bought a home

[LivingAlmostLarge]

I just wanted to say we bought a house and are now back in debt. LOL.

All people have done is told us we're going to be rich now from owning real estate.

No one ever wants to hear about how you can get ahead renting. Anyway have you ever considered how owning versus renting might have impacted your net worth?

I've thought about it and perhaps we'd have made more owning these past two years because appreciation of homes was a lot. But at the same time because it was so much chepaer we were able to save a lot so I'm not sure if we didn't come out ahead.

[Like2Plan]

Congratulations on your new home!

[disneysteve]

Congrats.

I'm sure over the long haul, we'll come out ahead as owners but we live in an area that didn't see the wild appreciation leading up to the crash. Of course, the benefit of that was that we also didn't see the dramatic drops in value after the crash.

We bought our house 23 years ago. Today, it is worth about 75% more than we paid for it, so a pretty modest gain on an annualized basis. We certainly could have made more investing the money, but then we would have been paying rising rent all of these years which would have offset investment gains.

[TexasHusker]

As your primary residence, a home isn't the poorest investment one can make, but it ranks right up there. Then again, it has many advantages over renting and is often more cost effective.

Enjoy!

[LivingAlmostLarge]

TH I think it's a pretty sour investment for a primary residence since you don't buy with the same idea as an investment property for sure. No way renting can affording this house or even the one we're renting isn't raking in enough to cover the mortgage.

But it's nice to feel more permanent.

[disneysteve]

it's nice to feel more permanent.

I think is really one of the primary reasons for buying vs. renting. You're putting down roots. You're establishing yourself and your family in a specific location. You're giving yourselves a place to call your own. You don't need anyone's permission to hang a picture on the wall, get new carpet, or repaint the bathroom. You have a "permanent" address that belongs to you for as long as you want it to.

[QuarterMillionMan]

How many bdrms/bath, 1 or 2 stories, garage, pool, etc?

[Eagle]

I just wanted to say we bought a house and are now back in debt. LOL.

All people have done is told us we're going to be rich now from owning real estate.

No one ever wants to hear about how you can get ahead renting. Anyway have you ever considered how owning versus renting might have impacted your net worth?

I've thought about it and perhaps we'd have made more owning these past two years because appreciation of homes was a lot. But at the same time because it was so much chepaer we were able to save a lot so I'm not sure if we didn't come out ahead.

I was actually talking to my wife about this recently.

We had a couple of mutual fund investments in 2009-2010 that were worth around 35k (Vanguard) and 30k (Fidelity). We cashed out the Vanguard account to use as a down payment for our house. Today the Fidelity account is worth just shy of 87k.

The house we bought in 2013 for 135k is now worth around 155k. We owe just shy of 90k on it. However, we haven't "wasted" money on rent these past few years.

So house value has increased 20k. We "saved" paying rent December 2013 to June 2017. So assuming it's a straight up $1000 a month we would've spent 43k on rent.

So 35k increased to 20k (value of the house) and "saved" us 43k on rent over the last 43 months. Does this make sense? Am I looking at this correctly?

[LivingAlmostLarge]

Rent = interest on mortgage to bank right? Depends what it would rent for. Our mortgage is high. The house itself is about $300k more than where we are living now for the same house if I am pricing it right. But over 30 years (which we won't stay), it's $10k/year. Is cutting an hour off my DH's commute worth an hour a day each way? Yes. It's 2 hours a day for 20 days a month = 40 hours a month. $833/40 = $20/hr. The real compromise is the size of home. For the same price we'd get double the house where we are renting now. Meh. I hate cleaning anyway. So we might as well pay more and get something like time out of it instead of a bigger home.

QMM it's a split entry 2050 sq ft with 3 bed/2.75 bath. Needs work in basement/1st floor walkout. It's finished but windows and stuff need replacing and I want to reconfigure. Upstairs is nice and redone.

Nice lot about .25 acres and flat. Good for kids and entertaining and it's fenced in. Has 2.5 car garage attached and an attached carport. Plan is DH park outside and use one of the stalls for storage.

House is cramped but great location and that can't be beat or changed. Basically we bought location, location, location. I learned my lesson last time, buy the best location you can when you think it's high because when it drops you're better off than buying more house in a lesser location.

[97guns]

So house value has increased 20k. We "saved" paying rent December 2013 to June 2017. So assuming it's a straight up $1000 a month we would've spent 43k on rent.

So 35k increased to 20k (value of the house) and "saved" us 43k on rent over the last 43 months. Does this make sense? Am I looking at this correctly?

Yes you can look at it like that, also if you factor in rents the value on your house has to drop to $90k before you realize any real loss

You don't really realize how much your throwing away by renting until you multiply it by the year, then 5 years, then 10 years. Just this year my tenants literally paid me off for the homes the are residing in, a big thank you from me, who doesn't like free stuff???

[rob62521]

Congrats on your new home. Although after 19 years our home is worth more than what we paid for, I wouldn't say we would make a bundle if we sold it. I think the buying versus renting is a personal decision based on what you want and how you want to achieve it. A friend of mine who has always owned a home, sold it and is renting and thrilled. Of course she was 85 when she decided she didn't want to be a homeowner and could afford a nice rental. She likes the convenience of calling someone to get things fixed without having to worry about it.

[disneysteve]

You don't really realize how much your throwing away by renting

I would point out, though, that in some cases renting makes sense and is the best choice. Buying is not always the right answer. I've seen far too many people buy because they felt tremendous pressure to do so, and ended up miserable or having to sell a couple of years later for various reasons and it cost them a bundle.

We need to get away from the whole American Dream crap that you're not a success unless you own your own home.

[Eagle]

Yes you can look at it like that, also if you factor in rents the value on your house has to drop to $90k before you realize any real loss

You don't really realize how much your throwing away by renting until you multiply it by the year, then 5 years, then 10 years. Just this year my tenants literally paid me off for the homes the are residing in, a big thank you from me, who doesn't like free stuff???

97 Guns, I'd like to discuss this more but started a new thread for it instead:

How many of you have rentals (i.e. you're a landlord)? Are they worth it?

[Eagle]

I would point out, though, that in some cases renting makes sense and is the best choice. Buying is not always the right answer. I've seen far too many people buy because they felt tremendous pressure to do so, and ended up miserable or having to sell a couple of years later for various reasons and it cost them a bundle.

We need to get away from the whole American Dream crap that you're not a success unless you own your own home.

This is very true. It doesn't make sense to buy a house when you're moving often. Here's a brief comparison...

Advantages of buying a home:

• Home equity - the quicker you pay off your mortgage the sooner you own the investment
• Homes typically increase in value over time.
• Added privacy
• Interest and property taxes are tax deductible.
• Potential long-term community with neighbors.
• In some situations you'll find similar monthly payments as what rent costs.
• Consistency of mortgage payments over the years.
• More decoration and remodeling options. Want to add a room? No problem.

Disadvantages of buying a home:

• Buying a home is a long-term investment.
• As a homeowner you are responsible for maintenance, repairs, and upkeep. Water heater goes out? You pay to fix it. AC or Heater goes out? You pay to fix it. Fence gets damaged or broken? You pay to fix it. Or you become handy and involved in a lot of DIY projects.
• Home ownership means less mobility or selling a house at a potential loss if selling within 2-5 years.
• Buying a house typically requires a down payment, home appraisal, home owners insurance, closing costs, taxes, and moving expenses.
• Often people moving into a bigger home will buy new furniture to fill the added space of buying a house.
• The value of your house may not increase significantly for the first few years of ownership.
• If you buy at the wrong time (2007-2008 housing bubble burst) you may end up owing more on the house than it's worth for a long time.
• If you get behind on your house payments your lender or bank can actually take your home from you.
• Home owners insurance is more expensive than renters insurance.

Advantages of Renting:

• Sometimes renting a house or apartment can be cheaper than buying a house.
• Sometimes rent includes utilities in some apartment complexes.
• There is more flexibility or mobility in relocating due to career changes/opportunities.
• Maintenance or upkeep is performed by the landlord. In an apartment complex the landlord mows the yards for you. The landlord might even be responsible for replacing appliances or AC/Heater.
• Perks associated with renting can include swimming pools, community centers, parks, gyms, etc. if you live in an apartment complex.
• Renters insurance is significantly cheaper in most cases than home owners insurance.

Disadvantages of Renting:

• Often landlords will require a security deposit and/or the first months rent.
• Your rent isn't fixed long-term and you can expect it to increase over time.
• By paying rent you aren't building any equity as you're not buying any asset.
• There's limited personalization regarding the basic layout or aesthetics of your home.
• There are often limitations to owning pets, making noise, owning a garden, etc.
• There are often additional costs to owning pets including pet rent or an additional pet deposit for potential damages.
• Some apartment complexes may not have the infrastructure in place to have a washer and dryer in your apartment. This means using laundry mats or community laundry units.
• There's no tax break for renting.

Here's a good calculator to compare to see if it's worth it to buy or rent.

[LivingAlmostLarge]

97guns I think that investing in RE is different than buying to live in. What we rented was substantially cheaper about 40% than what we bought. So it's not an apples to apples comparison. Even renting something comparable is still cheaper but that's not why we bought.

Now I'm going to look into RE as an investment I certainly wouldn't buy anywhere I've lived. The numbers never work. However I think it can work in many places. That's where I'd like to invest. But to live? I probably easily lost money in ever house i've lived because I would have made more investing the difference for sure.

When we bought our townhouse in 2005 we didn't need the space and grew into it. If we had continued to live in a 1 bd apartment for at least another 5 years we'd have banked about $1500-2k month difference in rent versus our mortgage and invested $18-24k for the years 2005-2010 and then let it ride assuming that we bought the townhouse 3 bd when we had our first kid. That $100k invested over 12 years would have outstripped any gains from buying in 2005-2012.

But I like having a dog, feeling rooted and the space was nice. I have no problems renting but for other reasons I buy a home to live.

And I certainly will invest in the right property that makes sense. I wouldn't mind looking into vacation rentals like Texas Husker. But I don't think it's cut and dry easy to get into and manage from afar or know you are investing in the right vacation rental. Probably easy to get burned.