Buy a house or rent (1 Viewer)

[MAC_32]

If you don't think you will live there for five plus years then don't buy.

If you do then determine how much you can afford, lock up a savings account for the unknown, write down a wish list then start shopping. You may find out given both of your wants that despite your wife wanting a place with everything done that you cannot afford it. Then you have the fixer upper or continue renting discussion.

 

[ghostguy123]

If you don't think you will live there for five plus years then don't buy.

If you do then determine how much you can afford, lock up a savings account for the unknown, write down a wish list then start shopping. You may find out given both of your wants that despite your wife wanting a place with everything done that you cannot afford it. Then you have the fixer upper or continue renting discussion.

Indeed. We will start looking in about 6-7 months. Once I get her into some houses we will have more concrete issues to discuss.

 

[comfortably numb]

ITS NOT AN INVESTMENT. ITS A PLACE TO LIVE.

ITS NOT AN INVESTMENT. ITS A PLACE TO LIVE.

Thats what I thought 11 years ago when I jacked up my finances.

Lots of nice places to live that are not purchases

ITS NOT AN INVESTMENT. ITS A PLACE TO LIVE.

Thats what I thought 11 years ago when I jacked up my finances.

Lots of nice places to live that are not purchases

And how much money have you lost over time in rent? At least it's slow, incremental and predictable though, right?

This is the part I don't understand.

If he buys a house in 9 years, he will have paid 70-100k in rent?

Wouldn't is be wiser to buy a home now?

Prices of homes in his area will be up XX amount, interest rate will be up XX amount in 9 years.

 

[mr roboto]

He can do whatever he wants, but buying is for suckers.

 

[Binky The Doormat]

Loans are like 4% interest is a non factor

It's not a non factor unless you put like 75% down

if the 19k over 10 years is your hangup then obviously you already made up your mind. I had 18 years left on my house and started over at 30. With a 3% rate and took 40k out in equity. You'll never get that rate. My point is if interest really bothers you pay more per month and you will pay less. I'm a big buy advocate but nothing wrong with renting but if you are trying to get this down to the penny you aren't ready to buy

Yes that is only 19k, but you aren't going to get anything by writing off that 19k, so it's a full 19k.

Just part of it. And are rates 4% right now??

Apparently lower. I put 4% in the calculator and it gave 3 rates with a couple at 3% or lower. I didn't look closely though - might be a few gotchas.

 

[ghostguy123]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

 

[Zegras11]

more than likely, you can find the same type of house at a lower payment buying a house these days. Not all places, but most.

A $200k loan at 4% over 30 years will have a balance of $157,568 after 10 years. The P&I is $955.

Ten years later balance will be $94,309.

Your payment will be CONSTANT. Rents are rising will continue to rise forever.

Rents dont seem to be rising much here, and like I said I have a nice rent payment given the property I am in.

And while rents rise, so will property taxes and insurance.............plus the cost of fixing things.

that's all fine and dandy.... no problem...

However, A person buying a $200,000 house will have $170 k more net worth in 20 years than the person that rents in those same 20 years, The numbers are 175k to 5k. Those were given to me off some govt site last Oct when I bought last Sept. It seems you're not understanding equity build up buying a house vs no equity build up just renting.

But, I digress. I'll happily take my equity build up and income each month on the places I rent out...

 

[Zegras11]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

It's a great idea if your market is stable. Where do you live?

 

[ghostguy123]

that's all fine and dandy.... no problem...

However, A person buying a $200,000 house will have $170 k more net worth in 20 years than the person that rents in those same 20 years, The numbers are 175k to 5k. Those were given to me off some govt site last Oct when I bought last Sept. It seems you're not understanding equity build up buying a house vs no equity build up just renting.

But, I digress. I'll happily take my equity build up and income each month on the places I rent out...

If you could guarantee that I would be in the same house in 20 years, I will buy one tomorrow.

I would probably be better off just buying a smaller house cash now and renting it out. What's a whole different thread though.

 

[comfortably numb]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

idk

some people will say with rates so low put a small amount down and invest the other 100k elsewhere.

 

[ghostguy123]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

It's a great idea if your market is stable. Where do you live?

Market is definitely stable where I live, 30-35 miles east of cleveland

 

[mr roboto]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

idk

some people will say with rates so low put a small amount down and invest the other 100k elsewhere.

This.

 

[ghostguy123]

That would be assumign they let you put next to nothing down, and that the rate is as low as you say......remember, this is in a year

 

[MAC_32]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

It's a great idea if your market is stable. Where do you live?

Market is definitely stable where I live, 30-35 miles east of cleveland

lake or geauga? We are in Lyndhurst, if we move it will probably be to Willoughy Hills. Get to Lake county taxes, still near civilization, but in the woods where I want to be. Regardless, yeah, stable market. Eventually everyone will stop moving southeast and will start shopping in that direction again. If you are looking to sell in five to ten years I think you will find a buyer.

 

[Dragons]

If you can rent a similar house for less than the mortgage payment with putting only a minimal amount down (including taxes and insurance), then I would suggest someone continue to rent. Especially if you will want to downsize in a few years. If your mortgage payment is a hundred or more less that renting, then that allows for some reasonable repairs while still gaining the benefits of owning (tax deductions, equity gains, etc.)

Be careful of assuming rents will stay constant though, if they are repressed because there are a lot of rentals properties available because people can't sell their old house, then that market can change quickly as the housing market improves. You'll be on the wrong side of both market changes.

 

[ghostguy123]

lake or geauga? We are in Lyndhurst, if we move it will probably be to Willoughy Hills. Get to Lake county taxes, still near civilization, but in the woods where I want to be. Regardless, yeah, stable market. Eventually everyone will stop moving southeast and will start shopping in that direction again. If you are looking to sell in five to ten years I think you will find a buyer.

Lake County...............not painesville

Actually where I live now, housing didn't drop nearly as much as most everywhere else.

 

[MAC_32]

If you can rent a similar house for less than the mortgage payment with putting only a minimal amount down (including taxes and insurance), then I would suggest someone continue to rent. Especially if you will want to downsize in a few years. If your mortgage payment is a hundred or more less that renting, then that allows for some reasonable repairs while still gaining the benefits of owning (tax deductions, equity gains, etc.)

Be careful of assuming rents will stay constant though, if they are repressed because there are a lot of rentals properties available because people can't sell their old house, then that market can change quickly as the housing market improves. You'll be on the wrong side of both market changes.

if he lives where I think he lives it is a buyers market right now. Everyone in Cleveland is moving away from the city, but not in that direction. Some homeowners are being patient, but definitely not everyone. If he does a good job shopping he will find someone to bend just so they can get rid of the house. Or even better, foreclosures.

 

[MAC_32]

lake or geauga? We are in Lyndhurst, if we move it will probably be to Willoughy Hills. Get to Lake county taxes, still near civilization, but in the woods where I want to be. Regardless, yeah, stable market. Eventually everyone will stop moving southeast and will start shopping in that direction again. If you are looking to sell in five to ten years I think you will find a buyer.

Lake County...............not painesville

lol, thank god!

 

[ghostguy123]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

 

[Dragons]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

At 3-4% interest, I don't think the money down even factors into the equation, unless you're wasting pmi.

 

[comfortably numb]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

ask if they will sell the house?

 

[MAC_32]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

especially if your house is in relative working order. We lucked into ours. The couple who lived here before did some dumb things like painting the deck instead of staining it but everything that needed done was cosmetic. We are appraised at 150 and if we tighten some things up as planned could increase it close to 200. All for a purchase of 85, 15 in cash.

 

[Zegras11]

So a quick recap of my personal thoughts. Assuming 150k-200k house

Not a good idea to buy a house if you are barely putting any money down.

Decent decision if you put a good chunk down, say...........................30% or more???

Very wise decision to pay cash if you have it.

All assuming no major life malfunctions or dwelling malfunctions.

It's a great idea if your market is stable. Where do you live?

Market is definitely stable where I live, 30-35 miles east of cleveland

Why not buy a small place like you described. Nice and safe. Put down 20%.

If you have to move in 5 or 10 years, rent it out. Rents in most places are higher than the payment these days.

Then you get to build up more equity for your family down the road. You'll also know all the ins and outs of that property if that time comes making it easy to manage.

Just an idea.... that's how I started 25 years ago,,,,

 

[ghostguy123]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

ask if they will sell the house?

I asked. Right now he wants too much.

I know he is losing a good amount of money on this.

 

[Zegras11]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

ask if they will sell the house?

before it goes into foreclosure.

 

[Zegras11]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

ask if they will sell the house?

I asked. Right now he wants too much.

I know he is losing a good amount of money on this.

What did he pay for it? What is it worth now?

 

[ghostguy123]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

especially if your house is in relative working order. We lucked into ours. The couple who lived here before did some dumb things like painting the deck instead of staining it but everything that needed done was cosmetic. We are appraised at 150 and if we tighten some things up as planned could increase it close to 200. All for a purchase of 85, 15 in cash.

It needs some work, but cosmetic type stuff.

I think the house is roughly worth about 130k or so in its current condition. If everythng was up to date probably 160k.

If it foreclosed.....................i bet it sells for under 100k, and guess who has first dibs.........

 

[Dragons]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

ask if they will sell the house?

before it goes into foreclosure.

Yeah, once the bank is involved, who knows what will happen.

 

[ghostguy123]

Why not buy a small place like you described. Nice and safe. Put down 20%.

If you have to move in 5 or 10 years, rent it out. Rents in most places are higher than the payment these days.

Then you get to build up more equity for your family down the road. You'll also know all the ins and outs of that property if that time comes making it easy to manage.

Just an idea.... that's how I started 25 years ago,,,,

I cold buy a small place CASH in the area right now. Thought about it believe me. I would rent it out.

 

[Dragons]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

especially if your house is in relative working order. We lucked into ours. The couple who lived here before did some dumb things like painting the deck instead of staining it but everything that needed done was cosmetic. We are appraised at 150 and if we tighten some things up as planned could increase it close to 200. All for a purchase of 85, 15 in cash.

It needs some work, but cosmetic type stuff.

I think the house is roughly worth about 130k or so in its current condition. If everythng was up to date probably 160k.

If it foreclosed.....................i bet it sells for under 100k, and guess who has first dibs.........

Why do you assume first dibs?

 

[Zegras11]

Why not buy a small place like you described. Nice and safe. Put down 20%.

If you have to move in 5 or 10 years, rent it out. Rents in most places are higher than the payment these days.

Then you get to build up more equity for your family down the road. You'll also know all the ins and outs of that property if that time comes making it easy to manage.

Just an idea.... that's how I started 25 years ago,,,,

I cold buy a small place CASH in the area right now. Thought about it believe me. I would rent it out.

How much for the place? How much could you rent it for?

 

[ghostguy123]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

ask if they will sell the house?

I asked. Right now he wants too much.

I know he is losing a good amount of money on this.

What did he pay for it? What is it worth now?

He paid $156,000 for it in 2003

I think at best he gets 130k right now as it sits given what I have seen houses go for on this exact street that are comparable in the last year. Only a couple houses, but they were more up to date and went for between 140-150.

Not sure what he stil owes, but he said his payment is more than the current rent.

 

[MAC_32]

My ultimate hope is that my current landlord forecloses. Would be sweeeeeeeeeeeeeeeeeeet

especially if your house is in relative working order. We lucked into ours. The couple who lived here before did some dumb things like painting the deck instead of staining it but everything that needed done was cosmetic. We are appraised at 150 and if we tighten some things up as planned could increase it close to 200. All for a purchase of 85, 15 in cash.

It needs some work, but cosmetic type stuff.

I think the house is roughly worth about 130k or so in its current condition. If everythng was up to date probably 160k.

If it foreclosed.....................i bet it sells for under 100k, and guess who has first dibs.........

Why do you assume first dibs?

get to it before it 'hits the market,' sorta an insider deal. Others can't bid if they don't know it is for sale, especially if he shows up with a pile of cash. It's what we did to lock up our house. Friend of the family is a realtor and is acquaintances with the former owners. Heard they were letting it go belly up, tipped us off, and before it got listed we showed up with a check book and said gimme. In the end, banks just want it off their books ASAP.

 

[ghostguy123]

Why do you assume first dibs?

Experience. Several times over I haev talked to people and heard about rentals that foreclose, and the tenants speak with the bank

 

[ghostguy123]

Why not buy a small place like you described. Nice and safe. Put down 20%.

If you have to move in 5 or 10 years, rent it out. Rents in most places are higher than the payment these days.

Then you get to build up more equity for your family down the road. You'll also know all the ins and outs of that property if that time comes making it easy to manage.

Just an idea.... that's how I started 25 years ago,,,,

I cold buy a small place CASH in the area right now. Thought about it believe me. I would rent it out.

How much for the place? How much could you rent it for?

There probably 75k with a rent of 800-900.

Move in ready at 75k, maybe a couple grand to spruce things up

 

[ghostguy123]

get to it before it 'hits the market,' sorta an insider deal. Others can't bid if they don't know it is for sale, especially if he shows up with a pile of cash. It's what we did to lock up our house. Friend of the family is a realtor and is acquaintances with the former owners. Heard they were letting it go belly up, tipped us off, and before it got listed we showed up with a check book and said gimme. In the end, banks just want it off their books ASAP.

Yep. Pretty much. And since I have the insider knowledge of the house and it's actual value, I would be ok paying a bit over the foreclosure price when it goes to auction or whatever.

I dont think it's likely, but it is possible he could foreclose.

 

[wilked]

This is the part I don't understand.


If he buys a house in 9 years, he will have paid 70-100k in rent?

Wouldn't is be wiser to buy a home now?

Prices of homes in his area will be up XX amount, interest rate will be up XX amount in 9 years.

Common misconception. People seem to forget that in those 9 years most of the mortgage payments are interest (not equity), he still has to maintain the place, pay homeowners insurance, pay property taxes. The 'wasted' money works both ways.

People above are using 3-5 years as a break-even for renting/buying, I personally am more toward the 7 year mark in my rule of thumb. Buying/selling houses is very expensive

 

[ghostguy123]

This is the part I don't understand.


If he buys a house in 9 years, he will have paid 70-100k in rent?

Wouldn't is be wiser to buy a home now?

Prices of homes in his area will be up XX amount, interest rate will be up XX amount in 9 years.

Common misconception. People seem to forget that in those 9 years most of the mortgage payments are interest (not equity), he still has to maintain the place, pay homeowners insurance, pay property taxes. The 'wasted' money works both ways.

People above are using 3-5 years as a break-even for renting/buying, I personally am more toward the 7 year mark in my rule of thumb. Buying/selling houses is very expensive

Agreed. Had I purchased 4 years ago, there is no way I would be in as good of a position as I am in right now.

 

[Zegras11]

Why not buy a small place like you described. Nice and safe. Put down 20%.

If you have to move in 5 or 10 years, rent it out. Rents in most places are higher than the payment these days.

Then you get to build up more equity for your family down the road. You'll also know all the ins and outs of that property if that time comes making it easy to manage.

Just an idea.... that's how I started 25 years ago,,,,

I cold buy a small place CASH in the area right now. Thought about it believe me. I would rent it out.

How much for the place? How much could you rent it for?

There probably 75k with a rent of 800-900.

Move in ready at 75k, maybe a couple grand to spruce things up

Invest 75K.

Rent is 800 = 9600 year.

If you have 2100 in expenses (repairs and such, which is high)

You'd net 7500, or 10% cash on cash return. What are you waiting for?

On top of those numbers, if the land is 15k and building 60k, you get to depreciate 60K/27.5 or about $2200 a year. Now multiply your tax bracket by 2200 and you'll save that in taxes.

 

[ghostguy123]

Invest 75K.

Rent is 800 = 9600 year.

If you have 2100 in expenses (repairs and such, which is high)

You'd net 7500, or 10% cash on cash return. What are you waiting for?

On top of those numbers, if the land is 15k and building 60k, you get to depreciate 60K/27.5 or about $2200 a year. Now multiply your tax bracket by 2200 and you'll save that in taxes.

Minus property taxes and insurance remember. Property taxes for some of the houses I saw like this were about $2,500.

Yes, definitely have thought about it. There is also the whole "my wife doesnt like the idea" issue. That and if we want to buy what we want to buy next year, not the best idea.

 

[ghostguy123]

Got enough goin on here thinking about buying one house let alone two.

 

[Zegras11]

Invest 75K.

Rent is 800 = 9600 year.

If you have 2100 in expenses (repairs and such, which is high)

You'd net 7500, or 10% cash on cash return. What are you waiting for?

On top of those numbers, if the land is 15k and building 60k, you get to depreciate 60K/27.5 or about $2200 a year. Now multiply your tax bracket by 2200 and you'll save that in taxes.

Minus property taxes and insurance remember. Property taxes for some of the houses I saw like this were about $2,500.

Yes, definitely have thought about it. There is also the whole "my wife doesnt like the idea" issue. That and if we want to buy what we want to buy next year, not the best idea.

write off. Still making 6-7%

 

[Dragons]

Why not buy a small place like you described. Nice and safe. Put down 20%.

If you have to move in 5 or 10 years, rent it out. Rents in most places are higher than the payment these days.

Then you get to build up more equity for your family down the road. You'll also know all the ins and outs of that property if that time comes making it easy to manage.

Just an idea.... that's how I started 25 years ago,,,,

I cold buy a small place CASH in the area right now. Thought about it believe me. I would rent it out.

How much for the place? How much could you rent it for?

There probably 75k with a rent of 800-900.

Move in ready at 75k, maybe a couple grand to spruce things up

Invest 75K.

Rent is 800 = 9600 year.

If you have 2100 in expenses (repairs and such, which is high)

You'd net 7500, or 10% cash on cash return. What are you waiting for?

On top of those numbers, if the land is 15k and building 60k, you get to depreciate 60K/27.5 or about $2200 a year. Now multiply your tax bracket by 2200 and you'll save that in taxes.

Your depreciation would only offset $2200 in income. The rest would be taxable income.

And any loss would only be immediately tax deductible if you meet certain income restrictions (probably not important if we're discussing buying $150k houses).

ETA - that might be what you're saying

 

[Zegras11]

Why not buy a small place like you described. Nice and safe. Put down 20%.

If you have to move in 5 or 10 years, rent it out. Rents in most places are higher than the payment these days.

Then you get to build up more equity for your family down the road. You'll also know all the ins and outs of that property if that time comes making it easy to manage.

Just an idea.... that's how I started 25 years ago,,,,

I cold buy a small place CASH in the area right now. Thought about it believe me. I would rent it out.

How much for the place? How much could you rent it for?

There probably 75k with a rent of 800-900.

Move in ready at 75k, maybe a couple grand to spruce things up

Invest 75K.

Rent is 800 = 9600 year.

If you have 2100 in expenses (repairs and such, which is high)

You'd net 7500, or 10% cash on cash return. What are you waiting for?

On top of those numbers, if the land is 15k and building 60k, you get to depreciate 60K/27.5 or about $2200 a year. Now multiply your tax bracket by 2200 and you'll save that in taxes.

Your depreciation would only offset $2200 in income. The rest would be taxable income.

And any loss would only be immediately tax deductible if you meet certain income restrictions (probably not important if we're discussing buying $150k houses).

Didn't say the rest wasn't taxable. "Now multiply your tax bracket by 2200 and you'll save that in taxes."

 

[fasteddie_21]

My rule of thumb. If you certain to be there at least 3 years (even better if 5 years), and you expect the house to appreciate at least 4%, you will come out ahead buying. Anyone that buys and knows they will be moving in a couple years will usually lose money, sometimes quite a bit.

But are you referring to buying the house straight cash, or taking out a loan?

Loan, even with minimal downpayment.

Gonna run the numbers on that later, but I can't see it being a good investment to buy a house and then move in 5 years if you only put down a little bit. Taxes, interest, repairs, cost of selling....................also can't EXPECT that kind of appreciation nowadays, can we?

But still, worth looking at the numbers later on. Will assume about a $150,000 house in my area and add up those costs and see how it compares to about $1,100 in rent for those five years.

You can expect that here in Denver.

 

[ghostguy123]

I remember when my dad moved out to Arizona near Phoenix, maybe 10-11 years ago. After he bought his house it pretty much doubled in a year or two.........and now it's worth less than when he bought it. Nuts.

 

[ghostguy123]

Speaking of buying a rental property........

Say we got a condo for $45,000. Needs 5 grand at the most to get it move-in ready for a tenant, so we invest 50k (cash on hand, no loan)

Say I get a property manager at about 10%, also the condo association fees are about $100. Insurance 500/year. Property taxes about $1,300.

Rent let's say $700.

......................................worth it?

COndo sold for about 75k in 2004. The area has not delcined at all or anything, and it won't, so the value will should stead or increase in time.

 

[Zegras11]

Speaking of buying a rental property........

Say we got a condo for $45,000. Needs 5 grand at the most to get it move-in ready for a tenant, so we invest 50k (cash on hand, no loan)

Say I get a property manager at about 10%, also the condo association fees are about $100. Insurance 500/year. Property taxes about $1,300.

Rent let's say $700.

......................................worth it?

Rent = 8400

mgr - 700

assoc - 1200

ins - 500

PT - 1300

Profit - 4700 9.4% on cash. 5k fixes you get to write off

If its local, no need for a mgmt company on a condo.

 

[ghostguy123]

When you say "9.4% on cash"...................what are you saying? Sorry if this is obvious and I am stupid

 

[Zegras11]

When you say "9.4% on cash"...................what are you saying? Sorry if this is obvious and I am stupid

4700 profit/50000 investment.