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I've been toying around with the idea of buying a house for a couple years now. I finally broke down and went to the bank to get pre approved for a home loan. Every time I check out the listing though, I get this feeling of anxiety... Do I really want to spend the next decade in this area??? I donno. I thought buying a home was supposed to be a special time, something to look forward to, right?
It's hard to put out of mind the troubles in the economy as well. This is my first home I'm thinking of buying, and I'm just getting a lot of bad vibes. I keep saying that I could always rent it out, but maybe I'm just thinking too much...
You buy a house because you can see yourself living there for 7+ years. (The transaction cost of selling is very high.)
You buy a house because, goddamnit, you want to paint the walls your color. And, you intend to live there for 7+ years.
How about... I buy a rough fixer upper, pour my heart into making that house shine again, and even if I move in 4 years, maybe I break even? I've actually seen some decent houses in nice neighborhoods that are in desperate need of some TLC. So much potential, but nobody wants to put the work in I take it. And ya, I do want to paint some walls damnit!
I have heard of people remote landlording. Is that a viable option? I know it requires you to tie up equity, but I have no problem going back to renting for awhile if I do decide to move in the future.
Although buyin a house might be something to look forward to , signing a 30 year commitment can cause some anxiety, perfectly normal.
I'm looking at fairly modest homes around 100K or less. Cheap enough to pay off in as little as a decade. Witnessing what happened during the recession, I'm frightened of over leveraging. Besides, the other investments tend to outperform real estate.
If you want some anxiety, try that "remote landlording" for immediate gratification.
Pick a home well below your income and "ability" to repay the loan. One of the fixeruppers in a decent area sounds like a good idea to me. If you knew beyond a shadow of a doubt that you want to live in a certain neighborhood for 8 to 10 years that's great. But if you clearly are unsure of this particular aspect of home ownership, start low and grow at a rate that is within your comfort zone.
And if you move away before you want to sell, interview 3 or 4 local realty companies who do property management and let them handle the day to day headaches of taking care of a tenant and rental property. But be sure that you come back ever 6 or 12 months and inspect it personally from top to bottom.
I'm looking at fairly modest homes around 100K or less. Cheap enough to pay off in as little as a decade. Witnessing what happened during the recession, I'm frightened of over leveraging. Besides, the other investments tend to outperform real estate.
Where I live a "modest" home is less than $50,000.00. There is no way I would ever pay even $50,000.00 for a home but that is just me and the way I do things.
I also will not sign a 30 year mortgage, if cash cannot be paid I don't need it.
As far as your original post I would say if you are not getting good feelings about the prospect of purchasing a home no matter how much you spend and how long you stay there, it is not the right time for you to purchase a home.
When you are completely comfortable with the prospect of house payments, upkeep, real estate taxes, homeowners insurance and all the other stuff that goes along with owning a home you will be relaxed and excited when searching for your home.
How about... I buy a rough fixer upper, pour my heart into making that house shine again, and even if I move in 4 years, maybe I break even? I've actually seen some decent houses in nice neighborhoods that are in desperate need of some TLC. So much potential, but nobody wants to put the work in I take it. And ya, I do want to paint some walls damnit!
I have heard of people remote landlording. Is that a viable option? I know it requires you to tie up equity, but I have no problem going back to renting for awhile if I do decide to move in the future.
If you buy a house at 3.5% or 5% down, you are not tying up a lot of equity when you convert your house into a rental, but you also won't able to count that rent as income should you attempt to buy another in a couple of years.
Quote:
Originally Posted by andywire
I'm looking at fairly modest homes around 100K or less. Cheap enough to pay off in as little as a decade. Witnessing what happened during the recession, I'm frightened of over leveraging. Besides, the other investments tend to outperform real estate.
When you say other investments tend to outperform real estate , do you mean your investments or statics which you have read? What are these other investment?
If you could pay it off in 10 years you just tied up your $100,000. If your other investments outperform the income and appreciation of the rental property, then it is pointless to tie up your cash in the rental property.
Take the money that you could've used to pay of the mortgage and make more income than the rate which you are borrowing the money. If you would've lock in a loan last year, you might have a 30 year loan at 3.3%. Even if you could pay it off in cash, you are only saving 3.3% so why pay it off. Rates now are between 4-5%, do you think your cash in hand will be making more than 5% in 10-15 years from now? Locking in a low interest rate loan and a reasonable living expense makes sense.
You seen the recession and you've seen property values go up and down, over the last 2-3 years , or from 15-20 years ago what has been the appreciation? On an investment property, you can capitalize on the market by selling it, not exactly the same thing if you live in the house.
In the recession, would it be better to have paid off your loan down to 50% and have less cash in hand or would it be better to have only paid down 20% and have 30K more in your pocket.
Quote:
Originally Posted by Ultrarunner
Sometimes owning is less out of pocket than renting over a given period of time...
For me it was being about to lock in housing costs... rents in my area continue to rise and I really wanted to own... so it made sense.
Bought a real fixer and moved in and fixed... still have it today as a rental and on my second family after all of these years.
If you think adding some TLC takes only 1hr like it HGTV make it appear, think again. Do you really want a second job fixing your house. If you are willing to take a second job, which most people aren't willing to do, you can create work for yourself buy literally building equity into your house. You can do it in less that 4 years. The cost to buy and sell a house short term is about 10%, if you like spending time in Lowe's or your local hardware store, and like doing things with your hands and buying power tools, then home improvement is right up your alley.
You aren't going to get rich of a $100,000 home, but paid off, it would be some nice supplemental income, who knows where social security will be in the future.
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Do not buy
