[08rookie]

i specify buying a property is not the BEST investment...im talking strictly financial

i can understand that certain people (couples) in certain situations invest in a certain property in a certain location and that may be the best investment for that exact situation...but im going a bit larger...more general...

take an average working class family buys a property for 250k... they throw 20 % down (all their savings) takes out a 30 year mortgage and buckle down for the next 3 decades...30 years later they sell the property for 700 thousand. great butttt what exactly did they return financially?...i mean after the interest and taxes and insurances associated with property over 30 years compounded with the 30 years of maintaining the property it seems like you can argue that you just about break even?!?! i mean you probably spend 20k over 30 years just to have your grass cut!

hypothetically, you look at ur mortgage statment, for the sake of argument that you pay 2700 a month to cover your 3 bedroom place in a nice neighborhood....if you can break down that 2700 into principal, interest, taxes and just use your "principal" amount as rent money deposit your "interest" and "tax" amount into a CD or money market or even a passive savings over the course of 30 years, would you have saved more then you would have profited in owning a house for 30 years considering the money spent in interest and maintaining?!

maybe i make no sense and for that i am sorry, it just seems more clear in my head and i thought i can articulate it better lol

[808six]

EQUITY.

[number335]

what about the tax write off you would get for interest and property taxes?

[b335i]

Do a bit of research on this topic and report back to us!

[Feyd]

Originally Posted by 808six

EQUITY.

+1

You've got to spend the money to live somewhere... you might as well get the money back in the end rather than pissing it away on rent.

You can also qualify for some tax deductions at the end of the year if you are a home owner.

They aren't making any more land either... real estate values might be in the shitter right now, but they will eventually go back up 5 years/10 years who knows, but they will rise again... so the investment is sound.

[BMW F22]

The thing is though most people that buy them as investments are not looking to keep the house for 30 years. Basically you buy low and sell high. Let's say if a house that was $400k is now selling for $150k, you could buy it and make the monthly payments for a few years until it goes back up and sell it back for $400k+. Of course you could always keep it longer to make more because homes tend to appreciate. The one pitfall is that you run the risk of it depreciating rapidly during a recession (in which case you would have to wait another 4-5 years before it goes back up).

Also, those that buy homes as investments are renting them out so that they don't have to pay the mortgage payments out of pocket.

[08rookie]

Originally Posted by 808six

EQUITY.

im not gona say "ooo in todays market equity isnt a promise" (even though there is some truth to that) ...il give equity the benefit of the doubt here and say the house will gain equity

but my point is...

the money you gained in equity over 30 years compared to the money you spend in interest and taxes and maintaining the house over 30 years seems to cancel each other out?!

[08rookie]

Originally Posted by Feyd

+1

You've got to spend the money to live somewhere... you might as well get the money back in the end rather than pissing it away on rent.
.

who wants to wait 30 years to see a return on ur investment?! the money could be there the entire time if you just save what you would have spent on interest and maintaining the house?!

[Buegie]

Originally Posted by 08rookie

the money you gained in equity over 30 years compared to the money you spend in interest and taxes and maintaining the house over 30 years seems to cancel each other out?!

For most areas, real estate has appreciated a great deal in the last thirty years. My guess would be that the equity outweighs the taxes in the vast majority of cases

[number335]

I think you are assuming people who take out a 30 yr mortgage intend on living in their home for 30+yrs and that everyone puts down 20%.

I was able to put 3.5% ($4,200)down on a 120k condo once. 5 yrs later I sold the condo for 290k. I don't think I could find the same kind of returns if I invested my $4,200 in a cd.

[08rookie]

Originally Posted by number335

I was able to put 3.5% ($4,200)down on a 120k condo once. 5 yrs later I sold the condo for 290k. I don't think I could find the same kind of returns if I invested my $4,200 in a cd.

of course...thats why in my original post i said this was in general...that is a killing...my brother bought a house in philly for 100k and sold it in a year for 175...these situations will always happen...

"certain people, certain locations, certain situations will gain..."

[SteveMD]

My parents bought their house in London for about $6K in 1962. They sold it in 1990 for $200K It was the same house with just the regular improvements.

They paid their mortgage for 25 years and probably paid out about $18K all in.

I looked it up when I was there in 2008 and it is now valued at about $400K.

Umm..what was your question again?

[08rookie]

Originally Posted by SteveMD

My parents bought their house in London for about $6K in 1962. They sold it in 1990 for $200K It was the same house with just the regular improvements.

They paid their mortgage for 25 years and probably paid out about $18K all in.

I looked it up when I was there in 2008 and it is now valued at about $400K.

Umm..what was your question again?

http://www.getrichslowly.org/blog/20...f-home-buying/

read that article and tell me that there is absolutely no truth in the mathematics comparing renting vs buying a house...

you can convey your point without the sarcasm...dont try to make me look foolish in my thread by citing one example and passing it off as a certainty...your parents place in london clearly did well...hi 5 to them...i live in jersey and one reason properties havnt been hurt like the rest of the country is the fact we are a bedroom state to philly and nyc...there are plennty of jobs around these cities and the employees need a place to live...i can imagine the same for london..

[Heinzftw]

Originally Posted by 08rookie

i specify buying a property is not the BEST investment...im talking strictly financial

i can understand that certain people (couples) in certain situations invest in a certain property in a certain location and that may be the best investment for that exact situation...but im going a bit larger...more general...

take an average working class family buys a property for 250k... they throw 20 % down (all their savings) takes out a 30 year mortgage and buckle down for the next 3 decades...30 years later they sell the property for 700 thousand. great butttt what exactly did they return financially?...i mean after the interest and taxes and insurances associated with property over 30 years compounded with the 30 years of maintaining the property it seems like you can argue that you just about break even?!?! i mean you probably spend 20k over 30 years just to have your grass cut!

hypothetically, you look at ur mortgage statment, for the sake of argument that you pay 2700 a month to cover your 3 bedroom place in a nice neighborhood....if you can break down that 2700 into principal, interest, taxes and just use your "principal" amount as rent money deposit your "interest" and "tax" amount into a CD or money market or even a passive savings over the course of 30 years, would you have saved more then you would have profited in owning a house for 30 years considering the money spent in interest and maintaining?!

maybe i make no sense and for that i am sorry, it just seems more clear in my head and i thought i can articulate it better lol

Equity....
And just to be a dick I wish I could buy a house for $250k.

[number335]

i think back in 2007 when the housing bubble occurred that renting would have been a good alternative to buying. you can't gain equity if the home will depreciate in value, and paying rent may be cheaper than the mortgage payments. looking back now, people who purchased homes at that time pretty much got jacked. the housing market in my area is now flooded with short sale and REO homes from people who lost their homes.

BUT, now would be a good time to get back into real estate...at least where i live.

[SteveMD]

Originally Posted by 08rookie

http://www.getrichslowly.org/blog/20...f-home-buying/

read that article and tell me that there is absolutely no truth in the mathematics comparing renting vs buying a house...

you can convey your point without the sarcasm...dont try to make me look foolish in my thread by citing one example and passing it off as a certainty...your parents place in london clearly did well...hi 5 to them...i live in jersey and one reason properties havnt been hurt like the rest of the country is the fact we are a bedroom state to philly and nyc...there are plennty of jobs around these cities and the employees need a place to live...i can imagine the same for london..

Using arbitrary figures as per the article is no better. The author uses 4% annual appreciation for real estate which, using the rule of 72 would result in the property doubling in value over about 18 years. Clearly not the case for the example I gave in London, or my current home which doubled in about 13 years without any significant improvement. I've been here 18 years and prior to the crash it was bordering on 3x what I paid. Just a regular single family in a nice neighborhood in a Maryland suburb. Nothing special.

The author then uses 8% as an investment return for his diverted cash. Even prior to the crash, 8% is very optimistic for a 'safe' investment. Sure you can play the market but if liquidity and immediate access of your cash is required, that's not going to work unless you are a Wall St. wiz. Long term however, that will work.

I guess it probably depends on what you plan to buy/rent and where it is. In between my posts, I looked up my first flat, also in London. I bought it in 1986 for $45K. Sold it in 1989 for almost $60K. Now they are about $150K.

Now is a great time to buy btw.

[08rookie]

Originally Posted by SteveMD

I bought it in 1986 for $45K. Sold it in 1989 for almost $60K. Now they are about $150K.

you made close to 15k in that property in 3 years...unless you roll your gain into a second home dont you get taxed substantially on that 15k? if you decide not to roll your gain into your next property and you do get taxed...say you walk away with maybe 10k?...unless you paid in cash for you property which you very well could have, 36 months netted you 10k...and if you paid close to 5k in interest over the 36 months then you actually netter 5k...5 thousand is still 5 thousand...so i guess its found money right ha...ur much better off then i and i respect my elders in financial situations...

[jpsum]

it all depends on the house that you are buying and the mortgage you get with it. I saved over $500 per month because I bought a two family home instead of renting. That's including tax and insurance, etc. Beats paying rent 100%.

In a couple of years, I'll get it all back, plus some.

Also, this is my first home. The first day I moved in and I was working in the yard, I had a new appreciation for everything around me. I realized that I actually own everything I see around me - the dirt, the grass, the trees... all the little things you don't notice before, now you have a new appreciation for it.

[firstkill]

Its about a wash either way. Luck can go either way also.

The good part about owning a home is you can do WHAT EVER you want in it.
Make it custom to it your own needs.



fk

[fdsasdasdf]

For the most part, houses = investments.

[MontegoGoGoGo]

Face + palm

We just bought a short sale house for 120K less than the previous owner did 4 years ago. It's sad that this couple got divorced and are losing their home, but you have to try not to think about that. Put a little somethin' somethin' into the house, and we're looking at a nice profit when the market bounces back. Who knows when that will be, but it will be. In the meantime, we will enjoy fixing up the house and living there.


No real estate investment is a 100% return, but it's better than buying a car!

[Heinzftw]

Originally Posted by MontegoGoGoGo

Face + palm

We just bought a short sale house for 120K less than the previous owner did 4 years ago. It's sad that this couple got divorced and are losing their home, but you have to try not to think about that. Put a little somethin' somethin' into the house, and we're looking at a nice profit when the market bounces back. Who knows when that will be, but it will be. In the meantime, we will enjoy fixing up the house and living there.


No real estate investment is a 100% return, but it's better than buying a car!

I have thought about this numerous times. Except!! 1-2month sub $10k fix-up. Rent out house for a pretty penny till market bounces back.