Why buy a house?
 

Steve wrote:

SoCalMike wrote:

ill be paying the same every month for the next 30 years.


Likely you won't. Property taxes keep going up, along with
maintenance, utilities, and other expenses. I own a house and also
rent. The house expenses have gone up every year, while the rent has
remained the same for over 7 years.


let everyone know where this magical place is, because you lucked out.

ive got a friend whose dad owns rental property, and never raises the
rates until someone moves. guess what? no one moves! its not
rent-controlled. he just does it to be nice. i guess the place has been
paid off for years, so he can afford to.

Why buy a house?
 

127.0.0.1 wrote:

On Thu, 05 Aug 2004 17:35:56 -0700, Steve wrote:


SoCalMike wrote:

ill be paying the same every month for the next 30 years.

Likely you won't. Property taxes keep going up, along with
maintenance, utilities, and other expenses. I own a house and also
rent. The house expenses have gone up every year, while the rent has
remained the same for over 7 years.

rent staying the same for 7 years is quite unusual, you're one of the
lucky few, in most places rents go up annually or biannually

so for steve, it might be more worth it to rent.

Why buy a house?
 

Roger Binns wrote:

SoCalMike wrote:

so basically, the english figures in the english article would apply
best to... england.


Correct. And I said UK, not England. There is a big difference.

And the housing market in the UK at the time was very similar. Yes
there was also a mortgage interest deduction (named MIRAS) which has
since been eliminated.

The figures for the US are going to be somewhat similar - ie the break
even point is unlikely to be 1 month or 17 years. My guess is that
it will close to a few years, probably something like 2 in overheated
markets such as California and 4 in more "average" areas. However,
since you know so much about it having gone through the process, please
do the calculation and tell us the results rather than bickering.
Ideally they should reflect the average experience in your area.


break even, compared to rent? are you including appreciation as well? if
so, less than a year until the place appreciated enough to cover the
down payment.

Roger

Why buy a house?
 

SoCalMike wrote:
Likely you won't. Property taxes keep going up, along with
maintenance, utilities, and other expenses. I own a house and also
rent. The house expenses have gone up every year, while the rent has
remained the same for over 7 years.

let everyone know where this magical place is, because you lucked out.
ive got a friend whose dad owns rental property, and never raises the
rates until someone moves. guess what? no one moves! its not
rent-controlled. he just does it to be nice. i guess the place has been
paid off for years, so he can afford to.

See, you refer to my situation as "magical," then promptly give
another example. :)

If you stay away from the large apartment complexes, there are many
properties where there's a good chance the landlord won't raise the
rent until there's a change in tenants. It's just way too expensive
and way too much of a hassle finding new tenants. And many folks are
"accidental" or absentee landlords, who will simply let things slide
as long as the rent is being paid on time.

Why buy a house?
 

SoCalMike wrote:
break even, compared to rent? are you including appreciation as well? if
so, less than a year until the place appreciated enough to cover the
down payment.

Yes, well, if that could be predicted, there wouldn't be a dime
invested in the stock market or anywhere else. Not to mention that
it's easy to say how much a house has appreciated until it's actually
sold. So many people read in the newspapers about 10 or 20 or 30%
annual appreciation, then wonder why their house didn't sell for that
much...

Why buy a house?
 

In article ,
Lou wrote:

If it doesn't make "sense" to itemize because the standard deduction is
greater than their itemizable expenditures, then that portion of the
standard deduction is "free".


I think the key word here is 'portion'.


Dimitri

Why buy a house?
 

SoCalMike wrote:
break even, compared to rent? are you including appreciation as well?
if so, less than a year until the place appreciated enough to cover
the down payment.

What about how much it would cost if you now sold the place? I can
certainly believe your exact experience may be been a little less
than a year. What is normal in that whole area, rather than just
your experience? What would the break even point have been if
the appreciation was 5% instead of what you got?

Roger

Why buy a house?
 

On Tue, 03 Aug 2004 09:47:11 -0700, someone wrote:

I currently live in an apartment - 3BR, 2 Bath, 2100 sq ft, top floor,
skylights, views of mountains, lake, and city. An equivalent house
would cost minimum $600,000. So let's say I buy a house for $600,000
and pay cash. At an interest rate of 5%, the house would cost me
$30,000/year in opportunity costs, about double what I'm paying in
rent...


Yup. And if you chose to invest that $30k per year, in a portfolio
that you regularly re-balanced, you indeed might come out better than
somebody who was basically stuck with one illiquid investment (their
house) come hell or high water.

Ole' RodSpeed also seems to be intentionally mixing two separate
concepts: investment performance and "if you are handy". You do not
have to be "handy" with tools to get investment returns, it is a
financial matter. You do have to be handy if you are going to make
money in the business of fixing houses, cars, boats, appliances
whatever. We might as well have an auto mechanic telling us cars are a
great "investment" because he buys beaters, fixes them, and sells them
for more than he paid.

What I still don't get is why Rod is so cranked up, does he have
secret doubts and need to convince himself that what he does is a
genius investment move? Why can't he stand to hear there is another
alternative that is beter for some - rent & invest in stocks, bnds,
whatever - or rent and travel & vacation while Rod is busy working on
his house.

-v.

Why buy a house?
 

v wrote in message
...

Ole' RodSpeed also seems to be intentionally mixing two separate
concepts: investment performance and "if you are handy".

Nope, just rubbing YOUR nose in the FACT that there that particular
approach is one way to make residential housing a decent investment.

Your claim that the house live in is a cost and not an
investment is just plain wrong in plenty of real situations.

You do not have to be "handy" with tools to get investment returns,

Never ever said you did. I JUST pointed out that in that situaiton
the housing isnt a COST, it is indeed an investment.

reams of you missing the point utterly flushed where it belongs

Why buy a house?
 

v wrote in message
...

What I still don't get is why Rod is so cranked up,
does he have secret doubts and need to convince
himself that what he does is a genius investment move?

Or he might just be extensively involved in ALL these investment
avenues and you have got egg all over your silly little face, yet again.

Why can't he stand to hear there is another alternative that
is beter for some - rent & invest in stocks, bnds, whatever

Tad unlikely that I cant 'stand to hear' about that when I do it, fool.

AND have MUCH more invested in those areas than in the house.

- or rent and travel & vacation while Rod is busy working on his house.

Havent worked on the house for 30 years now, fool.

Why buy a house?
 

"v" wrote in message
...
On Tue, 03 Aug 2004 09:47:11 -0700, someone wrote:

I currently live in an apartment - 3BR, 2 Bath, 2100 sq ft, top floor,
skylights, views of mountains, lake, and city. An equivalent house
would cost minimum $600,000. So let's say I buy a house for $600,000
and pay cash. At an interest rate of 5%, the house would cost me
$30,000/year in opportunity costs, about double what I'm paying in
rent...


Yup. And if you chose to invest that $30k per year, in a portfolio
that you regularly re-balanced, you indeed might come out better than
somebody who was basically stuck with one illiquid investment (their
house) come hell or high water.

No no no. That $30k is double what his rent is, so by renting, he frees up
only $15k a year that could be used for investment purposes, not $30k.
Possibly less, once the tax effects of buying are factored in.

That means he'd have to earn twice as much per dollar invested than a house
would have to appreciate to end up with the same net worth at the end of
whatever your time horizon is. Maybe more once the $500,000 tax exemption
on profits on sale of a home for a married couple filing jointly is factored
in.

You also need to consider that rent is likely to increase annually while the
principal plus interest portion of a mortgage payment is fixed for the life
of the loan - while renting may free up $15k this year, it may free up only
$14k next year, $13k in the year after that, and so on, even eventually
reaching the point where rent payments are more than the mortgage payment,
or in this case, more than the opportunity costs.

Is it possible to get that kind of return on an investment portfolio? I
suppose anything is possible. Is it likely? Who knows, but my guess is not
very.

The choice is almost never between buying a house and investing in the
financial markets. Nearly always the choice is between buying living
quarters and renting living quarters.

The rental quarters described sound incredible - nothing equalling that
would be available around here (no mountain views in sourthern New Jersey -
no mountains) - considerably beyond basic shelter. Suppose he gave up that
view and bought a $300k house instead of a $600k house? Now his rent and
his "opportunity cost" would be roughly equal. He "earns" nothing on the
rent, he stands a pretty good chance of earning something on a house. Even
if in the long run he loses money on the house, it's pretty unlikely he'd
lose it _all_, when he sold he'd walk away with some money even if it wasn't
as much as he paid. If he continued to rent, it would all be gone.

Why buy a house?
 

Yup. And if you chose to invest that $30k per year, in a portfolio
that you regularly re-balanced, you indeed might come out better than
somebody who was basically stuck with one illiquid investment (their
house) come hell or high water.

menawhile, you live in a refrigerator box, right? then move up to a
house by the time you retire, and die in it.

On Fri, 13 Aug 2004, Rod Speed wrote:

Never ever said you did. I JUST pointed out that in that situaiton
the housing isnt a COST, it is indeed an investment.

In the majority of cases it's only an investment in the sense that it
forces you to save.

I've owned two houses so I know what kind of money and work goes into
them. I lost money on both of them when I finally disposed of them.

Every financial analysis I've read over the past 30 years concludes that
in most cases people would be better off financially by renting and
investing the difference.

There are ways to make money in real estate, but buying a house to live in
isn't one of them.

Cheers,
Lech

There are ways to make money in real estate, but buying a house to live in
isn't one of them.

What are they?

Lech K. Lesiak wrote in message
...
Rod Speed wrote
v wrote

Ole' RodSpeed also seems to be intentionally mixing two separate
concepts: investment performance and "if you are handy".

Nope, just rubbing YOUR nose in the FACT that there that particular
approach is one way to make residential housing a decent investment.

Your claim that the house you live in is a cost and not an
investment is just plain wrong in plenty of real situations.

You do not have to be "handy" with tools to get investment returns,

Never ever said you did. I JUST pointed out that in that situaiton
the housing isnt a COST, it is indeed an investment.

In the majority of cases

I wasnt talking about the majority of cases, JUST some situations.

it's only an investment in the sense that it forces you to save.

That is still an investment, not a COST.

I've owned two houses so I know what kind of money and work goes
into them. I lost money on both of them when I finally disposed of them.

Your deficiencys are your problem. And that has NOTHING
to do with what was being discussed there, whether residential
housing can be an INVESTMENT and not a COST.

And yes, ANY investment can turn out to have not been a very good one.

Every financial analysis I've read over the past 30 years
concludes that in most cases people would be better off
financially by renting and investing the difference.

You want to get out more as far as what you read is concerned.

There are ways to make money in real estate,
but buying a house to live in isn't one of them.

Bull****. One obvious way to make real money in real estate
is to buy fixer uppers and fix them up while living in them and
greatly enhance the value of the property. If you keep doing
that you can make considerable money in real estate you live in.

The other obvious approach is to build the house from scratch too.

I made more money doing that than I was paid in a
VERY well paid job at the time, and in my case the
money I made from building the house isnt taxed at all.

On Fri, 20 Aug 2004 04:58:21 +1000, someone wrote:


There are ways to make money in real estate,
but buying a house to live in isn't one of them.

Bull****. One obvious way to make real money in real estate
is to buy fixer uppers and fix them up while living in them and
greatly enhance the value of the property. If you keep doing
that you can make considerable money in real estate you live in.

He keeps mixing them up. Buying property to fix up (if you can do it
successfully) is a way to make money in R.E. I have done it several
times myself. One MIGHT even live in a property that one is fixing
up. But the reason you make money is the fixing,"buying a house to
live in", which is what the other guy said, is not in and of itself a
way to make money.

You can make money fixing up property that you own & live in. You can
make money fixing up property that you own and don't live in. You can
make money fixing up other people's property that they pay you for -
that's contracting.

You cannot depend on making money just buying a house to live in. As
many people are not handy fixers, they would be better off putting
their efforts into some other form of second job or business activity.
I have made money fixing, building, etc., but its not for everybody,
and I don't know why Rod is so defensive about it.

You can also make money renting a small place cheap, and having the
difference payroll deducted and ivnested in, say, mutual funds. For
many people this would be a better choice.

-v.

v wrote in message
...

There are ways to make money in real estate,
but buying a house to live in isn't one of them.

Bull****. One obvious way to make real money in real estate
is to buy fixer uppers and fix them up while living in them and
greatly enhance the value of the property. If you keep doing
that you can make considerable money in real estate you live in.

He keeps mixing them up.

This fool cant work out the difference between an EXAMPLE of
a particular approach that does make money and anything else.

Buying property to fix up (if you can do it successfully) is a way
to make money in R.E. I have done it several times myself.

So the original claim is clearly just plain wrong, fool.

One MIGHT even live in a property that one is fixing up.

Quite a few do that, because it is a very low cost way of
operating. You dont pay rent while you are fixing it up, fool.

But the reason you make money is the fixing,"buying
a house to live in", which is what the other guy said,
is not in and of itself a way to make money.

It can be, most obviously when the property values increase
substantially in the area you have chosen to buy the property.

You can make money fixing up property that you own & live in.

So the original claim is clearly just plain wrong, fool.

You can make money fixing up property that you own and don't live in.

Irrelevant to the original claim, fool.

You can make money fixing up other people's
property that they pay you for - that's contracting.

Irrelevant to the original claim, fool.

You cannot depend on making money just buying a house to live in.

He didnt say anything about 'depend on', fool.

As many people are not handy fixers, they would be better off putting
their efforts into some other form of second job or business activity.

Irrelevant to the original claim which is clearly just plain wrong, fool.

I have made money fixing, building, etc., but its not for everybody,

Irrelevant to the original claim which is clearly just plain wrong, fool.

and I don't know why Rod is so defensive about it.

Just another of your pathetic little drug crazed fantasys, fool.

You can also make money renting a small place cheap, and having
the difference payroll deducted and ivnested in, say, mutual funds.

Irrelevant to the original claim which is clearly just plain wrong, fool.

For many people this would be a better choice.

Irrelevant to the original claim which is clearly just plain wrong, fool.