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But then I talked to a friend and he said don't do it. He made it seem like buying a house was the worst decision in the world, with huge upkeep and hidden costs, as well as property taxes.
You only have one friend? Find some more...
We have bought three houses in three states between 1980 and 1998. We are still in the last house we bought. Would do it all over again...
I guess I'll call my debt free landlord friend that owns 60 rental houses and 10 apartment complexes and ask him where he got the money to pay for his lake house, his motorcycles, his boats, wave runners, camper trailer RZR, his home in historic downtown, etc.....
Apparently he didn't get the memo that landlords don't always make a profit. He seems to be doing very well with it.
Where they were asleep was during the bubble, when everybody thought the price of real estate would always go up. Instead of buying a home they could pay for, they bought much more than they needed on spec, then mined their fictitious paper "equity" to live large and pay for things they couldn't afford. The people who lost their homes couldn't afford them in the first place. Nobody was upside down on their original purchase price for more than a couple of years.
There are always people with no idea how to manage assets. They sold their stocks at the bottom. They bailed on their house at the bottom. They locked in their losses in a panic. If they bought what they could afford and invested because they really had the money, then just rode it out, they have done very well indeed.
None pertain to the example I presented. I bought in 02, could afford it, and sold in 16 at a 33% loss. Everyone else in my area who bought and sold in the same time frame did as well. Had I sold at the bottom it would have been a 50% loss.
Again I am just showing the OP that not everyone makes money with buying a house.
There's nothing wrong with sharing both sides and presenting both options. As I stated before, owning a home isn't for everyone, but it isn't wise to immediately assume that owning a home is a money pit. That depends on how you buy it and what kind of decisions you make. There are ways to minimize risk, and that is what you have to shoot for. ANY investment comes with risk, but if done right the rewards can be greater than the risk.
Not everyone can dip into a bank account and pull out $15-$20k out if an emergency pops up. All things being equal, let's say you have to have a surgery that insurance only covers a small portion of..... and you have $40k of equity built into your home.
If you have paid off your home (or paid down a large portion of it where you have equity built up, or purchased low enough that it came with equity) you can pull that equity out to cover the expense. You will have to pay that money back of course over time, but you do have the option to sell the home at market value and pay off the loan you took against the home at closing.
If you are renting and you don't have a large nest egg built up in savings, and no market investments where do you plan to get the money? You can potentially take out a signature loan at your bank at a higher interest rate but there is no way to pay the loan off other than making monthly payments for possibly years until it is paid back. There isn't an option to pay it off early unless you fall into a small fortune.
Not sure what part doesn't make sense in this I guess.
What you are comparing doesn't make any sense to me. You are assuming all renters do not have a next egg and all homeowners have equity in their homes, as you have presented them your examples do make sense.
Lets take an example of someone with 50k, if they want to put it into a house it is more difficult to get at than if they rent and then have 50k in liquidity.
At the end of the day none of that is a problem for me, I rent and have a gigantic nest egg, I just prefer to deploy it in the market rather than in a home.
It means that the idea that landlords don't make a profit is a myth. Would you have a job that continuously drained you of any money you had with no return on the investment?
Nobody said that all landlords don't make a profit, nice straw man argument.
Even if my home was upside down in value it wouldn't matter to me because my mortgage is so low that it costs less than renting a one bedroom apartment.
Some people are still upside down because they bought at the height of the market and didn't do their homework, and got loans that they were not qualified for or spent money on upgrading the home instead of being happy with what you have, but even some of those have mortgage payments that are in line with what rental costs are in that area so they are not in that bad of a shape.
And this is where you are wrong, I bought in 02, the height was in 08, I was easily qualified for my loan and had minimal upgrades, rent was roughly what the mortgage was in my area. At the end of the day a 50k loss really doesn't do much harm to my balance sheet.
I only listed my example to show the OP that not everyone makes money buying a home. You yourself said earlier in the thread they should get feedback from people that have actually been home owners, so I provided an example, you just want to jump on it because it doesn't rubber stamp your belief.
And this is where you are wrong, I bought in 02, the height was in 08, I was easily qualified for my loan and had minimal upgrades, rent was roughly what the mortgage was in my area. At the end of the day a 50k loss really doesn't do much harm to my balance sheet.
I only listed my example to show the OP that not everyone makes money buying a home. You yourself said earlier in the thread they should get feedback from people that have actually been home owners, so I provided an example, you just want to jump on it because it doesn't rubber stamp your belief.
So you could have rented out the house and it would have covered the mortgage but you chose to take a $50K loss instead?
and instead of living in the house at market rent rate you chose to rent somewhere else and take a $50K loss?
I'm just about to buy my first house. Just has a lot of electrical issues, and I hope I can get them taken care of before I move forward with the purchase.
Apartment living in and of itself doesn't bother me. I don't mind renting space. But I'm at the point in my life where I get aggravated hearing other people on the other side of a wall. Or hearing people walking around on my ceiling/their floor. I don't like having to smell people smoking. There's an area for recycling/trash and it aggravates me when people throw their garbage in the recycling bin -- not because I'm an eco-warrior, but because it's right next to the dumpster, which means they literally don't care what they're doing. I don't like having to find parking or having to share parking with people who will squeeze right up next to your car.
I would avoid buying a house in this country, they are endless money drainers, because poorly build from cheap materials, unless you can find decent pre-war brick house in good condition.
Condo seems like a better idea, much less maintenance issues, and you can buy top floor to minimize noise from neighbors.
With condo you can also be much closer to work locations, usually, and can pay them off much quicker. It's nice not to have a mortgage rather than feeding usurers all your life.
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You can potentially take out a signature loan at your bank at a higher interest rate but there is no way to pay the loan off other than making monthly payments for possibly years until it is paid back. There isn't an option to pay it off early unless you fall into a small fortune.
