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Appreciate it. A bit confused on something, but maybe I'm just not thinking about this correctly...
Do you value any international exposure? Any bond exposure? Any small-mid cap? VFINX has none of those
Of course there isn't 0% downside risk in buying a house, and people shouldn't get in over their heads just to have a home, but I'm still not following the analogy. It generally isn't any cheaper to rent vs. buy an equivalent property, even factoring in the down payment, so the buy vs. rent and have a pallet of cash doesn't really make sense.
I'm looking at it from the perspective of wiping out all savings to make the downpayment and getting in over one's head with mortgage payments and property maintenance, utilities, etc. that might not have been foreseen. General perception being one can be viewed as more successful owning the house and having it on display, at the exception of foregoing the home purchase, paying affordable rent, and letting the downpayment stay in the market and grow.
I don't think I ever indicated that there was ZERO risk involved either.
Their other investments are 529 plans. Children are 6, and two twins 5 months old.
I'm mostly a pooh-pooher and I'm sure it's at least partially due to my experiences. Bought a house in 2003, sold it in 2008 when my family moved to a different city for work. House hadn't appreciated at all, and it spent four months on the market unoccupied before it sold. Buying was definitely the wrong choice for us in hindsight.
Closer to twice that much I think.
Jesus. How much did you lose on your last home to make you this bitter toward homeownership?
GM - I don't think anyone was pooh-poohing home ownership in general....we were commenting specifically to Bender's situation...and that's what prompted my original question.
We didn't lose that much. The price we sold it for and the price we bought it for were almost identical. Our losses were from brokers and lawyers and stuff on the two transactions, paying a mortgage for four months on a house we weren't using, and the relatively modest renovations we made to the house.I wouldn't say I'm bitter at all. Homeownership just isn't for me.
I made a mistake, but am learning from it. So no, not a pooh-pooher as I would buy in the future. I've owned a condo since May 2008, which is ~30% under water today, just about 7 years and a re-fi later. It wasn't a fortune so if it's a hard lesson, that's fine. I'm renting it out for way more than I could comparatively get in a sale, so it hasn't hindered me. I've hammered retirement, emergency and taxable accounts since, and I'm glad I did. Sure, the market is up, but even if it wasn't, I'd rather have my long-term basis in the market getting established now while I'm still relatively young.
Yeah, you got screwed. I also don't live on the east coast, so really, you can safely ignore everything I say.
About 70% of my savings account.
It's brutal out here for what you can get for your money.
I don't plan on moving. I just would like to be more mobile should the opportunity present itself (and it likely will eventually).
Yeah, I just don't know if we can really see eye to eye here. The numbers are just too different. I'm guessing if I lived where you do we would have bought.
I would love to live in DC, but I'm not paying double what I pay out here in Annapolis for half the house. Lots of variables go into home ownership, but I dismiss the perception it is the American dream or some kind of wonderful experience. It's neither, and it also ties me down too much which I hate. I have moved 11 times since I was 18, it seems almost weird to not move after three years in the same place.
True. But the principals still remain the same. Its generally better to rent if the purchase price is more than 100x rent. So if you are renting a $200K house for more than $2K/mo, you would be better off buying. Again, this is just a very broad guideline. I know for my local, I would never rent houses for 1% of the purchase price. We get closer to 5%.
Given the situation you laid out, I would be putting down 20% to buy. You're correct in the assumption that the more you put down does get buy you more safety.Man this is some good stuff. And, everyone has a different opinion for sure - that's why these things can be tough to digest and figure out some times.
Does the fact that I'm putting 20% help my position here relative to not getting under water at some point? Some of you might be surprised about how many folks I know still not putting 20% on the purchase of their first home and paying PMI.
I sort of look at the 20% as a bit of a safety net for me and that I'll immediately get "some" equity into the home and, even if I have to sell in 5 years time, I'll owe 270,000 on a 350,000 home (at least if 350k was my purchase price)
Put it this way...with 20% a lot can still go wrong, but is my nose less open to the bleeding from Day 1 as opposed to thousands of others purchasing their first home with 5 or 10% down?
If home prices fall when I need to sell, I've got way more cushion than the same person doing the same as I but putting down 10%, right?
I've paid 77,000 dollars in rent over the past 4 years since moving to Philadelphia burbs.
ETA: Again - yes I'm completely ignorant and a moron with this stuff. If my questions sound sophomoric, or written like I'm 12 years old it's because they probably are to the trained eye. I'm good at stuff I'm good at, but I don't know jacksquat about these things.
According to Zillow's estimate of the value of the house I live in (I know, not that accurate but it's all I have), our rent is about .3% of the purchase price.
So you're living in a $500K house for $1500/mo? I would rent as well. Or move.
Our rent is $2188 a month. Zillow claims the house is worth $644K.
Those are the prices around here. Our house is tiny and old, it's the location that makes it cost that amount.
I wouldn't buy in your case unless you're looking at it as an actual investment: as a future rental/income property.This is why we are GBs, IMO, omg
I dont want to take this thread too far off topic, but do incomes support that?Our rent is $2188 a month. Zillow claims the house is worth $644K.
I haven't done any sort of analysis, but yeah, it's a pretty wealthy area.I dont want to take this thread too far off topic, but do incomes support that?Our rent is $2188 a month. Zillow claims the house is worth $644K.
You're just worried I'm gonna ask you to help me to move.Doctor Detroit said:I wouldn't buy in your case unless you're looking at it as an actual investment: as a future rental/income property.John Bender said:This is why we are GBs, IMO, omgDoctor Detroit said:
I was just thinking of tax liability generated by portfolio turnover. If there are other differences, hopefully Sand or someone else can comment. VOO and VFIAX are based off the same index, so turnover would be the same.RUSF18 said:
That ratio is probably any "nice" suburb in the northeast. Most rentals in my area look like they are around 0.5%. 5% seems crazy to me.Random said:I dont want to take this thread too far off topic, but do incomes support that?fatguyinalittlecoat said:Our rent is $2188 a month. Zillow claims the house is worth $644K.Random said:
That ratio is probably any "nice" suburb in the northeast. Most rentals in my area look like they are around 0.5%. 5% seems crazy to me.Random said:I dont want to take this thread too far off topic, but do incomes support that?fatguyinalittlecoat said:Our rent is $2188 a month. Zillow claims the house is worth $644K.Random said:
yeah, that makes no sense whatsoever. think he forgot to carry the 1.That ratio is probably any "nice" suburb in the northeast. Most rentals in my area look like they are around 0.5%. 5% seems crazy to me.Random said:I dont want to take this thread too far off topic, but do incomes support that?fatguyinalittlecoat said:Our rent is $2188 a month. Zillow claims the house is worth $644K.Random said:
5%? Jesus. So rent in a $300k house is $15k per month? I'm missing something.
The way I understand things with ETFs they are allowed to perform stock swaps which don't trigger a sale, so no capital gains. Mutual funds do buy and sell, so there are capital gains distributions which will hit in a taxable account (in an IRA it doesn't matter). So ETFs tend to be a bit more tax efficient. Note that some funds are low turnover and some are shockingly high.
You also get to write off the interest...Tiger Fan said:Given the situation you laid out, I would be putting down 20% to buy. You're correct in the assumption that the more you put down does get buy you more safety.John Bender said:Man this is some good stuff. And, everyone has a different opinion for sure - that's why these things can be tough to digest and figure out some times.
Does the fact that I'm putting 20% help my position here relative to not getting under water at some point? Some of you might be surprised about how many folks I know still not putting 20% on the purchase of their first home and paying PMI.
I sort of look at the 20% as a bit of a safety net for me and that I'll immediately get "some" equity into the home and, even if I have to sell in 5 years time, I'll owe 270,000 on a 350,000 home (at least if 350k was my purchase price)
Put it this way...with 20% a lot can still go wrong, but is my nose less open to the bleeding from Day 1 as opposed to thousands of others purchasing their first home with 5 or 10% down?
If home prices fall when I need to sell, I've got way more cushion than the same person doing the same as I but putting down 10%, right?
I've paid 77,000 dollars in rent over the past 4 years since moving to Philadelphia burbs.
ETA: Again - yes I'm completely ignorant and a moron with this stuff. If my questions sound sophomoric, or written like I'm 12 years old it's because they probably are to the trained eye. I'm good at stuff I'm good at, but I don't know jacksquat about these things.
Re the 77,000 in rent comment...remember, that doesn't translate 1:1 into $77k that could have gone into equity. Assuming a 30 year mortgage on a $500k house (and putting 20% down), you're still going to pay about $60k in interest over the first 4 years.
Was sort of contemplating putting half in one and half in the other. And just let em go and go and goRUSF18 said:
We get about $700/mo for houses we buy for $10-$20K. I don't think there's any such thing as a $300K rental around here.yeah, that makes no sense whatsoever. think he forgot to carry the 1.That ratio is probably any "nice" suburb in the northeast. Most rentals in my area look like they are around 0.5%. 5% seems crazy to me.Random said:I dont want to take this thread too far off topic, but do incomes support that?fatguyinalittlecoat said:Our rent is $2188 a month. Zillow claims the house is worth $644K.Random said:
5%? Jesus. So rent in a $300k house is $15k per month? I'm missing something.
