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To invest in property, or not?



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amother


 

Post Tue, Dec 25 2007, 5:32 am
Me and dh live in a small out of town community, where dh is a Rav. The community pay our salary, give us a car, and a house, plus other minor benefits.

We have been living here for a number of years, and have managed to save up some money. Not much, but some.

Now, we both dislike the insecurity of not owning our house - basically it is tied to our job (although I don't think we will get fired, but who knows, we may have to leave for other reasons) There is no way we could afford to buy a house here, at least not in the part of town where we have to live. Even if we said, give us the money instead of a house, we still would be unable to buy the size of house we need in the neigbourhood we need to live. The house we have now is spacious, and beautiful, and very well located. Since we plan to live here long term, we were wondering what other rabbis do in this sort of situation? its all very well if we wanted to live here for 5 or 6 years and move on, but we don't.

Although we have managed to save money, as our kids get older, and our family increases, this will get more difficult.

We were thinking of taking the money we have saved, and using it to buy an apartment or house, either in our city, or perhaps another city where property is cheaper and rental returns are higher. We would rent out this property, and perhaps in a few years we could buy another one.

Is this the best use of our money? Or is better to put it in stocks or whatever.

(the other question is, is now a good time to buy? Property seems to have peaked, and even going down, - but I don't want to give away too much personal info)
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tzipp




 
 
    
 

Post Tue, Dec 25 2007, 5:51 am
Now? shock
The real estate market is having so many problems, that would not be the place unless you are the gambling type. There are other types of investments- start reading and speak to an investment counselor, and other people who you think know about the current market. I don't think jumping on something that seems hot now is your best bet, do some careful research and go from there.

Maybe there are some financial professionals onthis site who have advice?
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chocolate moose




 
 
    
 

Post Tue, Dec 25 2007, 5:52 am
I sell apts as part of my job. It's as busy as ever.
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catonmylap




 
 
    
 

Post Tue, Dec 25 2007, 5:53 am
I would invest the money in some other way, not in real estate. There must be someone in the community who is a financial advisor or something like that who can give you some good advice. I wouldn't put it in real estate. It's a real pain to deal with renters etc, and I don't think it is a good time to buy right now.

I think the community was very smart to buy a house for the Rabbi. It ensures for them that they will be able to get a new Rabbi later on even if the housing in the area become unfordable. I can understand how you feel uncomfortable about it if you know you want to stay in that community long-term.

We were Rabbi/Rebbetzin in a very small out of town community and had to buy our own home since the community didn't have a home for the Rabbi. Initially we found that kind of annoying since so many other Rabbis got deals that included housing. We made a good amount of money on the house when we sold, so we came out more than okay from the whole thing (actually I think the bulk of money we came away with was from the house). But if the housing market had swung the other way, we would not have done well.
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amother


 

Post Tue, Dec 25 2007, 7:32 am
[quote="catonmylap"]I would invest the money in some other way, not in real estate.
Quote:


I was thinking, since property seems so uncertain right now, that we should wait a year or so anyway. But housing just seems more secure to me. You can't lose all the money - there is always something there.

Quote:
I think the community was very smart to buy a house for the Rabbi. It ensures for them that they will be able to get a new Rabbi later on even if the housing in the area become unfordable. I can understand how you feel uncomfortable about it if you know you want to stay in that community long-term.


it seems to be pretty much standard practice. Almost anyone else I know who is a rabbi also has a house provided. I am very surprised to hear that you didn't have one - especially if you were not planning to stay long term.
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amother


 

Post Tue, Dec 25 2007, 7:51 am
My father is the rav of a shul that had a house, but it was always really important to my parents to own their own home. They didn't want to feel beholden to the shul more than necessary. Independece is very important to them.

They looked around for a house in the neighborhood and ended up buying the shul's house from the shul. It was the best in terms of location and size, and they gave my parents a good price.
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amother


 

Post Tue, Dec 25 2007, 8:06 am
My DH is the Rav of a shul inthe tri state area and we were not given a house....we were told we could either rent near the shul or try to buy. After years of renting we finally took the plunge and bought a house (of course as soon as we bought the housing market went way down...but we're here now, and don't forsee moving out of this community before the housing market comes up anyway).

It feels good to us to knwo that we havea some equity...if/wehn we move out of this community we will have something to take with us to set ourselves up in the next place we go. I think you are smart to try to look for some way to build up some equity.

Hatzlacha!
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catonmylap




 
 
    
 

Post Tue, Dec 25 2007, 9:13 am
They wanted us to stay forever.

The houses in that area were(/are) relatively cheap. Our 3 bedroom, 2 story house (with a separate 1 bd apartment in the back) was approximately 110k in 2003.
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amother


 

Post Tue, Dec 25 2007, 10:43 am
Quote:
My father is the rav of a shul that had a house, but it was always really important to my parents to own their own home. They didn't want to feel beholden to the shul more than necessary. Independece is very important to them.


That is also important to us. However, the city we live in is pretty expensive - the house we are in now would cost probably more than $1000,000. (the house includes dh's office) Even if we got something smaller and less well located, it would still be at least $600,000 or more probably.

If we could get a house for what you paid, Catonmylap, you bet we would.

And even if the shul would give us a good price on our house - how much of a good price could they give us?
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granolamom




 
 
    
 

Post Tue, Dec 25 2007, 1:21 pm
[quote="amother"][quote="catonmylap"]I would invest the money in some other way, not in real estate.
Quote:


I was thinking, since property seems so uncertain right now, that we should wait a year or so anyway. But housing just seems more secure to me. You can't lose all the money - there is always something there.

this is not always the case. sometimes you DO lose everything in real estate. the house might need a new: roof, boiler, etc
the tenants might stop paying rent and destroy the place, the market prices could drop out from under you.
there are tax consequences to owning a rental property too, make sure to look into that as well.

that said, I'd rather invest in real estate than stocks. but I'd keep my money close by, not in another city unless you know the city well (what kind of people tend to live there and how the local government supports landlords vs tenants) and are there frequently. if a real estate investment is to go well, you need to BE there alot.
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ArthurDent




 
 
    
 

Post Thu, Dec 27 2007, 9:32 am
Investment in general is suffering downturns right now. Unless you're an excellent stock predictor or have a wonderful financial advisor, you're going to take a beating in the stock market too. (We've lost maybe $10K this year on the principal alone.) When the economy is in the dumps, you want to make as safe investments as possible. Real estate has been classically one of the safest investments out there next to government bonds. But you have to be careful of the real estate bubble and it really depends these days on where you're buying. You should studying up and speak to financial advisors locally. It's such a geographic dependent question.
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