The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: iris lily on November 11, 2013, 10:33:28 PM
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Please let me brag about this, the one single big real estate appreciation I've ever had and ever will have:
My $4,000 lot, next to my house, could now sell for $95,000. We bought the lot 25 years ago. Now vacant land across the street is selling at high prices new construction. Two verified sales took place, one for $89,000 and one for $95,000.
No piece of real estate I've ever had has come close to that rate of appreciation. In fact, I lose money on real estate. My own house has --maybe--doubled in that time, not very impressive.
Now I just have to sell it to realize the profit, haha, But I won't because that's where my flower garden is. But it's fund to think about, thanks for your indulgence.
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I think it is actually closer to 13% on an annual basis. Still, well done!! Don't you wish you bought a dozen?
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I remember a bunch of people that were millionaires that owned Enron stock. :)
Remember it is a paper value until you actually sell it. Also don't forget to deduct your property taxes, maintenance, etc :)
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I think it is actually closer to 13% on an annual basis. Still, well done!! Don't you wish you bought a dozen?
13.5% actully, which is not bad.....but what this is gross, you would need to deduct for other expenses such as property taxes and insurance but I bet it will sill still be pretty good - espececially when the S&P500 returned about 8% during that time but that excludes dividends.
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Yeah I 2nd the paper value claim.
Don't forget to deduct expenses accrued and compensate for inflation.
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I'm not a fan of empty lots (or sections, as we call them in NZ) as they don't produce an income and still cost you money each year - if you can realise that increase, then woohoo....take the money and run :-)
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I will share a woo-hoo with you, since others are not expressing the enthusiasm I'm sure you expected.
Woo Hoo!
And how nice you have a double lot now to have a nice garden and space.
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My 2150% profit on real estate
Please let me brag about this, the one single big real estate appreciation I've ever had and ever will have:
My $4,000 lot, next to my house, could now sell for $95,000.
Not having a neighbor on that side: priceless!
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Well, and be sure also to include all of the profits in joy of gardening and flowers you didn't need to buy in your calculations ;)
Congrats!!
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Cool, but I'd reconsider selling. If that lot was available to you to buy now, would you be willing to pay $95k to prevent anyone from building next to you and for a flower garden?
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Cool, but I'd reconsider selling. If that lot was available to you to buy now, would you be willing to pay $95k to prevent anyone from building next to you and for a flower garden?
Oh, I'm not gonna sell. No way. Where would the iris and the lilies go to live? They are my babies, how could I rip their home out from under them? haha.
By the time we go to sell this lot and our house, we will be old. The builder who is building in this neighborhood will be gone and there will be no real market for it. My fab investment will be back down with all of my other real estate purchases--barely appreciated.
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I think it is actually closer to 13% on an annual basis. Still, well done!! Don't you wish you bought a dozen?
Please show me this math, I read posts on this board but don't know how to calculate this to come up with 13 percent..
There was only 1 lot, I could not have purchased more of them :(
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I think it is actually closer to 13% on an annual basis. Still, well done!! Don't you wish you bought a dozen?
Please show me this math, I read posts on this board but don't know how to calculate this to come up with 13 percent..
There was only 1 lot, I could not have purchased more of them :(
Basically it's from the compound interest. The original 4k purchase price at 13.5% year 1 leads to a worth of $4540 in year 2. That compounded leads to a higher value year 3, and so on and so forth until you get to year 25 and it's worth 95k.
So that's the reasoning behind it, the math looks like this. 4000 * (1.135)^25 ~ 95k
(25 is the number of years, 1.135 is 1, the principal, plus 0.135, the interest rate of 13.5%).
To solve for that 13.5%, you do 4000 * (1+x)^25 = 95000
Solve for x and you get an interest rate of 13.508%.
Or use a time value of money calculator like this: http://www.zenwealth.com/BusinessFinanceOnline/TVM/TVMCalculator.html
Present value -4000 (you paid out 4000 when you bought it), 0 payments, 25 years, 95000 future value, click to solve for the rate and it gives you 13.51% (same as above, but rounded to the nearest 100th).
Hope that made sense, I tried to keep it simple. :)
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The 0.6 acre lot became available after my neighbour made a lot line adjustment.. I really wanted to buy it to avoid having this house crammed in next to my fence line, together with screaming kids etc.
But they wanted $127k... ouch, so I turned it down. Now they will commence construction next Spring.
Yes I'm a little sick but it was financially the right thing to NOT do!
I told my Wife if we can't stand it we can always move, or rent out our place etc.
Frank
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I think it is actually closer to 13% on an annual basis. Still, well done!! Don't you wish you bought a dozen?
Please show me this math, I read posts on this board but don't know how to calculate this to come up with 13 percent..
There was only 1 lot, I could not have purchased more of them :(
Thank you for the time value of money chart. I will be bookmarking that.
Basically it's from the compound interest. The original 4k purchase price at 13.5% year 1 leads to a worth of $4540 in year 2. That compounded leads to a higher value year 3, and so on and so forth until you get to year 25 and it's worth 95k.
So that's the reasoning behind it, the math looks like this. 4000 * (1.135)^25 ~ 95k
(25 is the number of years, 1.135 is 1, the principal, plus 0.135, the interest rate of 13.5%).
To solve for that 13.5%, you do 4000 * (1+x)^25 = 95000
Solve for x and you get an interest rate of 13.508%.
Or use a time value of money calculator like this: http://www.zenwealth.com/BusinessFinanceOnline/TVM/TVMCalculator.html
Present value -4000 (you paid out 4000 when you bought it), 0 payments, 25 years, 95000 future value, click to solve for the rate and it gives you 13.51% (same as above, but rounded to the nearest 100th).
Hope that made sense, I tried to keep it simple. :)
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Good job! And valuing your flower garden over $95k is an indication of how free you are!