Just Visiting (San Francisco: HOA, health insurance, condo)
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I think he's talking about renting or some-such....but I said "own" so using your home definition to include condo's etc. as well as houses....I don't see it on 50k.
Maybe you are talking about buying a truck or van where you can park it on the street and sleep at night in the back. (Which I saw plenty of) It's not a house but it's a home.
It might not make a lot of sense, but it IS possible! My friend owns a beautiful condo in Santa Clara - not a van, LOL - and did so on about a $60K salary (as a nurse). It's called saving, financing, and whatever else people do to make it work... I personally don't want to stretch myself that thin, but for some it's worth the costs.
P.S. Sorry, but I had to edit your last post... please everyone, refrain from turning this into a personal argument.
It might not make a lot of sense, but it IS possible! My friend owns a beautiful condo in Santa Clara - not a van, LOL - and did so on about a $60K salary (as a nurse). It's called saving, financing, and whatever else people do to make it work... I personally don't want to stretch myself that thin, but for some it's worth the costs.
P.S. Sorry, but I had to edit your last post... please everyone, refrain from turning this into a personal argument.
Ok, so let's say your friends beautiful condo in SC costs 600k and she makes 60k a year. Even with 100k down that is at least 3k a month or 36k a year plus perhaps another 700 a month in association and property tax costs as a rough number.
This totals 3700 a month or around 45k a year.
They can't get out of paying social security and almost everywhere has a 401k where you'd better be putting in 6% so right there she loses about 8k of her income off the top.
From her remaining 52k we'll be nice and say she pays only 4k in state and federal income taxes due to massive deductions.
This leaves her 3k a year or only $62.50 each week for gas, clothing, food, haircuts etc etc etc.
Something really really smells in your story. I'm guessing she has 2 renters, can never have kids (or get sick) and perhaps inherited some cash on top of that.
Can you even remotely explain this because when you break it down, something is obviously wrong with this story?
I wasn't even alive in the 1950s, and many of my friends & peers own homes, purchased in the last 5 years - and they're FAR from millionaires! These homes/condos ranged in price from $299K - $1M, and they all afforded them without a million-dollar salary. I don't know much about real estate, but it can be done... and as Milliano said, you can't dispute how many residents here own homes (and aren't making huge salaries).
Just tell me how you buy a 500k property on 50k of income.
Here are the stipulations:
1. You are not allowed to use inheritance.
2. You are not allowed to commit felony tax evasion with unreported cash rental income.
3. You are not allowed to use wealthy parents to co-sign your mortgage.
4. No illegal supplemental income.
Something really really smells in your story. I'm guessing she has 2 renters, can never have kids (or get sick) and perhaps inherited some cash on top of that.
Not that I have to justify anything, but here are your answers. She lives alone (no renters), is a NURSE for a major hospital (so obviously health care isn't a problem), and didn't inherit anything... her father is passed, but her mom has control of the money for now. I should mention she's since earned raises, and probably makes closer to $80K; but she only made around 60 when she bought the place, and it cost about $299K - not $600K. That was my other point, that you can find cheaper, NICE, places if you look in the right areas.
Just tell me how you buy a 500k property on 50k of income.
Here are the stipulations:
1. You are not allowed to use inheritance.
2. You are not allowed to commit felony tax evasion with unreported cash rental income.
3. You are not allowed to use wealthy parents to co-sign your mortgage.
4. No illegal supplemental income.
I honestly don't know, since I haven't bought a home myself... and while these are close friends/family, I don't exactly ask to see their financial records. A few come from wealthy families, but I guess the others just did some creative financing. Hey, I didn't say it was the smartest move, did I? (which is why I still rent, and plan to continue renting until my situation changes)
Not that I have to justify anything, but here are your answers. She lives alone (no renters), is a NURSE for a major hospital (so obviously health care isn't a problem), and didn't inherit anything... her father is passed, but her mom has control of the money for now. I should mention she's since earned raises, and probably makes closer to $80K; but she only made around 60 when she bought the place, and it cost about $299K - not $600K. That was my other point, that you can find cheaper, NICE, places if you look in the right areas.
Thanks for the responses, good discussion.
Ok, 300k....she probably took one of those interest only or 3 year ARM's at really low interest rates so her mortgage, property taxes and assoc. fees are probably about 2k a month or 24k a year.
Ok, I can see how someone can pull it off (although she's got to keep a tight budget on everything else).
My disconnect was that I was forgetting how some of the creative financing can get someone into a home they really can't afford to "buy". With no cushion and refinancing (reset the clock to 30 years) every so often to keep the ARM adjustment from eating you alive (assuming nothing goes wrong and you can refi) you can live in the house but really make very little headway on the mortgage.
Frankly, to me....that's pretty much renting if you will be 60 and still carrying a substantial mortgage and not much margin for error or to save much for retirement.
That's the kind of smoke and mirrors home ownership that is leading to all of these foreclosures you see in the paper. (To each their own but I don't think a lot of people in their 30's are thinking ahead to their potential situation when they are 55-60 and can't retire or get sick etc.)
Just tell me how you buy a 500k property on 50k of income.
Here are the stipulations:
1. You are not allowed to use inheritance.
2. You are not allowed to commit felony tax evasion with unreported cash rental income.
3. You are not allowed to use wealthy parents to co-sign your mortgage.
4. No illegal supplemental income.
Be a saver...save that $20 Grandma gave you for your birthdays and Christmas.
Save 50% of what you earn starting with your paper route at age 13.
Go to Community College and State while working and living with family.
Never buy a new car... or have car payments.
Never carry a credit card balance.
Do all of your cars routine maintenance, including water pump replacement, brake pads, oil changes, etc.
Don't drink... i.e Bar Hopping and Clubbing.
Put down 25% cash at closing from your savings.
Buy your 500k home with seller financing at 5% fixed 375k loan in 2002.
Always pay your mortgage ON of BEFORE the first of the month out of respect.
Receive a promotion at work and now earn 65k in 2007
Have a job that provides good medical and retirement benefits.
The above is an actual account.
The fact is that it can be done and it is done all the time... life is a series of choices and there is no one perfect path. Basically, it starts by setting goals and consistently working towards those goals.
If it can't be done, how do you explain all the people that have done it?
I previously wrote about a family from Fiji that arrived in California with nothing. Fast forward 10 years and the each of the children have good jobs and own their own homes... the family pooled their resources and everyone worked one or more jobs...
(To each their own but I don't think a lot of people in their 30's are thinking ahead to their potential situation when they are 55-60 and can't retire or get sick etc.)
Very profound statement... many people do not or will not plan ahead.
I was lucky in that I grew up in a family where saving for the future was a religion... education was golden and owning your own home meant that you had achieved financial success.
My parents never bought a new car or carried any debt other than their mortgage. They had seen first hand what happened to neighbors during the Great Depression and tried to instill that in us.
My grandparents and parents thought having a credit card was the beginning of the end... financially. They were from the generation that believed you could not afford something unless you had the cash with you.
Ok, 300k....she probably took one of those interest only or 3 year ARM's at really low interest rates so her mortgage, property taxes and assoc. fees are probably about 2k a month or 24k a year.
Ok, I can see how someone can pull it off (although she's got to keep a tight budget on everything else).
My disconnect was that I was forgetting how some of the creative financing can get someone into a home they really can't afford to "buy". With no cushion and refinancing (reset the clock to 30 years) every so often to keep the ARM adjustment from eating you alive (assuming nothing goes wrong and you can refi) you can live in the house but really make very little headway on the mortgage.
Frankly, to me....that's pretty much renting if you will be 60 and still carrying a substantial mortgage and not much margin for error or to save much for retirement.
That's the kind of smoke and mirrors home ownership that is leading to all of these foreclosures you see in the paper. (To each their own but I don't think a lot of people in their 30's are thinking ahead to their potential situation when they are 55-60 and can't retire or get sick etc.)
Well, there is also the train of thought as to why bother trying to pay off a house? You can use interest only refinancing to mitigate "rent" increases, and chuck the rest of your money into stocks and funds....
And while it's not something I would do, it does give me pause for thought.... after all my mutual fund portfolio has been giving me 25% gains this year -- even with the roller coaster ride -- and my mortgage is 5.125%. That's principal AND interest.
I still say -- the market is not too much different from when we bought out house 20 years ago. I can't tell the people that said we overpaid, that we didn't have enough for a down (seller carried back a 15% mortgage at 10% interest only payment), that we were INSANE for buying, we couldn't afford it.. and we paid 72,000 for this house on a 28,000 income. And yes -- we paid more for a mortgage payment on this house than it would have rented for.
And in ONE YEAR, we gained enough equity to refi to pay off the 2nd mortgage, pay off the truck we had to buy to haul all the stuff the previous owner left, do some remodeling and get a house payment of 756.00....
Which was now about the same as what our house would rent for.
If I was starting over now, earning what we earn now, and knowing what I know now -- I would definitely buy again. And do what ever it takes to do so. My renting experiences were nothing short of hellacious out here... the first place we rented was sold because the more expensive apartment was consistently rented to people who moved out in the night owing back rent. One of the conditions of the sale was our eviction.
Our second apartment was owned by Methuselah, who wanted access at anytime she wanted with no notice... and she couldn't move fast enough to not let our cats escape. Which she did more than a few times, so I know she was going through our stuff. I changed the deadbolt lock out so she didn't have the key and three days after I did, I got a call at work from her yelling at me about her not being able to get into my unit. Nothing was wrong, no emergency, no reason -- she just wanted in. Once again -- with no notice.
She was also the one that claimed a written letter of 30 days notice with a return receipt requested so I know she got it (45 days before we were to vacate to our new house!) wasn't the right way to do it. She needed 30 days notice for the 30 days... in other words 60 days....
So no more renting for us!
Anyhow -- off the tangent -- there are many many ways to get attain home ownership... and it's still the way to go.
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