Greed and failure to see a bubble in real estate.

Why are so many investors choosing to handicap themselves from the outset?

I’ve got my final two rentals under contract, so I’ll be completely divested out of the Puget Sound. More over, I own no stocks currently (wink), and will sit on this cash to see where the stock market is headed.

In hindsight, there was no need to point out the windfall I got; however, I didn’t want any of you to worry about little ol’ Seattle Eric. I see already many are pouncing on my corpse. LOL.

Fare thee well bubble community. May you find wealth and health in life…and if you can’t have either, or both, just "female dog" about it online. :)

I’ve just started lurking every few days, so you may hear from me…but probably not as Seattle Eric.

P.S. Looks like Tim had fun with photoshop! :)

PECKHAMMER, YOU ACT LIKE $100K PER YEAR IS PEANUTS FOR AVERAGE SEATTLE HOUSEHOLDS

It’s $100k every 2 years. Meaning $50k a year.

Dealing with 12 of ‘em for the same profit would be about as pleasant as crapping thumb-tacks.

Quote of the day.

It isn’t peanuts, its out of reach, way out of reach for the average household incomes in Seattle. Its getting far worse with time too.

See the proof:

http://www.msnbc.msn.com/id/18868904/

Note, the article states if it wasn’t for more double household incomes we wouldn’t have even kept stable at $40K per household. But the probability of one of the double incomes getting axed is twice that of a single income household, albeit if the single household income gets axed, it could quickly lead to homelessness.

I’d add again [I've brought this up in blogs before], most of the older workers or “baby boomers” who make more income simply aren’t into real estate. They’re on a retirement mode and if they save enough to retire, a lot of them will be cashing in their homes, likely buying down too or selling it right off for nursing home costs to the guess who…..far poorer household income X/Y/Z generations.

Seattle’s longterm real estate outlook is grim indeed, based on household incomes, isn’t it. Its kind of like today’s stock market. Tweedle Dee and Tweedle Dum.

Also, I’d add a caveat that most Seattle home owners, especially with older kids long out of the house, can’t understand at all. This rapidly happenned, approximately in the last 9 years:

1. The grim no experience job market for our degreed Seattle youth [outside of nuses].
2. Our kids inability to get in to the University of Washington (i.e.) with a “B” average anymore.
3. Our public high schools that don’t basically grade on testing anymore (its called communal grading with homework cheats instead of English tests).
4. Our ghost domestic manufacturing base (besides the extinct dinosaur glueboard home) in Seattle.
5. I’d couple this with mass Microsoft/Boeing type Outsourcing and with local wage mitigation guest workers replacing a higher paid Middle Class domestic labor base possibility.

You get the gist, no wonder the the horrifying subprime loans to a lot of this new lower income overpopulation brainlessly added to Seattle the last 9 years is causing a possible horrifying Depression.

I know, the economy in Seattle is independently rosy and I’m all wet.

Invest for the long term.

Thanx for the response peckhammer.

All Vanguard, unless noted otherwise. The mix, expressed as percentages, looks something like this:

Capital Opportunity 18%
Selected Value 21%
Emerging Mkts Index, Intl Value, 14%
Global Equity 13%
Health Care 9%
Growth Index, Midcap growth Index, Midcap Value Index 8%
Fidelity Small Cap Opportunity 8%
Windsor II 5%
Short-Term Investment-Grade 4%

The last few weeks have eroded this years earnings, but I expect to make it back. Over the past ten years I’ve gotten close to a 15% average yearly return. A more conservative portfolio should handily get 10%.

Just curious – What kind of mutual funds do you own that provide a 10% return? The best I’ve done is a consistant 6% to 8% the last few years. Maybe I’ve been too conservative.

Of course it’s a whole new ball game right now.

IMO, if you are in your 40s, have a college education and aren’t handicapped, there are very few excuses for not being a millionaire(1). It doesn’t take brains or ambition. It only takes a simple formula that consists of spending less than you earn and not living beyond your means.

Having $1M means that you should easily be making $100K a year in passive income. That doesn’t make you rich; it makes you average.

(1) A health emergency would be an exception to this general rule of thumb, of course.

Lucky guy.

Thanks for providing the final chapter in your online RE investing story. Hopefully others can learn from your experience. I know that I’ve said it before, but thank you for your transparency and honesty which is so refreshing.

As for rental property, I can understand your frustrations. My dad owned several duplexes while I was growing up, but they were mostly within one block of our home, so we could walk over to them to take care of the invariable issues which came up. I lost track of how many times I ‘got’ to go fix leaky toilets, clogged drains, and so on. But the rental income paid for my college so I’m not complaining!

During college while living in Central Indiana, I lived in an apartment complex having 47 units and one manager’s office for the full-time manager. There was also a part-time maintenance person. The owner lived in Florida year-round and never had to deal with any of the day-to-day issues, and got a nice check in the mail every month. I always thought that was a pretty good way to be invested in RE, as the cash flow was very good and the hassles were minimized (the manager and maint. person were both long-term employees and great people, which of course is key).

And congratulations on winning the employment lottery (having a job where your stock options pay out big)! If only I had gotten a job at [anonymous big tech company] back in 1990, I would certainly have retired by now!

I wouldn’t get out of bed for two years of medium income in Washington State. It’s roughly equivalent to one year’s passive income in my mutual fund portfolio (up until a couple weeks ago anyway).

I did “flip” one house in Florida. Had it built in 2000 for $100K, rented it for 5 years with positive cash flow, and sold it in 2005 for a $100K net gain. One house was a handful. Dealing with 12 of ‘em for the same profit would be about as pleasant as crapping thumb-tacks.

um…that’s roughly two years of medium income in Washington state…and that’s “horrible return”?

For real? $100K on twelve houses. That’s a horrible return on your investment when you consider your time.