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I knew that once I could afford a home I ever rent especially a apartment again if anyway I could avoid it. Ever changing situation but some are just use to it and can't really manage owing; which I can understand.
That can also be the bad side to owning and having most of your money tied up in the equity in the house.
This has been kicked around before in these threads.
The anti-buy crew tends to avoid addressing the moderate compromises.
Up to 20% of assets locked into the family home? Should not be a problem for anyone.
That allows up to $200,000 in a home vs something in excess of $800,000 invested.
Up to 30% (as is likely needed for many) is still within the manageable.
Quote:
There are loads of seniors that end up being house rich and (investments) poor.
I agree on both counts. You need to be balanced if you own a home. The sad part is most folks are not.
I do like that 20% number too, when we owned our home it represented only 8% of net worth but we owned a real estate investment company.
Many bought more home than they should have and others counted on forever home appreciation acting as their savings . Many at my company even stopped contributing to their 401k because they felt their house was all they needed.
Now they have a home and little income generating investments to live on.
You need balance, whether you rent or buy ,your housing costs ,living expenses and income need to mesh .
Last edited by mathjak107; 05-31-2013 at 06:47 PM..
I've NEVER seen real estate appreciate, despite what Money Magazine, et al, says! We currently own one house, rent it for positive cash flow, that's enough. Every house we've ever owned was an albatross around our necks, took forever to dump (er...sell), and it takes 3-5 years to break even after a sale when you factor in commisions, closing costs, and "pretty up" the house to sell. Last home we sold, cost about 50K just to make it sellable, and it was NOT a dump by any means! Today's buyers are so picky, they want granite countertops, wood floors, yadda, yadda....you're always moving backwards. You buy a home, keep it well-maintained, then, in order to sell, put $$$$ into fixing it up to current trends. Then, you're starting all over with another home, you can't afford to fix up because you blew your equity fixing up the previous place, and so on........
Also, every neighborhood I've lived in, with one exception, has gone downhill. We're currently renting, and this neighborhood is slowly sinking. We're staying here for the schools, until our kids graduate, then we can move with 2 month's notice. By then, it will need a new roof, not our problem! There's 2 abandonded houses on our street, not my problem, not my equity! Actually, going downhill a bit helps us renters. Originally our owner wanted to sell but the house wouldn't move, he's underwater, not our problem. He won't be likely to find a buyer and kick us out, not unless he's willing to bring money to closing, been there, done that! I mean, we're not in a slum by any means, this is a nice, upscale neighborhood, we have all the advantages of living "on the hill" without all the headaches. Hey, sometimes, life give you a break, we've been underwater, upsidedown, unable to refinance due to negative equity, I could write a book OUr current property owner is a nice, young couple, we wouldn't want to deny them the education the school of hard knocks delivers! We consider this our home in the meantime, keep it well-maintained, have added landscaping, replaced carpet at our expense, etc. But we don't worry about property depreciation, that all figures in upon sale, again, not our problem!
Real Estate is a lousey investment, most neighborhoods simply go downhill, people trash out one then move to another
I've NEVER seen real estate appreciate, despite what Money Magazine, et al, says! We currently own one house, rent it for positive cash flow, that's enough. Every house we've ever owned was an albatross around our necks, took forever to dump (er...sell), and it takes 3-5 years to break even after a sale when you factor in commisions, closing costs, and "pretty up" the house to sell. Last home we sold, cost about 50K just to make it sellable, and it was NOT a dump by any means! Today's buyers are so picky, they want granite countertops, wood floors, yadda, yadda....you're always moving backwards. You buy a home, keep it well-maintained, then, in order to sell, put $$$$ into fixing it up to current trends. Then, you're starting all over with another home, you can't afford to fix up because you blew your equity fixing up the previous place, and so on........
Also, every neighborhood I've lived in, with one exception, has gone downhill. We're currently renting, and this neighborhood is slowly sinking. We're staying here for the schools, until our kids graduate, then we can move with 2 month's notice. By then, it will need a new roof, not our problem! There's 2 abandonded houses on our street, not my problem, not my equity! Actually, going downhill a bit helps us renters. Originally our owner wanted to sell but the house wouldn't move, he's underwater, not our problem. He won't be likely to find a buyer and kick us out, not unless he's willing to bring money to closing, been there, done that! I mean, we're not in a slum by any means, this is a nice, upscale neighborhood, we have all the advantages of living "on the hill" without all the headaches. Hey, sometimes, life give you a break, we've been underwater, upsidedown, unable to refinance due to negative equity, I could write a book OUr current property owner is a nice, young couple, we wouldn't want to deny them the education the school of hard knocks delivers! We consider this our home in the meantime, keep it well-maintained, have added landscaping, replaced carpet at our expense, etc. But we don't worry about property depreciation, that all figures in upon sale, again, not our problem!
Real Estate is a lousey investment, most neighborhoods simply go downhill, people trash out one then move to another
I've NEVER seen real estate appreciate, despite what Money Magazine, et al, says! We currently own one house, rent it for positive cash flow, that's enough. Every house we've ever owned was an albatross around our necks, took forever to dump (er...sell), and it takes 3-5 years to break even after a sale when you factor in commisions, closing costs, and "pretty up" the house to sell. Last home we sold, cost about 50K just to make it sellable, and it was NOT a dump by any means! Today's buyers are so picky, they want granite countertops, wood floors, yadda, yadda....you're always moving backwards. You buy a home, keep it well-maintained, then, in order to sell, put $$$$ into fixing it up to current trends. Then, you're starting all over with another home, you can't afford to fix up because you blew your equity fixing up the previous place, and so on........
Also, every neighborhood I've lived in, with one exception, has gone downhill. We're currently renting, and this neighborhood is slowly sinking. We're staying here for the schools, until our kids graduate, then we can move with 2 month's notice. By then, it will need a new roof, not our problem! There's 2 abandonded houses on our street, not my problem, not my equity! Actually, going downhill a bit helps us renters. Originally our owner wanted to sell but the house wouldn't move, he's underwater, not our problem. He won't be likely to find a buyer and kick us out, not unless he's willing to bring money to closing, been there, done that! I mean, we're not in a slum by any means, this is a nice, upscale neighborhood, we have all the advantages of living "on the hill" without all the headaches. Hey, sometimes, life give you a break, we've been underwater, upsidedown, unable to refinance due to negative equity, I could write a book OUr current property owner is a nice, young couple, we wouldn't want to deny them the education the school of hard knocks delivers! We consider this our home in the meantime, keep it well-maintained, have added landscaping, replaced carpet at our expense, etc. But we don't worry about property depreciation, that all figures in upon sale, again, not our problem!
Real Estate is a lousey investment, most neighborhoods simply go downhill, people trash out one then move to another
i do agree closing costs can be killer. with about 5% to buy and 10% to sell the costs eat up a few years appreciation for sure. we sold our home in pa and the costs with brokers commision was 10%.
here in nyc they are even higher as we have a nyc transfer tax too.
We bought our first house - for 92K in the country's most undervalued area... 5 years later bought our second home for $172K. Value now is estimated around $260K.
I realize that this is unprescedented growth and may never happen for new buyers... we were just lucky. And smart.
i do agree closing costs can be killer. with about 5% to buy and 10% to sell the costs eat up a few years appreciation for sure. we sold our home in pa and the costs with brokers commision was 10%.
here in nyc they are even higher as we have a nyc transfer tax too.
While I agree that closing costs can take a big chunk out of your profits, I can honestly say in two decades of owning homes and selling them I have always made money on them. And I'm not just speaking about the USA because I own properties in 5 different countries. And in those places as well I've never lost money selling.
I'm not sure if Marylee II is buying and 'flipping'. But I look at real estate investments as long-term in nature. I'm NOT the buy and flip type. The key to success for me was to always buy a house or apartment in the nicest part of town. It doesn't have to be the nicest house on the block... but for me location, location, location were always the most important things.
I also would never typically buy the most expensive house in the most expensive area. I'd rather have the cheapest house in the most expensive area.
It sounds like to me, Marylee might have bought all these "albatrosses" all during the peak/bubble years. Another part of real estate investing to me is understanding value relative to price of rents and historic prices of the house and also just plain, "what would it cost me if I had to build this house today".
But as mentioned, over the long term I've never lost money on real estate and I would have to disagree with her general premise of what she wrote.
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OUr current property owner is a nice, young couple, we wouldn't want to deny them the education the school of hard knocks delivers! We consider this our home in the meantime, keep it well-maintained, have added landscaping, replaced carpet at our expense, etc. But we don't worry about property depreciation, that all figures in upon sale, again, not our problem!
