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Your situation really isn't unique, but it is precarious because you're looking into the 8 ball and deciding prices will continue to soar. If prices do continue to soar and you don't buy now, you still might be able to buy unless you're not able to save. Did you save all this money through hard work or was it a windfall? Kids shouldn't make your savings rate go all the way to zero. If prices don't continue to soar or (very plausibly) go down significantly and you buy now, you'll be hosed. You make way too much money for a bank to really be willing to work with you if you end up way underwater.
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Jun 9, 2016 21:50
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Nail Rat posted:Your situation really isn't unique, but it is precarious because you're looking into the 8 ball and deciding prices will continue to soar. We're going from two incomes to one, at least for a few years. With one income, we'll be able to do alright, but we wont be saving much at all. Any extreme raise in our rent price would thus hurt a lot. So the whole deal is that, in about a year, we will be saving basically no money for the following few years. If we don't buy, we'll have a nice big chunk on savings, though. Believe me guys, I don't want to buy at the historically worst time to buy in Seattle and I don't want fear or future speculation to control my life. You understand how hard it is when family says things like "the market will never slow down so u better buy now or be priced out forever". As a risk averse person, it sounds like holding onto our cash is the safest bet (especially with a kid in the mix). If we do get way left behind by the market, well, it's not the end of the world. We will still have our cash reserves.
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Jun 10, 2016 00:05
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I got a card from a realtor today with a pretty picture of the Vancouver skyline and cutouts of Hillary and Donald in the corner with their mouths agape, and it read "thinking of moving, I can help!". I will admit I laughed.
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Jun 10, 2016 00:27
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Pryor on Fire posted:I got a card from a realtor today with a pretty picture of the Vancouver skyline and cutouts of Hillary and Donald in the corner with their mouths agape, and it read "thinking of moving, I can help!". I will admit I laughed. This is pretty good.
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Jun 10, 2016 01:23
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minivanmegafun posted:They're one of the few places that check the "no, we will not sell your loan" box on the paperwork. First Tech Federal Credit Union surprised me with this as well.
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Jun 10, 2016 01:32
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BeastOfExmoor posted:Property bubble, what property bubble? Not hard to guess where you live. 
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Jun 10, 2016 01:35
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chupacabraTERROR posted:If you love the place you're at, why not ride out the low rent until they raise it, then look? What's frustrating about my area is a two bedroom apartment is more expensive than a mortgage on a four bedroom house.
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Jun 10, 2016 02:29
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Drunk Tomato posted:We're going from two incomes to one, at least for a few years. With one income, we'll be able to do alright, but we wont be saving much at all. Any extreme raise in our rent price would thus hurt a lot. Yeah I would really not want to own a home in your case; having all of your money locked in property and suddenly needing cash is a bad situation to be in. Your family has absolutely no ability to predict the housing market, you'd basically be taking a gamble with money that you alreadyknow you can't really afford to spend.
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Jun 10, 2016 09:19
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Pixelboy posted:Not hard to guess where you live. But as a recent buyer in said school district I approve of the message! (You wouldn't want to live in Renton would you??)
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Jun 10, 2016 14:21
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Vancouver is a place for foriegn nations (Like Americans) who do not trust their sketchy banks/ governments with cash to store assets in the form of real estate that they can convert into loonies with relative ease. As long as it stay a good option for this function, prices will stay high as demand is driving them. It is just a lot of the demand is not for housing. It is for speculative return and asset safety. So let's say you have several million bucks that you may or may not have really earned. You buy a place in Vancouver, San Francisco, Tokyo, New Your, and London. Now you have a place to stay while you process immigration forms and or avoid extradition. Hey you also get an annual 10% return. Pretty sweet deal.
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Jun 10, 2016 14:36
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Drunk Tomato posted:We're going from two incomes to one, at least for a few years. With one income, we'll be able to do alright, but we wont be saving much at all. Any extreme raise in our rent price would thus hurt a lot. I would not recommend you buy right before you have a kid, because that is a dramatic change in your life and it might change what you want/need in a home considerably. Especially when combined with your wife stopping her work and changing your income. I would suggest you sit on that pile of cash and keep adding to it as you are able, and wait until after you have your kid and you see how that changes your life. For some people it is not a huge difference and for others it's a tectonic shift, and you don't want to be stuck in a condo that doesn't fit your needs - especially if you might also be short on income or have the market crash around you.
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Jun 10, 2016 14:58
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I'm interested to know what risk is involved in buying a house when both people have stable jobs and intend to stay in the area. Prices in the bay area are high, but so are rents. Why is the value of a home relevant if you are living in it? Chances are interest rates will just go up from here so I don't see refinancing a benefit in the future. Unforeseen financial disasters? Those things can happen to renters too, and in places where rents are high where jobs are located it's not like a renter can easily relocate somewhere affordable.
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Jun 10, 2016 18:20
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and remember renters are forced out of the property at gunpoint 3 days after missing a payment, buyers have 6+ months. 
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Jun 10, 2016 18:41
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The number (and magnitude) of unforeseen disasters that can happen to a renter is far, far lower than the same for an owner. If that's not extremely obvious, you haven't done your homework. Your mortgage stays the same whether the market goes up or down. So if the market drops and you wanted to leave (or a stable job isn't so stable and you can't make the payments), you're stuck and you're still incurring the opportunity cost having all of that money tied up. These things can be planned for. But to suggest that a leveraged, illiquid, and potentially volatile investment isn't risky is wrong.
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Jun 10, 2016 18:48
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Panfilo posted:I'm interested to know what risk is involved in buying a house when both people have stable jobs and intend to stay in the area. Housing prices drop because jobs leave the area, your stable jobs are not so stable now and you're super underwater. Houses have super-major repair expenses that are "when" and not "if" such as roof replacement. Renters don't have that sort of lump-sum issue. Property taxes go up and make the PITI uncomfortable/unaffordable. People hurt themselves on your property and sue you - higher chance for houses. Neighborhood goes to poo poo.
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Jun 10, 2016 18:49
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Keyser S0ze posted:and remember renters are forced out of the property at gunpoint 3 days after missing a payment, buyers have 6+ months. Not sure if you're being facetious or not, but in many states the timeline is basically the same; the landlord/bank asks you to leave, and when you refuse they go to court and get an eviction notice, and then you have 30 days. The bank might take longer simply because banks are slow bureaucratic monsters, "3 days" is a clear exaggeration Panfilo posted:I'm interested to know what risk is involved in buying a house when both people have stable jobs and intend to stay in the area. Others have done a good job of answering this, I'd just like to point out that the value of your home is relevant in two ways: 1) It's part of what determines what you pay for housing each month 2) It's relevant when you need to sell Your monthly payment is obviously important, but the price that you need to accept when you go to sell is, too. In an economic downturn stable jobs become unstable, and suddenly a huge number of people are all looking to sell their house either because they're broke or found new work somewhere else. This is the kind of situation where people wind up underwater; prices plummet because everyone is selling and no one is buying. All of that time and money that you've sunk into the house is suddenly gone and now your credit is hosed, too, if you can't bring cash to the closing table. And "underwater" doesn't just mean (selling price) - (loan principle) < 0; people often underestimate closing costs. Now consider the renter in the same situation. Their cash was never tied up in a house, so that's already safe (it might be tied up in other assets that have also depreciated, but possibly not). If they need to move somewhere else for work or for cheaper rent (swapping rent cost for commute time), they can do that; they might lose their security deposit for breaking a lease or they might be able to sublet. And even if we're not talking about an economic downturn, if you move in less than 3-5 years then you're probably losing money. A lot can happen in 3 years. Your employer might fire you. Your employer might demand that you move to a different city. Your neighbors might suck. QuarkJets fucked around with this message at 20:25 on Jun 10, 2016 |
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Jun 10, 2016 20:22
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QuarkJets posted:Others have done a good job of answering this, I'd just like to point out that the value of your home is relevant in two ways: 3) It determines the amount of your money that vanishes every year when you pay property taxes  Also thanks to this thread I'm now the only person I know who is telling all my friends that buying with 5% down and no savings is a terrible idea. Not that they'll listen to me over my realtor friends who are following the party line of "better do anything you can to buy now before the house prices skyrocket so high no one can afford to buy a house anymore".
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Jun 10, 2016 20:32
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Aren't all those expenses a homeowner deals with just passed on to their renters? So if you rent you're still technically eating the cost with nothing to show for it. Isn't it kind of a no brainer to budget for repairs and whatnot?
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Jun 10, 2016 23:00
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Panfilo posted:Aren't all those expenses a homeowner deals with just passed on to their renters? So if you rent you're still technically eating the cost with nothing to show for it. Realistically most rentals are going to price based on what the market can bear and not what their own expenses are so prices are driven by demand and not by cost of ownership. Higher expenses will just make renting less attractive driving more folks to sell those properties instead if they can no longer make money off them. Plus the renters get to decide up front if they want to agree to those costs before they sign a lease and if they don't want to they're only out the cost of a move. The whole renting means you pay "with nothing to show for it" is probably one of the biggest drivers that people I know (mostly mid to late 20s) have to try and buy ASAP but it is predicated on the assumption that home prices are only going up and even still it can be a loooong time before the equity you're building catches up with the recurring fees of ownership (plus the 6% of the home value + closing costs you lose when you try to go liquid again). When I laid out everything in a budget for the first time it was pretty clear that in the short-term owning was definitely going to be much more expensive in addition to being riskier. IIRC the break-even point from my crude analysis assuming conservative increases in value and one major repair of some sort a year was something like 8 years out. I would think it would be a no brainer but there are a lot of people that jump headfirst into that American dream of home ownership and saving up a sizeable emergency fund for repairs means they can't afford their 5% down payment *right now* and oh my god with how prices are skyrocketing if they don't buy now they'll never be able to get anything in the area they want and then rents will start going up and what in the world are they going to do, better buy now now now.
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Jun 10, 2016 23:43
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QuarkJets posted:Not sure if you're being facetious or not, but in many states the timeline is basically the same; the landlord/bank asks you to leave, and when you refuse they go to court and get an eviction notice, and then you have 30 days. The bank might take longer simply because banks are slow bureaucratic monsters, "3 days" is a clear exaggeration I'm being a smartass but there is no doubt that huge megacorp apartment complexes (which are everywhere) with constant turnover and hundreds of units are extremely aggressive in eviction and subsequent collections. They'll send you to collections even if you don't owe them money just for the hell of it. Homeowners in California were not making mortgage payments for 10+ months before getting booted. Remember they had to not make payments for 3 months just to get into a "short sale" back then as well.
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Jun 11, 2016 00:14
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Keyser S0ze posted:and remember renters are forced out of the property at gunpoint 3 days after missing a payment, buyers have 6+ months. Someone hasn't tried evicting someone in San Francisco apparently.
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Jun 11, 2016 00:14
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Do people at Bayside Village in SF (mega complex) get to pull that poo poo? at least the deposits are "low" though....  http://www.baysidevillage.com/online-leasing#k=17470 Keyser_Soze fucked around with this message at 00:21 on Jun 11, 2016 |
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Jun 11, 2016 00:17
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CA has some of the most favorable renter eviction laws. In some cases you cannot even start eviction procedures until the renter is 90 days late.
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Jun 11, 2016 00:55
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Bought a house this morning. Not broke yet. But I'll check back in tommorow.
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Jun 11, 2016 05:43
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Panfilo posted:Aren't all those expenses a homeowner deals with just passed on to their renters? So if you rent you're still technically eating the cost with nothing to show for it. People are imperfect. While it might be more logical to just sell a house that costs more to own and maintain than what you earn in rent, many people just aren't good with math, aren't good at thinking about the real costs of home ownership (aka they're happy just covering the mortgage payments), have sentimental attachments to their property, make leaps in logic in order to justify what are ultimately bad financial decisions (housing prices can only go up Up UP so who cares if I'm losing money right now), etc. While there are many markets where the cost of ownership definitely costs less than the cost of renting, there are also many markets where the opposite is true, and there are a variety of reasons (a mix of good and bad) for why home owners still rent out their properties in those markets where rents are low. The repairs thing is actually a perfect example of this because yes, it would seem to be a no brainer that you need to budget for repairs and whatnot, but many people just aren't thinking about that when they buy a house. They're thinking about what kind of dog they want to get and how awesome it will be when the house's price doubles in the next few years, because all of their friends are saying how prices are just going to grow exponentially forever and ever. And banks certainly don't give a gently caress about things like a repair budget when they tell you how much you can afford to borrow, but most people wouldn't second guess that number.
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Jun 11, 2016 07:38
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The other thing that gets missed is that rentals can be depreciated for tax purposes by the owner, but owner occupied housing cannot be depreciated by the owner for income taxes. Additionally, the owner of a rental property gets to offset their earned income with maintenance expenses as well.
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Jun 11, 2016 07:48
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crazypeltast52 posted:The other thing that gets missed is that rentals can be depreciated for tax purposes by the owner, but owner occupied housing cannot be depreciated by the owner for income taxes. Additionally, the owner of a rental property gets to offset their earned income with maintenance expenses as well. This works for renting out part of an owner occupied house as well, e.g., a basement apartment. You can deduct a percentage of the interest payments (not prinicipal) from the rental income, as well as other expenses, based on the percentage of floor area the rental unit takes up.
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Jun 11, 2016 15:39
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The Kestrel posted:This works for renting out part of an owner occupied house as well, e.g., a basement apartment. You can deduct a percentage of the interest payments (not prinicipal) from the rental income, as well as other expenses, based on the percentage of floor area the rental unit takes up. But the interest portion is deductible under ownership scenarios as well, unless it goes above the cap.
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Jun 11, 2016 17:15
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QuarkJets posted:People are imperfect. While it might be more logical to just sell a house that costs more to own and maintain than what you earn in rent, many people just aren't good with math, aren't good at thinking about the real costs of home ownership (aka they're happy just covering the mortgage payments), have sentimental attachments to their property, make leaps in logic in order to justify what are ultimately bad financial decisions (housing prices can only go up Up UP so who cares if I'm losing money right now), etc. This, but also if the rental market is less than the mortgage payment, the market rent is still better than having the building vacant. So there are plenty of times where the rent doesn't fully represent all costs in the short run.
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Jun 12, 2016 00:18
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The market rent on my property is 1600 and the P&I plus insurance and tax is 1300, I consider that a loss due to the associated expenses and risk. The insane straight line depreciation is pretty epic though.
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Jun 12, 2016 03:14
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Yeah, I just sold my house instead of renting it out because a rent of 30% over the mortgage payment wasn't enough to make it worth the trouble.
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Jun 12, 2016 03:17
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I could probably get ~220 on ~175 payoff which is super temping but prices have been very steadily rising ~5% a year in the area so I'm being stupid and holding on to it.
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Jun 12, 2016 03:22
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Renting as a self manager lets you take loses against your regular income. You then recapture those loses and depreciation at 15% instead of your higher marginal rates when you sell. As long as housing is appreciating renting at a loss is a real thing and financially beneficial thing to the landlord.
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Jun 12, 2016 14:49
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The only money in renting is if your own a bunch of properties or apartments. Renting out a home only seems like a good idea if you're underwater or an 'investor.' I lost one place to a cash investor. We both put in offers $10k under asking. Mortgage with hoa fees, insurance, etc would have been about $1,400. He just put it up for rent for $2k a month. Even that amount hardly seems worth it, unless you have 4+ properties going.
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Jun 12, 2016 15:30
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Sperg Victorious posted:The only money in renting is if your own a bunch of properties or apartments. Renting out a home only seems like a good idea if you're underwater or an 'investor.' A lot of those investors are paying cash so they don't have the mortgage cost at all. It's why you don't want to be bidding against them, they have very few contingencies.
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Jun 12, 2016 16:18
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My plan is to rent it out for a few years and use the rental income to cover the monthly payment, while putting the extra plus about 50% of the monthly payment into a separate savings account specifically for maintenance and vacancy expenses. So that's about $800 a month going into that fund which currently sits at about $5k. A year of that and I think I'll feel comfortable dropping the contributions down to the net rent proceeds which will only be a few hundred per month.
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Jun 12, 2016 16:23
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Sperg Victorious posted:The only money in renting is if your own a bunch of properties or apartments. Renting out a home only seems like a good idea if you're underwater or an 'investor.' Even if he only breaks even at $2k per month after maintenance and empty months, 15 years from now his rental income will more like 3k-4k per month while his expenses will only increase to like $2500, and the value of the property on average will have increased with inflation so say 34% to 56% (2 to 3 percent per year), so on a 200k house you would expect that to be somewhere in the $68-112k range. He also is forced to depreciate the property at like 3.5% a year, which depending on his income and job he can use as a deduction against other earned income, so he would get a ~$6000 tax deduction per year from the property as well (I think you can only depreciate the "building" not the land so you don't get a full $7000). So after 15 years of renting out the property, he would have gained:
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Jun 12, 2016 16:25
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Droo posted:Even if he only breaks even at $2k per month after maintenance and empty months, 15 years from now his rental income will more like 3k-4k per month while his expenses will only increase to like $2500, and the value of the property on average will have increased with inflation so say 34% to 56% (2 to 3 percent per year), so on a 200k house you would expect that to be somewhere in the $68-112k range. I know a lot of people who put all of their cash and retirement money into rental homes, using this same logic (although I do have a friend whose mother bought a condo in a dead beach-town, DOESN'T rent it out, and considers that her retirement fund. All the while she is paying HOA dues on a place she goes to maybe 5 times a year). Anyway, the problem is that you could end up in a situation like my father-in-law, where his rental become the home to a hoarder, and it cost them somewhere around $30,000 to renovate the place, basically draining their bank accounts, and after which the emotional turmoil of the incident led to them selling it anyway.
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Jun 12, 2016 17:31
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My old landlord said he'd had tenants tear down parts of walls to make moving in easier. People are loving awful.
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Jun 12, 2016 17:34
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Andy Dufresne posted:A lot of those investors are paying cash so they don't have the mortgage cost at all. It's why you don't want to be bidding against them, they have very few contingencies. Most will still refinance after closing to preserve cash and keep buying. Droo posted:Even if he only breaks even at $2k per month after maintenance and empty months, 15 years from now his rental income will more like 3k-4k per month while his expenses will only increase to like $2500, and the value of the property on average will have increased with inflation so say 34% to 56% (2 to 3 percent per year), so on a 200k house you would expect that to be somewhere in the $68-112k range. After 15 years, however he still hasn't been able to rent it. Hasn't come down on the price yet either. Which is good as far as I'm concerned.  Plus there are upcoming maintenance issues, that while not imminent are still going to have to be dealt with. He'll make money eventually, but he's going to need to put more money into it and hope the HOA fees don't start creeping up, which they will. Sperg Victorious fucked around with this message at 18:19 on Jun 12, 2016 |
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Jun 12, 2016 18:02
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