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Rick Rickshaw posted:"Buy a house for the peace of mind" Yeah for real. Every 3 weeks, I've got to spend 2-4 hours on a Saturday morning maintaining my yard. If I don't go spray poison/pull weeds within a week of a rainstorm, a zillion of them will sprout and the HOA yard sheriffs will send me a notice that I have 10 days to fix it, or they'll fine me $40/week. I have spent a few hundred dollars so far acquiring yardwork tools, and I still don't have all the most useful things. Also, my air conditioning unit is a time bomb of cash outflow. It's 12 years old, and when it goes, it will need to be replaced, because I live where summers exceed 110 degrees. There's $8-15k right there. I've made trips to the hardware store trying to beat the closing time at 10pm so I could get some parts to fix one of the toilets, because the idiot who installed it didn't do it to code and the overflow pipe wasn't functional and dumped a few gallons of (thankfully, fresh) water all over the floor. Also, I have 3x the space to heat, cool, and keep clean. This is my homeowner peace of mind
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Dec 9, 2014 19:04
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canyoneer posted:Yeah for real. Truly living the dream. Now imagine the bad with money approach of having $35k in credit card debt and being unable to pay a mortgage.
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Dec 9, 2014 19:15
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People who vehemently defend buying over renting without acknowledging the true costs and headaches of ownership always come off as if they're trying really hard to rationalize their decision to themselves. Renting can be good with money. Buying can be good with money. Both can also be bad with money. Buying can be super duper bad with money because of enormous downside potential. The situations, values, and desires between people and locations varies hugely. I'll eventually buy a house, but not until I have 20%+ downpayment and a small war chest for repairs/updates/maintenance. In an area where a modest house will easily run you 500k, it's going to be a few years. But when I do buy, it won't be because I can finally stop "throwing away money on rent" and "invest" in a house, but because I want to own a house and know full well that it is expensive and time-consuming and that I'm okay with that. Until then, the relatively fixed cost and low commitment of renting is awesome and my apartment is great and allows me to save/invest a shitload of money. Guinness fucked around with this message at 19:23 on Dec 9, 2014 |
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Dec 9, 2014 19:21
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Jastiger posted:We bought because yeah there is a bit of status, but for us its really important to be able to do what we want when we want. Want to play the new movie SUPER LOUD with the speakers? Can do. Want to put up Christmas decorations? Can do. Want enough space for my wife to do her sewing and crafting? Can do. Don't want to scrape the car off every morning after snow? Yup. It's kind of like buying a cottage. Cottages are nice, but like owning a home they are money pits. Guinness posted:People who vehemently defend buying over renting without acknowledging the true costs and headaches of ownership always come off as if they're trying really hard to rationalize their decision to themselves. melon cat fucked around with this message at 19:27 on Dec 9, 2014 |
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Dec 9, 2014 19:23
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melon cat posted:I definitely agree with most of your points, but what a lot of people fail to realize is that all of that extra freedom you get from home ownership (decorating the house, fancy audio set ups without bugging the neighbours, more space, etc.) comes at a premium. A lot of people think that buying a house is "cheaper" than renting because "you're throwing your money away". But the reality is that home ownership is a cost. Not an asset. On the other hand, if you're in a major city like New York or London, extortionate rents and rapidly inflating house prices mean that you're screwed if you don't buy. In the last 7 years my brothers 2-bed flat has gone from being worth £400k to about £700k, and we collect about £25k/year rent from it.
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Dec 9, 2014 19:33
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Guinness posted:I'll eventually buy a house, but not until I have 20%+ downpayment and a small war chest for repairs/updates/maintenance. In an area where a modest house will easily run you 500k, it's going to be a few years. But when I do buy, it won't be because I can finally stop "throwing away money on rent" and "invest" in a house, but because I want to own a house and know full well that it is expensive and time-consuming and that I'm okay with that. Until then, the relatively fixed cost and low commitment of renting is awesome and my apartment is great and allows me to save/invest a shitload of money. 1) Kids are getting older so we want to establish long term roots in a neighborhood; 2) We have a long checklist of things we want in a house, and we found a house that hits every item on the checklist. I have never seen a rental house hitting even a fraction of those items; 3) We have ~35% of the purchase price saved up to allow for a sizeable down payment, some updates, and a big buffer. melon cat posted:A lot of people think that buying a house is "cheaper" than renting because "you're throwing your money away". But the reality is that home ownership is a cost. Not an asset. tentish klown posted:On the other hand, if you're in a major city like New York or London, extortionate rents and rapidly inflating house prices mean that you're screwed if you don't buy. In the last 7 years my brothers 2-bed flat has gone from being worth £400k to about £700k, and we collect about £25k/year rent from it. gvibes fucked around with this message at 19:38 on Dec 9, 2014 |
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Dec 9, 2014 19:35
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melon cat posted:And that's exactly what they're really doing. They haven't done the math, and for people like them buying a house was an emotional decision, not a calculated one. Most people don't even realise you could calculate what financial position you would be in, let alone have a budget.
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Dec 9, 2014 19:36
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Yeah I kind of started a derail before but location matters. I wouldn't ever consider buying if I was in a high cost area. I think folks in the Midwest definitely have a different cost to own than someone in a ritzy suburb with hoa fees and even more social pressure to comform. Absolutely there are more costs to own and I gladly pay them for the benefit of ownership.
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Dec 9, 2014 19:36
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Part of the problem is buying a home because it's bigger than an apartment. I live in a large home and it's nice that everyone has their own rooms and my wife and I have separate offices, but it does cost more. And there's a lot of wasted space. Almost every home in my neighborhood has a two story foyer and most have two story family rooms for no practical purpose other than it looks extravagant. And you feel really extravagant when you're renting 14 foot scaffolding to paint the walls and change light bulbs. Oh it's like French royalty in its decadence.melon cat posted:It's kind of like buying a cottage. Cottages are nice, but like owning a home they are money pits. I want a cottage. Or I could combine two of the most risky and expensive purchases a person can make and get a houseboat.
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Dec 9, 2014 19:38
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I think it's really hard for some people, because the societal pressure is so strong, and perhaps their parents bought a house young and did really well and they grew up with that mindset. Maybe I got lucky (???) because I saw the disaster that home ownership was for my parents. They were strong-armed into buying a house soon after I was born because you need to buy a house for a baby, after all. It was supposed to be a "starter home" that they could sell for a profit after a few years and upgrade. They never moved out. It was a poo poo house in a poo poo neighborhood and we were stuck there. They couldn't afford a lot of the maintenance so we were living on the bare concrete floors (as one example) because the water heater flooded one day and ruined the carpets. Our grandparents replaced the water heater but for the carpet we were poo poo out of luck. I have no idea what the original terms were but the house even to this day lists for less than 100k and they bought it in 1984. When my mom died in 2004 she still owed money on the mortgage and given the condition of the house it couldn't be sold at a profit even then. So yeah, no home ownership for me until all student loans are gone, I have a separate maintenance fund, and we can pay at least 20% down on the type of house we want to live in long-term (no starter home BS).
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Dec 9, 2014 19:39
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tentish klown posted:On the other hand, if you're in a major city like New York or London, extortionate rents and rapidly inflating house prices mean that you're screwed if you don't buy. In the last 7 years my brothers 2-bed flat has gone from being worth £400k to about £700k, and we collect about £25k/year rent from it. "Prices have gone up uP UP for the past 7 years, you're a sucker if you don't buy now!" - Timeless financial advice that never hurt anybody Also, £25k/year rent on a £700k flat? Sounds like a pretty good argument for renting! EDIT: Not saying that there's never a reason to buy, but these attitudes get a lot of people in trouble.
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Dec 9, 2014 19:44
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Here's a great place to argue renting/buying until you're blue in the face: http://forums.somethingawful.com/showthread.php?threadid=3131399 At the risk of starting up another round of boring rear end wedding chat, Reddit, should I voluntarily go into debt for a wedding? quote:Should I put the main expenses of my wedding on my credit card? I've got the USAA World Master Card with a limit of $6,800 and regular APR of 15.9%. Would it be wise to pay for the venue and associated costs using the card? I really have no way of saving up the cash for this wedding and her parents (nor mine) can pay for anything. Luckily, OP seems to have seen the light but who knows if he'll actually follow through.
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Dec 9, 2014 20:01
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There's a lot of mention of the hidden costs of owning a home but I've been living in my house for 6 months now and I've not had to pay anything I wouldn't have had to pay if I was renting. Sure if the boiler broke that'd be a few hundred, but that's unlikely to happen more than once every decade. The savings I'm making by not renting have already covered me for that.
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Dec 9, 2014 20:02
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Laterbase posted:There's a lot of mention of the hidden costs of owning a home but I've been living in my house for 6 months now and I've not had to pay anything I wouldn't have had to pay if I was renting. Sure if the boiler broke that'd be a few hundred, but that's unlikely to happen more than once every decade. The savings I'm making by not renting have already covered me for that. How old is your house?
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Dec 9, 2014 20:09
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Within the past 30 days, I've spent $1,000 on things I wouldn't have had to pay if I was renting (removing dangerous dead limbs from a couple trees, and having my septic tank pumped). Not counting the $2k I spent on a snow blower.
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Dec 9, 2014 20:10
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pig slut lisa posted:How old is your house? 14 years. There's nothing in it that could break and really cost any significant money to fix.
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Dec 9, 2014 20:12
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Laterbase posted:14 years. There's nothing in it that could break and really cost any significant money to fix.
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Dec 9, 2014 20:24
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SiGmA_X posted:Its good that you do not have HVAC or a roof. Those things can be spendy and fail at any time (especially with turn of the century builders and builder grade components). He'd really just be out his home insurance deductible at that point. Zhentar posted:Within the past 30 days, I've spent $1,000 on things I wouldn't have had to pay if I was renting (removing dangerous dead limbs from a couple trees, and having my septic tank pumped). Not counting the $2k I spent on a snow blower. These are costs I think a lot of people take into consideration. For example you have $2K on a snow blower. I spent $7 on a shovel and I get by fine because I'm guessing my drive way is smaller than yours. Everyones experience is different, and cost-to-own-and-maintain varies wildly as well.
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Dec 9, 2014 20:26
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Laterbase posted:There's nothing in it that could break and really cost any significant money to fix. 
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Dec 9, 2014 20:28
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Scenty posted:I think it's really hard for some people, because the societal pressure is so strong, and perhaps their parents bought a house young and did really well and they grew up with that mindset. Maybe I got lucky (???) because I saw the disaster that home ownership was for my parents. They were strong-armed into buying a house soon after I was born because you need to buy a house for a baby, after all. It was supposed to be a "starter home" that they could sell for a profit after a few years and upgrade. They never moved out. It was a poo poo house in a poo poo neighborhood and we were stuck there. They couldn't afford a lot of the maintenance so we were living on the bare concrete floors (as one example) because the water heater flooded one day and ruined the carpets. Our grandparents replaced the water heater but for the carpet we were poo poo out of luck. I have no idea what the original terms were but the house even to this day lists for less than 100k and they bought it in 1984. When my mom died in 2004 she still owed money on the mortgage and given the condition of the house it couldn't be sold at a profit even then. Pressure is an interesting issue. For years buying a house didn't add up for me. I didn't know if my business would do well and if I'd relocate. There's also the risk of a major earthquake or worse the expense of contributing to structural strengthening where I live. In the end I bought new for good insulation and earthquake strength (which is pretty safe with a timber house). I don't really have much pressure from friends as most are poor. I realised on Monday night I was having beers with two close friends who are really doing the best financially. One is renting and the other has a piece of land worth twice that of mine and is building a house all freehold. My generation is kind of doing poo poo financially given everyone else I'm friends with is doing substantially worse (ignoring people at work with big incomes and having 10-20 years on me).
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Dec 9, 2014 20:36
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SiGmA_X posted:Its good that you do not have HVAC or a roof. Those things can be spendy and fail at any time (especially with turn of the century builders and builder grade components). Or plumbing. Jastiger posted:He'd really just be out his home insurance deductible at that point. If you think your homeowners insurance is going to cover those, you've got an unpleasant surprise in your future.
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Dec 9, 2014 20:40
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Laterbase posted:There's a lot of mention of the hidden costs of owning a home but I've been living in my house for 6 months now and I've not had to pay anything I wouldn't have had to pay if I was renting. Sure if the boiler broke that'd be a few hundred, but that's unlikely to happen more than once every decade. The savings I'm making by not renting have already covered me for that. Here's a list of hidden costs that renters don't pay: Property tax Strata fees/HOA Building insurance as a condition of mortgage Mortgage interest Lost investment opportunity on the down payment All of the above are things you pay for as a homeowner that do not contribute to your net worth. After accounting for those are you still paying less than renting?
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Dec 9, 2014 20:41
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SiGmA_X posted:Its good that you do not have HVAC or a roof. Those things can be spendy and fail at any time (especially with turn of the century builders and builder grade components). It's not really "at any time", proper maintenance and observations gives you a very clear indication when those things will fail. Roofs anyway, the average person probably doesn't know two shits about a natural gas furnace, but it is pretty clear when shingles are curling or missing. Most shingles have a 25 year life span, so Laterbase has a decade or so to budget for a replacement. On a house that young, you can just go straight over the old shingles (providing they aren't too badly damaged by that point) and you can DIY for under $2000. Even if you have to pay someone to scrape and reshingle, the final bill is probably going to average $9000-$10,0000. And like Jagister says, anything sudden is just the cost of the insurance deductible.
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Dec 9, 2014 20:44
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SiGmA_X posted:Its good that you do not have HVAC or a roof. Those things can be spendy and fail at any time (especially with turn of the century builders and builder grade components). I don't have HVAC (just one simple gas boiler that I could swap out in its entirety for about £500-700 if I wanted) and my roof would fall under building insurance so again I would only be out a few hundred. Both these events are once every 10 years if at all. I think most of these "hidden homeowner costs" only apply to buildings with a lot to maintain, I specifically stayed away from really old buildings because I've rented in them before and they're pretty nightmarish with draughts and old pipes, damp and cracked walls. It might sound like I'm having a go but I just noticed a lot of anti-buying sentiment and thought I'd offer some counterbalance.
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Dec 9, 2014 20:44
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Obligatory "Australian complains about property worship in his country" post. A good friend explained to me that using 70% of take home pay to meet a minimum mortgage payment is good with money. Oh, you don't need savings. Just redraw on the house. 
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Dec 9, 2014 20:57
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Zhentar posted:If you think your homeowners insurance is going to cover those, you've got an unpleasant surprise in your future. He's already run into things his homeowners insurance doesn't cover, but it's like he doesn't learn. The whole "don't buy a house unless you can come up with 20% down" advice screams Jastiger
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Dec 9, 2014 21:00
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Mantle posted:Here's a list of hidden costs that renters don't pay: The first 2 don't exist where I am and the last 3 combine to about 15k over 12 years. Then after those 12 years I never pay rent or a mortgage again. I guess it is very different in the US to the UK at the moment. We can even sublet a room tax free over here which would pretty much cover the entirety of the mortgage if I decided I wanted to live with someone or if my financial situation took a bad turn. CelestialScribe posted:Obligatory "Australian complains about property worship in his country" post. 70% of take home on the minimum payment? That's absolutely terrifying. Just to clarify my stance I would never recommend buying if the minimum payment was going to be even 40% of take home pay. Mine is 20% (it's a tiny house). Stretching financially to get the biggest house you can afford is way too dangerous in my mind given how much the market can change. Edit: Sorry I butchered the formatting on my phone. I think it's all ok now. Laterbase fucked around with this message at 21:16 on Dec 9, 2014 |
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Dec 9, 2014 21:11
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Bloody Queef posted:He's already run into things his homeowners insurance doesn't cover, but it's like he doesn't learn. I'm an insurance agent and I write policies all day I do know what is covered under most policies. I'm not trying to be a jerk about it. It'll cover a roof and certain aspects of HVAC things. If they just "wear out" though, that is different. And I knew going in that a water softener isn't covered under insurance. I was buying the house, the water softener just happened to be sitting there. Stop trying to start a fight sir and/or maam. Mantle posted:Here's a list of hidden costs that renters don't pay: Yeah. Edit: Yeah for what I'm getting. I"m paying maybe $100 a month with all of that, but like I said, tons of other quality of life bennies.
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Dec 9, 2014 21:16
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I think like buying anything, buying a house can be a very good or very bad decision. There's a lot of factors that determine if it's bad with money or not. I cringe when I hear people celebrating that they got a larger mortgage than they thought they could get. Or when people buy a house with the intention of selling it for a huge profit in a few years. But if you just want somewhere to live and you do your research and get something you can afford, it can be a good with money thing.
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Dec 9, 2014 21:25
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Mantle posted:Here's a list of hidden costs that renters don't pay: I think all of those are usually taken into account for the rent vs buy. (other than the investment stuff which frequently doesn't amount to much as most buyers put down the FHA 3.5%) However stuff like maintenance and unexpected events not covered by most insurance policies can absolutely shift things in the do never buy category. This is all said with me personally being a huge proponent of buying when the buyer is ready. Meaning job stability both position and location, marital stability (either single for life or not in a rocky marriage) and most importantly coming up with 20% down, for the mortgage and at least 5% of house value in an oh poo poo fund. (doesn't need to be seperate from your efund)
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Dec 9, 2014 21:28
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Mantle posted:Here's a list of hidden costs that renters don't pay: So do landlords take a loss out of the goodness of their hearts on those expenses then?
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Dec 9, 2014 21:35
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Laterbase posted:70% of take home on the minimum payment? That's absolutely terrifying. Just to clarify my stance I would never recommend buying if the minimum payment was going to be even 40% of take home pay. Mine is 20% (it's a tiny house). Stretching financially to get the biggest house you can afford is way too dangerous in my mind given how much the market can change. This is probably the key difference. In a lot of places it's hard to find modestly-sized houses that aren't shitheaps because people stopped building them decades ago. When people are putting up 2000 sqft 4br houses as "low end starter homes" renting an apartment looks a lot more attractive. Buying might often be cheaper in the long haul for comparably sized spaces but when it practically locks you into paying for more space than you actually need it becomes bad with money.
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Dec 9, 2014 21:36
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I got a really depressing thing from my neighborhood realtor. The price of a single family home in my area has hovered around $1.1 - 1.4MM for the past five years. This year, YTD, it's $2.7MM Living in my neighborhood is bad with money.
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Dec 9, 2014 21:45
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KYOON GRIFFEY JR posted:I got a really depressing thing from my neighborhood realtor. The price of a single family home in my area has hovered around $1.1 - 1.4MM for the past five years. This year, YTD, it's $2.7MM Uh, apparently it's really good with money if your house value doubled in a year
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Dec 9, 2014 22:03
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Not a Children posted:Uh, apparently it's really good with money if your house value doubled in a year He probably rents.
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Dec 9, 2014 22:04
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Jastiger posted:I'm an insurance agent and I write policies all day I do know what is covered under most policies. I'm not trying to be a jerk about it. It'll cover a roof and certain aspects of HVAC things. If they just "wear out" though, that is different. And I knew going in that a water softener isn't covered under insurance. I was buying the house, the water softener just happened to be sitting there. Stop trying to start a fight sir and/or maam. Also, most homeowners escrow the property taxes and insurance. So if you compare monthly payment to monthly payment, it's fairly even on that front. You have to cover maintenance, but a portion of your payment goes to equity. So if the payments are the same, the rest of it is probably a wash. My monthly home repair and improvement budget is roughly 1/3 of what I put into equity through my loan payments each month. I know I've got a 4-ton AC unit waiting to die, but I considered that when I made the offer on the house. But my other major systems are good for another decade. And I've never bought my own roof. I've had 3 now, and they've all been insurance claims from a hail storm. I imagine a claim-level hail storm rolls through more often than once every 20 years, which is the average roof lifespan. I bought my first house for lower monthly payments than an equivalently sized apartment. After you discount my improvements and repairs, it's raw appreciation was about the same rate as the S&P for that time period. And I didn't pay capital gains when I sold it. Also, remember that I was leveraged about 90%, so my returns were really more like 180%. Then on my next house, I did it again with less leverage, for about 80% return. Again, those gains were tax free. And, even considering the last few years, it's still safer to leverage than most other options, relatively speaking. You have to consider that too if you're going to compare renting. Now in defense of renting, I can do most home repair and improvement on my own. (I don't mess with gas lines or HVAC.) So most of those costs are significantly lower for me. It took me a decade or so to learn while stumbling through my own home repairs, but I got there. Owning vs renting is ALWAYS market specific. Edit: FYI, my first house was 35 years old when I bought it, my second was 25 years old, and my current was 40. I prefer older homes because they're cheaper (because I can do my own repairs and upgrades) and the kinds of things that can't be repaired or replaced, like a lovely foundation, are more likely to be evident. Folly fucked around with this message at 22:15 on Dec 9, 2014 |
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Dec 9, 2014 22:04
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Here are the houses I'm looking at. Still not putting my money into one before 20%, but you get a lot for a little here in the midwest. http://www.zillow.com/homes/for_sal...931_rect/13_zm/
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Dec 9, 2014 22:14
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I'm about to buy a 90yr old house with no down payment. Oh, and I support a family of 4 on 24k/yr. it would be bad with money, but a good chunk of it is coming from grants.  E: living in the rear end in a top hat of the south makes for a whole different set of rules when looking at property
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Dec 9, 2014 22:35
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CelestialScribe posted:Obligatory "Australian complains about property worship in his country" post. Australian pay is good relative to NZ but that's just asking for a disaster. Using revolving credit is fine so long as you keep making big payments into it to keep the interest rate down. However someone with 70% of net income going into the mortgage doesn't have any room for making big payments. Leroy Diplowski posted:I'm about to buy a 90yr old house with no down payment. Oh, and I support a family of 4 on 24k/yr. it would be bad with money, but a good chunk of it is coming from grants. Best thing is if the house price drops you walk away. I hope it has enough room to set up a still to get some moonshine going. Devian666 fucked around with this message at 22:45 on Dec 9, 2014 |
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Dec 9, 2014 22:41
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Leroy Diplowski posted:I'm about to buy a 90yr old house with no down payment. Oh, and I support a family of 4 on 24k/yr. it would be bad with money, but a good chunk of it is coming from grants. Beerdeer posted:Here are the houses I'm looking at. Still not putting my money into one before 20%, but you get a lot for a little here in the midwest.
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Dec 9, 2014 22:41
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