Buying a cheap condo.....worth it??? (rental, HOA fees, mortgage)

[Count David]

I will respectfully disagree with the "have to have a mortgage" folks.

[EscapeCalifornia]

Originally Posted by David Aguilar

I will respectfully disagree with the "have to have a mortgage" folks.

Yeah not paying interest > paying interest

I understand the concept of financial leverage and that's great for speculators who understand the downside risk, but most people would be better off buying a home, living in it, and getting free and clear ASAP.

[ajmac10]

Originally Posted by David Aguilar

I will respectfully disagree with the "have to have a mortgage" folks.

Well if that's the case, which is totally fine, another way of gaining liquidity through the equity in your home is to have a HELOC. Equity Lines of Credit are a great way to own your property free and clear but leveraging its value by gaining cash in which interest charged on the amount taken is also tax deductible. Of course you want to make sure it's somewhat property related expenses, don't want the feds to smell something funky with your tax deductible cash.

You can own your home outright and still have cash at your disposal.

[Count David]

Originally Posted by ajmac10

You can own your home outright and still have cash at your disposal.

Yeah, the money you'll have that isn't going to a mortgage payment.

[Bideshi]

Originally Posted by Brian_M

It's worth mentioning that it's ONLY a worthwhile tax deduction if you are over the 'Standardized' limits. My wife and I, in ~25 years of filing, have never been over those limits.

It's also worth considering that prop taxes have only one way to go and that is straight up.

[Bideshi]

Originally Posted by David Aguilar

Yeah, the money you'll have that isn't going to a mortgage payment.

There's a trade off here of course. The money put into the property isn't earning interest or dividends. You can get 4% interest for example on 100k which will give you $300 plus a month income. It's hard to figure the best way to play it, Be sure you're going to stay in one spot and don't intend to move for sure. Otherwise, rent. IMHO

[Bideshi]

Originally Posted by EscapeCalifornia

most people would be better off buying a home, living in it, and getting free and clear ASAP.

I mostly agree with that providing they can have some confidence that they will be able to stay long term. However, if they are likely to face a move in the foreseeable future, rent.

[Count David]

Originally Posted by Bideshi

There's a trade off here of course. The money put into the property isn't earning interest or dividends. You can get 4% interest for example on 100k which will give you $300 plus a month income. It's hard to figure the best way to play it, Be sure you're going to stay in one spot and don't intend to move for sure. Otherwise, rent. IMHO

True, but it is also possible the property will go up in value, and there is also a value in always having a paid for place to live.

Instead of investing $100K and getting $300/mo income, the $100K could go to the outright purchase of a livable property. And while not having the monthly mortgage payment, said person would save about $600-$700/mo, which would be better than the $300/mo income IMO.

[Bideshi]

Let's add it up: Prop tax + insurance+ HOA (maybe)+ upkeep (roof and paint every so many years, etc) + $320 a month we're not making in interest/dividends = you add 'em up for your situation, but I guess we're getting close to the break-even point buying vs renting.

[EscapeCalifornia]

Originally Posted by Bideshi

Let's add it up: Prop tax + insurance+ HOA (maybe)+ upkeep (roof and paint every so many years, etc) + $320 a month we're not making in interest/dividends = you add 'em up for your situation, but I guess we're getting close to the break-even point buying vs renting.

I think renting vs. buying is about the same in most parts of the country. Of course once you buy, the mortgage cost is (hopefully) fixed and will eventually go away. Rent will increase at the inflation rate or more. When it comes time to retire, I'd rather have a mortgage-free home to live in than an ever-increasing rent check to write every month.