Interesting real estate info

Alot more went into my thought process but it's just too much to type so here is the simplified version. Paying off a house isn't something alot of people ever accomplish. I'm 25 and just bought a house a few months ago. I have a 30 year mortgage. I do not plan on staying in this house until I'm 55. Say I stay here 10 years. I will have some equity but not much. I then buy another house with a 30 year mortgage. I am now 35. I will have some equity in it but I will still have a 30 year mortgage. I now will have to stay there until I'm 65 to pay it off. I also don't see myself staying in the second house that long but for these purposes let's say I do. It is feasible to get it paid off looking at it that way but for most people it won't happen. I could manage to get it paid off a few years early but like I said this is the simplified version. Most people won't buy their first home as early as we did which makes it even harder to accomplish. Most people will also move more than 2 times in 40 years. My reasoning might be way off but this is how my thought process went.
 
I bought my first house at 24, Im now 29 and owe less than 10k on it.
I wont buy #2 until it is paid for. A 30 year mortgage is a rip off, look at the payment diff between a 15 and a 30 and the total payout diff.

It is a problem with many folks who dont plan to ever own their home, but I cant stand the thought of a bank being able to all my note on a whim (read your mortgage, if you are ever late the bank probably has the right to ask for payment in full in 90 days or they take possession)

Maybe I'm wierd
 
I'm a real estate broker and a landlord and I own my own home so I've seen both sides of the conversation. This is a concept I've been preaching for years but people won't believe me. While it is nice to eventually have equity in your home you turn around and in 10 to 15 years you pull out what little equity you have and you barely have enough to pay for the heat pump you need to replace cause the contractor maximized his profits by installing the cheapest crap he could find that would pass code. Then you need a new roof, water heater, windows, carpet, paint and you get my drift. these things are expensive I know cause did I mention I'm a licensed contractor. So as you build equity in your home the home requires it to be reinvested in itself in order for it to appreciate or for it to be liveable 20 years down the road unless you enjoy living in junk. If you can find a nice house with a good landlord you will save money on taxes, insurance, mortgage, upkeep, you have a full time maintenance man and so what if the water is flooding the house. Has anyone checked the price for a plumber, HVAC man, or electrician lately. $75 an hour is about standard anymore plus travel plus materials plus fuel surcharge and so on. So a $1000 mortgage payment can easily turn into 1400-1500 house payment. I'm done ranting but I'd like some feed back on this also. P.S. If you have any complaints please mail them to Washington postmark The White House I'm sure it would get there. Ha Ha
 
I own my home. or rather i will when the loan is payed off. Right now i share it with the bank but we dont live in it together. I would prefer paid in full but i didnt have a spare 100k sitting around. I will admit, upkeep sucks. your right. it does get expensive. owning a house is one repair after another. Spend the money, fix things the right way.

i couldnt rent though. the thought if even having a landlord sucks. i dont need another "boss" in my life.
 
lockedup5 said:
I'm a real estate broker and a landlord and I own my own home so I've seen both sides of the conversation. This is a concept I've been preaching for years but people won't believe me. While it is nice to eventually have equity in your home you turn around and in 10 to 15 years you pull out what little equity you have and you barely have enough to pay for the heat pump you need to replace cause the contractor maximized his profits by installing the cheapest crap he could find that would pass code. Then you need a new roof, water heater, windows, carpet, paint and you get my drift. these things are expensive I know cause did I mention I'm a licensed contractor. So as you build equity in your home the home requires it to be reinvested in itself in order for it to appreciate or for it to be liveable 20 years down the road unless you enjoy living in junk. If you can find a nice house with a good landlord you will save money on taxes, insurance, mortgage, upkeep, you have a full time maintenance man and so what if the water is flooding the house. Has anyone checked the price for a plumber, HVAC man, or electrician lately. $75 an hour is about standard anymore plus travel plus materials plus fuel surcharge and so on. So a $1000 mortgage payment can easily turn into 1400-1500 house payment. I'm done ranting but I'd like some feed back on this also. P.S. If you have any complaints please mail them to Washington postmark The White House I'm sure it would get there. Ha Ha
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Dude...
In 5 years my houses value has increased about 25k. And I hav esomewhere around 125k in equity right now. I can fix a lot o damn heat pumps with that coin.


BTW remember your average 150k house, is actually a 100k house sitting on a 50k lot, and you could GC it yourself without lifting a hammer and build it for 80k, tops...

I mean, I cant even believe adults are having this conversation.
 
SkyHiK5 said:
Dude...
In 5 years my houses value has increased about 25k. And I hav esomewhere around 125k in equity right now. I can fix a lot o damn heat pumps with that coin.
Click to expand...

Ron, the reason thsi worked for you is the following 3 crticial factors...
1 - you're a reasonably smart and responsible guy
2 - you can do things yourself and have/find the time to learn the business necessary to get house-related projects done cheaper
3 - IIRC, you've have pretty good financial fortune (even w/ some ups and downs)

What you have to keep in mind is by definition, 49% of people are below average intelligence. By that same token, 50% of people are higher than average "lazy".
Likewise, many,many,many Americans are just making ends meet, month-to-month.
"Success" in buyin ga home (vs renting) requires all three of the above, or particular strength in one to ocmpensate for others.
A very lareg portion of the housing and market crash right now is b/c literally millions of people owned homes who simply should not have. It was not the better ifnancial decision for them - as proven by the loss. Guess what, all those folks will be renting now.

What it comes down to is simple - renting vs buying depends on who you are and what your circumstances are. In the example above, you are doing very well on your home b/c you could afford a 15 yr mortgage. When we bought our home 6.5 yrs ago, we were scraping just to get the 30 yr deal. I woud have LOCVED to do a 15 year plan... but we just didn't have the money. Simple fact. So, I got around the problem by boosting up on Factors 1 and 2 above, did alot of upgrades myself at the sacrifice of sleep, time, and career. But not everybody has that luxury.

We jsut sold our home here, and when we move to MD, will be renting. It kilsl me - but financially it's the best deal right now. The 20% equity $$$ we will walk away with here would barely be enough for 5% up there....
 
RatLabGuy said:
Ron, the reason thsi worked for you is the following 3 crticial factors...
1 - you're a reasonably smart and responsible guy
2 - you can do things yourself and have/find the time to learn the business necessary to get house-related projects done cheaper
3 - IIRC, you've have pretty good financial fortune (even w/ some ups and downs)
What you have to keep in mind is by definition, 49% of people are below average intelligence. By that same token, 50% of people are higher than average "lazy".
Likewise, many,many,many Americans are just making ends meet, month-to-month.
"Success" in buyin ga home (vs renting) requires all three of the above, or particular strength in one to ocmpensate for others.
A very lareg portion of the housing and market crash right now is b/c literally millions of people owned homes who simply should not have. It was not the better ifnancial decision for them - as proven by the loss. Guess what, all those folks will be renting now.
What it comes down to is simple - renting vs buying depends on who you are and what your circumstances are. In the example above, you are doing very well on your home b/c you could afford a 15 yr mortgage. When we bought our home 6.5 yrs ago, we were scraping just to get the 30 yr deal. I woud have LOCVED to do a 15 year plan... but we just didn't have the money. Simple fact. So, I got around the problem by boosting up on Factors 1 and 2 above, did alot of upgrades myself at the sacrifice of sleep, time, and career. But not everybody has that luxury.
We jsut sold our home here, and when we move to MD, will be renting. It kilsl me - but financially it's the best deal right now. The 20% equity $$$ we will walk away with here would barely be enough for 5% up there....
Click to expand...

While I agree with most everything here, I also think there is a bit of maturity involved as well.

It wasn't that people should not have been owning homes, its that they should not have owning THOSE homes.

The year we bought our house, our combined gross annual income was 38k....today I make 3x+ that and the wife stay home. But we havent upsized our payments to go along with our increased income. The saying act your "wage" becomes relevent here.
No one "deserves" anything.
Some work hard and are able to have nice things, some are dumb/lazy and deserve less.

I'm sorry, I do not feel bad for anyone who doesnt work as hard as the next guy, but wants to keep up with the Jones's.

I think renting long term is a horrible plan, now that may mean that you cant buy the house, in the neighborhood, with the counter tops you want but tough shit. When people learn to not be defined by stuff, their life will suddenly get better.
 
BTW to directly attack the article.

US Nationwide data suggests that house values have averaged an 18% annual increase over the pst 70 years in this country.

Regardless of how long your mortgage is (within reason; and conditioned on a decent interest rate) it will always be a more financially sound decision to spend equal dollars on a purchase than a rent.

The best financial model would be to rent a $100 garage apartment from a little old widow and never purchase, but thats not what the article suggest. It would have you believe that paying $1500/month on a rent payment >$1500month mortgage on the same property...even if you take its "modest" $300 savings (which a large chunk would be offset by tax benefits for most) and invest it you will have a hard time outrunning the increase of the home value.

Then you get into risk abatement and many other issues.

The market is in a down tick, sure. If you do not own a home it is probably a good idea to rent (cheap and pile up cash) for 2-5 years to see where the market stabilizes, but as a long term success strategy it is absolutely ridiculous.

The article is short sighted, very mis leading and quite honestly contains bad math...if one is not able to find the mathematical flaw, it may pay for that peerson to hie a CPA to balance their check books...
 
Putting the financial stuff aside.. When you own a house.. you can upgrade things as you want.. you can change the kitchen if you want, you can put up a shop, etc. etc.

In a rental, you're not going to get that flexibility, and if the countertop needs to be replaced, you ain't getting Corian.. you're getting the cheapest thing the landlord can find.
 
RatLabGuy said:
What it comes down to is simple - renting vs buying depends on who you are and what your circumstances are. In the example above, you are doing very well on your home b/c you could afford a 15 yr mortgage. When we bought our home 6.5 yrs ago, we were scraping just to get the 30 yr deal. I woud have LOCVED to do a 15 year plan... but we just didn't have the money. Simple fact. So, I got around the problem by boosting up on Factors 1 and 2 above, did alot of upgrades myself at the sacrifice of sleep, time, and career. But not everybody has that luxury.
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This is exactly the boat we are in right now. For now the 30 year will have to do but shortly down the road when the g/f is out of pharmacy school and actually working a refinance into a shorter term will happen.

I don't believe a bit about renting being better than buying but just thought it was an interesting take on things from a different point of view.

My very simple equations in the beginning of the thread were based on the way most people function. Liek was said earlier, alot of people don't worry about ever paying off a house and for some people renting might work out better but, for most of us on this board, owning a home is just about necessary.
 
SkyHiK5 said:
Dude...
In 5 years my houses value has increased about 25k. And I hav esomewhere around 125k in equity right now. I can fix a lot o damn heat pumps with that coin.
BTW remember your average 150k house, is actually a 100k house sitting on a 50k lot, and you could GC it yourself without lifting a hammer and build it for 80k, tops...
I mean, I cant even believe adults are having this conversation.
Click to expand...

First of all if your house has increased in value in the last two years without upgrades you must live in a very desirable upscale 400k plus neighborhood. Because the rich will always have money. And if you have lived in your home only 5 years and already have 125k in equity you are one of the lucky ones cause you either had money for a large down payment or you make enough to pay alot more than minimum payment like most people. Then again you may have GC it your self but there is not many people can do that. Someone living in a home for only five years paying minimum pmt probably has only a couple thousand dollars in actual equity. Where people has gotten so much equity before this economic crunch the bank pretty much loaned more than it was actually worth. Not smart on the banks part but they were banking things were going to be alright for a while. I know a couple had a mortgage and a second appraised it owed 125% of actual value so it was smarter to just let it go back. Mostly the people I'm talking about is the lower income people that max out their credit to pay a $1000-$1500 payment working a run of the mill job because when the job runs out the bank gets the equity too so exactly what have you gained but a bad credit score.
 
Appreciation, plain and simple. I bought my first home ($125k) and made $45k on it in 6 years. I put that back into my second home (fixed 15 years) at signing and bought a relatively inexpensive home. Renting sucks, get some balls- buy the damn thing and work on it yourself and buy things on sale. Get some 20% off LowesHD coupons on eBay and continue to stick it to the man. Sure the bank makes money, but when its all said and done, I have somewhere to stay- and no landlord other than the bank- and they just want their money. Put the mortgage on auto-draft and carry on.
 
I rented before buying my house 5 years ago. I could not park my trailer at my house because it would not fit on the driveway. My truck will not fit into the garage so I could not do any work on it at all. I wanted a fence for my kids/dog but the landlord would not put one in. I could do it on my dime or rent one though. My house now I can do what I want (within reason/ordinances). Since I bought my house I have installed all new hardwood flooring, new windows, doors, and vynl siding. I will not get all my money back for that I am sure but it was needed. I am in the process of re-doing the bathrooms and kitchen now. I bought my house to live in, I did not buy it to make money, so Breaking even when I sell it will make me happy. I bought my house for 89K 5 years ago. I have put 10K-12K into it since then. I am looking at 110K in the house. It estimates at like 120K now in todays market.
 
SkyHiK5 said:
Dude...
In 5 years my houses value has increased about 25k. And I hav esomewhere around 125k in equity right now. I can fix a lot o damn heat pumps with that coin.
Click to expand...

x2. We bought our house about 6 years ago. We've got better than 50% equity in it now.
 
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