[TunedM2C]

There are way more positives than negatives to owning a home. Paying someone else's mortgage is a thing of the past for me. Now granted, there are times (like the present) where renting can make more financial sense but over the course of history housing has appreciated. What we're experiencing now is a hiccup but recovery is slowly coming back.

The fact I can gain equity, write off closing costs, mortgage interest, real estate taxes and my home office is a no brainer here. The fact I can say the home is mine is another feel good.

Now, if anyone is considering buying a home I can't imagine a more opportunistic time to do so. Extremely low prices and up to a $8k (non-repayable) tax credit for first-time buyer's as well as move up buyer's who've lived in their home for at least five years.

My two pennies.

[MontegoGoGoGo]

Now, owning a second home...that is expensive, draining, and did I mention expensive? Take all of your bills multiply them by two, then add in alarm, taxes, insurance, yard maintenance, car all the SHIT that can go wrong, and you've got a migraine.

It's all about timing, unfortunately you can't see the future. We bought our vacation home 3 years ago, and met with an agent about selling it this past summer. (Having to install a new lateral line was the last straw.) She said to list it @ $50K less than we bought it for. FML. We're lucky we can keep it and are not forced to sell it. Just proves that real estate is not a sure thing.

Just a bad time to sell. But gains from buying right now outweigh the loss of selling. We got quite a bit less for our primary residence than I was estimating and hoping for, (took a while to get it through my head that what the house was worth and what I wanted for it were two different things, lol) but gained much more in scoring a great deal on a new house.

[TurboFan]

Originally Posted by 08rookie

i specify buying a property is not the BEST investment...im talking strictly financial

i can understand that certain people (couples) in certain situations invest in a certain property in a certain location and that may be the best investment for that exact situation...but im going a bit larger...more general...

take an average working class family buys a property for 250k... they throw 20 % down (all their savings) takes out a 30 year mortgage and buckle down for the next 3 decades...30 years later they sell the property for 700 thousand. great butttt what exactly did they return financially?...i mean after the interest and taxes and insurances associated with property over 30 years compounded with the 30 years of maintaining the property it seems like you can argue that you just about break even?!?! i mean you probably spend 20k over 30 years just to have your grass cut!

hypothetically, you look at ur mortgage statment, for the sake of argument that you pay 2700 a month to cover your 3 bedroom place in a nice neighborhood....if you can break down that 2700 into principal, interest, taxes and just use your "principal" amount as rent money deposit your "interest" and "tax" amount into a CD or money market or even a passive savings over the course of 30 years, would you have saved more then you would have profited in owning a house for 30 years considering the money spent in interest and maintaining?!

maybe i make no sense and for that i am sorry, it just seems more clear in my head and i thought i can articulate it better lol

You are correct. Buying a home, in a normal market, is not a good investment. Everyone can banter back and forth in generalities, but when you put the pencil to the paper, it's a lousy investment, financially. At best it is simply forced savings as long as you can sell with an average return of 2.5-3%/year.

Buy a house because you need the room, want to raise a family in a particular neighborhood, or any other tangible reason, but not financial. Buy the minimum house you need and invest otherwise.

That said, if you can buy RENTAL properties, they can be the best thing going, especially in this market. You can pick up a cheap house or multi, and rents will be rebounding soon. As long as you can make the property cash flow (that means set aside money for maintenance, pay the PITI and pay yourself a little) on 9-10 months of rent per year, on a 20 year or less loan, you'll have someone else paying off the house and you'll have a valuable asset, free and clear, after 20 years.

[TurboFan]

Originally Posted by Tuned1

There are way more positives than negatives to owning a home. Paying someone else's mortgage is a thing of the past for me. Now granted, there are times (like the present) where renting can make more financial sense but over the course of history housing has appreciated. What we're experiencing now is a hiccup but recovery is slowly coming back.

The fact I can gain equity, write off closing costs, mortgage interest, real estate taxes and my home office is a no brainer here. The fact I can say the home is mine is another feel good.

Now, if anyone is considering buying a home I can't imagine a more opportunistic time to do so. Extremely low prices and up to a $8k (non-repayable) tax credit for first-time buyer's as well as move up buyer's who've lived in their home for at least five years.

My two pennies.

You gain equity - that's a pretty way to say you are forced to save money. Not a bad concept, but it's a crummy reason to pay 6% of the price of the house, just to be forced to save money.

You spend thousands on closing costs, interest and taxes. You get, on average, ~15% of this money deducted from your taxes. You are still out of pocket to the bank and insurance company for the other 85%!!!!

Your maintenance can not be deducted. Your home improvements, in general, can not be deducted. You have increased your exposure to risk, in terms of damage to your home.

I'm not saying "Don't buy a home". Just don't lull yourself into some false idea it's a good way to spend money. I'm a home builder, I want everyone to buy a home! But, as a good citizen, I don't want to see people making the horrid financial mistakes that were made over the last 15+ years. Not everyone should own a home. If you do own a home, stop and think very hard about what you REALLY can afford.

[jaiman]

Originally Posted by 08rookie

http://www.getrichslowly.org/blog/20...f-home-buying/

read that article and tell me that there is absolutely no truth in the mathematics comparing renting vs buying a house...

you can convey your point without the sarcasm...dont try to make me look foolish in my thread by citing one example and passing it off as a certainty...your parents place in london clearly did well...hi 5 to them...i live in jersey and one reason properties havnt been hurt like the rest of the country is the fact we are a bedroom state to philly and nyc...there are plennty of jobs around these cities and the employees need a place to live...i can imagine the same for london..

My first criticism of that article is that I think he is being horribly optimistic about the rental cost vs owing. Finding one 400k house that rents for 1500/mo is easy. Consistently finding that large a discount I would expect to be very hard.

But let’s use the numbers he gives. Assuming that you invest that monthly difference, and achieve a 10% return on your investments (long run average for equities) you end up with $1.7m in your portfolio after 25 years. The home if it appreciates at 5% per year is worth $1.4m. So in this case, as skewed as it looks towards renting, after tax, you aren't that much better off in net worth terms. And the homeowner has a place to live with only maintenance costs for the rest of their life. The renter still needs to come up with about 3k per month for their rent (what, you think rent doesn't rise with inflation? The writer of the blog seemed to forget that). Also, the renter is required to chase equity returns solely for 25 years. This might be acceptable if you are comparing these options at 20 years old but if you’re over 30 you will be 100% equities at a time in you life when you should be moving to a more balanced portfolio.

So, $1.7m in an investment account. You contributed about 157k to that account. So, 1.54m is capital gains, and for me, in Canada, I'd pay half my marginal tax rate on those gains so, we can ball park at 22%. After tax I'm left with about 1.5m. So, I'm up 100k over the owner (who, in Canada, pay no tax on principal residence). And to do that I needed to find a place that was being rented for a below market rate, and assume that the landlord would only raise that rent at 3% annually.

Using more realistic numbers, ie equivalent rent of 75% of the cost of mortgage and ownership is far better. Your investment portfolio is about 400k before tax vs 1.4m for the home.

[SoCali E36]

Originally Posted by 08rookie

i specify buying a property is not the BEST investment...im talking strictly financial

i can understand that certain people (couples) in certain situations invest in a certain property in a certain location and that may be the best investment for that exact situation...but im going a bit larger...more general...

take an average working class family buys a property for 250k... they throw 20 % down (all their savings) takes out a 30 year mortgage and buckle down for the next 3 decades...30 years later they sell the property for 700 thousand. great butttt what exactly did they return financially?...i mean after the interest and taxes and insurances associated with property over 30 years compounded with the 30 years of maintaining the property it seems like you can argue that you just about break even?!?! i mean you probably spend 20k over 30 years just to have your grass cut!

hypothetically, you look at ur mortgage statment, for the sake of argument that you pay 2700 a month to cover your 3 bedroom place in a nice neighborhood....if you can break down that 2700 into principal, interest, taxes and just use your "principal" amount as rent money deposit your "interest" and "tax" amount into a CD or money market or even a passive savings over the course of 30 years, would you have saved more then you would have profited in owning a house for 30 years considering the money spent in interest and maintaining?!

maybe i make no sense and for that i am sorry, it just seems more clear in my head and i thought i can articulate it better lol

who in there right mind would live in a house for 30 years then decide to sell it? did it take 30 years for the property value to reach 700k? i would have sold the house soon as the value went up 200k. your argument makes no sense. you are one of those CD/Saving tree hugers that will switch from one back to another because across the street the other bank is offering 0.0000001% more for you 12 month CD.


do some research. you have a CD in the bank right now that is earning what lets say 1.5% you are actually not making shit. The best rate you can get right now is what like 2.2% for what like 5 years? no thanks lol ill just put the money in a house that is 400k right that had a previous value of 800k. lets see which one of us makes more money in 30 years.

[doubled24]

IDK if there will be property purchased anytime soon for me. I'm thinking of changing locations as often as possible for many years to come... im young and theres alot of the world out there to see. Most of the poeple on this board are probably better with money than I am, but I'll take my bmw to vegas with some fake titties a sack of doja and some gambling over your fancy investments any day =P

I guess what im trying to say is buying property seems like alot of respnsibility that I'm not ready to sign up for just yet.

[lauer87]

Does no one realize that the housing bubble was in fact just that, a bubble, and that prices more than likely will not reach those super inflated prices again in some markets (Cali, Florida, etc..) for quite some time???

[mpimping]

buy low sell high

[mpimping]

the best investments are poker and private equity.

[mpimping]

if you buy a house in cali you can grow pot and sell it for 3000+ a pound so just a few plants can cover your mortgage. you can buy a house, rent a room cheap to a cute college student and have her tend to your plants. do you have any gardening experience? "no but I have/am a hoe" when can you move in?

[mpimping]

its like 401k and company health insurance. when i crashed my bimmer the plan didnt cover anything. what was accepted as the smart move really wasn't

[mpimping]

http://www.nytimes.com/2008/01/31/bu...ss/31sbiz.html

[ideliver]

You keep thinking that way...'cause I need tenants for my rental property I really like it when others people money pays by bills

[bassholic]

Originally Posted by BMW E90

The thing is though most people that buy them as investments are not looking to keep the house for 30 years. Basically you buy low and sell high. Let's say if a house that was $400k is now selling for $150k, you could buy it and make the monthly payments for a few years until it goes back up and sell it back for $400k+. Of course you could always keep it longer to make more because homes tend to appreciate. The one pitfall is that you run the risk of it depreciating rapidly during a recession (in which case you would have to wait another 4-5 years before it goes back up).

Also, those that buy homes as investments are renting them out so that they don't have to pay the mortgage payments out of pocket.

Originally Posted by number335

I think you are assuming people who take out a 30 yr mortgage intend on living in their home for 30+yrs and that everyone puts down 20%.

I was able to put 3.5% ($4,200)down on a 120k condo once. 5 yrs later I sold the condo for 290k. I don't think I could find the same kind of returns if I invested my $4,200 in a cd.

What was the purchase price of your next home?

[number335]

^ i've been renting since then (2005). didn't make sense to me to purchase another home when prices were at their peak. i'm in the process of purchasing a home now for 250k and i also have a rental property.

[1cleanm6]

you need to start thinking differently...

so you rather pay someone elses mortgage?

Or buy your own house and whatever you pay you will get back and more some day.

No offense i wish where i live houses were 250k for a 3 bedroom house, try 250k for a 800sq condo in a crowded area.

3 Bedroom house, atleast 450k in a decent area.

Real estate has been picking up the last 6 months, how do i know...im into real estate investment.

Things will slowly pick up again.

[Heinzftw]

Originally Posted by lauer87

Does no one realize that the housing bubble was in fact just that, a bubble, and that prices more than likely will not reach those super inflated prices again in some markets (Cali, Florida, etc..) for quite some time???

Prices have NEVER dropped from my community thank you very much. Not true for everywhere

[Peanuto]

I am a real estate agent. Sorry OP, but you are in this case flat out wrong. It is all relative as compared to the property how good an investment is. I just got clients into a 2,300 sq ft waterfront condo in Baltimore that sold in 2007 for $1.2 million. We are settling next month at $467,000. Not a good investment? In this market if you have cash, which many people don't you can get a ridiculous bargain. With your figures you are looking solely at conventional loans. As for finding a 400k property to rent for $1,500/mo... maybe where you live, but not around here. It would be closer to $2,250. It is all about finding the right investment, not just any house.