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Old 01-21-2019, 09:12 PM
 
Location: Philaburbia
31,673 posts, read 58,228,116 times
Reputation: 52665

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Quote:
Originally Posted by GearHeadDave View Post
The only caveat to that is that it has to be easy to maintain.
My next starter home will be a starter ground floor condo.
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Old 01-21-2019, 09:16 PM
 
Location: planet earth
3,760 posts, read 1,343,875 times
Reputation: 8283
This is the worst advice, ever.

If you can get into the real estate market, do it!

There are no down-sides in most markets.
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Old 01-21-2019, 11:47 PM
 
4,971 posts, read 4,856,278 times
Reputation: 5830
Just like everything else---it depends. But I'm sure he got a lot of attention for his article.

As much as I don't like my apartment, I would like to think I made a good decision:
-If I sold it tomorrow, I would stand to sell it for probably double what I paid in five short years
-My mortgage+maintenance=hundreds of dollars less every month than a comparable rental

I am hoping to sell it this year and roll my profit into something better. Real estate is pricey where I live and I need that big d/p to buy ANYTHING because I am not rich.

That being said, I am sure there are TONS of people for which buying a starter home is not a smart idea. I would think that those are usually people who aren't putting much down, plan on moving within five or so years and/or in a flat market. Between all of the fees associated with buying and selling, there is a good chance you might not break even.
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Old 01-22-2019, 02:41 AM
 
Location: South Park, San Diego
4,732 posts, read 7,251,726 times
Reputation: 8664
[/IMG]

Iíve made worse mistakes.
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Old 01-22-2019, 08:01 AM
 
Location: Raleigh
7,483 posts, read 5,532,186 times
Reputation: 10239
Quote:
Originally Posted by mathjak107 View Post
renting can be a great deal when you have some assets accumulated and can invest in much greater growing assets ..

we took the money we made in homes earlier in life and for the last 15 years rented and invested in all kinds of things . we can buy two houses like we had today with the money . so renting is not throwing money away , it may enable you to take the money that would be other wise locked up in a house and grow a whole lot of wealth with it .

it really depends on the stage you are in and your resources accumulated . obviously if you have little money , finding something to buy vs rent is a better idea .

but it is not as clear cut once you have choices and lump sums of money that can be deployed in other investments by renting instead .
You repeat that, over and over.

But the first apartment I lived in alone, without roommates, has gone 7.6% a year since I moved in in 2012. I know because a friend still lives in the building, and it went up that amount in the three years or so I lived there. In that time frame the S&P returned 8.4%, 10.5% w/ dividends reinvested, if you don't adjust for inflation.

To me, that's a thin margin to be told what color I can paint the bathroom or what I can hang on my wall.

My experience wasn't unique to my building or even that neighborhood...We routinely griped about whether it was better to move in the face of a rent hike or stay put (given the costs of moving.)
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Old 01-22-2019, 08:30 AM
 
Location: Columbia, SC
8,939 posts, read 17,666,868 times
Reputation: 6379
Quote:
Originally Posted by steveklein View Post
In most markets, a $275k property is going to be much nicer than a $1,000 rental.

My home would sell for about $210k right now and would rent for about $1,500.
Interesting. Would be curious to know about others rental vs. sales prices.

I paid 163,000 for my starter home in 2006. Starting renting it in 2009. Currently worth around $180,000 and rents for 1450/mo. My mortgage is 1250/mo. Tenants have paid down the mortgage payoff by about $35,000 so far.
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Old 01-22-2019, 08:37 AM
 
67,409 posts, read 68,269,472 times
Reputation: 45249
Quote:
Originally Posted by JONOV View Post
You repeat that, over and over.

But the first apartment I lived in alone, without roommates, has gone 7.6% a year since I moved in in 2012. I know because a friend still lives in the building, and it went up that amount in the three years or so I lived there. In that time frame the S&P returned 8.4%, 10.5% w/ dividends reinvested, if you don't adjust for inflation.

To me, that's a thin margin to be told what color I can paint the bathroom or what I can hang on my wall.

My experience wasn't unique to my building or even that neighborhood...We routinely griped about whether it was better to move in the face of a rent hike or stay put (given the costs of moving.)
you need to look over long periods of time not 3 years or even 10 years .

location matters too .. 100k in the fidelity insight growth model in 1987 when i started is 2.8 million today that is using plain old fidelity funds . in fact you could subtract out all the rent and taxes spent over decades and buy 2 homes today from that difference . my house wqas 169k back then , today it is 950k , the growth model with equal dollars is 4.70 million .

on the other hand we rented the last few years and invested that money no longer in a house in manhattan co-ops . the return has been spectacular from those co-ops . the co-ops beat the growth model but they are in a prestigious building overlooking central park .

overall real estate is very local but on average it has tracked inflation over the long haul and not much more except in certain areas .

on the other hand we bought a 2nd home in 2007 in the poconos , we sold it in 2012 for what we paid . 2 years later the people we sold to got 60k less .

typical investment time frmes span decades not years . heck we had a lost decade for stocks where bonds beat stocks , but look at a typical accumulation time frame which spans decades and it sill is in the same 9-11% range .

Last edited by mathjak107; 01-22-2019 at 09:08 AM..
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Old 01-22-2019, 10:15 AM
 
4,639 posts, read 11,704,099 times
Reputation: 3168
Quote:
Originally Posted by Seduflow View Post
Great article, https://awealthofcommonsense.com/201...-you-can-make/


Here is a preview of what's in it:


I think the idea of buying a starter home is one of the worst moves you can make financially as a younger person. Buying a starter home will likely cost you way more money in the end as opposed to waiting until youíre ready for a more high quality home. Around 70% of your mortgage payments in the first 5 years will go towards interest costs on your loan, so you build up very little equity in a starter home by the time youíre ready to move. Then you end up spending a ton of money trying to fix the place up. And when you do decide to trade-up to a nicer place you end up paying closing costs and realtor fees. In the majority of cases it will prove to be a far better move to rent for a few more years and save enough money until you can afford a nicer house. At that point the pros far outweigh the cons because of the sense of community, place to call your own and the psychic income involved.
"Great article"......uh yeah....not so much.

More like "something to consider". FAR from great.
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Old 01-22-2019, 10:49 AM
 
Location: Raleigh
7,483 posts, read 5,532,186 times
Reputation: 10239
Quote:
Originally Posted by mathjak107 View Post
you need to look over long periods of time not 3 years or even 10 years .

location matters too .. 100k in the fidelity insight growth model in 1987 when i started is 2.8 million today that is using plain old fidelity funds . in fact you could subtract out all the rent and taxes spent over decades and buy 2 homes today from that difference . my house wqas 169k back then , today it is 950k , the growth model with equal dollars is 4.70 million .

on the other hand we rented the last few years and invested that money no longer in a house in manhattan co-ops . the return has been spectacular from those co-ops . the co-ops beat the growth model but they are in a prestigious building overlooking central park .

overall real estate is very local but on average it has tracked inflation over the long haul and not much more except in certain areas .

on the other hand we bought a 2nd home in 2007 in the poconos , we sold it in 2012 for what we paid . 2 years later the people we sold to got 60k less .

typical investment time frmes span decades not years . heck we had a lost decade for stocks where bonds beat stocks , but look at a typical accumulation time frame which spans decades and it sill is in the same 9-11% range .
Good Points. Its a really tough comparison because there isn't an average rent yoy that I can find nationally. All I really have is local data points. Which is kind of the equivalent of picking a single stock to make the argument you make; some have done wonderful, some not so much.
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Old 01-22-2019, 11:14 AM
 
136 posts, read 44,129 times
Reputation: 266
Quote:
Originally Posted by GeoffD View Post

If you want to optimize for wealth creation, you rent a dive studio in a sketchy neighborhood and invest the difference in the market. 35 years later, you'll be very wealthy.
I don't want to waste my best years living in a slum so I can have a lot of money when I'm too old to enjoy it.
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