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Nobody here talk about the real numbers and every home owner believe that they "built equity" and can only get richer when signing that 30 years mortgage.
Tell me the real cost of living in that 2 bedroom one bathroom house without cutting on water, heat or electricity usage and then lets compare it with cost of renting similar size apartment. I can understand if you say "it's an image thing" or "I love to stay home and work in my own garden" or "because my mom said so" but the numbers doesn't add up at least in Toronto. Less and less young couples can afford buying that house yet you want me to believe that in 5, 10, 20 or 30 years you will sell your houses and get even or make profit? I like to visit my friends in the summer, having a beer or two at theirs backyard but feel sorry for them when the summer is over. Love the possibility of working in your own garage but there is only so much you can do there if you have assholes neighbours. I don't know who is buying today but I know that most of the people hate math and are not good at it. |
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That house looks great by the way... I should dig up a few pictures of our place. Quote:
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Building equity is applicable only when you are maintaining your current residence, and that the market is strong. It's a lot harder to get approved for a mortgage in Canada because of the new lending laws. Gone are the days of people taking 30-35 years to pay off their homes. 25 years is the longest term you can borrow for, and the CHMC is a heck of a lot stricter as to whom can borrow (and under what terms). Banks are still somewhat unrealistic as to how the calculate what you can actually afford since they only tie hydro and water, and property taxes to the costs. "Real cost of living" is what you make it. It's like a lot of people here have mentioned. Live within your means, and you'll be fine. Purchase a expensive home that's beyond your means, just because the bank thought that you can carry the costs, then I wish you good luck, because you will need it. |
Just compare the bills: one year renting 2beds 1 washroom (all in) vs one year of owning that house
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Water:$26 (includes waste disposal) Taxes (built into the mortgage payment) Electric: Paid $137 last month in the heat of the summer As far building equity.... My house was bought for 100k, the house across the street from me built in 69 (mine built in 89) sold for 130k cash. Last "estimate" according to Zillow puts my house in the $137k today and with the addition of all things the city is putting in (Amphitheater, Train system, and shopping district), it should only improve. That said, I didn't buy my house for what it will be worth 10/15/20 years from now. I bought it for the market it is in, that my rent is basically controlled by me, and when I'm paying the bills.... I have something at the end. As for rent, they are putting new apartments at the end of my block (right next to the train station that is already up and running), 1b/1B starting at the 9-1000/month. Same goes for where my sister used to live. (lets not even get into the fact there is no renters insurance in that price or doggy fees for pets) Sure we have to mow the lawn and change our own air filters and light bulbs, but rent by and large seems to be a great deal for those renting the place out. PS Zillow estimates we could rent our house today for $1250/month, which even that seems low consider what renting an apartment costs locally. |
It should be known that renting is throwing away money.
Makes sense if your a baller or have too poor of credit to get financed. Otherwise financially... Owning > Renting |
You should base your house cost 2 1/2 times combined salary. This is a good measurement of what you can afford.
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i have an aunt whose into property. she owns a couple shopping centers and plenty of homes that are always rented out. paid for in cash, and usually foreclosed. she always has tenants, and starts to profit after only a year. then i have other friends who have 3 $500k homes, two of which are rented out. another one just bought his first home at 28 years old, and it's a $500k house. He's got the cash to pay it all off now but he decided to put a fat down payment and just finance the rest.
so if you want to live in a very nice house and not have to worry about money, start your own business and be profitable. Lol |
I make pretty damn good money and have accepted the fact that I won't be able to buy a house until the next bubble bursts. It's pretty ridiculous when tech bros and people from China not only outbid the asking by at least $50k, but also pay in cash. I'm remodeling my dad's house for him, already put close to $12k into it, and barely made a dent. More power to some of you, but fixer uppers definitely aren't my thing.
On top of that, actually having a shortage of houses for sale in SF and tenants beginning to require a salary and credit score threshold just to rent. By the way, no one outside of the SF bay area gets to bitch. Ever...... |
Pretty interesting thread going on.
Me and my fiance have been window shopping houses and areas for the last 6 months or so just to see what we like, dislike need and can live with. And like Exitspeed said, the area that we are from (Milwaukee area) There is a huge range in prices just within a 30-40 minute drive. |
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Bought in 2009 for $171k 30 yr fixed rate Mortgage: $929.45 monthly (includes priciple, interest, and escrow) APR: 3.63% Taxes: Covered by my escrow Insurance: Covered by my escrow Water: ~$50, includes garbage and sewer(thanks to desert landscaping) Electricity: ~$60 in cool months and ~$200 in hotter months Gas: ~$50 Total: $1089-$1229 depending on the month Zillow Zestimate (lol): $252k (Not bad for 2,942 sq ft, 2 story, 4 bd, 3 ba, 3 car house) In the end I'm owning my house and can do what I want with it. Plus I'm currently renting it out right now, so now I only pay the mortgage payment. My renters pay me $1,500 monthly |
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Mortgage, utilities, and property taxes all together are below $1100/month. Average rent in the area is $2,000/month. Current property estimate is $315k based on the previous condition (prior to remodeling). A freshly remodeled property in my area with similar dimensions is $360k. $240k + $30k (remodel) = $270k. I'll probably sink in another $30k to the house since I'm having my entire backyard redone, garage interior remodel, and new driveway. After a year, I'm already up $90k. I can't think of another investment turning such a large profit in such a short amount of time. At the market's peak, it was worth $450k. It's obviously equity at this point, but I'd be stupid to sell it. Definitely going to collect that rent check though once I have kids and need something bigger. After having worked as a personal banker in an upscale/high net worth area and talking to so many retired folks, the majority of them had made their money in real estate. Most still owned the first property they ever purchased. Sure, times were different back then, properties cost far less than what they do today, but interest rates were close to 20%. |
To future home buyers-
Look at how much resources you put into a car (both money, and time doing research, fixing/ect) over a course of a year. You probably could have bought a house. Not all houses are 500k. Ever since I put the car stuff on pause a couple years ago, I've gotten into real estate investing. All of my houses are under $110k and generate profit at a high performance IMO. Most major markets (DC, NY, LA, Bay, ect) are over inflated again, however in secondary and below markets, there are still an abundance of decent priced foreclosures. Also, there is more than one way to buy a house. You dont need to get a mortgage through a bank. You don't need an agent taking a cut. Some of the great investors out there got their start with no "real" job or much money at all. When you deal with a sale-by-owner, the two parties can get creative with financing methods. My first house i bought on the internet through an auction about a year out of college without an agent. I had no idea what I was doing, I just winged it honestly. At the same time I bought a retired east coast drift car, and a new truck. I only needed a couple thousand for the house. Hind-sight it was stupid to buy the truck and drift car, but I wanted to make a point that you really don't need a whole lot of money to do it, and you can get creative with it. Another point I want to throw out there, do you really need a house? Is owning a home of your own something you really want to do, or is it something someone else told you is a good thing to do? Depending on the market you live in, it is cheaper to rent. That depends on your lifestyle as well. Despite the fact that I own houses, my designed lifestyle is better suited towards renting. |
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If you're serious about long term, invest your money. Don't save it. Quote:
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I still live at home for this exact reason. Trying to save up for a nice downpayment and waiting on my gf to finish nursing school. Im not ashamed of it at all. I cringe when I see friends sign apartment leases and see them just simply throw their money away. Nobody answered my previous posted question though: If you were going to set up I guess you can say a long term "piggy bank" for a house down payment where would you put your money into? I am looking into something that has a pretty good APY. I am leaning towards a money market account but I dont know if theres anything better or not. |
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You also give up the flexibility of easily relocating. You also pay a realtor 6% and finci all fees. Buying a house can cost $10-20k up front and that doesn't even touch the base cost of the house. |
Yes, thanks. That is a big one and it completely depends on how one want to design his/her lifestyle.
there is no one choice fits all. For some people, being in a place he or she is comfortable with, and have that stable job for decades to come is what he/she wants. For others, experiencing new places and people and constantly learning new things is life. |
Rules of thumb for house buying is keeping your mortgage,upkeep expenses and property taxes below what you would normally pay to rent. Now with that said Silverbullet is right. In a lot of situations these days renting is the better way to. You think you are doing something with the mortgage money because it's going there and not being squandered on rent. Like he said there are expenses some of that money is going to you never get back. Cost of living period. Ya you can try and look at a owning a House as an investment but if you do you are slipping into the same game that has a lot of people underwater now and in the last few years.
Houses are not meant to be investment vehicle. They are meant to be security so you raise a family in a nice neighborhood to send your kids to school. There is a reason a 30 year mortgage was the norm. People did not buy houses to trade up equity. Unless you are professional contractor or real estate person who specializes in buying houses fixing them and flipping them it's pure dangerous for the average consumer or home owner/ would be home owner. There are exceptions and I know a few have spoken up here. It's just like buying and selling cars. Some can do it most cannot and fact is most should not. People need to stop looking at houses like piggy banks. It's a roof over your head and a shelter from the storm. Oh and there are other things to invest that yield much safer profits over the long term. Housing in this market where I live has indeed gone into another bubble. It is not as bad as the previous one but it's a bubble none the less. It will pop. If you are speculating onit you better be pretty smart to know when to pull out before it does. Now if you went into thinking this is were I am going to live for the next 10-15'years or more and you meet the previous criteria I stated then it's not a bad thing. It may not be as great as you think though either |
Surprised none of you nerds posted this yet.
http://www.nytimes.com/interactive/2...ator.html?_r=0 Have fun! |
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We understand that rent is like a test drive and it's great for people that want that freedom and flexibility, and that's fine. However going back to my original point you can't say that renting and is financially more responsible or is a good business decision to one that can "afford to buy a home" because that is just not so. Looking at owning a home as an investment vehicle on the other hand is one thing. Most of us understand that nothing is guaranteed but paying rent is essentially paying someone else's bill except you have nothing to show for it in the end. Think about it. Yes you can move around and relocate, but you can you leverage your expenses and potentially make $$? Can you remodel, Can you sell? No, most cases no and definitely no. What exactly do you have in the end, your freedom, ok got it. Also your notion of owning a home as being a security blanket for kids is very single sided and quite frankly just isn't so. There are many people here that still even in today's market flip coin on buying and selling or buying and renting properties for other "investment" purposes. There's a great term here that's huge among business owners, called "It takes money to make money" think about the landlord you're paying your rent check too and get back to me on all those ppl that are using homes as security blankets. Put quite simply if you make a decision and it is within your means of affordability, the smarter thing to do is leverage what you have in attempt to have more. You can't sell what you don't own and that's the bottom line. Risky lending has caused the housing industry to fail! Looking forward, If you can afford it after looking at your budgets/income/career, I would 100% say go out and get a house while you can. Now if your lifestyle says the latter, than by all means give that money to the landlord, the person most likely using you as his means to more. |
Meanwhile, in Texas...
http://www.piiholozipline.com/UserFi...rs_Cropped.jpg That's about 40K for the land, in an ideal area. |
I actually started a thread about home buying, but I recieved very little help. I closed on my 2500sq ft with 2 car garage and in ground swiming pool. My house had all the up grades in it. I paid 278k, I used my VA Loan. By 2015 I want to be completly of the electric grid, is anyone else of the grid?
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We installed a 3kw solar system at home in January but are still tied to the grid (in New Zealand btw). Due to the placement of the panels we should see no bills in summer and in winter it should reduce by 50%.
It should have paid for itself in 11 years, but in 10years if we decide to stay we will extend the house and add another 4 panels and replace the inverter, and hopefully the technology in batteries has advanced enough to allow a bank of batteries to be added to the system cost effectively. |
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The same goes for buying vs leasing a car. In the case of a vehicle it made more sense to me to lease with the particular car I own now. |
is there already a houses/house mods pic thread?
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Fact is most people can't flip houses and make money in fact a lot of times they lose just like flipping cars. Everyone will tell you can't mod a car and make money. Actually some of us do and have. same goes for houses. Fact is I can make more money off financial investments in less time than owning a house. Ok and don't get started about financial advisers. Fact is indeed there are financial advisors out there that will tell you that owning a house is not always the way to go. You guys smoke the pipe of the American dream with the twist of the I want it now of the early part of this century. Fact is there a few markets in the country that have rising equity in most places equity is flat if not still somewhat negative. It does not make financial sense for all people to own homes. Jus like car leases can be favorable to owning the car and making payments. Stop looking at from one side. Maybe my post came on strong from the opposite but it was rooted in financial awareness and facts. Do you watch the financials markets everyday? I do and I follow housing as well. All I am saying is don't just merrily jump on the idea that owning a house is better. It's not always. Quote:
I will say again guys stop thinking its written in sand one way. It's not and it's not that simple or cut and dry. I should add any homeowner is not going to like what I wrote. They bought and own a house to tell them it might not have been the wisest choice of them offends and bothers them. You could say that as well as the homeowner telling the renter he made a bad choice. Only real difference is if I can make more off investments in ten years than the equity earned from owning a house, while paying less rent and no property taxes or upkeep costs. No realtor fees , no bank fees. Then I have probably put my money to better use than owning. That is a fact, owning a house does not mean you are not throwing money away. It all depends on needs, costs and markets. Not all is the same in any given region of the country. |
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