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Losing $1 Million In Real Estate Never Felt Better

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One of my favorite things to do during bear markets is accept losses. The more we accept reality, the more we accept reality. The more we accept reality, move on with your life.

I recently lost about $1 million in real estate. It took a huge hit on my net worth. Years of profits, savings and hard work gone into thin air! How sad.

Thankfully fake retirees Looking at cash flow, a $1 million property loss didn’t hurt my rental income. If you can keep the cash flowing for the next 18-24 months, all will be well.

Let me share a situation on how losing big money in real estate can actually be a plus.

Losing $1 million strategically in real estate

My goal as a real estate investor is to buy properties below market value. improve properties, rent properties at market prices.always focused generate more passive income Be free.

I believe in the long-term value of real estate, so I intend to hold each property for as long as possible. Additionally, paying taxes and fees at the point of sale is economically wasteful. In the long run, it is better to ride the wave of inflation than to be exposed to it.

Purchased in 2019 fixer upper $1.75 million.The property was listed at $1.9 million with the intention of creating a bidding war to get a price of over $2 million. good neighbor negotiationsI was able to purchase the property at a discount.

Only a property estimate before a big loss

Below is a Redfin snapshot showing where I bought ($ symbols) and where Redfin felt the market value for 2019. .

However, one month after purchasing in 2019, Redfin’s quote line was actually closer to $2 million instead of $2.2 million (see chart below).

In other words, Redfin (and Zillow) often practice revisionist history. their estimates cannot be fully relied uponAlso, online real estate quotes cannot be fully trusted, so use them to your advantage when negotiating or trying to save on taxes.

After adding about 300 square feet of living space, home remodelWhen Add Deck With an all-in of about $200,000, the home is currently worth about $2.85 million. At the height of the real estate market craze, this home could have fetched him over $3 million.

Area homes with panoramic ocean views and new finishes are priced between $1,000 and $1,300 per square foot.And this home is over 2,800 square feet, with ocean views on every level. can be viewed.

embrace the real estate downturn

With mortgage rates dramatically rising and a bear market in stocks, it’s inevitable real estate prices fallCities like Austin, which saw the most dramatic price increases during the pandemic, could also see the biggest drops.It is here Cities most at risk of price declines.

Unfortunately for millions of American homeowners, property appraisers No Motivated to lower the valuation to lower property taxes.have a desire to collect more Property taxes in difficult times. Property taxes become even more important as other sources of tax revenue, such as payroll taxes, decline.

property assessor automatically Raise home valuations in a bull market. But during a bear market, they limp and chop it up, if at all. You may have to pay a fee if you attempt to dispute the valuation of your property. Next, you must write a long report containing comps to support your claim.

Even with proper comps and logical arguments, the examiner’s office often Deny your appeal by disqualifying your compThey then use their own unrelated constructs to support their position. They are the government, so once they make a decision there is nothing you can do. As a result, most homeowners aren’t even willing to fight for their rights.

I have fought many times with San Francisco real estate appraisers and have been bombarded with emails showing how unfair and illogical they are. Don’t be naive by thinking that the appraiser is on the homeowner’s side. is not.

Governments act according to a different set of rules and in the end they always win. Accept losing to the government, but try to lose less.

Succeeded in devaluing assets online

I’m happy after 2 months lower my property stats onlineRedfin finally lowered the value of my property!

Notice that the purchase price ($) is now ~$150,000. Moreover Real estate value estimated by Redfin in 2019. The unadjusted purchase price ($) was approximately $450,000 below Redfin’s estimate.

More importantly, instead of a quote of $2,600,000 (not including expansion and retrofit values), Redfin’s latest quote is just $1,896,825. Yes, it’s the exact same property.

Redfin Quote - Losing $1 Million in Real Estate Never Feels Better

The newly lowered Redfin property valuation makes it harder for San Francisco real estate appraisers to justify increasing the property’s value during a recession. It’s sad that they don’t automatically do the right thing. But it’s local government for you.

From 2007 to 2010, San Francisco real estate appraisers continued to try to raise my property’s valuation each year, even as real estate prices declined.As a result, I had to fight the assessment office and actually 3 years in a row win.

But most homeowners across the country continued to pay higher and higher property taxes as property prices fell by 10% to 35%. .

Real estate appraisers cannot come to your home and inspect it, so they have to rely heavily on online data. In addition to using her Redfin and Zillow estimates when valuing a property, the appraiser uses Google Maps to see what the front and top of the home will look like.

Property value as part of net worth

Personally, you can value your property for whatever value you want. If you’re feeling down, you can increase the value of your property to match the best comps in your neighborhood. If you feel good and want a financial challenge, we recommend that you underestimate the value of your property.

Personally, I like to value my property at cost and conversion costs. By keeping property values ​​constant, you create an upward buffer over time.Plus, it curbs my net worth growth during bull markets which helps reduce delusional thinking.

It’s dangerous to start confusing your brain with a bull market.If so, it’s easy to invest and blow yourself up Risky and Inappropriate MethodsThink of all the money lost NFTs, memetic stocks, and other highly speculative investments since the pandemic began. Investing in FOMO is very difficult to compete in a bull market.

keep property values ​​constant my net worth tracker It also dampens volatility on the downside. It also provides a psychological buffer when a recession finally hits after years of locking in real estate values. Having less to lose visibly also protects your mood.

There are three situations in which you need to know the true market value of a property:

  • when thinking of selling
  • for inheritance tax before death
  • If you are trying to calculate a cap rate (net rental yield) to better optimize your overall investment return

Otherwise, the value of your property doesn’t matter much. Most importantly, cash flow it generatesIf you’re planning to buy and keep it forever, as most people want to do, your main goal should be to enjoy your home or optimize your rental income.

Being visibly poorer is the way to go

Ideally, every physical property owner wants to generate the maximum amount of cash flow while making their property worth as little as possible to the public.

If an appraisal firm values ​​your property at just $1,000, you’ll take it! That means property taxes will only cost you $6 to $30 a year, depending on your location.

Unfortunately, the mission of property appraisers is to collect as much tax as possible from homeowners. Real estate appraisers don’t do a good job during a recession, so you need to take the initiative to lower your real estate stats online.

Not only would doing so increase the odds of not paying more property taxes in a bear market, lower public wealth profileThe fewer assets you have, the fewer people will try to ask you for money or anything else. This is especially important if you have young children.

Finally, the lower your property value, the less likely you are to face jealous people. Some people can’t help but hate richer people.So your goal should be make yourself look poorer than you really areIdeally you come across as middle class enough status Make sure you and your child are not left out of opportunities.

A battle over property values ​​ensues. Take the initiative now by lowering your public funds! Losing a lot of money in real estate isn’t all that bad. In fact, it’s great!

Reader questions and action items

Have you successfully downgraded your real estate statistics online to lower your estimates? Do people perceive you as class or poor?

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