ALL CASH OFFERS IN IRVINE

[quote author="hedgehog" date=1248353120]



Actually, here's one, based on a couple I know. They bought a house recently with a huge down payment.

One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.

I believe the limit is currently 12K per year. Do that for 20 years and you can easily leave your child a 300-400K down payment.

Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K...

So I can see how this would be possible.

But just because it's possible it doesn't mean that it's likely or common.</blockquote>


Actually, each parent can leave 12K to a child and 12K to the spouse, so that's 48K a year at which point the money adds up quickly. I have acquaintances who bought a house this way (not $800K all cash), but got a sizable down payment after being married for three years.
 
[quote author="ABC123" date=1248382342][quote author="hedgehog" date=1248353120]



Actually, here's one, based on a couple I know. They bought a house recently with a huge down payment.

One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.

I believe the limit is currently 12K per year. Do that for 20 years and you can easily leave your child a 300-400K down payment.

Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K...

So I can see how this would be possible.

But just because it's possible it doesn't mean that it's likely or common.</blockquote>


Actually, each parent can leave 12K to a child and 12K to the spouse, so that's 48K a year at which point the money adds up quickly. I have acquaintances who bought a house this way (not $800K all cash), but got a sizable down payment after being married for three years.</blockquote>


I think there is also a lifetime exemption of like $1mil which you can give tax free.



Or, you just have your parents live with you.



Delroy
 
[quote author="C Delroy Spuckler" date=1248382836][quote author="ABC123" date=1248382342][quote author="hedgehog" date=1248353120]



Actually, here's one, based on a couple I know. They bought a house recently with a huge down payment.

One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.

I believe the limit is currently 12K per year. Do that for 20 years and you can easily leave your child a 300-400K down payment.

Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K...

So I can see how this would be possible.

But just because it's possible it doesn't mean that it's likely or common.</blockquote>


Actually, each parent can leave 12K to a child and 12K to the spouse, so that's 48K a year at which point the money adds up quickly. I have acquaintances who bought a house this way (not $800K all cash), but got a sizable down payment after being married for three years.</blockquote>


I think there is also a lifetime exemption of like $1mil which you can give tax free.



Or, you just have your parents live with you.



Delroy</blockquote>


Yup, it's a million for life, beyond that 12k a year. As a practical manner, few people will even hit the million dollar mark.
 
[quote author="hedgehog" date=1248353120][quote author="Mcdonna1980" date=1248348634][quote author="PANDA" date=1248348330]Hahaha, fooled all you guys... I am 2ugly2sell.... just kidding...



Sometimes i wonder if these Cash Rich Asian buyers are so smart... I mean why in the world would you want to put down $650,000 to $800,000 when it is so cheap to borrow money at 5.375%? I would only put that kind of money down if A) mortgages rates are at 12% B) unemployment reaches 15-20%., and C) when it feels like the world is coming to an end.</blockquote>


To avoid getting caught by the IRS. Looks pretty fishy if you are deducting a heck of a lot in interest and you only claim 80k AGI on your 1040.



on side note, THE USE OF ALL CAPS is very telling</blockquote>


I have to say that I don't really buy this argument.

It makes sense to a point, I'm sure that there's some undeclared inome.

But, really, if you've been claiming less than 80k AGI for the last 10-20 years, and then all of a sudden you're paying property taxes on a 800K property and no mortgage deduction, do you think the IRS won't notice?

The IRS is not that dumb. It's trivial to write the piece of code that will flags suspicious tax payers that have lots of property and no income.



I don't have an alternate theory to offer, but this argument is not that convincing.



Actually, here's one, based on a couple I know. They bought a house recently with a huge down payment.

One of them is asian, and the parents had been contributing the maximum amount that is tax-free each year to the trust fund.

I believe the limit is currently 12K per year. Do that for 20 years and you can easily leave your child a 300-400K down payment.

Now, I suppose that if you have two sets of well-to-do Asian parents, you can have 600-800K...

So I can see how this would be possible.

But just because it's possible it doesn't mean that it's likely or common.</blockquote>


You bring up a good point, how likely are they to get caught? I don't really know. But judging by the low number of judgements past for this the IRS either has caught people doing this and done nothing about it or they don't have the capability to cross reference all the different organizations that are involved in the tax recording process.



Given how many different organizations are involved in tax recording it's likely that the IRS relys mostly on the filing of personal income taxes to find people to audit(for the vast public.richer people are probably watched more closely). There are like thousands of different brokerage houses, banks, county assessor offices, etc and they all make mistakes in their records and have to issues corrected statements, etc. I'm sure it a big mess.



The people that are trying to evade taxes would not try to deduct the property taxes either. Who knows if they will face punishment for this. But my answer to Panda wasn't about this. I think it is a real likelihood that people would not to take out a mortgage because they aren't going to deduct it on their mortgage and they think they can fool the IRS that way.
 
I doubt that anyone who is smart enough to have accumulated enough cash to pay cash for real estate is stupid enough to use cash to purchase a home in order to try to evade taxes. All merchants, banks, etc. are legally required to report all cash transactions of $10,000 or more to the IRS. That is how Spitzer got busted and his transactions were all under $10,000. The banks also report suspicious amounts of cash withdrawn or deposited.









Purchasing real estate with cash is kinda like blaring a horn the IRS's ear and yelling, "Hey, come look at my cash transactions!"
 
[quote author="graphrix" date=1248364307][quote author="irvine_home_owner" date=1248354875][quote author="graphrix" date=1248354461]If you go to the <a href="http://irvinerealtorsite.com/">IrvineRealtorSite</a>, then you can go through the data of past sales, and see that on a percentage basis that cash buyers are not much higher than previous months. Just because you are noticing cash buyers, doesn't mean they haven't always been there. They were there in 06 just as they are in 09. If you weren't actively looking in 06 for a house as you are now, then you wouldn't know or hear about cash buyers, would you?</blockquote>
Are you saying the FCBs have been there since the beginning of time?



Awesome.</blockquote>


The FCBs are Irvine, they were here in the 80s and 90s. I know you weren't in the area back then, but I was. Some of the comments I have in my head about Irvine from back then can't be repeated, since they are not PC today, nor do I think they deserve to be repeated. But, lets put it this way, the demographic has always been less Caucasian than some cities of OC.</blockquote>
Hehe... I need to add [sarcasm] tags to my posts... c'mon... you should know me by now.



I've actually been in Irvine since the mid 80s... 70s if you count the visits to Lion Country Safari.



Just for the record... are you acknowledging the existence of FCBs? Heh.
 
I like to agree with graph, IR2?s average of down payments last year was around 30%; I?m not sure where it is not this year, but I like to guess that it is down a bit. My guess is that large sums of money always attract a lot of attention. We never remember those transactions that have very little down. That is not to say that there are no 100% cash buyers out there; I know there is and I personally know quite a few of them.



Most cash Chinese buyers share a few perfect combinations/factors:



1) 1st generation parents tend to own small businesses that might deal in large sums of cash, thus it is easier to evade the IRS



2) 2nd generation kids have comfy corporate gigs that afford them large monthly payments



3) The Chinese culture centers on the kids; you have to give your kids everything they want, when they want them. When the 2nd gen have kids, the 1st gen grand parents now have to give more to the kids as well as to the grand-kids



4) Chinese don?t like debt, and they love to save, but do not necessary invest well. They are risk adverse, and love to dump huge amounts of cash in sure things like Irvine RE



5) They are pretty much live a very frugal lifestyle, but have a lot of cash in the bank.. so the next fobbish, homeless looking Chinese that comes out of Sam Woos wearing 80s sandals could very well have more than $100k in the bank?
 
So are all cash buyers criminals, or just the Asian ones?



Is it inconceivable that large down payments could be funded by legitimate after-tax savings?



This thread reminds me of the many strange theories about Orientals I heard from my parents white friends when growing up as a kid.
 
I've heard of women who after divorcing and receiving a large cash settlement buy their next house with all cash because they didn't want the hassle of a mortgage. Since they didn't really have much income, they didn't need any kind of tax deduction that a mortgage provides.
 
[quote author="ABC123" date=1248393268]I've heard of women who after divorcing and receiving a large cash settlement buy their next house with all cash because they didn't want the hassle of a mortgage. Since they didn't really have much income, they didn't need any kind of tax deduction that a mortgage provides.</blockquote>


I personally know of a widow who used life insurance proceeds to purchase a home in cash after her husband passed away at a young age from illness. With all the problems of coping with her loss as well as suddenly becoming a single mother, she didn't want to deal with mortgage payments.
 
The Chinese merchants who have cash by cheating on their taxes often give or lend money to children or relatives to purchase a home. The title will not be in their name but the merchants are the real silent owners. If the house is sold then the silent owners get their money back plus profit.



Jeffrey Business Park is becoming the center of Academic enrichment for Chinese children. Chinese Culture Center/school is also near by. Chinese parents have structured home purchases around the children's academic years in specific schools.



This is a true case: Parents bought the cheapest home in West Irvine for the children to attend Pioneer Middle School. When the children are finishing the 8th grade they will move to Fullerton so the kids can attend Troy.



New homes in Woodbury around the the Academic Center are well sought after by Chinese outsiders who are desperate in getting their children into a good school. Home shoppers living in Chinese communities in San Gabriel Valley and Rowland Heights are aware of Woodbury and its proximity to Academic Center. Many more will be coming to Irvine to buy homes.
 
[quote author="High Gravity" date=1248392276]So are all cash buyers criminals, or just the Asian ones?



Is it inconceivable that large down payments could be funded by legitimate after-tax savings?



This thread reminds me of the many strange theories about Orientals I heard from my parents white friends when growing up as a kid.</blockquote>


A few of my clients are all cash buyers or all equity owners after having paid off their mortgage, and I know three others who bought with all cash. None are criminals. Almost all folks who can save up enough to buy with all cash are too smart to be involved in criminal activities.
 
Agree with the original post. It is progressively becoming difficult for me to believe that Irvine

Prices are going to go any lower. Although I would like it to as I've been

waiting for ever now.



Recently I've see many properties New constructions in Portola springs and

many older homes. All 1800 sq ft and up in the 630 to 700 K range. Most of these

homes I believe were/are WTF prices. But I was planning to buy anyway since I've

waited too long and the time our family would like to have a home is running by.



Examples of these homes



New homes: Paloma plan 2 & Plan 3. Manzanita plan 1.



old homes: 10 wakefield, 12 phillipsburg, 67 turnbury ln, 104 winslow ln, 57 essex ln, 63 sconset ln etc.



Before even i think of what percentage down or how much to bid most of these homes just go into

back ups and I'm told pretty much the offer was withing 2-3 % +/- of the asking.



The observation I had was new homes a slighly lesser priced by 40-50K but have high mello roos+HOA

The older homes are higher priced but have lesser fees by 400 dollars to 600 dollars a month.



Also if you assume 30-40% down and moderate 2% loss on the down payment the rent Vs own

is pretty close. To me it means Rents are just too high as well similar to home prices.





I'am not sure if I'm just wishing for low prices that may never happen?
 
[quote author="bkshopr" date=1248396564]Jeffrey Business Park is becoming the center of Academic enrichment for Chinese children. Chinese Culture Center/school is also near by. Chinese parents have structured home purchases around the children's academic years in specific schools.

</blockquote>


Up until a few years ago, the Irvine Chinese center rented classroom space at University High School until IUSD raised the rent exponentially so they bought their own building at Jeffrey Business Park. Now all those Turtle Rock Chinese parents have to drive all the way to the Northern Sphere for Chinese school.
 
This thread is hilarious. News flash: cash comes from saving. There's no mystical magical mystery to it. Americans can't understand because they are $13 trillion in debt whereas the Chinese are $2 trillion in cash. They can buy up "all the land and property in New York City, Los Angeles and Boston" combined.



<a href="http://blogs.wsj.com/economics/2009/07/22/what-can-china-get-for-its-2-trillion/">http://blogs.wsj.com/economics/2009/07/22/what-can-china-get-for-its-2-trillion/</a>
 
I completely agree with witin4ever.

I feel and experience exactly same about housing in Irvine.



-Nomogy





Agree with the original post. It is progressively becoming difficult for me to believe that Irvine

Prices are going to go any lower. Although I would like it to as I?ve been

waiting for ever now.



Recently I?ve see many properties New constructions in Portola springs and

many older homes. All 1800 sq ft and up in the 630 to 700 K range. Most of these

homes I believe were/are WTF prices. But I was planning to buy anyway since I?ve

waited too long and the time our family would like to have a home is running by.



Examples of these homes



New homes: Paloma plan 2 & Plan 3. Manzanita plan 1.



old homes: 10 wakefield, 12 phillipsburg, 67 turnbury ln, 104 winslow ln, 57 essex ln, 63 sconset ln etc.



Before even i think of what percentage down or how much to bid most of these homes just go into

back ups and I?m told pretty much the offer was withing 2-3 % +/- of the asking.



The observation I had was new homes a slighly lesser priced by 40-50K but have high mello roos+HOA

The older homes are higher priced but have lesser fees by 400 dollars to 600 dollars a month.



Also if you assume 30-40% down and moderate 2% loss on the down payment the rent Vs own

is pretty close. To me it means Rents are just too high as well similar to home prices.





I?am not sure if I?m just wishing for low prices that may never happen?
 
[quote author="High Gravity" date=1248399205][quote author="bkshopr" date=1248396564]Jeffrey Business Park is becoming the center of Academic enrichment for Chinese children. Chinese Culture Center/school is also near by. Chinese parents have structured home purchases around the children's academic years in specific schools.

</blockquote>


Up until a few years ago, the Irvine Chinese center rented classroom space at University High School until IUSD raised the rent exponentially so they bought their own building at Jeffrey Business Park. Now all those Turtle Rock Chinese parents have to drive all the way to the Northern Sphere for Chinese school.</blockquote>


The home demands have also shifted away from TRock to Northern Sphere as well for the Chinese buyers.
 
Why is this all Chinese. I know a Syrian co-worker whose parents gave him all cash to buy a house 700+. I'm sure Syrians and Persians have money too.
 
[quote author="orgopeach" date=1248409923]Why is this all Chinese. I know a Syrian co-worker whose parents gave him all cash to buy a house 700+. I'm sure Syrians and Persians have money too.</blockquote> You are correct. The Persians have cash too but they are after the larger homes in the 700+ range while in the recent 300k range activities are mostly Chinese buyers.
 
It's true that there are many wealthy Asian buyers in OC. I personally know a few. One couple that got married last year, both are relatively young (mid 20's) and never worked a "real" job in their entire lives. Other than going to school and doing volunteer work for their Church, their life seems to revolve around Church training and seminars. Their parents bought them a brand new million dollar custom home in Diamond Bar so they can start popping kids. Another girl, was recently married with million dollar dowry.



Being from a relatively "poor' family, I don't have parents who can give me a million dollars, so I have to actually work for the million myself. But then life isn't fair. I was born with healthy genes and got all my fingers and toes. What about the guys who were born handicapped and have to spend their entire life in a wheelchair? Money comes and goes, but your health may never recover from a serious illness. There are COUNTLESS ways to make money, but there is NO CURE for cancer. America is an AWESOME country with so many opportunities to make your fortunes. It's really stupid to waste your time being envious of someone else's wealth when you can just go make $$ yourself.
 
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