will when the interest rates climb) you could be upside down.
My house in Havasu has been a good investment, but I don't count on it as something I use like a bank account and it is just a rental and vacation house. I definitely would not do this if it was my primary residence.
Housing sales seems to have slowed a little here in San Diego and it is a much more desirable market than Havasu. I think as Southern California goes so will Havasu since that is where most of the $$$ is coming from. My 02.

[Ion]

And as was pointed out above, I thought the housing market leveled.. Is that not the case in Havasu?
That is my POINT...the Havasu housing market has not leveled. Ask any realtor in town. There is at least one who posts regularly in this forum.

[Ion]

You can't treat the equity in your house like a bank account or stocks though...
I said if I wanted to to a home improvement project, I'd rather use my equity and repay myself, than the alternative of giving all my money to a bank. And furthermore, can you honestly say that your mutual funds or stock investments are doing better than Havasu real estate. I didn't think so.
I'm going fishing...later.

[Ion]

I THINK YOU ARE FAILING TO SEE THAT IT HAS NO BEARING ON FUTURE PRICES OF HOMES!!!!
MORE IMPORTANTLY, I THINK I AM FAILING TO CARE WHAT YOU HAVE TO SAY!!!!

[Havasu Cig]

I said if I wanted to to a home improvement project, I'd rather use my equity and repay myself, than the alternative of giving all my money to a bank. And furthermore, can you honestly say that your mutual funds or stock investments are doing better than Havasu real estate. I didn't think so.
I'm going fishing...later.
Overall our stocks and mutuals have done better than the Havasu real estate market. I also don't have to pay the money back that I cashed out in stock.
I am not trying to get down on you just pointing out a fact that a lot of people are using the equity in their homes to buy toys and other stuff. They act like they don't have to pay the money back. If you would have taken a loan anyways and your inflated equity does not drive you to make the decision to pull money out, then go for it.
I can't wait to buy up some properties when the market comes back to reality. I would not be able to sleep If I had an ARM or was leveraged against my home to the point I had no equity left. I think a lot of people now are buying a payment and don't care what the cost of the house is. When their ARM's are done and interest rates are up 3-5 years from now they won't be able to afford their house payment. It's all good though. :cool:

[al cole'holic]

Overall our stocks and mutuals have done better than the Havasu real estate market. I also don't have to pay the money back that I cashed out in stock.
I am not trying to get down on you just pointing out a fact that a lot of people are using the equity in their homes to buy toys and other stuff. They act like they don't have to pay the money back. If you would have taken a loan anyways and your inflated equity does not drive you to make the decision to pull money out, then go for it.
I can't wait to buy up some properties when the market comes back to reality. I would not be able to sleep If I had an ARM or was leveraged against my home to the point I had no equity left. I think a lot of people now are buying a payment and don't care what the cost of the house is. When their ARM's are done and interest rates are up 3-5 years from now they won't be able to afford their house payment. It's all good though. :cool:
..so I take it you have made over 100k in a year in the market with the same size risk?? You must be one hell of a broker....

[Havasu Cig]

I am not a broker and my house in Havasu, while it has appreciated, has not been 100k a year.
Our stock portfolio, while it is a bigger risk, has made well more than 100k in year. The stock market has not been great lately but overall it has done better.
Look at the housing market over the last ten year and then compare it to the stock market during that same time period. Both markets are cyclical. Everyone that thinks real estate is going to stay the way it is for ever were probably not around it the late 80's early 90's when it was terrible.

[Excessive Force]

I can't wait to buy up some properties when the market comes back to reality.
Wonder how long that will be in? Im lookin to buy also but maybe now is not a good time? Of course buying low is always good , just dont wanna buy at current prices just for them to go lower than what I paid. :idea:

[phebus]

I personally would never take equity out to pay for toys. I can understand the need for writeoffs but this is not a way that I would do it. Too many other ways. The only time I took out any equity was to buy other property which in turn has done very well. Too many people take out equity for unnecessary purchases. To each his own though. Whatever works for them is OK with me. The key is to be diversified and any smart investment professional will tell you this.
O.K., I am just a fierman (and a financially stupid one), but if someone was going to take a loan out to purchase a boat, why wouldn't it be smarter to borrow against your equity to take advantage of a lower interest rate and the tax deduction savings, and just pay a monthly payment equal to what the monthly payment would be on the boat loan so the payment would not be strung out over a longer period? Heck, with the savings you could pay a larger payment and pay it off even sooner.
Again as a disclaimer, I am financially stupid, but boy has it led to some real stupid good times!!! :D

[al cole'holic]

I am not a broker and my house in Havasu, while it has appreciated, has not been 100k a year.
Our stock portfolio, while it is a bigger risk, has made well more than 100k in year. The stock market has not been great lately but overall it has done better.
Look at the housing market over the last ten year and then compare it to the stock market during that same time period. Both markets are cyclical. Everyone that thinks real estate is going to stay the way it is for ever were probably not around it the late 80's early 90's when it was terrible.
I didn't realize how retarded my comments were til I went back and read it... :boxed: ...I was under the impression you were in the securities biz :rollside:

[al cole'holic]

Wonder how long that will be in? Im lookin to buy also but maybe now is not a good time? Of course buying low is always good , just dont wanna buy at current prices just for them to go lower than what I paid. :idea:
..well, think of how many people you know that said 2 years ago they were going to wait to buy until the market drops...chances are they are still renting :frown:

[summerlove]

..well, think of how many people you know that said 2 years ago they were going to wait to buy until the market drops...chances are they are still renting :frown:
buy a lot, build a house, get instant equity. Protect against downturn as much as possible. IMHO.

[Mandelon]

I am not a broker and my house in Havasu, while it has appreciated, has not been 100k a year.
Our stock portfolio, while it is a bigger risk, has made well more than 100k in year. The stock market has not been great lately but overall it has done better.
Look at the housing market over the last ten year and then compare it to the stock market during that same time period. Both markets are cyclical. Everyone that thinks real estate is going to stay the way it is for ever were probably not around it the late 80's early 90's when it was terrible.
Oooh, my turn to agree. Well, maybe not with the 100K appreciation in my stocks part....(I wish) but the rest of it, yeah that's right. If you are smart or lucky enough to be in whichever is rising, that's great. Over time the returns are typically 10% a year if averaged over the long term. Sure there are periods of rapid appreciation, but they are punctuated by slower or even negative periods....

[4-B]

Life is short... to short sometimes. Enjoy it while you can. If that means spending $$$ or taking out loans to achieve that what makes you happy, go for it, I know I have :D .

[totenhosen]

MORE IMPORTANTLY, I THINK I AM FAILING TO CARE WHAT YOU HAVE TO SAY!!!!
I can't help it that you are so stupid to base your opinion on "the fact" that property values will continue to increase because of your tax assessment. So go ahead and buy up and the properties you can because there is no end in sight to the good times JACKASS!

[locogringo]

Investing in real estate blindly is a dangerous proposition. It is great that you say that property is appreciating 100k a year in Havasu, (not according to my tax assessment, and I have a 3 yr. old 1500 sq.ft house with lake view large lot and huge garage). What matters is where the market is going no matter what people say.
Hav. Cig, I disagree with you in regards to interst only loans. If you choose wisely what you do with the saved monies, interest only loans are the only way to go. You realize that there are even 30 yr. interest only loans out there? I carry 5 yr. IO on one property and 1 yr. IO on all the others that carry a mortgage. The key is to invest that money you are saving in payments towards higher yields of return. But, for those who carry interest only loans jsut so they can afford to get in the biggest house possible, this is where the issue concerns me, actually I'm elated by it. From what I study and learn and hear from seasoned investors, the market in California in respects to foreclosures is going to increase by 1500% between the 2005-2010 years.
The key now is to know when this is happening, when to jump in and when to jump out. When one market cycle is in decline, others are in an absorption cycles, expansion cycles, or equilibrium cycles. Money can be made in all three but the correct determination has to be met.
I see Havasu as being in the somewhat similar cyclical market as California. I see it being good, according to the economics of the city for another 2-5 years. So I will still invest in Havasu and other right areas of Arizona.
Speculation is one thing but studied speculation is another.
Okay, I'm off my trip nd am back into reality again. Sorry. :D

[Kilrtoy]

Look at the housing market over the last ten year and then compare it to the stock market during that same time period. Both markets are cyclical. Everyone that thinks real estate is going to stay the way it is for ever were probably not around it the late 80's early 90's when it was terrible.
Exactly, I bought my house in 96, it was forclosed on. The guy lost almost 100k from what he paid. that was my gain
I dont think it will ever get that bad again, But I agree and its gonna go back down as the interest rates climb. Granted I feel that the prices will drop quicker than the rising of the rates

[Mandelon]

Investing in real estate blindly is a dangerous proposition. It is great that you say that property is appreciating 100k a year in Havasu, (not according to my tax assessment, and I have a 3 yr. old 1500 sq.ft house with lake view large lot and huge garage). What matters is where the market is going no matter what people say.
Hav. Cig, I disagree with you in regards to interst only loans. If you choose wisely what you do with the saved monies, interest only loans are the only way to go. You realize that there are even 30 yr. interest only loans out there? I carry 5 yr. IO on one property and 1 yr. IO on all the others that carry a mortgage. The key is to invest that money you are saving in payments towards higher yields of return. But, for those who carry interest only loans jsut so they can afford to get in the biggest house possible, this is where the issue concerns me, actually I'm elated by it. From what I study and learn and hear from seasoned investors, the market in California in respects to foreclosures is going to increase by 1500% between the 2005-2010 years.
The key now is to know when this is happening, when to jump in and when to jump out. When one market cycle is in decline, others are in an absorption cycles, expansion cycles, or equilibrium cycles. Money can be made in all three but the correct determination has to be met.
I see Havasu as being in the somewhat similar cyclical market as California. I see it being good, according to the economics of the city for another 2-5 years. So I will still invest in Havasu and other right areas of Arizona.
Speculation is one thing but studied speculation is another.
Okay, I'm off my trip nd am back into reality again. Sorry. :D
Interest only loans have their place. For an investment maybe, but if you expect to keep the house you're in long term, I'd rather have the equity. In 30 years or less my house will be all mine, while an IO will have the appreciation, but not really own it. Granted if one invests that money in the right vehicle they could be better off, but the market does cycle down sometimes. I'd hate to have that happen when I planned to retire. I know its old fashioned but its been working well for a long time.

[locogringo]

Mandelon, you are thinking inside the box (not that that is bad) just think outside for a minute...
let's role play (no, not rolling around in mud or anything like that! Now, if you were a girl... anyway, back to what I was saying..)
this is you...on a $200,000 house
15-year mortgage at 5.12% (5.44% APR)
$40,000 big down payment
$0 left to invest
$1,275 monthly payment
(56% is tax deductible first year / 28% average)
$1,153 average monthly net after-tax cost
Send $100 monthly to lender in effort to eliminate mortgage sooner
this is what I do...30-year interest-only loan at 6.11% (6.29% APR1)
$10,000 small down payment
$30,000 remaining to invest
$967 monthly payment
(100% is tax-deductible first 15 years / 59% average)
$657monthly net after-tax cost
Adds $100 monthly to investments, plus $496 saved from lower mortgage payment, where account earns 8% rate of return
after jsut 5 years...
you...Received $11,286 in tax savings
Have $0 in savings and investments
me...Received $18,574 in tax savings
Have $88,428 in savings and investments
after 15 years...
you..Received $19,702 in tax savings
Have $27,592 in savings and investments
Own home outright
me...Received $55,723 in tax savings
Have $305,154 in savings and investments
Remaining mortgage balance is $190,000 - and I have enough savings to pay it off and still have $115,154 left over, free and clear.
after 30 years...
you...
Received $19,702 in tax savings
Have $567,148 in savings and investments
Own home outright
me...Received $87,927 in tax savings
Have $1,215,069 in savings and investments
Own home outright - so start fresh and enjoys the same benefits once again.
Would you still do it yor way?

[SBullet]

Man LOCO!! It makes me want to go refy both my houses! :D

[Kilrtoy]

This is getting way to heavy for me...

[locogringo]

Man LOCO!! It makes me want to go refy both my houses! :D
I'll happily do it for you. :rollside:
any state but Hawaii and New York

[Ion]

I can't help it that you are so stupid to base your opinion on "the fact" that property values will continue to increase because of your tax assessment. So go ahead and buy up and the properties you can because there is no end in sight to the good times JACKASS!
Obviously it bugs the crap out of you that many of us have had the foresight to invest in property here and reap the benefits, while you remain on the sideline wondering "what if"?
Grow up douchebag!

[Essex502]

buy a lot, build a house, get instant equity. Protect against downturn as much as possible. IMHO.
Exactly! Did just that and the appraised value of the result was $90K more than my cost to buy and build after a 9 month cycle. Not too shabby. Our other house in Havasu is listed now for $100K more than we paid for it 2 years ago. Not too shabby. My other investments in Mutual funds has not performed as well. Neither has the Dow nor Nasdaq nor S&P 500 over that time period, I believe.

[Havasu_Dreamin]

Loco certainly presents a compelling case.

[callbob4homes]

Best post (by locogringo) I have senn on this subject. I/O's are not for everybody, but if done right are a money maker. case in point: I sold my dad a home here in Gilbert in August of 04. Now my dad is real old school...30 year fixed only thing he knew. Talked him into 7 yr arm because, #1 he is 77 years old, #2 with $70,000 down on a 2 year old home in a new area, and he always liked to pay his own insurance and property taxes anyway. One month later I sold the identical home, same builder, same view premium size lot, sq. ft. etc, for $21,000 more than dad bought his for. and yes it did appraise for it. He also pays on his principal every month. Now at the end of his seven yr arm, giving the outlook for appreciation in this area, (and even if it doesn't worst case scenario) this man is in great shape on his equity. That is the key to these low interest only deals. If you don't have the discipline to make those extra principal payments on the money you are not spending on house payment for a 30 yr fixed........DON'T DO IT! As for the statements about foreclosures coming........you betcha ass they will, have seen it already.

[Ion]

I am not a broker and my house in Havasu, while it has appreciated, has not been 100k a year.
Our stock portfolio, while it is a bigger risk, has made well more than 100k in year. The stock market has not been great lately but overall it has done better.
Look at the housing market over the last ten year and then compare it to the stock market during that same time period. Both markets are cyclical. Everyone that thinks real estate is going to stay the way it is for ever were probably not around it the late 80's early 90's when it was terrible.
You seem to forget that Havasu is still an emerging city and will be until the first build-out occurs, which won't be for at least another 10 years. All the fluctuation in the LA-area markets happened to largely mature areas that had reached their respective plateaus. Havasu will first have to reach it's plateau before it can "level off". That's nowhere in sight at this juncture.
Re: your returns on market investments...if you're maintaining at least a 30% annual return, PLEASE let me in on the secret!

[cdog]

You seem to forget that Havasu is still an emerging city and will be until the first build-out occurs, which won't be for at least another 10 years. All the fluctuation in the LA-area markets happened to largely mature areas that had reached their respective plateaus. Havasu will first have to reach it's plateau before it can "level off". That's nowhere in sight at this juncture.
Re: your returns on market investments...if you're maintaining at least a 30% annual return, PLEASE let me in on the secret!
When rates rise and prices retract some, who will be buying a 10 year old house when you can go buy a brand new one in the "emerging city" that has buildable land still to offer to the consumer. That will hurt the resale market and bring down prices also. Supply and demand!!!! It seems as though everytime we have one of these cycles everyone becomes a real estate/stock market pro! History will repeat it's selt to an extent. Just make sure you can weather the storm and you will make money in the long run.

[Excessive Force]

ok whats it costing to build out in Az per sqft? And whats it going for in Cali also?

[totenhosen]

Obviously it bugs the crap out of you that many of us have had the foresight to invest in property here and reap the benefits, while you remain on the sideline wondering "what if"?
Grow up douchebag!
Actually I have R/E investments in the PHX area because I feel that Havasu is still primarily seen as a vacation spot. In hard times vacation spots are hit the hardest as there is no real economy there beyond that of the lake. Or does Havasu have a large influx of Fortune 500 companies or even middle market companies setting up shop there? Thank you come again!
What do the others here think as I would like to hear what you think.

[cdog]

Actually I have R/E investments in the PHX area because I feel that Havasu is still primarily seen as a vacation spot. In hard times vacation spots are hit the hardest as there is no real economy there beyond that of the lake. Or does Havasu have a large influx of Fortune 500 companies or even middle market companies setting up shop there? Thank you come again!
What do the others here think as I would like to hear what you think.
I could not agree more. Vacation homes are the first luxury to cut loose with when in hard times.

[Essex502]

ok whats it costing to build out in Az per sqft? And whats it going for in Cali also?
We just built a very nice home in Havasu for $95/sq.ft. including granite countertops, enlarged boat deep 3 car garage, extensive 15" tile floors, jacuzzi tub, stainless steel appliances, 8 ft doors (interior - not garage), large patio, upgrade plumbing fixtures, upgrade solid brass hardware, 3 bedroom, 3 bath, etc., etc., etc...
Can't touch that in California unless you live WAAAAYYY out in the boonie. No offense.

[Excessive Force]

Last i heard it was like $120/sqft in cali

[HavasuDreamin']

Potential scenario..........
Interest rates rise. They will, they can't stay this low for ever. Demand levels off or goes down because of the increased rates. Foreclosures begin to occur more frequently due to people on arms that can't afford the increased payment or people that are leveraged to the max. This equates to increased supply on the market. Now you have potentially greater supply than demand. Prices go down. Don't forget, in order to sell, there is generally at least 5% commission to be paid (for most of us).
For those that have made money in RE, great. Sound investing principles can go a long way. For those that are trying to time investments, either RE or the stock market, don't get caught with your pants down or you will be up shit creek without a paddle. :devil:

[callbob4homes]

[QUOTE=HavasuDreamin']
Sound investing principles can go a long way. QUOTE]
This it in a nutshell :cool:

[totenhosen]

anyone else?

[Debbolas]

I just got my latest property tax assesment and for the second year running, it went up over $100k! I have read posts here where Doubting Thomases believe things here have "leveled off", or "peaked". Here's proof that it has not!
How the heck have you been? :D

[Mandelon]

Mandelon, you are thinking inside the box (not that that is bad) just think outside for a minute...
let's role play (no, not rolling around in mud or anything like that! Now, if you were a girl... anyway, back to what I was saying..)
this is you...on a $200,000 house
15-year mortgage at 5.12% (5.44% APR)
$40,000 big down payment
$0 left to invest
$1,275 monthly payment
(56% is tax deductible first year / 28% average)
$1,153 average monthly net after-tax cost
Send $100 monthly to lender in effort to eliminate mortgage sooner
this is what I do...30-year interest-only loan at 6.11% (6.29% APR1)
$10,000 small down payment
$30,000 remaining to invest
$967 monthly payment
(100% is tax-deductible first 15 years / 59% average)
$657monthly net after-tax cost
Adds $100 monthly to investments, plus $496 saved from lower mortgage payment, where account earns 8% rate of return
after jsut 5 years...
you...Received $11,286 in tax savings
Have $0 in savings and investments
me...Received $18,574 in tax savings
Have $88,428 in savings and investments
after 15 years...
you..Received $19,702 in tax savings
Have $27,592 in savings and investments
Own home outright
me...Received $55,723 in tax savings
Have $305,154 in savings and investments
Remaining mortgage balance is $190,000 - and I have enough savings to pay it off and still have $115,154 left over, free and clear.
after 30 years...
you...
Received $19,702 in tax savings
Have $567,148 in savings and investments
Own home outright
me...Received $87,927 in tax savings
Have $1,215,069 in savings and investments
Own home outright - so start fresh and enjoys the same benefits once again.
Would you still do it yor way?
I understand it, and have done it on other properties. But you list only the pros, and not the cons.....
Not everyone has the discipline to invest that other money. Something always seems to come up......
No provision made for rising interest rates in your scenario. They used to be over 10%......and more like 17% when Carter was president. Is that int only loan fixed????
You never build a bit of equity. You are essentially renting that house. Why buy at all? Let the landlord own it and fix it, invest even more.
What do you invest in that gives a positive return as in your model? Stocks? More real estate?....each are cyclical and could suffer declines. Your investments are not necessarily guaranteed to succeed as in your model. If you needed your investment money back.....and it was unfortunately invested in Worldcom, Enron and JDSU, you'd be lucky to have a box to sleep in....
If the real estate market drops, you will be upside down in your house with minimal downpayment. Easier to walk away I suppose.....
I can justify doing that on an investment property, but not my main residence.
There will be a peace of mind that is incalculable when that house is paid off.
I can dip into my equity if needed to buy something, pay for college or take care of an emergency.
I am not saying you are wrong at all, but maybe not presenting a complete picture.... :cool:

[SHAKEN Not Stirred]

I cant beleive you guys can afford those prices :confused: What do you all do for a living :idea:
Milk Man.... :D

[mtndewdrops]

Actually I have R/E investments in the PHX area because I feel that Havasu is still primarily seen as a vacation spot. In hard times vacation spots are hit the hardest as there is no real economy there beyond that of the lake. Or does Havasu have a large influx of Fortune 500 companies or even middle market companies setting up shop there? Thank you come again!
What do the others here think as I would like to hear what you think.
I agree with this logic, Here's why
I bought my vacation home in Havasu back in 2003. My family loves it and would rather stay in our own home than a hotel. But now I have 2 kids with braces, college staring me in the face and my car is pushing 200k miles. I will probably have sell my vacation home this spring and get my bills down to a less stressful level. I would like to keep it, but I have built up quite a bit of equity and don't mind paying the capital gains tax to simplify life. It was fun while it lasted.
As long as I can keep my BOAT everything else is fine.

[Mandelon]

Exactly! Did just that and the appraised value of the result was $90K more than my cost to buy and build after a 9 month cycle. Not too shabby. Our other house in Havasu is listed now for $100K more than we paid for it 2 years ago. Not too shabby. My other investments in Mutual funds has not performed as well. Neither has the Dow nor Nasdaq nor S&P 500 over that time period, I believe.
Hard to go wrong in a rising market. But don't let that fool you into thinking that you are some investment genius. (Not you, Essex, I mean anyone)
When the market is declining, and you are making $90K a year, then start bragging... :D Right now we are lucky to have owned already, and should have bought more........
I know plenty of guys who built and lost money cuz the market declined after construction started. Don't let it happen to you.

[SHAKEN Not Stirred]

I agree with this logic, Here's why
I bought my vacation home in Havasu back in 2003. My family loves it and would rather stay in our own home than a hotel. But now I have 2 kids with braces, college staring me in the face and my car is pushing 200k miles. I will probably have sell my vacation home this spring and get my bills down to a less stressful level. I would like to keep it, but I have built up quite a bit of equity and don't mind paying the capital gains tax to simplify life. It was fun while it lasted.
As long as I can keep my BOAT everything else is fine.
Like you, I bought the house in Havasu in 2002 for the family....espicially for the kids....not intentionally for the investment......
I thought about selling it when business was a bit slow and take the $150K I've made.....
But.....It would be really hard to get back in again later!!!
CJG

[shueman]

Why buy real property? Buy the dirt instead...!!
My buddy got me started many years ago buying land at $50/acre. No matter where it was, necessarily, but our threshold was $50/acre. Later, we went up to $500/acre, sold off some, at a profit, and re-invested.
His best buy was 20 acres along the Klamath, worth over a Mil today. I did alright as well. My best investment has been acreage in South Carolina.
When my cousin moved to Havasu in '78 with McCulloch (her husband was an engineer with them), I did buy 4 lots when I saw what was going to be happening. They did good for me, but whoa, look where they are now..!!!

[locogringo]

I understand it, and have done it on other properties. But you list only the pros, and not the cons.....
Not everyone has the discipline to invest that other money. Something always seems to come up......
No provision made for rising interest rates in your scenario. They used to be over 10%......and more like 17% when Carter was president. Is that int only loan fixed????
You never build a bit of equity. You are essentially renting that house. Why buy at all? Let the landlord own it and fix it, invest even more.
What do you invest in that gives a positive return as in your model? Stocks? More real estate?....each are cyclical and could suffer declines. Your investments are not necessarily guaranteed to succeed as in your model. If you needed your investment money back.....and it was unfortunately invested in Worldcom, Enron and JDSU, you'd be lucky to have a box to sleep in....
If the real estate market drops, you will be upside down in your house with minimal downpayment. Easier to walk away I suppose.....
I can justify doing that on an investment property, but not my main residence.
There will be a peace of mind that is incalculable when that house is paid off.
I can dip into my equity if needed to buy something, pay for college or take care of an emergency.
I am not saying you are wrong at all, but maybe not presenting a complete picture.... :cool:
Mandelon, people who don't have the discipline should not do this, I agree.
there are 15 year fixed interest only loans.
sure you build up equity, just like all those others that are. Most people rfi their houses every 4.3 years in California as it is. Why would you get a 30 year or 15 year fixed when most don't even carry a mortgage for that long.
there is an equity index annuity out there that gurantees that you never lose money. Even if the stock market does. The catch...you can only get 10% return on your money but when the market goes down, your annuity won't. How can you lose on this. Only if the market goes up over 10% yo are stuck at the 10% cap. 10% return on money is nothing to whine about.
when the real estate market drops, if and when it does, you stillwill not be upside down on it.
Have your equity work for you. For those who have equity in their houses, how much did it make you last year? None.
My rule of thumb on my properties is to go with a power option loan. IO which is at 1.95% which would give me a payment of the scenario I mentioned earlier of $537 per month. That extra money is reinvested. The key, only go 80% LTV. Since it is a differed interst program, I wouldn't do this on my primary residence but still have a fixed interest only loan on it.
Another quick scenario...
I have 250000 in equity in my house...
I pull out $200k through a refi. I buy 4 4plexes that cost 500000 a piece. My payment on these with a IO loan is roughly $17000-1800 with taxes and insurance. I rent out each one for $1100 a unit. So, that is $4400 per 4 plex. Each 4 plex is now cash-flowing $2600. That is a total cash flow on all units of $10,400 a month. Where do you loose here? Your renters are paying for your home mortgage also.
This is what I do. This is what I teach people who want to learn. It is working for me and many others.
I know you are saying, what if the market falls and crashes...
If it does, is it fair to say that you can at least get $1100 total for each 4 plex? I don't see rents falling that much to $300 a unit.
Bear in mind that at the same time, you are building equity in these 4 plexes each year also. If it is a 20% increase within the right market cycle, that is an additional $100,000 per 4 plex per year. You have just gained an additional $400,000 in equity in one year.
Enough secrets for now though.... :hammerhea

[BoatPI]

I would not expect residental rents to drop in So Cal. In my lifetime, period. No more room in the metro areas, good jobs, and people waiting. OC unemployment is at 3 1/2%.
At the apprecation rate right now, a $500K property was increasing in value at a rate of $281 PER DAY in 2004.
This last time I had a vacancy, I recieved 150 calls in three days.
If you purchase in Havasu, go for the LOCATION!!!!!!!!!!!!!!!!!!!!! View, lot size!
My hideaway is on a 1/2 acre lot. Ask youself, how many real choice lots are left? So look at the older established homes with close in views.
Best RE investment I have ever made. My 2 cents.

[totenhosen]

Why buy real property? Buy the dirt instead...!!
My buddy got me started many years ago buying land at $50/acre. No matter where it was, necessarily, but our threshold was $50/acre. Later, we went up to $500/acre, sold off some, at a profit, and re-invested.
His best buy was 20 acres along the Klamath, worth over a Mil today. I did alright as well. My best investment has been acreage in South Carolina.
When my cousin moved to Havasu in '78 with McCulloch (her husband was an engineer with them), I did buy 4 lots when I saw what was going to be happening. They did good for me, but whoa, look where they are now..!!!
My problem with land is that you do not get the tax benefits that you do with a residence, you can't rent it out and have someone else pay the mortgage, and financing is limited.

[Excessive Force]

This is what I do. This is what I teach people who want to learn. It is working for me and many others.
More info please!

[NashvilleBound]

My problem with land is that you do not get the tax benefits that you do with a residence, you can't rent it out and have someone else pay the mortgage, and financing is limited.
The land purchase can be made for devlelopment. I purchased 11 acres (in TN) for $375k. Its old farmland right now but will be 30 improved( streets/full utilites)lots when I am done. My cost per lot when ready for the builders...$24k...sales price $50-55k each. 9 month project. Developing land "Can" be much more profitable in the short term. Buying rentals, as in no mortgage, is the only way to go. By the end of this year we will have 10 rentals paid for along with our home that already is. Coming from CA this situation is totally possible for most people. Doing a 90/10 is a scare me situation. If you cant go 80/20 with a 15 year loan I would be hesitant, but I am always on the safe side...it has served me very well through vacancies and tough times. When you have rentals things always happen at the same time. One month you will have one vacant with a months rent for repairs, another needing something else that costs....someone 15 days late on there rent....the bank doesnt give a rats ass what your tenants are doing, your payments are due when they are due! Havasu seems like a very stable community. I might look into buying out there when thing decline.....and they will decline its just a matter of when.
Just my .02

[Excessive Force]

The word decline scares me, leveling off sounds better :cool:

[totenhosen]

The land purchase can be made for devlelopment. I purchased 11 acres (in TN) for $375k. Its old farmland right now but will be 30 improved( streets/full utilites)lots when I am done. My cost per lot when ready for the builders...$24k...sales price $50-55k each. 9 month project. Developing land "Can" be much more profitable in the short term. Buying rentals, as in no mortgage, is the only way to go. By the end of this year we will have 10 rentals paid for along with our home that already is. Coming from CA this situation is totally possible for most people. Doing a 90/10 is a scare me situation. If you cant go 80/20 with a 15 year loan I would be hesitant, but I am always on the safe side...it has served me very well through vacancies and tough times. When you have rentals things always happen at the same time. One month you will have one vacant with a months rent for repairs, another needing something else that costs....someone 15 days late on there rent....the bank doesnt give a rats ass what your tenants are doing, your payments are due when they are due! Havasu seems like a very stable community. I might look into buying out there when thing decline.....and they will decline its just a matter of when.
Just my .02
Unfortunately I don't have any experience with land development. But what you are telling me sounds very interesting. I would need to learn more about it before I pull the trigger on something like that.

[Essex502]

I agree with this logic, Here's why
I bought my vacation home in Havasu back in 2003. My family loves it and would rather stay in our own home than a hotel. But now I have 2 kids with braces, college staring me in the face and my car is pushing 200k miles. I will probably have sell my vacation home this spring and get my bills down to a less stressful level. I would like to keep it, but I have built up quite a bit of equity and don't mind paying the capital gains tax to simplify life. It was fun while it lasted.
As long as I can keep my BOAT everything else is fine.
Contemplate renting the house and keeping it as long as the negative can be handled or better yet definitely keep it if there is a positive cash flow.

[Essex502]

Hard to go wrong in a rising market. But don't let that fool you into thinking that you are some investment genius. (Not you, Essex, I mean anyone)
When the market is declining, and you are making $90K a year, then start bragging... :D Right now we are lucky to have owned already, and should have bought more........
I know plenty of guys who built and lost money cuz the market declined after construction started. Don't let it happen to you.
I believe the Havasu market to be somewhat unique in that its proximity to California and Nevada and being a "playground" for both. Land is somewhat limited in that expansion can cannot continue forever. The retired folks who have their houses there now won't probably sell but the heirs might. Land in LHC and its surroundings is finite so I believe that the market can be sustained even with a general real estate market that would be dropping elsewhere.
Only time will tell and when the market quits rising I'll quit investing in the real estate in Havasu and look to invest elsewhere. The past two years I've done much better in LHC than the stock market. I'm no genius at this - just a minor player in the game at the moment. Our next property will be a duplex for rental only.

[phebus]

For curiosity sake, what price range do nice 3 bedroom homes in Havasu that are in nice neighborhoods rent for on a yearly basis? (yearly, not snowbirds). I am also in a position where I am contemplating selling our Havasu home, but need to consider what income could be generated if it were to be rented.

[Essex502]

For curiosity sake, what price range do nice 3 bedroom homes in Havasu that are in nice neighborhoods rent for on a yearly basis? (yearly, not snowbirds). I am also in a position where I am contemplating selling our Havasu home, but need to consider what income could be generated if it were to be rented.
We tested the market on our small house (1,600 sq.ft.) before deciding to sell it....
two years old
3 bedroom
2 batch
2 car boat deep garage @ 31' deep
lots of upgrades
south end near the new Bashas - neat, clean neighborhood
Listed it at $1,100 a month and got several calls on it. We had no intention of renting it at the time we listed it so I didn't persue the opportunities. So I'd hazard a guess that you can get $1,000-$1,100/mo year round. Lots more to snowbirds.

[Havasu Cig]

Investing in real estate blindly is a dangerous proposition. It is great that you say that property is appreciating 100k a year in Havasu, (not according to my tax assessment, and I have a 3 yr. old 1500 sq.ft house with lake view large lot and huge garage). What matters is where the market is going no matter what people say.
Hav. Cig, I disagree with you in regards to interst only loans. If you choose wisely what you do with the saved monies, interest only loans are the only way to go. You realize that there are even 30 yr. interest only loans out there? I carry 5 yr. IO on one property and 1 yr. IO on all the others that carry a mortgage. The key is to invest that money you are saving in payments towards higher yields of return. But, for those who carry interest only loans jsut so they can afford to get in the biggest house possible, this is where the issue concerns me, actually I'm elated by it. From what I study and learn and hear from seasoned investors, the market in California in respects to foreclosures is going to increase by 1500% between the 2005-2010 years.
The key now is to know when this is happening, when to jump in and when to jump out. When one market cycle is in decline, others are in an absorption cycles, expansion cycles, or equilibrium cycles. Money can be made in all three but the correct determination has to be met.
I see Havasu as being in the somewhat similar cyclical market as California. I see it being good, according to the economics of the city for another 2-5 years. So I will still invest in Havasu and other right areas of Arizona.
Speculation is one thing but studied speculation is another.
Okay, I'm off my trip nd am back into reality again. Sorry. :D
I don't think all interest only loan are bad. What I think is risky is to do an interest only loan on your primary home if you are leveraged to the point you will not be able to afford the payment when you have to re-fi in a more realistic market. I don't think you will see interest rates anywhere near where they are at now 3-5 years from now when these ARM's come due. Like I stated before a lot of people are buying a payment and don't really care about the price of the house. If they can afford the payment they buy. When interest rates rise a couple of points they won't be able to make the payment anymore.
If you are doing ARM's for investments or flipping properties then go for it. My point was directed at people doing it on there primary homes.

[Havasu Cig]

You seem to forget that Havasu is still an emerging city and will be until the first build-out occurs, which won't be for at least another 10 years. All the fluctuation in the LA-area markets happened to largely mature areas that had reached their respective plateaus. Havasu will first have to reach it's plateau before it can "level off". That's nowhere in sight at this juncture.
Re: your returns on market investments...if you're maintaining at least a 30% annual return, PLEASE let me in on the secret!
Like I said it's cyclical. Overall during the past ten years a 30% average would not have been hard to acheive in invested properly. The stock market payed for our Cig and our house in Havasu, among other things, so I think it has been fairly good to us.
As far as the housing market in Havasu, like others have said interest rates will effect it. As So. Cal. goes so will Havasu IMO.

[al cole'holic]

..how many people are very worried about the interest rates going up?? When I bought the house I am in now 5 years ago I got an interest rate up as high as 9%, bear in mind I had claimed a stated income and no docs but was ok with the loan terms then. We have refi'd and for the last 2 years roughly have been in the 5% range...it would take a large rise in interest rates for me to be back to square 1...:confused:

[Havasu Cig]

I would say the people leveraged to the max, or the people that can barely (or not really) afford their house with Interest only loans should be worried about rate rising.
BTW: Who owns the helicopter in your sig line?? I have seen it at Civic Helicopters at Palomar and was wondering. I used to fly out of Civic years ago. :cool:

[al cole'holic]

I would say the people leveraged to the max, or the people that can barely (or not really) afford their house with Interest only loans should be worried about rate rising.
BTW: Who owns the helicopter in your sig line?? I have seen it at Civic Helicopters at Palomar and was wondering. I used to fly out of Civic years ago. :cool:
...actually the copter that was in my sig was the one DCB used last year for their photo shoot at the 'Scru complete with red DCB logo's...I caught that photo while on mbrown2's boat with the photographer waving :)

[Mandelon]

Where do I find properties like these?
I pull out $200k through a refi. I buy 4 4plexes that cost 500,000 a piece. My payment on these with a IO loan is roughly $17000-1800 with taxes and insurance. I rent out each one for $1100 a unit. So, that is $4400 per 4 plex. Each 4 plex is now cash-flowing $2600. That is a total cash flow on all units of $10,400 a month. Where do you lose here? Your renters are paying for your home mortgage also.

[ROZ]

Enough secrets for now though.... :hammerhea
Secret must be where that rental 4plex property is :p :D

[Ion]

Where do I find properties like these?
I pull out $200k through a refi. I buy 4 4plexes that cost 500,000 a piece. My payment on these with a IO loan is roughly $17000-1800 with taxes and insurance. I rent out each one for $1100 a unit. So, that is $4400 per 4 plex. Each 4 plex is now cash-flowing $2600. That is a total cash flow on all units of $10,400 a month. Where do you lose here? Your renters are paying for your home mortgage also.
Providing your interest only loan is fixed, and you have no problem renting them out...YOU WIN!

[INSman]

The market is still very warm there. I am looking to buy a lot and build a nice summer use/ winter rental house and just today, I found a lot that had just popped up on the MLS, had my realtor in Havasu run by and take some pics, wrote the offer the very next morning (AT FULL PRICE !!) and it was already gone... :mad: :mad: :mad:

[shueman]

They're asking $60k+ of lots out in the middle of nowhere in Fort Mojave. Yes, absurd, and yes, they are selling as fast as they get sub-divided.
Havasu is just one of many hot/growth areas in the Southwest.

[Mandelon]

Where is this 10% guaranteed annuity???
"there is an equity index annuity out there that gurantees that you never lose money. Even if the stock market does. The catch...you can only get 10% return on your money but when the market goes down, your annuity won't. How can you lose on this. Only if the market goes up over 10% yo are stuck at the 10% cap. 10% return on money is nothing to whine about."
Loco, I sure would like to know where to find all these awesome scenarios... :notam: I'd like to buy some of those 4-plexes you talk about.....

[TCHB]

The rates for money will have to stay low because of the economy. If the rates go up too far the economy will slow to stop. The bankers and politicians will not let this happen. It is all a balancing act.

[locogringo]

Mandelon, and to the others who have asked questions through email, PM and on this thread.
I am no longer talking to any of you!
Just kidding... :D
Where are these scenarios...
Look right in your upper backyard of the 951 and 909. There are plenty complexes that are in the 500k range. Even in San Diego, there are 4 plexes there for 2-300k more. It just lowers A. the ability to buy as many with said money, B. by the same amount with less down, or C. as high of a cash flow.
Talk to a realtor and have them find four plexs for you. Myself, I actually like commercial apartments with way more units because it becomes even more lucrative. Depending on people's score, they can even go 100% financing oncommercial properties (bear in mind that commercial loans are done more on income generated more than credit scores though both play an important role).
Hire a Propery Management company that takes 8-10@ of the rents monthly. They handle any and all headaches leveraging your time to more important things.
Where is this annuity you ask? It is called a Equity Index Annuity. Talk to your financial advisors or call me if need be and I'll explain it more in depth. The parent company I work for offers this annuity also.
I have many more secrets on maintaining your wealth and not gettng taxed even remotely as much on your income generated but that is a whole other subject.
Bear in mind folks, I am not a financial advisor of any sort (yet at least, I haven't had time to go to the required education to get it yet) so I am speaking strictly off of personal experience.
Ciao for now...
Daniel

[Keith E. Sayre]

Being a lowly boat salesman and not understanding squat about all of the
previous posts-- I've known and trusted Daniel for years and I've got to
admit you've got me convinced. How many duplexes or 4 plexes can I get
with the $6.75 a week that my ex wife leaves me??? Just kidding. But not
about the $6.75! Havasu Cig--gotta admit makes a good case too and so
does Mandelon. I'm going to invest whatever I have in a Reeses and a coke
tonight after dinner.
Keith Sayre
Conquest Boats

[PHX ATC]

I have got to hang out with that high roller, Keith, when I'm at Havasu next.
Just gotta! :220v: :)

[locogringo]

Being a lowly boat salesman and not understanding squat about all of the
previous posts-- I've known and trusted Daniel for years and I've got to
admit you've got me convinced. How many duplexes or 4 plexes can I get
with the $6.75 a week that my ex wife leaves me??? Just kidding. But not
about the $6.75! Havasu Cig--gotta admit makes a good case too and so
does Mandelon. I'm going to invest whatever I have in a Reeses and a coke
tonight after dinner.
Keith Sayre
Conquest Boats
Keith, as always, cracking me up!
Hope all is well with your bad self. Gonna be at the boat show hopefully?
I have got to hang out with that high roller, Keith, when I'm at Havasu next.
Hope you are not talking about me Toby. I'm just common folk living a modest life... :wink: :D