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Old 01-06-2015, 01:27 PM
 
2,409 posts, read 2,627,228 times
Reputation: 1807

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Quote:
Originally Posted by emm74 View Post
That presumes there is money left over to invest after renting. Rents in Denver are very high and for the last home I owned plus the one we just moved into, renting a comparable property would be more expensive than my mortgage, taxes, interest, HOA and insurance combined. No money left to invest if I wanted the same standard of living.
That mortgage payment is higher than rent is a premise proposed in post #46.

On top of that, the down payment can be invested as well. Even in a tight rental market like Denver, paying mortgage and maintenance is still usually more expensive than paying rent. Lowering the monthly payment means putting down a larger payment up front which comes with a lot of investment returns forfeited.
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Old 01-06-2015, 01:55 PM
 
Location: Denver, CO
898 posts, read 987,183 times
Reputation: 1366
I can argue both ways on the matter.

My personal opinion: buy a house because you want to be a homeowner and live in the same house that belongs to you, not as an investment. There are better investment vehicles out there.

the long story: houses do appreciate, but historically not by much (barely keep up with inflation is my understanding - could be wrong, and I will not supply data to back up my claims at this time). They are volatile but so are other investments.

The cost of owning is higher, and that difference in cost can be investment in stocks / bonds / whatever. With that said, don't forget the human element - how many of you are actually comparing the cost of ownership to cost of renting and investing the difference? I'd bet not many. Most people don't budget at all but we are savvy here on CD aren't we? So we budget our bills, expenses, and savings. Invest what we decide (not the calculated difference between renting and owning) and live our lives. Paying a mortgage FORCES you to save which for some is a very good thing. You are putting money into an investment (it is ABSOLUTELY an investment - you put money into it, it appreciates and / or depreciates and you can liquidate it. The argument should be whether it is a GOOD investment) that you would normally put into rent. Can you make a killing? yes you can but you can also lose money. I'm not very good at predicting the market but I suspect neither are those pundits on TV so I don't listen to them.

I bought a house just now because I am ready to settle at the same place, and want to be a homeowner. I want my own piece of land and no landlord and I want to be a homeowner. I don't plan to leave Denver any time soon and want to buy now while rates are low and prices are still reasonable.

Each make your own decision but don't assume that what is best for you is best for everyone.

Last edited by ayoitzrimz; 01-06-2015 at 02:45 PM..
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Old 01-06-2015, 03:00 PM
 
Location: Colorado
2,483 posts, read 3,518,333 times
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Quote:
Originally Posted by ayoitzrimz View Post
My personal opinion: buy a house because you want to be a homeowner and live in the same house that belongs to you, not as an investment. There are better investment vehicles out there.
I share this opinion and I also agree that whether owning or renting is best depends on circumstances.

In any case, you should never think of your home as income, because it is almost always an expense, even if you live in an area with a lot of potential appreciation. Usually, the only way it ever becomes income is if you've owned in CA or NY, etc. for many decades and are now in a position to sell. Or maybe if you're are an experienced flipper with a lot of bankroll to finance your own deals from start to finish. A lot of people think they are or could become either of those things, but very few actually are.

Figure out how much rent is vs buying, broken down per month. Then take your best guess at how long you plan to stay in one place. It is more than 3-5 years, it may make sense to own, but even then it may not. I own my own place and I'm sure glad I do. But I don't plan on selling it unless I have to and I will eventually pay it off and live in it when my income becomes more fixed. Even if I had to move, I would rent it out and then return to it asap. So I'm glad to NOT see my property appreciating mud because that would just mean more taxes for me.

Not many people are that resolved to stay where they're at, so buying a home becomes riskier. Most of the people I know who got burned back around '08 are people who rushed into housing (in CA) because they felt like the elevator door was closing and they had to jump in before it went up without them. Resist that urge, and only buy if it makes real financial sense to.

More on topic: the amount of gross income you need will depend on the size of your mortgage, and its terms. Conventional thinking says housing should not be more than a third of your gross, but I'd make that a quarter, MAX, and aim for closer to 10-15% if possible.
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Old 01-25-2015, 12:13 PM
 
Location: Washington Park, Denver
6,902 posts, read 6,494,653 times
Reputation: 7348
$82,036

The 10 richest cities in America
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Old 01-25-2015, 02:09 PM
 
Location: High Plains of Colorado
97 posts, read 106,137 times
Reputation: 158
Quote:
Originally Posted by SkyDog77 View Post
Honolulu didn't make the cut? I'm surprised.

Anyway, I'm assuming most of the ppl posting in this thread aren't mathematically challenged. For those who are, $82,036 gross salary per year comes to about $40/hr.

If there's two of you (and you've made sure you love each other very much -- or put a good attorney on retainer) then that'll be 20/hr each.

I know it's simple math, but judging by the previous housing bubble (which is still recent memory, btw) I'd say there are a number of folks who are challenged.

Happy home shopping!
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Old 01-26-2015, 02:28 PM
 
2,409 posts, read 2,627,228 times
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Quote:
Originally Posted by SkyDog77 View Post
And how does "living comfortably" equate to "buying a home"?
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Old 01-26-2015, 02:44 PM
 
Location: High Plains of Colorado
97 posts, read 106,137 times
Reputation: 158
Quote:
Originally Posted by AmFest View Post
And how does "living comfortably" equate to "buying a home"?
Someone's going to buy the home or live "comfortably" on the streets.

What, exactly, is the difference btwn rent and mortgage? Who pays less? How much? Are you implying the difference for the renter creates that comfort?

Not getting your point, or are you not making one?
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Old 01-26-2015, 03:06 PM
 
Location: High Plains of Colorado
97 posts, read 106,137 times
Reputation: 158
@AmFest: In other words, the article is surely speaking of homeowners because $82K seems a bit excessive to live comfortably, doesn't it?
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Old 01-26-2015, 03:57 PM
 
Location: Phoenix, AZ
1,801 posts, read 2,070,971 times
Reputation: 2758
Quote:
Originally Posted by certainquirk View Post
@AmFest: In other words, the article is surely speaking of homeowners because $82K seems a bit excessive to live comfortably, doesn't it?
It depends on your definition of "comfortably".
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Old 01-26-2015, 05:30 PM
 
2,409 posts, read 2,627,228 times
Reputation: 1807
Quote:
Originally Posted by certainquirk View Post
@AmFest: In other words, the article is surely speaking of homeowners because $82K seems a bit excessive to live comfortably, doesn't it?
Because that figure is excessive, by definition, it's not the "ideal" income level to buy a house.
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