How not to buy real estate

[larmando]

http://www.irishtimes.com/life-and-style/abroad/ten-things-i-wish-i-had-known-about-buying-a-home-in-ireland-from-abroad-1.3127716

Sic :(

[nereo]

at least twice the author suggests that she is purchasing this vacation home 'as an investment' - yet she doesn't mention or seem to consider any aspects that would make it anything other than a luxurious expense (like using it as a vacation rental).

Reading between the lines - she plopped a large sum down and took out a mortgage for a scenic secondary home with substantial maintenance needs in a country where she does not live that's at least a full day's drive + ferry ride.

[larmando]

Yes. That's exactly my problem with it. If she had been an eccentric millionaire looking for a toy I'd say it's a perfect choice, but in her case I'm a bit worried about her "research" into the investment world.

[Travis]

Isn't that how home ownership was sold to the public in the 2000s?  You simply buy a home, use it for a few years and miraculously sell it at a substantial profit.  I'm in the middle of a move and one of my coworkers said "Why don't you buy a home when you get there? You'll only be there for two years, but you'll have some equity saved up" as if it was such a simple formula.  I had a sizable bite taken out of my rear because I didn't do the math on our purchase the last time I only owned a home for two years.

[nereo]

Isn't that how home ownership was sold to the public in the 2000s?  You simply buy a home, use it for a few years and miraculously sell it at a substantial profit.  I'm in the middle of a move and one of my coworkers said "Why don't you buy a home when you get there? You'll only be there for two years, but you'll have some equity saved up" as if it was such a simple formula.  I had a sizable bite taken out of my rear because I didn't do the math on our purchase the last time I only owned a home for two years.

I think this is how home ownership has been sold to the public since at least the 1970s (and probably going back to the 1950s). The real estate sector is one of the most powerful lobbies in the US, and their marketing-speak has been passed around as universally true, like buying a home is biggest investment most people ever make and ownership builds equity while renting is throwing money down the drain.  At least in the US its codified by things like the mortgage interest deduction and fixed, federally backed 30y loans. They've pushed numerous studies with questionable conclusions highlighting how neighborhoods with a high percentage of owners have lower crime and higher affluency, while neighborhoods with lots of renters tend to have more crime and (gasp!) have more non-whites.

Most people I know have bought this hook-line-sinker.

[Sibley]

Isn't that how home ownership was sold to the public in the 2000s?  You simply buy a home, use it for a few years and miraculously sell it at a substantial profit.  I'm in the middle of a move and one of my coworkers said "Why don't you buy a home when you get there? You'll only be there for two years, but you'll have some equity saved up" as if it was such a simple formula.  I had a sizable bite taken out of my rear because I didn't do the math on our purchase the last time I only owned a home for two years.

I think this is how home ownership has been sold to the public since at least the 1970s (and probably going back to the 1950s). The real estate sector is one of the most powerful lobbies in the US, and their marketing-speak has been passed around as universally true, like buying a home is biggest investment most people ever make and ownership builds equity while renting is throwing money down the drain.  At least in the US its codified by things like the mortgage interest deduction and fixed, federally backed 30y loans. They've pushed numerous studies with questionable conclusions highlighting how neighborhoods with a high percentage of owners have lower crime and higher affluency, while neighborhoods with lots of renters tend to have more crime and (gasp!) have more non-whites.

Most people I know have bought this hook-line-sinker.

My parents certainly have. Mom said she's not comfortable living somewhere she doesn't own. She's much more comfortable now that I bought a house. Of course, for them, ownership has been a massive problem for them, and once they get out from under the house, they won't be buying again if I have any say in it.

[MgoSam]

Isn't that how home ownership was sold to the public in the 2000s?  You simply buy a home, use it for a few years and miraculously sell it at a substantial profit.  I'm in the middle of a move and one of my coworkers said "Why don't you buy a home when you get there? You'll only be there for two years, but you'll have some equity saved up" as if it was such a simple formula.  I had a sizable bite taken out of my rear because I didn't do the math on our purchase the last time I only owned a home for two years.

I think this is how home ownership has been sold to the public since at least the 1970s (and probably going back to the 1950s). The real estate sector is one of the most powerful lobbies in the US, and their marketing-speak has been passed around as universally true, like buying a home is biggest investment most people ever make and ownership builds equity while renting is throwing money down the drain.  At least in the US its codified by things like the mortgage interest deduction and fixed, federally backed 30y loans. They've pushed numerous studies with questionable conclusions highlighting how neighborhoods with a high percentage of owners have lower crime and higher affluency, while neighborhoods with lots of renters tend to have more crime and (gasp!) have more non-whites.

Most people I know have bought this hook-line-sinker.

My parents certainly have. Mom said she's not comfortable living somewhere she doesn't own. She's much more comfortable now that I bought a house. Of course, for them, ownership has been a massive problem for them, and once they get out from under the house, they won't be buying again if I have any say in it.

I will say that owning does have its perks. I can definitely understand that a neighborhood whose homes are owned by their occupants are more likely to be maintained than a neighborhood concentrated with rental properties.

That said, I completely agree that home ownership isn't the investment people think it is. It can be a wise decision for many people but they need to know what they are getting into.

One good thing that home ownership is good for is building equity. I think of it as forced savings as they pay off their mortgage each month, but that said, you don't build equity too much over the first few years because a huge portion of your payments are eaten by taxes and interest. I know my first 2 years I've paid a few extra hundred a month to shave off a few years. I don't plan on doing that once I hit the 2 year mark as I would rather put that money into index funds.