Lessons from the old to the young!

[sapphire]

Originally posted by wheelin&dealin
Buying a house isn't that AMAZING like most people make it out to be. You could be throwing your money away if you have to repair and fix it up all the time. It could be the worst decision of your life. You aren't instantly set for life if you have a house. Say you live in the place for 3 years and make $10,000... that's chump change and nobody ever talks about how much you could lose on it. If you rent you don't have to pay for electical/plumbing or any other problems and if you don't like the place you can just leave.

If you buy a house you'll probably buy in a sh*tty area because you're too poor to afford a house in a rich neighbourhood. You'll commute to work for about 2 hours a day. And all you have to say for it is "I own my own place". That's stupid in my opinion. Why not live the life while you're young and rent a condo in a nice area?

As long as you live withing your means you will be fine. Who cares about saving up for the future... You live your life in the present.

The worse advise any one can give.

Sure, live your life to the fullest now, don't save and blow your money on things that don't appreiciate in value and then find yourself 30 years hence without a penny to your name because you never thought about retirement.

The point is you don't have to sacrifice your youth to invest in your future. Forget about social security. It is going to be bankrupt by the time most of us reach our supposed golden years.

 

[A-Unit]

Re:

I would never suggest renting is better than buying; each situation requires taking into consideration individual circumstances.

BUT. I get irked when people talk like the house is some USEFUL asset.

I have a friend who bought into a house with his GF. She already had bought and was paying for it; he hopped on to help with payments and improvements. They've dumped 50k plus into it, either from cash OR from the HE in it.

WOOPDEEDOO.

Good, they'll always have a place to live, and the inflation hedge of home appreciations ensures that they have a good place to live, because you don't lose the invested value of improvements...and nobody can replace the comfort of a tangible asset and the emotional significance of outright home ownership. But for ALL those reasons, you cannot use it!

If you're not WISE enough to invest debt into other ventures, then you RISK the home you've BUILT over time for what? More money? More toys? Yeah, my friend's place is up around 300+ in Brockton; his gf bought it for 170k or so. But the HE yank out requires more payments; it isn't free. And if you take cash out, all you're doing is PAYING now on the home you'd have to pay for in the future.

As noted by 1 financial advisor, "whatever you pay for a house, you'll at least double in home improvements over 5-10 years." This from a 65 year old guy who does consulting for a living to over 3000 people. So is he THAT wrong? A home is a home. It's nice it goes up, but it's bad, too, because where do you go and what do you pay if you move?

You guys in TX, who's homes appreciated, just TRY moving to Boston. You'll get LESS house for that appreciation. Same for lots of parts of FL and CA. If you want, go to less settled parts of the country, and you can, but how will you work?

It's totally worth it to buy, but realize, they're "sunk costs." Only property you don't reside can be counted as an ASSET because it puts ACTUAL dollars into your pocket NOW, as opposed to the hypothetical 'Later' at the time you sell. Which is unlikely.

The only people I know capable of Downgrading are the ones sitting in million dollar homes, who go to retirement communities for 500,000 homes, or 750,000. They get WAY less home for the actual dollar, because OLDER homes are much more stable, warmer, and built better, as opposed to these quick throw-ups going up everywhere.

-------------------

Ditch the mentality that a HOME is an ASSET. Sure, RDPD says it, but I never got it until it went into practice. It's a place to live, you'll always need a place to live, and if you're going up in price, so are homes you probably want to live in, SO YOU BETTER hope it appreciates so you can MOVE without a mortgage in your future.

Your wife or GF will want to invest in crap because it's a home, and it's a LIFELONG venture. It never ends. Once you square away 1 room, you have to do more to match it. If you have kids, THEY WILL WRECK it. It's a LIABILITY, and will be unless you own it outright. Even if you own it outright, property taxes will always be there, and they escalate with your rising property value. You'll always have home insurance and fire insurance, and some weather insurance and maybe even alarm systems. You have to buy stuff for the upkeep, and hope termites don't get it. But that's a home.

Much like toiling with women, KNOW WHAT YOU"RE getting into potentially from all angles. Then you don't get burned. If you cut the line too thin, thinking you'd profit quick and dump it, don't be foolish. Flipping is for the fluid investor, not for someone in need of a home.



A-Unit

 

[GirlCrazy]

The last few years I owned my home in Orange County, CA, it went up about $100k each year (that's income folks), with the 4 years before that averaging a tidy sum.

I sold it, and bought my house in Spokane for under market value, put 20% down cash, and in the year I've owned it, it's probably appreciated $50k at least - so it's doing great on the equity front.

Not as drastic as the gains in other parts of the country, but still, not too shabby either.

I'm admittedly not the best with money, but I'd never turn away $50k - $100k each year in income. The misinformation in this thread is just astounding. STR8UP should beat you over the heads with his money clip.

And technically, anything you own that has value is an asset. And since real estate is just about the only thing any of us will ever own that actually goes UP in value, if that doesn't count as an asset, I don't know what the hell does

 

[A-Unit]

Re:

I'm not doubting the appreciation of property; that's a given. If you employ a strategy of accumulating wealth and arbitrage over your lifetime, you'll profit and stay ahead of the game. I know lots of families in wealthy cul-de-sacs that have $500k+ homes. But what do you do?

Inside MA, you move to a less settled town and bank the gain, maybe. But you move away from your employer, possibly, too. You up-root your kids, or wife, too.

If you're not emotionally attached to the home, it works. But the fallacy is, people put MORE into their homes than other venues. Gains in a home are accidental and unintended. You don't lose the sunk improvement value, but you can't use it in the sense of consummable, useable, income.

---------------------------

I would say CA, and esp. Orange County is one of those areas that appreciated alot, much like Boston. But I would say Washington isn't one of those states that saw the widespread run-up in R/E prices. As a result, you could get more house the same money, or downgrade and bank it. In either case, not all people do that. They're upgrading until retirement. And when you're upgrading, you face the aforementioned higher costs.

--------------------------

Tactics:

**Learn to invest WISELY with leveraged debt, so if you extract the equity in your home and purchase other R/E, you're not screwing yourself. [A book called Missed Fortune talks about using Mortgages and Home Equity]

**Realize a home WILL consume lots of cash while you live in it. If you move, there's a multitude of factors that don't make it seamless. Certainly it can happen that your profit, but don't make a home be your only asset, as illiquid as it is.

**Single guys and bachelors can move frequently, even guys who are married can move for awhile, but inevitably, you'll want to settle down somewhere good to raise kids, and won't be up or downgrading for 20 years, so like what you get.

I'd invite ST8UP to par-take in these talks and impart his thoughts. I'm stating what I know from the side of dealing with the Average American, and what I see. MOST people live in 1 home for quite sometime. The new trends appearing are to move every 5 or so years until kids are had or they find a place they really like. Each time, it does cost dough to move, refinancing, and possibly a diff. mortgage.

I would say you SHOULD upgrade, because each area of the city/town, state, and country see diff. property growth rates, and you want stay at pace or AHEAD of it so as not to get stuck in a home that doesn't appreciate. In my city of 100,000, some areas peak over 500k and then some. The average home is around 280k. My parents had their home around 100k, it's gone up nicely, but to get the SAME house now would be 400k+.

My aunts house down the road, which houses 4 kids, 2 adults, a 2 car garage a pool and yard is over 600k. If you wanted that same home now, it'd be more than 600k unless you're willing to move to the boonies, REALLY seek a deal, re-do a home, or accept less home.

Just thoughts, it isn't etched in stone and WILL be diff. for each guy across the country.



A-unit

 

[wheelin&dealin]

Originally posted by sapphire
The worse advise any one can give.

Sure, live your life to the fullest now, don't save and blow your money on things that don't appreiciate in value and then find yourself 30 years hence without a penny to your name because you never thought about retirement.

The point is you don't have to sacrifice your youth to invest in your future. Forget about social security. It is going to be bankrupt by the time most of us reach our supposed golden years.

So, you read the first chapter of a real estate investing book?? That's great! If you think you're gonna be poor in 30 years then why don't you grab a microphone and cry me a river like Justin Timberlake. No sh*t you want to invest in things that appreciate in value. Does spending $350/month on strata fees on a newly bought condo make you happier then "throwing away your money" for rent? Most people don't have a clue as to how much money it actually costs to own their own place. Like everything, there's a trade off of risk and reward. Just because the real estate market did well the last few years doesn' t mean guaranteed profits.

If your place goes up in value $20,000 that isn't money you can just pocket. You get taxed on 50% of that and even then, you're now buying a place in a market with higher prices. So are you this bling-bling'n millionaire that you once thought??? No. If your place has problems, like leaks, you could be down $100,00.

 

[ElChoclo]

Forget Kiyosaki

Does Warren Buffett own a house? And did he live there a long time? And is it in a crappy location? Yes to all three.

Anyone know more about investing than Warren? I refer you to "The Millionaire Mind" T.J. Stanley 2000, page 8 "Nearly all of us (97%) are homeowners."

 

[Bonhomme]

Rent goes up, house payment does not. In fact, decreases, in terms of real money, over time, due to the effects of inflation.

In 20 years, your payment should be less than 1/2 what it is now, in terms of what money will be worth then.

However, if you're in a ridiculously inflated market, such as SF, LA, NYC, Boston, or DC, in which house payments are 3 times what you would pay in rent for the same house even if you have the best fixed rate (adjustable rates are a sucker bet in the current market), it's better to rent, and wait until the next time the market bottoms out to buy.

For example, people who bought houses in the DC area about 1990 (the last time of drastically inflated prices there) paid way more than they would have if they rented, and saw almost no increase in value until about 2001. Then the market exploded. The time to buy was about 2000.

 

[racerX]

The best thing about buying a house is that someday, it will be yours. I have 10 years left on a 15 year mortgage & then my condo is mine. If you rent, you rent forever & the landlord can raise your rent at anytime.
Equity means nothing unless you sell it. Everyone says " i have $300k worth of equity in my home...i could sell it & move to Montana or..Iowa." Well, chances are you wont move there, because the job market sux & you wont have any friends or family.
If you spend the time & $ getting a college degree, make sure you can get a stable, good paying job out of it. Dont go to college just because your parents want you to. So many people get English degrees, marketing or philosophy degrees & end up working in some entire different field. You have wasted time & $ going to college if that happens.
Cars: buy it cash or dont buy it. Learn to diagnose & work on you car-you will save hundreds of thousands of dollars in you lifetime. Cars are worthless after 100,000 miles or 10 years.

 

[englishman]

Originally posted by wheelin&dealin
Buying a house isn't that AMAZING like most people make it out to be. You could be throwing your money away if you have to repair and fix it up all the time. It could be the worst decision of your life. You aren't instantly set for life if you have a house. Say you live in the place for 3 years and make $10,000... that's chump change and nobody ever talks about how much you could lose on it. If you rent you don't have to pay for electical/plumbing or any other problems and if you don't like the place you can just leave.

If you buy a house you'll probably buy in a sh*tty area because you're too poor to afford a house in a rich neighbourhood. You'll commute to work for about 2 hours a day. And all you have to say for it is "I own my own place". That's stupid in my opinion. Why not live the life while you're young and rent a condo in a nice area?

As long as you live withing your means you will be fine. Who cares about saving up for the future... You live your life in the present.

I dunno west coast, i bought a house up the fraser valley from van city, its gone up a hundred grand in 2 years and I only had to put down 15 grand, the tenants paid my mortgage and I plan to sell it in spring and get the fvck outta dodge city and travel the world......also it has to be noted the market can bomb and then your fvcked.

 

[Create Reality]

Wow I just saw this.

Excellent post!