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But renting a $1000 a month apartment for 10 years is like losing $120K, plus more because rents go up.
It's not like losing 120k. You were paying for a place to stay, have shelter.
I will put an example in front of you, it gets complicated so hang with me.
Let's say you purchase a house for 200k 30 year loan at 3.5% 2% property tax, insurance and have 2% appreciation annually. What does it look like when you sell your house after 10 years?
Sales prices is 243k but you only net 93% of that after commission and other closing costs so 226k. Your payoff is 155k great except that's not profit 40k of that was your own money just coming back to you from principal payments you made. So you made roughly 32k without any maintence costs. You also as a side note ended up paying 62k in interest and 48k in taxes along the way.
If I rented @ 1k a month and put 300.00 a month aside with no growth I'd have 36k in savings. The truth is buying isn't always that great and people often don't fully walk through the math. Most homeowners sell or refi by years 7-9 and most buyers buy more house than they would rent.
Btw if you sold at the end of year five you'd get 22k back at closing of which 18k was your principal payment while the renter would have 18k
1. Stay away from condos!!!!!
2. Don't buy a home unless you are married, have a family, and fully intend to settle down in an area for at least a decade. If you have kids, you should own a home since apartments are no place to raise kids.
3. Don't buy a home that is over 20 years old. The repair bills aren't worth it.
4. If you are single, keep renting cheap apartments, cook your own food, drive an old car, and stick what's left over in your 401k and IRA. Renting provides you with a lot of flexibility career-wise since you can easily move. A home is a ball and chain. That kind of goes with #2, wait until you are married and settled down before considering homeownership.
5. Never EVER listen to realtors who tell you that renting is "throwing money away" and that owning a home is an "investment." Stocks are investments. A home is just something you live in. You throw money away on realtor's commissions, HOA fees, maintenance costs, property taxes, insurance, etc. on a home and should you need to sell when the housing market stinks, you'll throw a ton of money away.
We've obviously had different experiences, as I disagree with everything you've outlined!
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by mls012
We've obviously had different experiences, as I disagree with everything you've outlined!
Me too, mostly, except for #1. While I would not advise staying away from condos, I wouldn't go for one myself. Just too much like an apartment. I need space and a yard. Plenty of single people in their first job have bought homes and started building equity. I would suggest buying a home before having kids, but not waiting until you have a spouse and kids to buy. Twenty years is nothing, people are paying close to a million or more for 100 year old homes that are holding up just fine. Homes are not investments unless you stay there or chose a highly desirable area. Our house cost $190k in 1993, now worth $700k. Back then it could have rented for $1,500, (now $3,500) so just keeping it at that rate we would have "thrown away" at least $414,000, and I know we have not spent anything close to that in maintenance and taxes.
1. Stay away from condos!!!!!
2. Don't buy a home unless you are married, have a family, and fully intend to settle down in an area for at least a decade. If you have kids, you should own a home since apartments are no place to raise kids.
3. Don't buy a home that is over 20 years old. The repair bills aren't worth it.
4. If you are single, keep renting cheap apartments, cook your own food, drive an old car, and stick what's left over in your 401k and IRA. Renting provides you with a lot of flexibility career-wise since you can easily move. A home is a ball and chain. That kind of goes with #2, wait until you are married and settled down before considering homeownership.
5. Never EVER listen to realtors who tell you that renting is "throwing money away" and that owning a home is an "investment." Stocks are investments. A home is just something you live in. You throw money away on realtor's commissions, HOA fees, maintenance costs, property taxes, insurance, etc. on a home and should you need to sell when the housing market stinks, you'll throw a ton of money away.
The same as in I had always wanted to own and bought my first home just as I was turning 22 a few blocks below East 14th Street in East Oakland. I did this just that not listening to the neigh sayers and thank goodness for that.
It was a starter shack on a 25x100 lot and all mine... every 18 months or so I would by my next fixer, move in and renovate and making the last one a rental... with each move a little bigger/better and it took me to nearby cities...
The only thing I would change would be to stay the course and not to have accepted a corporate Director position which left little time for more acquisitions... dumb on my part as jobs go it is OK but any real wealth came when I worked for myself building a Real Estate portfolio and not from working in the corporate world.
In all the cities I have lived, their home prices have skyrocketed in the past 20 years. I just wished I could afford to buy more properties.
It is all down to location, location, location. If it is NYC, SFO, HNL, SEA,....just go ahead and buy. If it is a small town in nowhere in the Midwest, just rent.
Btw if you sold at the end of year five you'd get 22k back at closing of which 18k was your principal payment while the renter would have 18k
But a home can go up and can double in price in 5 years. While it's a rarity it can happen. Your $300 a month saved in not going to double. And maybe the renter doesn't save the $300 because his rent goes up $50 or more each year.
But a home can go up and can double in price in 5 years. While it's a rarity it can happen. Your $300 a month saved in not going to double. And maybe the renter doesn't save the $300 because his rent goes up $50 or more each year.
Well if you start with maybes it's endless isn't it? For most home owners their house doesn't double in five years or anything close to that. Rent can go up, so can taxes, maintence, insurance. You could have the value of your property decline as well
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