Is owning a home mostly a bad thing?
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I bought my house 2 years ago. I lived in a 1bd apartment that was refurbished 10 years ago and paying $875 per month. The home I bought was built in 2008 and is 3bd/2ba and my payments are $836 for P&I (with taxes and insurance though the payment comes to $1085 per month) Out of my mortgage payment about $240 per month goes to principal right now. So if i still lived in my apartment and just put $240 in the bank every month is $875 + $240 = $1115, so just by buying my house, thats an extra $30 in my pocket every month, not to mention 2 extra bedrooms and 1 extra bath, the place is twice the size of my old apartment and I have a garage instead of a carport which at least once per week some jackass would park in my spot at the apartment.
In the future as rents increase,my mortgage stays the same. 20 years ago a house could be rented for $465 per month. Same home rents for about 1200-1500 today. Assuming the same inflation takes place (dont worry, it will be worse, im sure) then you can reasonable expect rents will be $3600-$4500 for an average house, while my mortgage will still bee $1100 per month meaning 20 years from now, I will be able to put $2k-3k extra per month away in my retirement account, while the renter cant.
Its the same way with someone who bought 20 years ago. Right now they are able to save $1000 more per month than renters because their mortgage is so low.
If you can live somewhere for free, vs buying your own house, then it might be worth it to just save that rent money to invest, but if you are going to be paying rent money out anyway...why are you paying someone elses mortgage and not your own?
And even if you move after only a few years, you just rent your house out and let the tenents pay your rent. If the market rents are not high enough to pay your mortgage, then when you bought you house, you just proved that you are too stupid to invest your own money anyway and this conversation is lost on you.
When I bought my house, I made sure that the payments were low enough that if i moved, I could rent it out and have cashflow. When you invest, always have more than 1 exit strategy.
In the future as rents increase,my mortgage stays the same. 20 years ago a house could be rented for $465 per month. Same home rents for about 1200-1500 today. Assuming the same inflation takes place (dont worry, it will be worse, im sure) then you can reasonable expect rents will be $3600-$4500 for an average house, while my mortgage will still bee $1100 per month meaning 20 years from now, I will be able to put $2k-3k extra per month away in my retirement account, while the renter cant.
Its the same way with someone who bought 20 years ago. Right now they are able to save $1000 more per month than renters because their mortgage is so low.
If you can live somewhere for free, vs buying your own house, then it might be worth it to just save that rent money to invest, but if you are going to be paying rent money out anyway...why are you paying someone elses mortgage and not your own?
And even if you move after only a few years, you just rent your house out and let the tenents pay your rent. If the market rents are not high enough to pay your mortgage, then when you bought you house, you just proved that you are too stupid to invest your own money anyway and this conversation is lost on you.
When I bought my house, I made sure that the payments were low enough that if i moved, I could rent it out and have cashflow. When you invest, always have more than 1 exit strategy.
http://www.latimes.com/business/la-fi-homes-investors-20100820,0,7168785.story
Where'd our friend BuyHiSellLow go?
Where'd our friend BuyHiSellLow go?
That is a very difficult question to answer.
1) Different people have different ability to generate return of cash. If you are a hot shot trader but not a hot shot RE investor, obviously RE is not the way to go.
2) Location, location, location. RE price is a reflection of local economy. Namely jobs. You are betting on the local economy when you buy any RE.
3) 50+% of American own a home and they are not RE investor. Just like all those 401k account owners who are not traders. They get fed to the pros. The difference is the carrying cost is kinda high in RE and volume might not be there. On the other hand, leverage is cheap because of the government.
1) Different people have different ability to generate return of cash. If you are a hot shot trader but not a hot shot RE investor, obviously RE is not the way to go.
2) Location, location, location. RE price is a reflection of local economy. Namely jobs. You are betting on the local economy when you buy any RE.
3) 50+% of American own a home and they are not RE investor. Just like all those 401k account owners who are not traders. They get fed to the pros. The difference is the carrying cost is kinda high in RE and volume might not be there. On the other hand, leverage is cheap because of the government.
My wife and I bought a home in 1992 in Southern California when real estate prices were at a low point. It turned out to be a good investment; not because I had any great foresight, but because we just happened to be in the right place at the right time. Our home is now worth 5x what we have invested in it. And, yes, you're right about stability. We're raising our two kids here and this is only place they've ever lived. I want to keep it that way until they graduate from high school. (Unless we leave the country, but that's another issue altogether.)
If you only put 3% down, then that 4% appreciation is really 125% ROI.
Repairs & maintenance do not equal 4-5% unless you bought a 20k house, then maybe you pay that much. The average person owns a $200k home and they are not paying 8K-10K per year in maintence & repairs.
MAYBE if you bought a $200k home that was 50 years old you MIGHT have 1 year where you pay that much for a new roof or airconditioner, but not every year.
I just laugh at every homeowner related thread on this site. Its called Elite Trader but every apartment dwelling asswipe in Camden is in here talking about home ownership.
I've run into 2 people who know jack about RE on ET and that is Dr.Z and Surf and Dr.Z has become a raving radical liberal.
You guys don't even know what maintenance is. It was ~600k to replace my slate roof 4-years ago. I got 1.2M off the price and over-financed to cover the roof. Its the stuff of nightmares lol but it has stayed well above water all through the downturn.
Now if we can just get these clowns in D.C. thrown out I might make some money. I'm all in and am staying pat.
Hey you've got to live somewhere, right? Might as well turn it into an R/r thing imho.
I've run into 2 people who know jack about RE on ET and that is Dr.Z and Surf and Dr.Z has become a raving radical liberal.
You guys don't even know what maintenance is. It was ~600k to replace my slate roof 4-years ago. I got 1.2M off the price and over-financed to cover the roof. Its the stuff of nightmares lol but it has stayed well above water all through the downturn.
Now if we can just get these clowns in D.C. thrown out I might make some money. I'm all in and am staying pat.
Hey you've got to live somewhere, right? Might as well turn it into an R/r thing imho.