Why You Shouldn't Buy a Home

originally posted by: Edumakated

Because the vast majority of people wind up getting married and having kids. With kids, you need more space and good schools. Neither of these are typically available when renting apartments.

A house is a store of wealth. It is a stable and in most cases, appreciating asset. When you pay the mortgage off, you have that equity and when you sell it is real money.

I bought my first place in 2003. I sold it two years later and made $80,000 on the sale. here is the kicker... I put ZERO down when I did that. If I had chosen to rent, I would have pissed away two years of rent and had nothing to show for it.

My current home hasn't appreciated a ton, but I have been in it 13 years now. It will be paid off entirely in about another 10 years, maybe sooner. The house is worth about $600,000. That is real net worth. When I sell that is money that will help set my kids up for a better opportunities than I had. I could also do a reverse mortgage and live off that equity in retirement.

Waiting to buy a home in your 50s isn't a bright idea as most people are nearing retirement. The goal then is to reduce your housing expense, not increase it. By that time, most folks are nearing having their mortgages paid off.

Okay but don't you ever worry about having all your assets tied to that one house?

if that $600k house is 75% of your net worth (25% in a IRA)... that's not a good diverse portfolio.

what if the neighborhood goes to $hit? Look at what happened in Houston... how are those real estate values doing after getting hit by a hurricane?

originally posted by: luke1212
a reply to: DD2029

buying a home is the single best investment a person can make. i didn't even bother to watch the video as i was a renter for 30 years and a homeowner now. i am completely out of debt, the money i was making in rent then house payments now goes to a savings account for emergency's /repairs on my home. taxes on my home is about equal to 2 months rent i was paying before. only a fool would think that renting is better then buying.

That's true for you, but I know well intentioned people that it was the single worst investment in their lives. I total money pit where they barely bought the house and had no money for improvements the house needed. Now it's like a house of cards with one thing after another costing 10s of 1000s of dollars that they can't afford.

I've been renting an awesome apartment for about 12 years at an under market rate. While do hope to own a home in the future, im content with renting as well. I would never buy a house by the skin of my teeth. Id have to have at least 50k for house maintenance which most people just don't have.

originally posted by: DD2029
You clearly haven't seen the movie Money Pit.

Oh I know a money pit. I live in one. A cottage built in 1730. It sucks up money, but it's mine.

The house is mine and I can do what I like - within reason. In a few year, should I wish, I can sell up and move on. You cannot do that if you spend your life renting.

originally posted by: DD2029

originally posted by: Edumakated

Because the vast majority of people wind up getting married and having kids. With kids, you need more space and good schools. Neither of these are typically available when renting apartments.

A house is a store of wealth. It is a stable and in most cases, appreciating asset. When you pay the mortgage off, you have that equity and when you sell it is real money.

I bought my first place in 2003. I sold it two years later and made $80,000 on the sale. here is the kicker... I put ZERO down when I did that. If I had chosen to rent, I would have pissed away two years of rent and had nothing to show for it.

My current home hasn't appreciated a ton, but I have been in it 13 years now. It will be paid off entirely in about another 10 years, maybe sooner. The house is worth about $600,000. That is real net worth. When I sell that is money that will help set my kids up for a better opportunities than I had. I could also do a reverse mortgage and live off that equity in retirement.

Waiting to buy a home in your 50s isn't a bright idea as most people are nearing retirement. The goal then is to reduce your housing expense, not increase it. By that time, most folks are nearing having their mortgages paid off.

Okay but don't you ever worry about having all your assets tied to that one house?

if that $600k house is 75% of your net worth (25% in a IRA)... that's not a good diverse portfolio.

what if the neighborhood goes to $hit? Look at what happened in Houston... how are those real estate values doing after getting hit by a hurricane?

My house is only a small part of my net worth.

However, it is one of those things that even if you don't have a ton of other investments can still give you a nice cushion in retirement. My grandparents were basically lower class. They had no other investments, but they did manage to payoff their house. They were able to do a reverse mortgage which provided a nice lump sum of cash in combination with their social security to provide for a decent retirement.

The best way to think about a house as an investment is like a savings account. You pay the mortgage down, you have that money.

You should only a buy a home in a stable neighborhood with good schools and mostly other like minded homeowners. The area in which I live is known for great architecture, good schools, is close to public transportation, etc. Basically, a lot of people want to live in this area and the home prices reflect that demand. I don't really have a fear of lost money in this area.

Buying homes in risky areas or areas with a lot of renters (especially section 8), bad schools, crime, etc is a sure fire way to lose your ass investing in a home. While buying a home is a place to live, it still is an INVESTMENT and you should do a lot of due diligence.

originally posted by: paraphi

originally posted by: DD2029
You clearly haven't seen the movie Money Pit.

Oh I know a money pit. I live in one. A cottage built in 1730. It sucks up money, but it's mine.

The house is mine and I can do what I like - within reason. In a few year, should I wish, I can sell up and move on. You cannot do that if you spend your life renting.

Some people have no choice but to rent. It's not a conscious decision. They also don't waste money on maintenance and home improvements. There's pros and cons of both.

A typical $300k house... a nice home... costs about $15k - $20k a year before you touch any mortgage payment.

I have $8k alone in property tax
$1k in HOA fees
$1.5k in insurance
Utilities are double that of an apartment
Lawn
Maintenance

it's about $15k a year without mortgage, and if I want to move to a better house I'll have "buy & sell relator fees" which is usually 3% of the property value.

that's why it's somewhat of a scam. In some cases you can flip them and make good money...

but not all. Still have to pay a Capital Gains Tax if you make a substantial profit.

originally posted by: mkultra11
Some people have no choice but to rent. It's not a conscious decision.

Oh, I know. I started my life renting before I was in a position to buy - both financially and settled. Buying a house is a choice and a financial commitment. It ain't a right. If you cannot buy a house, then you cannot buy a house.

a reply to: DD2029

why not get a nice small house in a place you want to be? It's cheap, it's not hard to keep clean, and since it's cheap, you have some money to do repairs and upgrades, which will make the property more valuable. You likely don't need 4000Sq ft, or 5 bedrooms. Renting is wonderful for the landlord. It's not good for the renter in the long run. It's meant to be an alternative when you are young, poor, or just have bad credit.

originally posted by: paraphi
Why chuck money away in rent. Chucking you well earned cash into someone else's pocket. If you can, you should buy. That's my advice.

Also, if you buy, or rent, then for God's sake read the small print and get legal advice. In that way you don't get surprises.

Im going to start investigating how much money is really wasted in rent. It's really not that much.

Many variables can come into play.

originally posted by: Edumakated

originally posted by: superman2012
I would never buy a house in a large city. The prices are too inflated. When you can live 30-45 mins away, and pay a third of the cost to own a home with a large yard and all the amenities, it seems like a no brainer to live in a small town.

Homes in the city cost more because far more people rather live in a city than a far out suburb. Simple supply and demand. Many people rather have walkable neighborhoods with shops, restaurants, etc right at their door step instead of having to pile into a car and drive 20 minutes just go to the grocery store.

Not saying one is better than the other, but home prices reflect the values that people place on them. location. location. location. This why a 1200 sqft condo in downtown chicago may set you back $650,000 while for that same price in a suburb 50 miles away you can get a 4000 sqft house on 5 acres.

Exactly. That's why I live in a town of 600 people. It has a bank, a grocery store, a restaurant, a bar, insurance agency, pharmacy, hardware store, gas station, new water treatment plant, a K-12 school, nursing home, and a doctor that comes 3 times a week. I love it here and wouldn't change anything, except the weather! I can walk anywhere in town but at -40 it doesn't happen.

Owning was great for the Baby Boomer Generation and WWII vets.

This will not be the case for the 30 and 40 somethings of today.

everyone's situation is different though.

Where I'm from, it's virtually impossible for low and middle income persons to buy a house. Corruption and white-collar crime have inflated house prices to ridiculous levels. Renting is usually the only option.

Have to agree with OP though, renting is a viable option if you do not want to worry about maintenance or prefer to be mobile.

a reply to: DD2029

You're right, it depends on many variables. Some are just not "homeowner" types. They don't want the responsibility of keeping up a home and would rather let someone else worry about the new roof, leaky faucet, mowing the grass, property taxes, etc...

I have a 3 bedroom ranch with a HUGE fenced in yard, we bought when the kids were little, 2 blocks from the school and I practically stole it. The lady who owned it as a rental property was getting married and wanted out from under it. She casually mentioned that and that she would sell it for what she owed to start debt free in her new marriage.

Bwahahaha. Got the whole thing for $37,000. I know right? Friggin unbelievable huh? Now ya know why we jumped on it so fast. Spent a few years remodeling, planting roses, fruit trees, raspberries, strawberries and I have plenty of room for garden. [ mmmm fresh home grown tomatoes and peaches still warm from the Sun ] And the best part....I am this close to having it payed off.

Grandpa bought this house with over a quarter acre, and a pond, an orchard for 90K. Now its worth 300K, and his mortgage is only 700 a month. That includes taxes, and insurance. All his friends that rent, pay way more then that now.

With home ownership, inflation can be our friend. Your wages go up, but the mortgage stays the same

There are some decent apartments out there:








3 different places in 6 or 7 years wouldn't be a bad idea for someone like me.

would free up some money if I sold my house.

I invest in real estate full time for a living.

Those tax numbers are rediculously high.

When you rent, you are paying the mortgage, the property taxes and the slumlords paycheck.

They usually pick them up at auction for cheap, I've seen 120k houses sell for 10k at auction.

You make all your money on the buy, not the sell.

Renting is a horrible idea, it is almost always higher than the mortgage.

I picked up a house at 169k, it will be sold at 400k. It needed 100k worth of work. The property tax was 6k for 2 years.

You don't have to pay taxes on improvements made if you live there over 2 years.

The I don't want to fix stuff line is bunk. When you close on a house these issues are located with a good inspector YOU hire and addressed before you close.

Renting os throwing your money into someone elses bank account, while they sit on their a@@es.

We need more homeowners, not slumlords, they drive housing costs up.

Temp rental for college ok, but living in a rental is extremely stupid.

Sell your house... get apartment...

invest 20% in tangible gold coins,

buy XRP and bitcoin (with caution and strategy)

invest 75% other places...

wait until next housing crisis, take advantage when market gets bad.

settle down in longterm home no later than 2029.


edit:

(I somehow listened to this random dude for 25 minutes lmao)



114,619 views
Published on Dec 16, 2017

crazy.

originally posted by: DD2029
Sell your house... get apartment...

invest 20% in tangible gold coins,

buy XRP and bitcoin (with caution and strategy)

invest 75% other places...

wait until next housing crisis, take advantage when market gets bad.

settle down in longterm home no later than 2029.

No way, not me.

There isn't some big market crash coming, prices are still lower than 06.

If someone advises to sell real estate for bitscam, find a new broker.