[Stylo]

Originally Posted by JayCT

A $110,000 condo today was priced at about $55,000 30 years ago. Who knows what it will be in 30 years. But you also don't know that the investments made will be worth more either. The stock market and other investment markets drop too.

Also I am not sure how you can say that rent has not increased as much as taxes and common charges. That is just NOT TRUE. Landlords do not eat these costs. They pass them on to the tenant.

And I never said the mortgage rate was 3%. It is 3.9% (read what I posted) which is the rate I got from the Liberty Bank website. Check for yourself. Jay

Again, no one is talking about keeping a place for 30 years. Just 5. He won't make up his closing costs in 5 years with appreciation.

[kidyankee764]

Originally Posted by Stylo

He won't make up his closing costs in 5 years with appreciation.

Not even close. The kid will likely lose money by buying.

The days of buying your primary home as an investment are gone.

[Cambium]

Originally Posted by JayCT

A $110,000 condo today was priced at about $55,000 30 years ago. Who knows what it will be in 30 years. But you also don't know that the investments made will be worth more either.

That comment doesnt help your views. Thats only a 100% gain.

I'm Not talking about investments Jay. Talking about saving $1000 a month renting for 30 yrs. That would be a 360,000% gain.

Are you really comparing a 100% appreciation to a 360,000% cash gain???? And dont forget... Its not $110,000 that you dished out. Its more like $170,000 over time. So technically your way less than a 100% gain.

I'm curious about something else.. Do you think you'll get market value for an outdated property? Chances are you have to spend $30,000 fixing it up to be on par in 30yrs.

And lets hope there's no condo assessments along the way. lol. My my.

[Cambium]

Originally Posted by Stylo

Again, no one is talking about keeping a place for 30 years. Just 5. He won't make up his closing costs in 5 years with appreciation.

True...but he did say this.

Originally Posted by justanotherguy!

the point of me wanting something cheap is so I can pay the mortgage off faster so I can sell it and use that money as a down payment towards a nicer house in the future.

Although of course I'd be looking for something decent and not run down/built in the early 1900's.

Sounds like Ownership for a long time to me. Thats why I'm using a 30yr senario but in his case its 35yrs since he wants a 5yr condo and then a house.

There's too many senarios if you think about it. You can put an extra $1000 towards the mortgage and pay it off sooner paying less interest over time. My whole thing is people dont actually sit down and think about how much they spend year over year.

I'l be back later....I have to go buy grass seeds and fertilizer so I'm not the only one with brown grass... Whooops, there's another $50 that I wouldnt need to spend if I was renting.

[Stylo]

Originally Posted by Cambium

Sounds like Ownership for a long time to me.

Irrelevant. Every new house means new buying/selling costs. Hard costs like closing costs and agent fees. If you keep jumping from house to house you're going to need a lot of extra money. It's not a money-making game. Also, if he sells a cheap condo in 5 years he's not making any money to put down on a bigger house. At that point he'll have to rely on savings.

No one factors in closing/selling costs. It can eat up your profit pretty quickly.

Take me for instance, I bought and sold a place quickly in 2009. I sold it for $35,000 more than I bought it for, but between all closing costs upfront and selling costs when unloading it, I actually just broke even.

[Cambium]

My condo in Milford built in the 1980s has a wooden Kitchen counter, green tiles, old carpet, old washer/dryer, drafty windows and I am dredding putting $20,000 into it to update it, because I know it wont appreciate that much. So eventually I'll sell it as is and accept $20k less than market value.

Thats what 30yrs of no updates does.

[Philbert]

Originally Posted by Stylo

Pretty much no bank is giving out loans for less than 20%. It would have to be FHA insured, which means it carries a hefty PMI payment every month.

True, condos have become very difficult to get traditional mortgages on, and as I noted in an earlier post, even FHA can be a problem if the condo board wants to stand in the way (which happened to us).

Single family homes can be done with less than 20% down - the 2-loan structure has made a comeback (at least in some circumstances).

Also, if going the one-loan route with PMI, something to consider is single premium PMI vs monthly.

[Cambium]

Originally Posted by Stylo

Irrelevant. Every new house means new buying/selling costs. Hard costs like closing costs and agent fees. If you keep jumping from house to house you're going to need a lot of extra money. It's not a money-making game. Also, if he sells a cheap condo in 5 years he's not making any money to put down on a bigger house. At that point he'll have to rely on savings.

No one factors in closing/selling costs. It can eat up your profit pretty quickly.

? lol. I agree with your views. Thats what I meant. Its not just a 5 year thing like you said. Its longer and its one to another eating more of your hard earned money.

Exception is he finds a foreclosure or an awesome deal or can generate income from it)

[Stylo]

I'm just saying keeping ONE place for 30 years is a lot different than buying and selling 6 places in 30 years. The costs add up.

[Philbert]

Originally Posted by kidyankee764

Not even close. The kid will likely lose money by buying.

The days of buying your primary home as an investment are gone.

I don't know if I'd go that far, but it's definitely not the primary road to wealth. Though, I'd argue, it never really was. You have to live somewhere, so even with large appreciation in housing, your net worth is either trapped in your house, you take on debt to access it, or you sell and pay market rate for a new place to live. And it turns out most people don't end up "downsizing" (in the sense of a less expensive place) when they retire.

Back to the OP, I think the key takeaway here is that you shouldn't rush to buy as soon as you can afford "something" just to be a homeowner. Rather, you should wait to buy until you can afford a place you will want to live for a long time.