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Old 05-18-2018, 01:31 PM
 
3,964 posts, read 1,593,575 times
Reputation: 12390

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Quote:
Originally Posted by LifeIsGood01 View Post
All you need is basic maintenance not improvements, A terrible investment is renting for the same price that you could buy.
True. But you can often rent for less, without the property taxes, maintenance, homeowners insurance, et al. The old wheeze that the realty biz likes to spout is that a house is an investment. But that isn't always true. There are times when it can be downright dangerous. After all, the Federal government, through the good offices of FMAC and FMAE, saw homeownership as the path towards wealth building during the last decade, and see what happened there.

Now that our last child has flown the coop from high school, our next place will be an apartment a couple of blocks from my wife's office. It's a nice high-rise that will cost us roughly $1,500 a month less in living expenses, even when we factor out wear and tear on her car. Take our equity, plow it into a nice prudent portfolio, and decide what Phase III of our lives looks like.
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Old 05-18-2018, 01:59 PM
 
Location: Cary, NC
31,594 posts, read 55,307,520 times
Reputation: 30150
Quote:
Originally Posted by MinivanDriver View Post
True. But you can often rent for less, without the property taxes, maintenance, homeowners insurance, et al. The old wheeze that the realty biz likes to spout is that a house is an investment. But that isn't always true. There are times when it can be downright dangerous. After all, the Federal government, through the good offices of FMAC and FMAE, saw homeownership as the path towards wealth building during the last decade, and see what happened there.

Now that our last child has flown the coop from high school, our next place will be an apartment a couple of blocks from my wife's office. It's a nice high-rise that will cost us roughly $1,500 a month less in living expenses, even when we factor out wear and tear on her car. Take our equity, plow it into a nice prudent portfolio, and decide what Phase III of our lives looks like.
Buying a home is always an investment. Homes sure are not consumables, and particularly when they come with dirt.
It isn't like we buy them with throwaway money. We want a return, or at least preservation of principal.
Just sometimes, it is a great investment and other times a very poor investment. Money is lost quite often in many investment vehicles.
Anything you would buy with an eye on resale value should be treated as an investment. That is one reason we do due diligence at time of purchase of real estate.

The error some agents make is promoting home buying as the best investment you can make.
They should clam up on that point. It makes them look dull.
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Old 05-18-2018, 05:14 PM
 
255 posts, read 758,880 times
Reputation: 222
Quote:
Originally Posted by LifeIsGood01 View Post
That's all built into rent too. Landlords rent to make money not as a favor to you.
Maybe, but my landlord hasn't increased rent on me in 8 years. He's just glad to have a good tenant. Of course the place was built in the 80s and doesn't have all the bells and whistles that newer places do. I'm in a situation where I don't currently have to worry about rent increases, but I'd still like to have something of my own, but prices have gotten out of hand in my area.
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Old 05-18-2018, 05:56 PM
 
10,265 posts, read 6,495,798 times
Reputation: 10837
Quote:
Originally Posted by Family_Guy27 View Post
Maybe, but my landlord hasn't increased rent on me in 8 years. He's just glad to have a good tenant. Of course the place was built in the 80s and doesn't have all the bells and whistles that newer places do. I'm in a situation where I don't currently have to worry about rent increases, but I'd still like to have something of my own, but prices have gotten out of hand in my area.
It's paid off of inherited prolly so his expenses are low and he wants to keep a good tenant.

When I lived up north we had leases and it went up a few % each year. When I moved to Florida the rent stayed the same but I moved a few times. I was still throwing money away. I could have paid for my house with the money I paid in rent. My mortgage is less than what I paid in rent when I moved to Florida in 2008.
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Old 05-18-2018, 06:22 PM
 
5,675 posts, read 7,260,887 times
Reputation: 3182
Quote:
Originally Posted by RoamingTX View Post
If you think they’re going to lose 50% of their value in the next 2.5 years - but you'd rather buy because you've spent $11K/yr on rent....

Damn, it’s no wonder you hate accounting. Your math is ****ed up.

I’ll tell you why not to buy, with your own math.

The 27K you’ll spend on rent for the next 2.5 years will be dwarfed by the amount of money you’ll spend on a house that is 50% less than today’s value.

Keep renting.
If OP truly believes their OP, then this is the answer and there's really no debate, unless OP is currently looking at homes that are ~$50K.

Even on a $100K home in today's market, OP would save $20K+. I think most would say that's worth another 2.5 years of being annoyed by renting if you've already been doing it for 12.

Maybe it will cost a little more, but can't you rent a house?
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Old 05-18-2018, 07:42 PM
 
820 posts, read 275,250 times
Reputation: 2611
If you KNOW it's the height of the market in Jacksonville, you'd be foolish to buy a house there.

Instead, take that talent to Vegas and make a FORTUNE, baby!
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Old 05-18-2018, 07:54 PM
 
Location: Salem, OR
13,741 posts, read 31,556,293 times
Reputation: 12105
So what you do depends on your tolerance for risk and how stable you are, meaning you could live in Jacksonville for a long time if needed.

So let's look at a 50% drop scenario.

Jacksonville house purchase for $200,000 today at a 4.875% interest rate with 20% down.

Year 1:Payoff balance: $157,626.40 Home value:$195000 Equity position: $37,374
Year 2: Payoff balance:155,133.82 HV: $190,000 EP: $34,867
Year 3: Payoff balance:152,516.35 The year of the crash. HV is $100,000 now. EP:-52,516
Year 5: Payoff balance: 143,850.27 Home value is $110,000. EP: -33850
Year 10: Payoff balance: 126,258.40 Home value is $150,000 now. Equity position:$23,742 Hey, it was a long dark, depression...
Year 15: Payoff balance is 103,793.85 HV: $250000 EP: $146,207

If you are in a stable job in a city you like and you are in a position to weather out the cycles of real estate you can buy anytime. Real estate is cyclical and you have to be okay with that. If you genuinely believe that the housing market will drop 50% in the next two years in your market and you buy now, you need to plan to hold that house for a good 8-10 years.
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Old 05-18-2018, 08:04 PM
 
5,675 posts, read 7,260,887 times
Reputation: 3182
Quote:
Originally Posted by Silverfall View Post
So what you do depends on your tolerance for risk and how stable you are, meaning you could live in Jacksonville for a long time if needed.

So let's look at a 50% drop scenario.

Jacksonville house purchase for $200,000 today at a 4.875% interest rate with 20% down.

Year 1:Payoff balance: $157,626.40 Home value:$195000 Equity position: $37,374
Year 2: Payoff balance:155,133.82 HV: $190,000 EP: $34,867
Year 3: Payoff balance:152,516.35 The year of the crash. HV is $100,000 now. EP:-52,516
Year 5: Payoff balance: 143,850.27 Home value is $110,000. EP: -33850
Year 10: Payoff balance: 126,258.40 Home value is $150,000 now. Equity position:$23,742 Hey, it was a long dark, depression...
Year 15: Payoff balance is 103,793.85 HV: $250000 EP: $146,207

If you are in a stable job in a city you like and you are in a position to weather out the cycles of real estate you can buy anytime. Real estate is cyclical and you have to be okay with that. If you genuinely believe that the housing market will drop 50% in the next two years in your market and you buy now, you need to plan to hold that house for a good 8-10 years.
You can still “make out OK” in OP’s scenario if you buy now and hold. But you make out much better if you buy in Year 3.
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Old 05-18-2018, 08:15 PM
 
820 posts, read 275,250 times
Reputation: 2611
Quote:
Originally Posted by Silverfall View Post
So what you do depends on your tolerance for risk and how stable you are, meaning you could live in Jacksonville for a long time if needed.

So let's look at a 50% drop scenario.

Jacksonville house purchase for $200,000 today at a 4.875% interest rate with 20% down.

Year 1:Payoff balance: $157,626.40 Home value:$195000 Equity position: $37,374
Year 2: Payoff balance:155,133.82 HV: $190,000 EP: $34,867
Year 3: Payoff balance:152,516.35 The year of the crash. HV is $100,000 now. EP:-52,516
Year 5: Payoff balance: 143,850.27 Home value is $110,000. EP: -33850
Year 10: Payoff balance: 126,258.40 Home value is $150,000 now. Equity position:$23,742 Hey, it was a long dark, depression...
Year 15: Payoff balance is 103,793.85 HV: $250000 EP: $146,207

If you are in a stable job in a city you like and you are in a position to weather out the cycles of real estate you can buy anytime. Real estate is cyclical and you have to be okay with that. If you genuinely believe that the housing market will drop 50% in the next two years in your market and you buy now, you need to plan to hold that house for a good 8-10 years.
Ah, some nice meat to sink the teeth into.
That's why they say 'Numbers are worth a thousand opinions!'
Gracias.
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Old 05-18-2018, 08:35 PM
 
10,265 posts, read 6,495,798 times
Reputation: 10837
Quote:
Originally Posted by PamelaIamela View Post
If you KNOW it's the height of the market in Jacksonville, you'd be foolish to buy a house there.

Instead, take that talent to Vegas and make a FORTUNE, baby!
It's not there are still a lot of cheap homes there. When it's getting closer to the top all the cheap homes are gone.
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