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I just can’t convince myself to buy a house.

Discussion in 'Road Side Pub' started by coposrv, May 15, 2019.

  1. coposrv

    coposrv Well-Known Member Established Member

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    I think it’s a huge 20-30 year liability for a terrible return and I can’t stomach the thought of it. Am I over thinking it?

    The average decent single family home that isn’t 150 years old and on top of the neighbors house where we are is 500k and another 8-10k in taxes a year. We can pay the mortgage but I don’t want to. My wife and friends think I’m crazy.


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  2. Zemedici

    Zemedici Well-Known Member Established Member

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    depends on a bunch of factors

    I bought my house last year, and with how the surrounding area is coming up, I should be up 75-100k within 5-8 years.
     
  3. youngster

    youngster Active Member Established Member

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    Definitely overthinking it
     
    Last edited: May 15, 2019
  4. Mpoitrast87

    Mpoitrast87 Well-Known Member Established Member

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    Homes are one of the few investments that are pretty much guaranteed to see a return on. Alot plays into whether to rent or buy. For me i would much rather pay $1500 a month for 30 years than $1500 a month for the rest of my life.
     
  5. V6&V8SHO

    V6&V8SHO Well-Known Member Established Member

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    Could be worse. You could be in northern IL with a 400k home paying 10-15k in taxes a year.
     
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  6. coposrv

    coposrv Well-Known Member Established Member

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    The reason rent appeals to me is I don’t have to do anything. I pay for the year and if anything goes wrong I make a call. I don’t have to maintain it or worry about it. If shit happens I can just leave. I’m not tied to it. We’re renting a renovated 2 bedroom in southborough now for what equals to 1400 a month


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  7. mysticsvt

    mysticsvt southernmustangandford Premium Member Established Member

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    Throwing money away each month renting is a horrible idea. Plus the mortgage tends to be cheaper than rent. Besides, it's catchy...all the grown ups are doing it. ;)
     
  8. coposrv

    coposrv Well-Known Member Established Member

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    Yeah I know it seems like throwing money away but I just can’t convince myself to get on the hamspter wheel. Maybe if things grow with work and we can gross 25-30k a month then yeah I won’t worry too much but having 25-30% of our gross income going to one thing scares me.


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  9. Mpoitrast87

    Mpoitrast87 Well-Known Member Established Member

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    2 bedroom house or apartment? either way thats cheap for southboro. My old co-worker rents in marlboro and he pays 1800 a month for a 2 bedroom.
     
  10. slo984now

    slo984now AKA 01yellerCobra Established Member

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    There's also a tax deduction for the property taxes you pay. I paid $365K back in 2009 for my house. It appraised for $550K earlier this year when we refinanced. And we haven't done much as far as upgrading. Plus I don't have to deal with a landlord.
     
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  11. 96gt02

    96gt02 Well-Known Member Established Member

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    Yup your crazy
     
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  12. coposrv

    coposrv Well-Known Member Established Member

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    We’re on the bottom of a 2 family home. It’s a great situation I’m reluctant to leave.


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  13. coposrv

    coposrv Well-Known Member Established Member

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    I won’t speculate on seeing Increases like that. Insane.


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  14. quad

    quad Well-Known Member Established Member

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    If you rent you have zero return. My buddy just had to move to San Fransisco with his wife and they are paying $3000 per month for a small apartment under 800 s.f. Every month he is out $3000, $36,000 per year gone.

    Even if you pay 8-10k in property taxes you still come out better than many people that rent - if you buy the right property in the right area.
     
  15. Pribilof

    Pribilof 5,280 Reasons to Mod Established Member

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    If you're going to live in the house for over 5 years it generally makes sense to buy. Despite what realtors say, it's almost never an "investment" after factoring in carrying costs, inflation, and transaction costs. However, you have to live somewhere. It's more of a lifestyle investment. If you want an actual investment, buy stocks.

    For instance:
    $365k in 2009 is about $435k in 2019 dollars.
    Seller's transaction costs on a $550,000 value are $33,000.
    Net $517,000 after commissions.
    Taxable gain of $185,000 equals a tax payment of $37,000.
    Your $517,000 net just turned into $480,000, for an inflation adjusted gain of $45,000

    What were your maintenance costs over 10 years?
    What were your property taxes over 10 years?
    What were your interest costs on the mortgage?
    What were rental costs of a similar home?

    Probably a wash on your gains but you got to live somewhere you owned and you had to live somewhere anyway

    Edit:
    Also if you had 20% down on your initial mortgage ($85,000) you lost the use of those funds for 10 years.
    If you had put that $87,000 in the SP500 in January 2009 you would have roughly $300,000 today.
     
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  16. L8APEX

    L8APEX On my tummy..! Established Member

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    If your are worried about the maintenance there are condos and housing developments that cover most things. Interior isn't usually as hard to keep up with if you can find something halfway new. My house is 37 years old, with about 2k sqft above and another 1.9k below ground is right around $900 a month with taxes included in the mortgage payment.
    The only apartment I've had was a 1 bed <800 square feet and was $850. Electricity was more there than the house as I had to run the AC on max year round. Heat from the lower units on top of basically not being insulated was terrible. Stayed 6 months.
    Unless you want the ability to pick up and move it's silly not to put money towards a house, even in the worst markets you're more likely than not to get a much better return on your money than tossing it in the bank, You might get more from the market, but I cant live in the stock market. Even after accounting for/subtracting the mortgage interest ~4% (which is deductible in most cases). Even here in Kansas where property is relatively cheap my house has gone from 158k to 180k since 2015, just keeping it up.
     
  17. Coiled03

    Coiled03 Well-Known Member Premium Member Established Member

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    It's been shown over and over that in the long run, it's cheaper to rent in most cases, and that's even at dirt cheap interest rates like we have now. But, most people like to fool themselves into thinking otherwise.
     
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  18. IronSnake

    IronSnake Permanently apathetic Established Member

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    Personally it's more than a financial investment.

    It's an emotional investment. It's your home. You can do whatever you want to it as a reflection of your own interests and personality.

    We bought two years ago just last week. It had a large blank yard, and a pretty big deck when we bought. I've since torn up the deck, paved, redid the yards, knocked out walls, new floors, flexed out the garage, started plans for an external backyard garage with a lift, and enjoyed every bit of it.

    When I come home, open the house up, see the animals run around out back, know that it's our land and home, and see myself wrenching out there while the wife plays with the dog, it is very much worth it.
     
  19. blownstang4.6

    blownstang4.6 Active Member Established Member

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    Yes, but in the end you have nothing. It's like throwing money out the window. While $500k is expensive for just a decent house, it will be yours, and you will be building equity as you pay down the mortgage and the house appreciates. Your other option is to buy a multi-unit property and live rent free as tenants pay your mortgage, but it doesn't seem like you'd be willing to do the upkeep or maintenance.
     
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  20. Pribilof

    Pribilof 5,280 Reasons to Mod Established Member

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    Not necessarily true. Please read my earlier post and those of several others. It's a lifestyle investment. Rarely a financial one.
     

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