tag:blogger.com,1999:blog-1038822739809431926.post6582584400871157946..comments2023-11-03T03:04:34.375-07:00Comments on SubMedian: Wow that was fast! And an update...Unknownnoreply@blogger.comBlogger13125tag:blogger.com,1999:blog-1038822739809431926.post-74222520498192147322007-12-08T21:56:00.000-08:002007-12-08T21:56:00.000-08:00Hi Blaise,Somehow I missed your comment. Hopefully...Hi Blaise,<BR/>Somehow I missed your comment. Hopefully you will return and see my answer. <BR/>Someone else caught my error in forgetting to add back the interest above 1 million. That has been fixed in the latest iteration.<BR/><BR/>Gain/loss of ownership is calculated by taking the sale price and subtracting how much you owe on it (i.e. loan balance at the close of sale), and how much you spent on it (i.e. total post tax expenses including maintenance, property tax, interest, insurance, closing fees, commissions, etc.). <BR/>If the resulting number is negative, then you lost money, if it's positive, then you made money.Missionitehttps://www.blogger.com/profile/10622554190703184361noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-58130910798077688882007-12-04T22:42:00.000-08:002007-12-04T22:42:00.000-08:00On the spreadsheet with the $1.4 mill house - the ...On the spreadsheet with the $1.4 mill house - the "Total Interest Expense" is $85732.70, not $56,220.09 - you forgot the interest above $1 mill. <BR/><BR/>Also, how do you arrive at the "Gain/loss of ownership"?Anonymoushttps://www.blogger.com/profile/13466547440989730452noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-13565617009623574892007-12-04T22:22:00.000-08:002007-12-04T22:22:00.000-08:00Red,There is absolutely no guarantee that the owne...Red,<BR/><BR/>There is absolutely no guarantee that the owner gets any of the down payment back. In fact it is entirely possible for the owner to have to cut a check AFTER selling the house, in order to pay back the loan. In many cases even modest appreciation will result in losing all of your down payment. <BR/><BR/>The "down payment" on the renter side is not income per se, but the interest you earn on it is. And it must be included in the assets you still own when you rent, which is why it is in the "income" section. <BR/><BR/>BTW the "income" section is in quotes, because it is not technically or strictly income as defined by an accountant, it was just a tag I gave that section to describe anything that contributed positively to a renter's financial status.<BR/><BR/>R.,<BR/>The point of the spreadsheet is to calculate the true cost of ownership over *any* given period of time, not just 30 years. A down payment that is not ameliorated by declining home value or transaction costs shows up in the owner's final gain/loss statement, just as it should.Missionitehttps://www.blogger.com/profile/10622554190703184361noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-550595153842547212007-12-04T16:49:00.000-08:002007-12-04T16:49:00.000-08:00The housemath site comes up with a breakeven point...The housemath site comes up with a breakeven point of $9487.45. That's not too far from my breakeven point of roughly $10k. <BR/>They do look at things a little differently then I do, from what I can tell, as their approach is more generalized, while mine is more specific to SF.<BR/>I'll have to look at their site in more depth when I ahve more time. At the moment I gotta run...Missionitehttps://www.blogger.com/profile/10622554190703184361noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-50289621814722010192007-12-04T15:47:00.000-08:002007-12-04T15:47:00.000-08:00This comment has been removed by the author.luptonixhttps://www.blogger.com/profile/09447848922571835023noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-40707559426013391552007-12-04T15:37:00.000-08:002007-12-04T15:37:00.000-08:00Hiya, you do have a few bugs in the spreadsheet.Se...Hiya, you do have a few bugs in the spreadsheet.<BR/>Seems the main problem is the computation of income on the amounts not spent by the renter.<BR/>The owner loses the money for interest, taxes, insurance, maintenance etc gradually, not at the beginning, and the sales costs - (and actually, most of the maint costs as the place is made ready to sell...) only occur at the end of ownership, when the much poorer home owner becomes a wiser renter.<BR/>Then it looks like the Own vs Rent difference seems to be about twice the right amount; perhaps the $170000 down payment, which the owner gets back (mostly), is being included in the renters income?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-31197887941858558142007-12-04T15:34:00.000-08:002007-12-04T15:34:00.000-08:00Ah I see, you were missing a "www" in front. Not s...Ah I see, you were missing a "www" in front. Not sure why my browser was tripping on that (new computer with the new eexplorer, so who knows, haven't downloaded firefox yet...)<BR/>Let me investigate...Missionitehttps://www.blogger.com/profile/10622554190703184361noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-2293480235275908752007-12-04T15:25:00.000-08:002007-12-04T15:25:00.000-08:00This comment has been removed by the author.luptonixhttps://www.blogger.com/profile/09447848922571835023noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-27299235989509480382007-12-04T15:01:00.000-08:002007-12-04T15:01:00.000-08:00R,Nice catch on the equivalent rent bug. I didn't ...R,<BR/>Nice catch on the equivalent rent bug. I didn't add the rental appreciation until later, so I forgot that the monthly contribution was still linking to the equivalent rent field. This is the kind of diligent proof reading I need, so thank you for that!<BR/><BR/>Your point on disclosing assumptions is also well taken. I have added a disclosure on the bottom of the spreadsheet that addresses the assumptions I made regarding rental investment income. I am open to suggestions on this front if somebody has a better way to handle this.<BR/><BR/>I don't see anything when I visit the site you listed so I can't speak to their methodology. But I can tell you that the spreadsheet I made takes the rather optimistic view that 100% of the difference between renting and owning will be invested on an ongoing basis, and generate at least a 5% return. I start with this assumption because that is the true apples to apples comparision, but I do encourage people to tap this number down to a more realistic amount based on their personality and spending habits.<BR/><BR/>I doubt the website you linked to does this, and I suspect that may play a big part in the difference.Missionitehttps://www.blogger.com/profile/10622554190703184361noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-91021132623743771602007-12-04T14:13:00.000-08:002007-12-04T14:13:00.000-08:00This comment has been removed by the author.luptonixhttps://www.blogger.com/profile/09447848922571835023noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-53375486232735179692007-12-04T14:07:00.000-08:002007-12-04T14:07:00.000-08:00This comment has been removed by the author.luptonixhttps://www.blogger.com/profile/09447848922571835023noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-49500023795848843522007-11-30T11:54:00.000-08:002007-11-30T11:54:00.000-08:00Hi Sophie, I appreciate your comment, and I unders...Hi Sophie, <BR/>I appreciate your comment, and I understand were you are coming from.<BR/>However, as someone who has personally experienced and lived in just about every class including homeless, poor, middle class, upper middle class, and even occasionally hobnobbing and doing busines with with some of the richest (and most famous) people in America, I'm also familiar with how the scales of the current financial system are tilted in favor of those with wealth. Even some of the wealthiest people in the US (such as <A HREF="http://www.nytimes.com/2007/11/15/business/15buffett.html" REL="nofollow">Warren Buffet</A>) have concerns about our economic system turning into a plutocracy, so I don't think it's fair to say, without knowing me, that I came across this position out of bitterness or jealousy (emotions which I am admittedly not immune to, but which I don't think are a factor in this particular instance). <BR/><BR/>I can't help but have a point of view, so I can't promise you that I won't share this point of view from time to time (that's what a blog is for, right?). On the other hand, I can assure you that I do not intend to use this blog as a soapbox for classist screeds, and I think my opinions are more likely to be in the form of the very occasional witty (I hope) sarcastic (likely) aside, and not the focus or main thrust of my posts here. <BR/>In short, I am more interested in building a blog based on facts, then on opinions. And it sounds like that is what you are looking for, so keep checking back and we'll see if you continue to find it interesting.Missionitehttps://www.blogger.com/profile/10622554190703184361noreply@blogger.comtag:blogger.com,1999:blog-1038822739809431926.post-22035053422598477592007-11-29T22:13:00.000-08:002007-11-29T22:13:00.000-08:00tax brackets. yes and no. yes, you MAY qualify to ...tax brackets. yes and no. yes, you MAY qualify to use pre-tax dollars to pay you house.<BR/>Like you MAY pay $12.000 a month in pre-tax rater than taxed dollars.<BR/>However, you still pay a "fricking nice ass house" property tax.. which would be $2000/month in that case. Only to have the "fricking nice ass house" property tax money spent on public schools - while you still cough 25000 in private Kindergarden for your kid, spent on free healthcare for all - while you spend thousands in not-covered botox etc.<BR/>Seriously, dont go that way. There are some ultra mega rich people who couldnt care less about the cost of anything, and then there are some "they seem rich but looking at their budget, I'm not sure I'd want to be in their shoes".<BR/>Keep your focus on the submedian houses, and I'll keep reading you with a lot of interest.<BR/>This is a VERY WELCOMED blog for normal people, talking about normal houses. Leave the bitterness/jalousy/gossip etc for others.Anonymousnoreply@blogger.com