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Rusty Shackelford posted:You are counting that money from your roommate as rental income, right? 
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Feb 20, 2011 06:39
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senor punk posted:Who knew that buying could be cheaper than renting when you lie on your taxes?
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Feb 20, 2011 07:25
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I recently put an offer in on a foreclosed townhome and the bank accepted the offer. A really upsetting thing happened. Being a foreclosure, the bank actually went ahead and did some work on the place to clean it up. New carpeting throughout (cheap, but new and clean looking), and fresh neutral painting throughout. The place was spotless and move-in ready except for the normal foreclosure things (needs appliances, bathroom dirty, etc). Fast forward a week, the offer has been accepted, and I show up for the inspection. The place is a loving mess. It appeared as though a contractor had up and left in the middle of a project... Painting rugs/cloths were covering the carpets and floors, plaster was smeared everywhere in an attempt to "repair" walls that were perfectly fine and freshly painted a week ago. Holes were cut in the wall for seemingly no reason at all, and the inspector could not find any wiring or even hardware installed to accept wiring into these small rectangular holes cut into the walls. What the gently caress happened? My realtor and I were in shock at the state the home was in and took pictures to send to both the listing agent and my attorney. The speculation from my realtor is that the contractor hired by the bank to do work had shown up and, upon finding no work to do, started "making work" by cutting holes and fixing them, plastering and repainting, etc... Has anyone heard of this ever happening? This is purely cosmetic, but it was still disheartening to see such a nice place turned into an unfinished mess of holes and plastering. I'm not kidding when I'm telling you that walls were literally SMEARED with plaster. I don't know what my options are at this point as I won't speak with my attorney/realtor until Monday, but my realtor mentioned that she'll have my attorney demand the property be put back to its original condition prior to the sale. Just curious to see if anyone has had or known of an experience like this?
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Feb 20, 2011 09:04
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I know the OP has a bit about foreclosures already, but as I work in the industry (In the US) I wanted to add a bit. First off, foreclosure is a process. Buying a home in foreclosure via a short sale is SAFE. Let me repeat that... a short sale is 100% completely SAFE. The only downside to a short sale is that the paperwork and process is a nightmare and can take months... in a successful 'quick' sale. This is not a quick process. Second, Foreclosure breaks 'ALL' the rules. If you're buying a home, typically you have to have title insurance. Foreclosure auctions don't require this. I have personally viewed people get hosed over for in excess of $800,000.00 via buying unclear titles at foreclosure auctions. Again, short sales you will be safe (at least in the US...) be really, really careful if purchasing at a foreclosure auction. Your best bet is to contact the trustee and order a copy of the Title Report $60-$100, and then have you Realtor look this over. Finally... Foreclosure breaks all the rules. Seriously keep this in mind, homeowners, HOAs, and banks all try to gently caress people over when a property is in foreclosure. (Condos can be in foreclosure too!) I don't yet own a home (working in foreclosure and destroying families/souls doesn't pay well) but I just want to add a 1st hand... be careful of any form of home buying from someone in foreclosure. It can work out... but foreclosure really does break a lot of the rules(laws).
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Feb 20, 2011 09:38
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Alright, so I know this isn't going to be the most useful of questions before I even ask it, but... How the hell do (single) people afford to buy anything but shoeboxes in major cities (NYC, Boston, SF, etc)? Over the past few weeks, it's become clear that I'm going to be sticking around Boston for the next few years at least for work, so I started thinking to myself, "Hey, self, you have a good, stable job, paying you far more than you can spend/save, and you're getting on in years, and like the area - maybe you should consider buying a place of your own and settling down!" The rent v buy calculators basically say DO NEVER BUY no matter what parameters I enter. But I start looking around anyway at various for-sale listings on Craigslist or in the windows of realty offices as I walk by, just out of curiosity. "Gosh, 600-750k+ for a condo in my neighborhood?! That's an awful lot, but maybe if I stop maxing out my 401k and IRA contributions and eat peanut butter for the next 30 years I could afford it. Maybe. drat, forgot HOA fees. And property taxes. poo poo. Probably not." On the cheaper end of the spectrum, for 3-400k, I could live in a lovely 600 sq ft place in the crappy industrial parts of the city or in otherwise sketched out run-down neighborhoods. Or I could resign myself to move to the burbs, have a lovely commute, and pay 400k for a 2bd ranch. "Fun". Who are these people that can afford all this property that I see for sale? I need a rich wife, post-haste! (Sorry for the whine, it's just really baffling how anyone manages to buy here!)
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Feb 20, 2011 13:09
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senor punk posted:I hope you are kidding, or this could really come back to bite you in the rear end.
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Feb 20, 2011 16:32
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sheri posted:I hope you are kidding, or this could really come back to bite you in the rear end. Renting a room out of your house and not reporting it isn't really something that bites a lot of people in the rear end.... It might be immoral and illegal(if you're a nancy pants), but it's not likely to get him in any trouble. It's generally one of those things the IRS doesn't give a poo poo about unless you are doing it on a large scale/as a business. If you've got one roommate who helps pay the bills and you don't structure it as income and depreciate all your expenses and generally go through a lot of hassle for a very small amount of money, the IRS isn't going to come banging on your door.
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Feb 20, 2011 18:06
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devilmouse posted:(Sorry for the whine, it's just really baffling how anyone manages to buy here!) 1. Parents footing the down payment 2. Successful start-up. Big part of how I got my down (and lost with the bubble popping). You can become a millionaire quite literally overnight in Silicon Valley, but I was in Seattle and wasn't that early stage in the start-up, so I got less than six figures. Not bad for 3 months at a start-up though. 3. Aggressive amortization schedule mortgages (meaning very long term) / ARMs. Usually for those that are actually somewhat normal in income. Has always bitten them in the rear end down the road in my secondary experience. 4. Rich, out of town (or country!) buyers. Major cities have interest to people internationally. Note that due to the wealth gap in the US rising immensely in the past 20-30 years, the rich can afford to buy many more houses than before, and that's what a lot of real estate developers have been targeting (no money to be made doing "affordable" housing unless it's a tenement tract of property practically)
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Feb 20, 2011 18:47
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greasyhands posted:Renting a room out of your house and not reporting it isn't really something that bites a lot of people in the rear end.... It might be immoral and illegal(if you're a nancy pants), but it's not likely to get him in any trouble. It's generally one of those things the IRS doesn't give a poo poo about unless you are doing it on a large scale/as a business. If you've got one roommate who helps pay the bills and you don't structure it as income and depreciate all your expenses and generally go through a lot of hassle for a very small amount of money, the IRS isn't going to come banging on your door. He's getting over $10k/year from his roommate, which ends up being more than half his mortgage. That's not exactly a small amount of money.
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Feb 20, 2011 18:53
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necrobobsledder posted:2. Successful start-up. Ha! This is the one I'm counting on right now! Just have to wait to vest and for the inevitable IPO and this whole process could be much more affordable. Or I'll realize I actually wanted to just play hooky from life. The other reasons all make sense. There also seems to be a lot of people that have just been in the same places forever. In New England where our houses go back to the 1700s, and a "new construction" is in the 1960s, time's scale is a bit skewed.
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Feb 20, 2011 19:43
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sheri posted:He's getting over $10k/year from his roommate, which ends up being more than half his mortgage. That's not exactly a small amount of money. It's only that much money because it's NYC.
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Feb 20, 2011 23:11
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senor punk posted:It's only that much money because it's NYC. It's still over half your mortgage, is it not?
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Feb 21, 2011 00:32
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Yeah, it doesn't really matter if the IRS doesn't specifically seek out and investigate lots of homeowners to see if they might be renting out rooms without reporting it. The point is that he could be audited for another reason (or just randomly) and if he is... he's committing a felony by deliberately cheating on his taxes. The IRS will not be kind.
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Feb 21, 2011 20:15
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Leperflesh posted:Yeah, it doesn't really matter if the IRS doesn't specifically seek out and investigate lots of homeowners to see if they might be renting out rooms without reporting it. The point is that he could be audited for another reason (or just randomly) and if he is... he's committing a felony by deliberately cheating on his taxes. The IRS will not be kind. I would sympathize if it wasn't such a monumental pain in the rear end to calculate all of the deductions/depreciation related to renting out a room to balance out the income. I just tried to do it on the piddly $5400 I get from my brother to rent 1/3rd of the square footage in my house. I just closed out the tax software without saving changes halfway through. I'm not paying an accountant a few hundred dollars just so I can say I paid the IRS the same exact amount, just technically more correctly.
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Feb 21, 2011 20:24
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Arzakon posted:I would sympathize if it wasn't such a monumental pain in the rear end to calculate all of the deductions/depreciation related to renting out a room to balance out the income. I just tried to do it on the piddly $5400 I get from my brother to rent 1/3rd of the square footage in my house. I just closed out the tax software without saving changes halfway through. I'm not paying an accountant a few hundred dollars just so I can say I paid the IRS the same exact amount, just technically more correctly. You're doing the right thing, the IRS doesn't give a poo poo about one roommate even if it's 10k. The potential income off of 10k of roommate revenue to the IRS is infinitesimal and they aren't going to waste their time or your time. And even if you do get audited and they want to be assholes, you'll just have to pay the back taxes (if any, you still get to properly calculate at that point- and it will be a very small number.) but I would like to see anyone find someone who has ever gotten in trouble for not itemizing a roommate (when they weren't doing anything else illegal)... the IRS agent doesn't want to deal with that poo poo either. You aren't going to jail or going to have big fines levied against you for this.
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Feb 21, 2011 23:38
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greasyhands posted:You're doing the right thing, the IRS doesn't give a poo poo about one roommate even if it's 10k. The potential income off of 10k of roommate revenue to the IRS is infinitesimal and they aren't going to waste their time or your time. And even if you do get audited and they want to be assholes, you'll just have to pay the back taxes (if any, you still get to properly calculate at that point- and it will be a very small number.) but I would like to see anyone find someone who has ever gotten in trouble for not itemizing a roommate (when they weren't doing anything else illegal)... the IRS agent doesn't want to deal with that poo poo either. You aren't going to jail or going to have big fines levied against you for this. That was basically my assumption. And sheri, you are correct in that it is more than 50% of my mortgage, however it is worth emphasizing that it is not half of the mortgage and the Co-op maintenance fee, which is the true cost of the apartment. Even if I paid the mortgage off tomorrow I will forever be paying the maintenance. No it's not literally part of the mortgage, but it is certainly a real cost associated with it.
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Feb 22, 2011 06:25
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devilmouse posted:Ha! This is the one I'm counting on right now! Just have to wait to vest and for the inevitable IPO and this whole process could be much more affordable. Or I'll realize I actually wanted to just play hooky from life. You also hit on probably the biggest key in your initial question: dual-income. If you work at a relatively high-paying job and you marry a co-worker, you can afford a lot of house. Of course you also have double the chance of losing enough income to no longer afford that house...
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Feb 22, 2011 07:41
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I bought a house in the Seattle area suburbs in the summer of 2005 while things were still on the way up but too close to the peak, obviously. I'm not underwater technically but after all the costs associated with selling a house I probably would end up in the red a bit. I am thinking of selling in this horrible horrible time to sell because it's such a great time to buy; I want to upgrade to a nicer house in a nicer suburb while I can. In theory if everywhere declined by the same percentage, upgrading to a more expensive house would be a good move even if I take a little bit of a bath on my current house (since the more expensive house would have declined by even more in absolute dollars). Here's the problem: it appears that my neighborhood has been particularly hard hit, losing another 10% or so over the last year, while the neighborhoods I want to move to have flat-lined or perhaps gained a percent or two. So my theory doesn't work out in practice. Nonetheless I am still tempted to make the move. The question is if I can expect my neighborhood to bounce back faster when/if the recovery occurs than the more desirable neighborhoods. That seems like an unlikely bet. My current neighborhood isn't desirable now and isn't likely to be any time in the next 10 years. Am I crazy? Should I just suck it up and sit tight? My current place isn't terrible and I'm not miserable, but I really would like to move up. Seattle has lagged a bit behind the rest of the nation as the crash happened later here and we are still declining or perhaps at the bottom right now.
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Feb 22, 2011 07:52
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DancingMachine posted:I bought a house in the Seattle area suburbs in the summer of 2005 while things were still on the way up but too close to the peak, obviously. I'm not underwater technically but after all the costs associated with selling a house I probably would end up in the red a bit. I am thinking of selling in this horrible horrible time to sell because it's such a great time to buy; I want to upgrade to a nicer house in a nicer suburb while I can. In theory if everywhere declined by the same percentage, upgrading to a more expensive house would be a good move even if I take a little bit of a bath on my current house (since the more expensive house would have declined by even more in absolute dollars). From a financial standpoint, it'd be pretty dumb to go all-in on a bigger house when you already are getting soaked on a smaller house. Despite being a bad financial decision, it may be the right personal decision for family or quality of life reasons, if you can afford the larger house.
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Feb 22, 2011 14:14
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Just an update on my situation that I posted about eariler in this thread, as well as another question. A few months ago, a family friend who was dying of cancer offered to sell us her house at well below the appraised value because a) it was all we could afford, b) she needed money for lawyer and doctor bills asap, and c) she wanted the house to go to us being friends of the family and all. We put together our offer and presented it to her, but her health suddenly turned for the worse and she passed before she could sign the offer. She did verbally accept it however, and made it clear that it was her intent to sell it to us. She did not have a will, and as such, her estate including the property is currently in probate. We figured that we didn't really have a chance at the house since there was no written acceptance of our offer, among other things. My agent, however, has recently told me that the proposed administrator of the deceased seller's estate (the seller's brother-in-law) intends to honor the seller's verbal approval of our offer and proceed with the sale to us. I'm wondering a couple of things. First, assuming he stays true to this statement, is there anything else legally, that could pop up to invalidate our purchase of the house? Also, what sort of time frame are we looking at? As far as I know with probate matters, the proposed administrator first has to be officially appointed the role, and then the sale still has to go before a judge for approval.
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Feb 22, 2011 19:55
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Well, after considering all our options, seeing foreclosures of several stripes, normal listings and Fannie Mae properties, my wife and I settled on a house in an estate sale. We got a verbal agreement last night and are anxiously awaiting the signed contract. We negotiated them down 15k (we came up 10k) from the listing price and the comps in the area all sold for/are under contract for at least 25k more than our agreed price. Now it's all about setting up the home inspection and preparing to apply for the loan. I haven't been getting any good sleep for the past few days and I don't think I will for the next month and a half. Edit: also, the obligatory, "Did you follow DO NEVER BUY?!". This is going to be our home for the long term, 10+ years if not the rest of our lives. We're confident in our decision to buy now.
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Feb 22, 2011 20:17
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Dik Hz posted:Nice combination of trying to time the market and the housing ladder up in here. Why is now a good time to buy? Housing prices are still on their way down, by most estimates. Housing prices will never "bounce back". They were unsustainably high due the real estate bubble. Saying that your house's "true value" was its peak value is a fallacy. The price history of your house has no effect on its actual value. Now is a good time to buy because housing prices are more or less back in line with long-term historical trends, and interest rates are extremely low. It's not so much that the prices are depressed, I agree the prices are merely corrected, not depressed. I shouldn't have used the term "bounce back" but I do think we will see prices return to a slow march of appreciating 1-3% percent every year some time in the next couple years (though we might lose another 10% or so before that starts). It's interest rates that are the key factor here. They are going to go up pretty soon (a month? 6 months? 2 years? certainly not longer.) and they will almost certainly never return to these levels once they do. I figure my current house is sunk cost and shouldn't really influence my decision to buy into a new neighborhood.
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Feb 22, 2011 20:19
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DancingMachine posted:Now is a good time to buy because housing prices are more or less back in line with long-term historical trends, and interest rates are extremely low. It's not so much that the prices are depressed, I agree the prices are merely corrected, not depressed. I shouldn't have used the term "bounce back" but I do think we will see prices return to a slow march of appreciating 1-3% percent every year some time in the next couple years (though we might lose another 10% or so before that starts). It's interest rates that are the key factor here. They are going to go up pretty soon (a month? 6 months? 2 years? certainly not longer.) and they will almost certainly never return to these levels once they do.
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Feb 23, 2011 00:48
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Dik Hz posted:You do realize that low interest rate = higher sticker price, right? Do you have anything to back that up? I took a quick look at the prime interest rate compared to historical real estate prices and no sort of huge correlation jumped out at me. If anything, houses in the late 70's early 80's should have been approaching free if that was the case. Of course it makes sense that if interest rates are lower that people should be able to take out larger mortgages thus house prices should rise, but I don't see that that is actually reality.
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Feb 23, 2011 01:00
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Arzakon posted:Do you have anything to back that up? I took a quick look at the prime interest rate compared to historical real estate prices and no sort of huge correlation jumped out at me. If anything, houses in the late 70's early 80's should have been approaching free if that was the case. Of course it makes sense that if interest rates are lower that people should be able to take out larger mortgages thus house prices should rise, but I don't see that that is actually reality. In my experience, the average person somehow completely ignores interest when deciding how much house they can afford and determining how much money they have sunk into their house. It's kinda baffling. It's kind of like all the people in this thread that ignore they were paying for a place to live for 5 years when deciding how much money they have "lost" on their house. They'll say "ok I paid 200k for this house 5 years ago, put 20k into it, now i can sell it for 225k so I only made 5k what a horrible investment real estate is" and somehow ignore that they have been *living* there for 5 years so you can easily add $25k (that's an extremely low-end conservative number) onto the value they have extracted from the house, but no one wants to do that for some reason. greasyhands fucked around with this message at 02:18 on Feb 23, 2011 |
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Feb 23, 2011 02:12
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greasyhands posted:In my experience, the average person somehow completely ignores interest when deciding how much house they can afford and determining how much money they have sunk into their house. It's kinda baffling. Most people are aware that home loan interest is deductible (but ignore the fact that a deduction is not the same as a credit, and that they also must discount all their itemized deductions by what they'd otherwise get with the standard deduction, before they can calculate how much interest they're effectively not paying by reducing taxes). Interest rates and home prices are loosely coupled at best; because the Fed sets interest rates based on its attempts to control inflation... and inflation tends to happen when the economy is heating up... and when the economy is heating up tends to be when prices are rising. Including home prices. I would argue that house prices are more tightly coupled to the unemployment rate than they are to interest rates. When more people have solid, stable full-time jobs, there are more buyers and this pushes prices upwards. When more people are unemployed, underemployed, or only working temporary jobs, the number of buyers drops and prices drop as well. Another factor worth considering is that the number of new housing starts plummeted in the last two years. From zoning to move-in takes a year or two usually, so we should expect a lag of at least a year between when the housing market begins to improve, and when builders have new houses on the market ready to buy... and probably more like 2 years before full-scale building resumes. That implies that prices may have multiple spikes and drops over the next few years even if the economy and unemployment start improving steadily. And of course, housing is always local. Few people move from one housing market to another just to chase lower house prices (because home buyers are almost always tied by their employment). So any generalization about the housing market not specifically related to nationally-set figures (like the prime interest rate) is going to be inaccurate for some markets even if it proves true for the national average.
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Feb 23, 2011 02:25
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DancingMachine posted:Now is a good time to buy because housing prices are more or less back in line with long-term historical trends, and interest rates are extremely low. It's not so much that the prices are depressed, I agree the prices are merely corrected, not depressed. I shouldn't have used the term "bounce back" but I do think we will see prices return to a slow march of appreciating 1-3% percent every year some time in the next couple years (though we might lose another 10% or so before that starts). It's interest rates that are the key factor here. They are going to go up pretty soon (a month? 6 months? 2 years? certainly not longer.) and they will almost certainly never return to these levels once they do. 1-3% a year isn't making money though, its merely preserving it from erosion at a "typical" rate of inflation. It's just treading water, really.
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Feb 23, 2011 15:07
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jerkstore77 posted:I'm wondering a couple of things. First, assuming he stays true to this statement, is there anything else legally, that could pop up to invalidate our purchase of the house? Also, what sort of time frame are we looking at? As far as I know with probate matters, the proposed administrator first has to be officially appointed the role, and then the sale still has to go before a judge for approval.
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Feb 23, 2011 16:43
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Arzakon posted:Do you have anything to back that up? I took a quick look at the prime interest rate compared to historical real estate prices and no sort of huge correlation jumped out at me. If anything, houses in the late 70's early 80's should have been approaching free if that was the case. Of course it makes sense that if interest rates are lower that people should be able to take out larger mortgages thus house prices should rise, but I don't see that that is actually reality. The very first thing most people I know did when starting the home buying process was plug their monthly budget into a mortgage calculator to find out how much house they could afford. They said something like, "We want to spend 30% of our monthly take-home income on housing." Most didn't say, "I want a $200,000 house, to hell with the interest rate."
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Feb 23, 2011 16:52
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roadhead posted:1-3% a year isn't making money though, its merely preserving it from erosion at a "typical" rate of inflation. It's just treading water, really. Meanwhile, you are living for "free" against your equity so the effective return is significantly higher than 1-3%. Interest obviously reduces this, but with a large down payment and a good interest rate, after several years you are pretty far in the black vs renting assuming equal or greater resale value from purchase price (which, how large of an assumption this is depends on where you live).
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Feb 23, 2011 17:05
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Interest rate affecting house prices with a microeconomic model is a bit complicated. If you reduce interest rates, that doesn't necessarily push people to go buy a house honestly. Unless combined with really fishy lending policies, lowering interest rates a bit would make a difference of a few hundred bucks a month for most people, which is nothing compared to the down payment you'd likely need. People buy houses oftentimes without looking at much besides "do we need one?" and "how much can we afford?" and won't try to time the market or anything. A new baby could push a couple to buy a house (oftentimes against good financial prudence) whether interest rates are at record lows or at record highs. However, if you increase interest rates, it can immediately push people out of the pool that could have otherwise bought the house. However, similar to the housing tax credit the other year, if that's what pushes you "over the edge" it's probably not a smart move and could weaken the stability of the housing market if anything fucks with demand during the lifetime of the loan. So my point is, there's a lag with pushing interest rates down and on the flipside it has a more prominent, immediate impact upon the market to push it up.
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Feb 23, 2011 19:15
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necrobobsledder posted:However, if you increase interest rates, it can immediately push people out of the pool that could have otherwise bought the house. True, but wouldn't it also bring a new "subset" of people into your home's price range as well? For example if you are selling a median home worth $200K and you have some people looking at it. Interest rates rise and now those people feel like they want to start looking at $180K homes instead. Wouldn't the people that were looking at $220K homes fall right into your $200K bracket? If you are trying to buy, then rising rates could price you out of your desired range. If you are selling, it seems that unless you have a home that is worth significantly more than the median (in that there aren't as many "move down" buyers available) it wouldn't have a huge effect on you.
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Feb 24, 2011 16:25
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Realjones posted:True, but wouldn't it also bring a new "subset" of people into your home's price range as well? I get what your saying, and could see it, but at the same time there may be people out there who, upon realizing that they can't afford as much house as they originally thought, will drop out of the market altogether instead of just looking at cheaper houses. Based on just anecdotal evidence and reading here, it honestly seems like it's pretty difficult to draw much of a conclusion about buying habits based on interest rates. They are obviously a factor, however they are just one of many.
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Feb 24, 2011 16:28
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I've been looking at houses online because I fantasize about when me and my boyfriend finally buy a place of our own. One particular house has had me excited, cause we could possibly afford it and it's possibly in a good location. I'm glad I checked this thread to bring me back to my senses. It looks like we really can't afford what I thought we could afford.
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Feb 24, 2011 17:39
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greasyhands posted:Meanwhile, you are living for "free" against your equity so the effective return is significantly higher than 1-3%. Interest obviously reduces this, but with a large down payment and a good interest rate, after several years you are pretty far in the black vs renting assuming equal or greater resale value from purchase price (which, how large of an assumption this is depends on where you live). If you have a $100k home with 100% equity, you are gaining 1-3% in appreciation, but could be getting 7-8% if invested, so you are losing out on 5-6% ($5-6k a year) that way.
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Feb 24, 2011 18:13
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gvibes posted:Keep in mind that your "equity" could be invested in something with returns, so there is an opportunity cost as well. Investing your equity for 7-8% would also require you to obtain a mortgage for the amount you just invested, reducing possible gains if your mortgage is in the 3-5% mark. Having 100% equity on your home gaining 1-3% appreciation also gains against the current mortgage rates in interest saved. Is the leverage worth the risk?
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Feb 24, 2011 19:50
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gvibes posted:Keep in mind that your "equity" could be invested in something with returns, so there is an opportunity cost as well. You only gain equity by foregoing rent (you have to live somewhere), so if you rented instead of buying you wouldn't have all that money to invest anyways. You can make that argument but only about the cost difference between renting and buying, not the total value (and it works out to a much smaller amount). I should point out that I always use 15 year schedules when calculating this because I think 30yr mortgages with minimum payments is a not-very-smart thing to do. renter posted:Renter of home with 150k value buyer posted:Buyer of 150k house So buying a house returned 4x as much as renting would have using pretty conservative numbers. At this point you can sell the house, return to renting and pay 1.5k/mo into eternity and invest the 201k however you like or you can pay $300/mo in taxes and maintenance and invest the 1.2k monthly into eternity. If you live in the house for another 15 years and invest that 1.2k every month and see a 6% return you will have another $348982.45 cash + a house worth 272441.79 (again assuming 2% appreciation) net worth = $621,424.24 If you return to renting and invest the 201,880.25 and forego contributions to make rent payments at the end of another 15 years you have $495433.02 in cash with no property asset. net worth = 495,433.02 Yes, people move and upgrade houses and whatnot and that changes the equation, but you still come out ahead buying unless you buy at the top of a terrible market or have a terrible interest rate. This calculation also ignores the benefits of hard assets in an inflationary environment vs cash. I don't think anyone believes we won't see significant inflation in the future, though how much is up for debate. Another plus for buying a house. This is also assuming your rent doesn't go up for 30 years, which is of course absurd. The real number with a historical rent increase figured in would make renting look even worse. greasyhands fucked around with this message at 20:21 on Feb 24, 2011 |
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Feb 24, 2011 20:07
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Yeah, there are like a million factors and assumptions. For instance, in my market, I think a 150k place would be lucky to score you 750 a month.
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Feb 24, 2011 20:21
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gvibes posted:Yeah, there are like a million factors and assumptions. For instance, in my market, I think a 150k place would be lucky to score you 750 a month. Then there are no landlords in your area because that would not be a profitable investment. But I'm guessing that isn't true. Also, if you live in Detroit or some decaying Ohio town, yeah things are different but you can also buy a house for much less than 150k Also, renter posted:20k invested at 6% initially vs. housing net worth of 201,880.25 after 15 years so even assuming a depressed rental market or renting a lesser place than you would buy you STILL lose. And again this is assuming no rent increases over 15 years, which is stupid. Renting is giving money to another person to cover their mortgage payment(plus a little profit if they're lucky) so they can build equity and you can have a place to live. Buying is giving money to a bank so you can build equity for yourself *and* have a place to live. How all the people in this thread honestly believe renting will make you more money than buying is absolutely boggling. greasyhands fucked around with this message at 20:40 on Feb 24, 2011 |
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Feb 24, 2011 20:23
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greasyhands posted:Then there are no landlords in your area because that would not be a profitable investment. But I'm guessing that isn't true. Also, if you live in Detroit or some decaying Ohio town, yeah things are different but you can also buy a house for much less than 150k The only houses I could find in my suburb of Boston for rent were renting for around $1400 or so a month. This for a house that would sell for at least $220k (probably much more). There are all kinds of distortions in local markets that can gently caress up the numbers you posted. Then again, there aren't too many single-family houses for rent in the area, so you may be right.
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Feb 24, 2011 20:56
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