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Which is the Smarter Bet?

Topic closed. 21 replies. Last post 9 years ago by Coin Toss.

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justxploring's avatar - villiarna
Wandering Aimlessly
United States
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November 5, 2005
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Posted: December 20, 2007, 7:23 pm - IP Logged

Who's doing the "expecting"? If you don't want/can't afford the house, then you also are relying on someone coming along who wants and can afford it. Meanwhile, you're eating the carrying costs while plenty of other comparables are dropping in price. Your "win" could cost you more than $100.

Your "win" could cost you more than $100.
 

What?  That makes no sense at all unless the person winning the house can't manage money.

I just don't see how winning a house can ever be a loss. We aren't talking about a trip on Wheel of Fortune. This is a piece of property. After all, even if you sell a $400,000 home (that cost you only $100 in the first place) for $300,000 you are still a big winner. What difference does it make if you have to pay taxes on the money you get?  First of all, you wouldn't have to wait for someone to come along because there are lots of smart investors who would be glad to take a brand new home off your hands for $100,000 under the appraisal. 

But I would simply keep the house and take out a mortgage to pay the taxes. That way you are making payments that are 1/3 of what someone else would pay for the same home.  Example: let's say the tax to the IRS is $150,000.  Imagine owning a $400,000 dream house and paying the same as if you spent $150,000 for it.  If I couldn't afford the utilities and property taxes on my income, even if I had to get a housemate until I could sell the home, I would do it.  I simply don't see how winning anything worth $400,000 can be a "loss" - a headache maybe, which is why I never buy tickets for anything but a cash prize. 

note to Lilly:  I'll make a deal with you.  If you win this $400,000 house, sign it over to me, I'll pay the taxes and take it off your hands!  Thumbs Up

    time*treat's avatar - radar

    United States
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    March 30, 2005
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    Posted: December 21, 2007, 2:25 am - IP Logged

    Well, I'm not trying to force you (or anyone else) to see the matter in any particular way. I'm stating the way I "see" it. "Real estate is in the dumper here right now" indicates that there is some waiting going on. Perhaps you are willing to direct some of these "smart investors" to Idaho?

    "Cost" is not always money. 

    Now, if we all saw everything the same, it wouldn't be much of a discussion, would it? One statement followed by 20 people each saying "I agree" and "Me, too" Roll Eyes

    In neo-conned Amerika, bank robs you.
    Alcohol, Tobacco, and Firearms should be the name of a convenience store, not a govnoment agency.

      justxploring's avatar - villiarna
      Wandering Aimlessly
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      Posted: December 21, 2007, 3:21 am - IP Logged

      Time*treat, real estate is in the dumper here too. Florida is one of the worst markets in the nation.  But people are still buying bargains. You are right about opinions.  Many people predict the market will continue to fall for the next couple of years. 

      I was only saying that houses are still selling and people will always have their eyes open for houses selling below appraised value, especially a new home.  $400,000 in Boise isn't that outrageous from what I've seen.  It's way out of my league, but so is my town. Frown

      "if we all saw everything the same, it wouldn't be much of a discussion, would it?"

      Hey, that's my line!  Wink

        Avatar
        NY
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        October 16, 2005
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        Posted: December 21, 2007, 3:37 am - IP Logged

        OK CoinToss and Justxploring, you're both right.  What I meant was, the odds are good on the House giveaway, but there are other factors involved -  Is the house somewhere you want to live, can you pay the taxes if you win, will you be able to afford property taxes and potentially higher utilities EVERY YEAR?  With all due respect to St. Judes, how about can you trust the raffle is fair?  That said, it's also a charity which has other rewards.  Certainly, the odds on Lotteries are higher, but you can play for just a dollar. 

        Odds are funny.  Certainly buying 10 tickets means you have more opportunities to win than the person who bought just one, but the odds for EACH ticket are the same.  He has the same chance his number will be drawn as your ten. 

        Whether you want to live in the house or can afford to live in it are just one piece in figuring out how much you're really playing for. Even if you were already planning on buying a 400K house, you aren't playing for achnace to win that much, because ypou'll be paying taxes on the value of the house. Other than actually shopping for the house, the most optimistic scenario would be reselling it yourself for its fair value. More likely you'll lose about 20 grand in fees to a real estate agent (there may be a reasonable argument that it should be deductible).  Personally, I'd figure taxes on 400 and actually grossing perhaps 350k, depending on the market.  350 less the taxes means playing for about 200k. 

        How you evaluate the odds is pretty subjective.  The same $100 spent on PB or MM tickets could give you about a 1 in 30,000 chance to net roughly the same amount. Since you're at least 4 times as likely to win the house, that's definitely the better bet.

        As far as 1 ticket vs 10, of course each ticket has the same chance of winning, but the person with 10 tickets has 10 times as many tickets. That makes them 10 times as likely to win. Of course whether it's PB or the house raffle the odds still mean they're very unlkely to win.

          sirbrad's avatar - Lottery-062.jpg
          PA
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          October 6, 2005
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          Posted: December 21, 2007, 6:59 am - IP Logged

          Go for the house, think about how much money it will save you in mortage or rent payments. Also these types of raffles only come around once in awhile, the powerball is always there to lose.

            LuckyLilly's avatar - savy chick.png

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            Posted: December 21, 2007, 1:49 pm - IP Logged

             Perhaps you are willing to direct some of these "smart investors" to Idaho?

            They're already here.  Over the last year on my street alone (2 short blocks) they've bought 4 homes for around $150K to $175K.  Then they turn around and rip them down and where 1 home once stood they build 3 or 4 in-fill houses with tiny yards and sell them for $250K - $350K each.  They all sold for the asking price except the last lot of 3.  Those didn't get finished until Oct. when the bubble had already burst, but they've even sold one of those.  The other 2 will sell by spring whaddya wanna bet, and the investors will be buying and building more.

            If I do enter the St. Jude's raffle and win it, that's what I'd do with the money.  Tear down my own home and build 2 to sell.  Only then would I have enough $$$ to pay cash for a nicer home in a better part of town.  Sounds exhausting and stressful.  I'm starting to think maybe I'll just buy a few extra PowerBalls here and there.  ROFL

              Coin Toss's avatar - shape barbed.jpg
              Zeta Reticuli Star System
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              Posted: December 21, 2007, 6:51 pm - IP Logged

              Not sure if it's stlil the case, but at one time Idaho was reported as having more millionaires per capita than any other state.

              Must be a lot of money in potatoes!

              Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

              Lep

              There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.