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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (7833)	8/28/2001 9:05:19 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 74559

hi Jay, At 3% downpayment, the house should simply become a trading play, after accounting for the 5% two-way commission. J6P typically are not great at daytrading the market, and cannot be expected to do well by trading the house the sad thing is, the commission is 6% (no discount for J6P!), effectively 7% when you add in the title co and various and sundry expenses, so J6P is underwater from day one. he must have about 250% appreciation in his "equity" in order to break even. now isn't that the kind of bet i like -ggg-. actually, J6P is convinced he's a buy-and-holder, and happened to buy at the peak after torturing himself reading the Sunday housing supplement the past three years on his apartment stoop. those house prices just rose 25% a year like clockwork, and finally there was nothing to be done except hit up Ma and Pa 6P for the down payment. that, indeed, may point to a silver lining: J6P may not be as effectively broke as he looks if he's got "invisible mortgage insurance" in Ma and Pa 6P (of course, he's still got to pay $100/month for the visible mortgage insurance considering he only put down 3%--there goes a nice chunk of the vaunted homeowner's tax break!).