Investment for Noobs

[octopus]

http://en.wikipedia.org/wiki/Down_payment

[RKenshin]

When you pay $300k for a home that is the only money you fork up. The broker would charge the seller $10k, leaving him $290k. And there is nothing that prevents you from selling on your own, saving that $10k. If the state has some kind of transaction tax for book keeping then you may get billed for that, but should not be much.

No, the broker/agent's charges/commissions/fees can be on the buyer, on the seller, or both. Buying a house is a negotiation process, even sometimes similar to an auction... there is no absolute set way it works and that's the only way.

It varies vastly by the house, situation, seller, competition for it and the methods to which you came upon the house (Craigslist, for sale by owner, a real estate agent, or what). Needless to say though, the better the house the more likely you will not be able to get the best end of the deal.

That is why you need to pick a good place to keep property taxes low, some states you get below 0.50%. And also in many cases the assessed value of the property is lower then the purchase price. So in a real investment situation you would see about $1k in property tax for a $300k home.

You act like buying a house in the ideal location is like shopping for a new pair of shoes. People can't just uproot their lives to the ideal housing location, buy a house, leaving their family/career/education behind, and expect to have everything else work itself out. What kind of advice is this?

"Quick - quit your current job, find a place with cheap property taxes and a good deal on a house, purchase a property, and then figure all that other silly income and job stuff later - the house alone will make you rich!"

Seriously.

For the sake of any discussion relevant to this thread, the home purchase will be the same home the people will have to live in. There is no hope of the far off investment property that you might have to visit once a month for rent/upkeep, and even then that's still a little ridiculous.

And guess where all the highest property tax areas are? In the city/suburban areas, AKA where 90% of the jobs are. And a 2 hour commute can easily erase the 'savings' of lower property taxes.

BTW: Taxes and home value/growth are two INVERSELY related factors -- higher taxes are more often to coincide with higher home prices, growth potential, and population (as in most of the biggest cities and their surrounding suburbs). Take a look at these maps and try and see if you can spot the relationship here:
http://money.cnn.com/interactive/rea.../property-tax/
http://www.mapofusa.net/us-population-map.gif
http://www.trulia.com/home_prices/

The location matters. Just because Detroit pulls the average way down does not mean you have to buy there.

Again, location is not a simple matter for most people to deal with.

And once more, which is it? Lower property taxes or highest growth potential? You really can't have both in most situations.

Do you realize how passionately you're arguing for such a difficult investment with suggestions of seeking out a specific magical area with low taxes and high home growth returns, on the perfect home with minimal maintenance, an easy sale, etc, and all for what is ultimately minor returns?

At the very, very least please at least tell me you realize how exponentially easier/simpler it is to invest in just about anything else. You literally could have set aside a single day 25 years ago setting yourself up with $10,000 in an index fund, and never have done a single thing to it since then, and have turned that into $115,000 by today. And you could probably set up an account online in under an hour now.

The effort really isn't comparable, nor are the returns... but do you at least agree on the effort part?


EDIT: Arrg, why am I writing so much when it's so futile! I swear I didn't think I wrote more than a few sentences before I hit post.

[Ksandra]

You know, I saw a lending tree commercial earlier, and I thought of this thread.

Looking at aks interest rates I really only see one loan (her 13% one, rest I think are lower than what lending tree offers) that could be beneficial to using a company like them, but it may be still worth it?

I think I remember back in the day where debt consolidators were huge, that they could hurt your credit because they bargained with your creditors iirc. Not sure if that is still a thing. But if anyone has any input that may help aks help pay off that higher interest loan.

[*Shinzon*]

You know, I saw a lending tree commercial earlier, and I thought of this thread.

Looking at aks interest rates I really only see one loan (her 13% one, rest I think are lower than what lending tree offers) that could be beneficial to using a company like them, but it may be still worth it?

I think I remember back in the day where debt consolidators were huge, that they could hurt your credit because they bargained with your creditors iirc. Not sure if that is still a thing. But if anyone has any input that may help aks help pay off that higher interest loan.

Using one of those companies is /never/ a good idea. I worked at a consumer financial protection clinic in law school. Those companies typically work by having you pay money to them in order to establish a "payment plan" with creditors. The company then would theoretically negotiate with creditors using the pooled money and showing them that you can make payments.

However, the vast majority of these companies actually see no results or just pocket your money, often leaving you in a worse position.

[Ksandra]

What about going directly to a lender? Are there any that are any trustworthy anymore?

[Aksannyi]

The 13.25% loan has approximately $2k left to it. I've been chunking away at it with every spare cent I have. It absolutely will be gone by the end of the year, if not sooner.

[Quixon]

With only 2K left I wouldn't bother refinancing it.... which is basically what Ksandra is talking about.

The issue with Refi, is that you need good credit to refi if you want a good rate.

For instance (and you can actually go back probably 4 years on this forum to find where I brought this up originally):

When my life lived at home with her parents, her parents had horrible credit. They couldn't manage money for shit, and still can't. My wife had phenomenal credit and was around 20 at the time. Her parents had to redo their deck, and some other shit in the house.... so of course my wife signed up for the home depot card. They instantly dropped like 8K on the card. To make a long story short, they kept paying the minimum, and then spending more..... repeat ad nauseum.

The largest the bill was at was 12k. There was no possible way they could ever pay it off, and I refused to marry her until we figured out a solution. She took a debt refinance loan out at the local credit union to pay off the 12k, which was at like 21% since it was a store card, and a rate of 5-7%. That dropped the monthly payment from around $550ish min (would pay off credit card in something stupid like 25 years) to $225ish with the loan paid off in 5 years, but of course added a few years onto the pay off. Her parents could actually afford to pay that though. That solution worked out in the long run, as the loan is paid off I believe this coming Spring.

Nothing negative went on her credit as we got this figured out before her parents had to start missing payments.


A debt refinance through a bank or credit union is exactly that, there is no fancy language or tricks. If you owe 18k to a creditor, the bank cuts a check for 18k to that creditor.... and you pay the 18k back at the new terms you signed up for. Not the same as the debt consolidation bullshit those independent companies try to push.

[*Shinzon*]

With only 2K left I wouldn't bother refinancing it.... which is basically what Ksandra is talking about.

The issue with Refi, is that you need good credit to refi if you want a good rate.

For instance (and you can actually go back probably 4 years on this forum to find where I brought this up originally):

When my life lived at home with her parents, her parents had horrible credit. They couldn't manage money for shit, and still can't. My wife had phenomenal credit and was around 20 at the time. Her parents had to redo their deck, and some other shit in the house.... so of course my wife signed up for the home depot card. They instantly dropped like 8K on the card. To make a long story short, they kept paying the minimum, and then spending more..... repeat ad nauseum.

The largest the bill was at was 12k. There was no possible way they could ever pay it off, and I refused to marry her until we figured out a solution. She took a debt refinance loan out at the local credit union to pay off the 12k, which was at like 21% since it was a store card, and a rate of 5-7%. That dropped the monthly payment from around $550ish min (would pay off credit card in something stupid like 25 years) to $225ish with the loan paid off in 5 years, but of course added a few years onto the pay off. Her parents could actually afford to pay that though. That solution worked out in the long run, as the loan is paid off I believe this coming Spring.

Nothing negative went on her credit as we got this figured out before her parents had to start missing payments.


A debt refinance through a bank or credit union is exactly that, there is no fancy language or tricks. If you owe 18k to a creditor, the bank cuts a check for 18k to that creditor.... and you pay the 18k back at the new terms you signed up for. Not the same as the debt consolidation bullshit those independent companies try to push.

Right, a refinance is completely different from what the consolidation companies do. Refinancing is a good tool when you have a large debt, but have a decent credit score to get a lower rate thereby reducing the interest you'll pay over the lifetime of the loan. The consolidation companies are just scams for the most part with low success rates. Ever see those commercials advertising that they can help you with IRS debt? Well many of those companies have people working for them who aren't even authorized to practice before the IRS and aren't attorneys. There is a very specific process to negotiating with the IRS, and you are required to put a down-payment or a deposit. If the company fails to negotiate the compromise you lose your down-payment or deposit, which is typically $20,000 or more if you are really behind on taxes. It's something they tend to never state in clear language or even warn you about.

It's off-topic, but I feel like people need to be aware of these scams.

[Vandalhart]

Aksannyi, I don't know what it's like where you're at, but I would go to a bank or financial institution and talk to a person there about your options.

I'm not shitting on anyone here in terms of advice. My wife and I have investments through an investment firm at no additional cost to us. I have no idea if such a place exists in the states though. I could walk into my bank, or my wife's bank and ask to talk to a person who would give us advice and see about getting something setup to help reduce debt.

If you're comfortable doing that yourself, all the power to you, but I know our investment guy has done right by us and we wouldn't have what we had without his knowledge and expertise. Same with our mortgage and work related retirement funds. Mind you, we are farther ahead than most our age due to an influx of funds because of my wife's inheritance.

[aurik]

No, the broker/agent's charges/commissions/fees can be on the buyer, on the seller, or both. Buying a house is a negotiation process, even sometimes similar to an auction... there is no absolute set way it works and that's the only way.

It varies vastly by the house, situation, seller, competition for it and the methods to which you came upon the house (Craigslist, for sale by owner, a real estate agent, or what). Needless to say though, the better the house the more likely you will not be able to get the best end of the deal.

You act like buying a house in the ideal location is like shopping for a new pair of shoes. People can't just uproot their lives to the ideal housing location, buy a house, leaving their family/career/education behind, and expect to have everything else work itself out. What kind of advice is this?

"Quick - quit your current job, find a place with cheap property taxes and a good deal on a house, purchase a property, and then figure all that other silly income and job stuff later - the house alone will make you rich!"

Seriously.

For the sake of any discussion relevant to this thread, the home purchase will be the same home the people will have to live in. There is no hope of the far off investment property that you might have to visit once a month for rent/upkeep, and even then that's still a little ridiculous.

And guess where all the highest property tax areas are? In the city/suburban areas, AKA where 90% of the jobs are. And a 2 hour commute can easily erase the 'savings' of lower property taxes.

BTW: Taxes and home value/growth are two INVERSELY related factors -- higher taxes are more often to coincide with higher home prices, growth potential, and population (as in most of the biggest cities and their surrounding suburbs). Take a look at these maps and try and see if you can spot the relationship here:
http://money.cnn.com/interactive/rea.../property-tax/
http://www.mapofusa.net/us-population-map.gif
http://www.trulia.com/home_prices/

Again, location is not a simple matter for most people to deal with.

And once more, which is it? Lower property taxes or highest growth potential? You really can't have both in most situations.

Do you realize how passionately you're arguing for such a difficult investment with suggestions of seeking out a specific magical area with low taxes and high home growth returns, on the perfect home with minimal maintenance, an easy sale, etc, and all for what is ultimately minor returns?

At the very, very least please at least tell me you realize how exponentially easier/simpler it is to invest in just about anything else. You literally could have set aside a single day 25 years ago setting yourself up with $10,000 in an index fund, and never have done a single thing to it since then, and have turned that into $115,000 by today. And you could probably set up an account online in under an hour now.

The effort really isn't comparable, nor are the returns... but do you at least agree on the effort part?


EDIT: Arrg, why am I writing so much when it's so futile! I swear I didn't think I wrote more than a few sentences before I hit post.

Surprised you didn't get to mentioning that if the house you get isn't the one you live in, you will generally need to claim cap gains on your taxes as well.

[RKenshin]

Yep, and property taxes are also typically more expensive if you're not actually living in the home.

Varies by state/county of course, but generally a good number of places have a 'homestead discount' on property taxes if its your primary dwelling. Otherwise, in some places you pay practically twice as much.

[barcasmith]

Anyone here day trades? Any tips or strategies that have worked for you? Basically starting to day trade full time within the next 2 weeks. I will be using a Scottrade account to day trade. A few modest trades in the past month have made me about 2300 dollars with 35k investment. I have only really traded apple and BoA stock. Thanks in advance for any info on the subject.







jean grey phoenix