Novice needs some Real Estate advice

A lot of the post here can be summed up by the following "use rational decision making for the purpose of buying investment properties, but when buy your primary residence don't bother to crunch numbers just buy or you will be poor all your life"

If you crunch numbers and it is cheaper to buy then buy. Keep in mind though that if you rent and put your savings into a program that you employer matches or a tax exempt saving vehicle you can get a lot of bang for you buck.

There is also the notion that owning property protects you from the flaws in a fait money system. Because you can't exchange small bit of your house for food you are still reliant on a functioning system of money to preserve your savings. Property prices are very much a function of the same factors that affect paper assest like stocks and bonds. The fact that you can see it does not make it value less absract.
 
It is better buying a home with a price off 20-percent and high interest rate market than buying overpriced property in a lower rate market (like now) - you'll end up paying the same but the rates will have to come down anyway or else we all start heading for the hills and collecting guns and ammo - so waiting will not hurt too much. Here in CA the average waiting for a home to be sold is 4 months, last year they had multiple offers within weeks. The prices will come down period. foreclosures are up and high end homes 500K up the builder is giving 10,000 incentive options. Forget about investors, there are great first time buyer programmes.
Quote from JJSea:

Hello. I'm totally new to investing (having inherited a little bit of money) and would like a little real estate advice, if possible.

I'm in the Seattle area, which has been appreciating out of sight the past couple years. They expect a slowdown, but it hasn't happened yet. I really need to buy some sort of a place to live (not strictly an investment, I need a primary residence, having been a renter all my life). I seem to have lingered a little too long looking about these past couple years and now interest rates are inching up, and prices as well, making it more difficult, as I have a very modest income. My investment advisor says not to buy right now, wait till things come down a little, but I don't see them doing that, they only ever seem to go up, and I'm afraid I will miss the bottom rung of the ladder.

Should I go for broke and try and get in now while things are at their "peak", or hang about another six months or a year and hope for a price drop? Just curious to see what you money-savvy folks might have to say.

Also, I was wondering how feasible the idea might be of finding an investor to go in with me on a property, since I would ideally like to try and build. Are there people around who might want to buy the land as an investment, with me building a little house on it, and share the equity? I have enough to build a house, but not buy the land with it (land prices are getting real high here, too). Is this a good idea or totally impractical?

Thanks for any advice!

JJSea
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Quote from zf trader:

#2 is dead wrong, why pay more to take on huge price risk, responsibility for repairs and to become tied down to one spot. This is part of the flawed thinking that is driving up prices. There is no magical need to own a house.
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Well, # 2 has made me over 350,000 in the last 3 years.. My mortgage is about 1900 which is about what I would pay for a three bedroom today. Plus I rent out the first floor for 1600. So I almost live for free plus enjoyed
a huge return on my down payment and 55 K that I used to remodel the home.

I can also write off my interest... so come again my friend ? Wrong

Even if the market hadn't appreciated as it did, just the write off and a modest apprecition would be well worth it... As a renter my 1900 would have been in the garbage.

Nick
 
I as I know well my self buying a place and renting out a part of it to pay the whole mortgage is a great way to get ahead in life. You don't pay rent and you get to build up a little equity. I have seen friends of mine go out and buy a house because they feel that they have to get that first rung on the property market even though they would have been better off renting.

From a Canadian perspective where mortgage payments are not deductible you are much further ahead to put your marginal savings dollars into a tax sheltered RRSP or pension plan where you company matches your contribution than making principle payments on a house if all other things are equal.

For you Yanks the tax deductibility does make buying more attractive but you should look into the difference between putting your marginal savings dollars in a Roth IRA or 401K and making principle payments on a house.(Maybe someone could explain the British situation).

Historically buying has worked out better than renting. This is because if you needed a 25% down payment there was a limited pool of people who would have this much capital together. This kept the pool of owners relatively small and renters big. Over time the down payment required has been reduced to almost nil. Credit to buy home also been extended to risker borrowers. What this has done is forced up the price of houses while reducing the pool of renters. For most of the last fifty years you would have been better off buying, however conditions have changed to the point where you really need to crunch the numbers before deciding whether to rent or buy.
 
Quote from NKNY:

Well, # 2 has made me over 350,000 in the last 3 years.. My mortgage is about 1900 which is about what I would pay for a three bedroom today. Plus I rent out the first floor for 1600. So I almost live for free plus enjoyed
a huge return on my down payment and 55 K that I used to remodel the home.
......

Nick
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Yes. But keep in mind that real estate really is cyclical ..... it just might be that you are living in interesting times where you are enjoying a nice set of shorter term circumstances............these types of opportunities may not appear again for a few years ....So congratulations on smart dealings but your experience may not be easily duplicated into the near future ....
 
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