Author Topic: Do I need to buy a home?  (Read 4774 times)

MgoSam

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Do I need to buy a home?
« on: March 17, 2014, 09:20:27 AM »
Hey,

I have been sending about 80% of my takehome pay to Vanguard for the past few years, it is fun to watch the money grow. I am on the road a lot for work and my company doesn't pay too well but they will cover nearly every expense of mine while I am on the road plus plenty at home so not worried about their pay scale.

I have enough saved to buy with cash but that would deplete a ton of my invesments, get a mortgage, or move in to my parents basement. I don't feel much shame in this last option because my paretns are great and they want me to stay because otherwise it is a largely emptied paid-off house (siblings live in other states). They have declined rent except for chores.

I'm going back and forth on this. The reasons I want to buy a house are this

1. Own it on my own
2. Get out of home
3. Have more control over what I do in the space
4. Live closer to work and bike there
5. Can make rent money by renting out available bedrooms (I am single)

The reasons against are
1. My stache is growing each week by living at home, the money I would pay towards the mortgage is instead growing
2. I love my parents, get the opportunity to spend more time with them
3. Coming home from work to fix things around the house isn't my idea of relaxing
4. I think I am looking forward to the prestige of owning rather than any scorn that comes from living at home (I know I shouldn't care about what others think but can't help it).
5. Buying will lock me in for a few years in that location whereas by staying with my parents I am flexible.

One option I do have is to keep looking at the market for a really good deal, though in my area a few realters have told me that there aren't that many bargains available. Maybe look for a duplex so that I can really get some rent money?

MrsPete

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Re: Do I need to buy a home?
« Reply #1 on: March 17, 2014, 09:52:06 AM »
My opinion isn't particularly "the party line" on this site, but I believe it:

You don't need to buy a house TODAY.  In fact, given that you're happy with your living situation, it might be wise to continue as you are and save so you can avoid a mortgage payment.  The more money you save, the less interest you'll flush down the toilet. 

But you probably do need to own a house eventually to be secure in retirement.  If you own your house outright, your expenses are more predictable: Your rent won't increase over the years.  And your monthly expenses are much lower, if you're paying only taxes and maintenance. 

A well-chosen, well-located house is a great investment that is not subject to the ups and downs of the market (okay, the value of the house can go up and down, but you can still live in it). 

James

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Re: Do I need to buy a home?
« Reply #2 on: March 17, 2014, 10:01:31 AM »
No, I wouldn't suggest buying a home in your situation. Being on the road a lot is the main reason I say that, why weigh yourself down with home ownership if you aren't going to be there a lot?


The desire for your own space is fair, so instead of buying and renting out rooms, maybe rent a room from someone else? Doesn't sound like you want much, so I imagine you could spend some time looking and find something pretty cheap with nice people. Having said that, there are likely to be unexpected expenses and issues that come up, so if you are happy where you are there is nothing wrong with continuing it.


Sounds like you have a great thing going, be careful about the next step, but it's fair and understandable to want to make that move.

MsSindy

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Re: Do I need to buy a home?
« Reply #3 on: March 17, 2014, 10:15:08 AM »
In your situation, I wouldn't buy.  You have so much flexibility now with your current arrangement.  Also, think about what you want your life to be like in ER?  Will you be traveling?  Will you live in another area?  or some other non-traditional approach to housing?  Not having a house provides you with a lot of opportunities and freedom....especially as a single guy.    (Also, think about living some of those ER dreams now while you have those sweet living arrangements)

Also, this is a huge red flag:
. Coming home from work to fix things around the house isn't my idea of relaxing

Ask anyone who owns a house, there is always something to do.  And if you're gone all week working, guess what you'll be doing on your weekends...it won't be relaxing!

lackofstache

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Re: Do I need to buy a home?
« Reply #4 on: March 17, 2014, 10:24:24 AM »
The short answer: NO. You definitely don't NEED to buy a home. In your position, I wouldn't. I'd keep the freedom and keep saving & investing. I wouldn't buy a home until you're prepared to stay there for a while, even then it has to make some sort of financial sense. I realize you won't always want to live in your parents' basement, but keep saving until you're ready to move out, then rent somewhere for a while until you're sure you're going to stay in the area or unless it's a solid property for renting to others.

Dibbels81

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Re: Do I need to buy a home?
« Reply #5 on: March 17, 2014, 11:38:28 AM »
With your flexibility and growing 'stache, you're in an ideal situation.  I think the worst way to go about buying a home is the ol' "I'm ready to buy a home, so I'm going to buy one in the next 3 months."  I would move in with the parents, work on your handyman skills, and keep an eye out over the next year or so for killer home deals, which don't come around too often, but when they do, you'll have the ability to jump on it like it's on fire (cash is king).  One smart housing move and you can set yourself up with cheap living the rest of your life.   

griffin

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Re: Do I need to buy a home?
« Reply #6 on: March 18, 2014, 11:21:41 AM »
I'm living with my parents as well, with basically the same arrangement (attic instead of basement). Personally I'm dreading the day I have to move out, because of how hard it will set back my FI date. There is no way I would be able to maintain anywhere near my current savings rate (unless I got a huge raise) if I were living on my own. I'm 22 now, and have no plans to move out anytime soon. I have no idea how much money you have saved up, or what property prices are like where you live, but if I were you I would figure out these numbers and look into how much money buying a house will cost you, and how that plays into your FI date.
I do agree that living with parents has some downsides, and I feel you on the 'scorn' part. I imagine these problems are slightly exacerbated by being single, in terms of bringing home prospective dates etc etc, but I don't have much experience in this regard. On the flip side, it sounds like you get to spend a decent amount of time on the road, which probably lends some feelings of autonomy? As you mentioned, buying a house locks you into a location for quite some time, do you see yourself at your current job for a long time? If the stigma is whats getting you down, I might try renting first and seeing how you like it? WAY less of a long-term commitment. I'm firmly of the belief that keeping your options as open as possible results in a much more exciting and enjoyable life!

hybrid

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Re: Do I need to buy a home?
« Reply #7 on: March 18, 2014, 12:27:31 PM »
I think it's great if you stay with your parents if all parties benefit from it, but if and only if you pay 1/3 of the utilities and some more on top to cover home maintenance costs. Otherwise, you're mooching even if they honestly claim that they don't want the money. I would insist on this in your position. That way you are truly independent while choosing to live in your parents home.
« Last Edit: March 18, 2014, 01:06:33 PM by hybrid »

MsSindy

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Re: Do I need to buy a home?
« Reply #8 on: March 18, 2014, 01:01:57 PM »
Also, FWIW, my husband was living with his parents when we met at 26.  He had the same sweet deal you do.  My take on it was, "wow, there's a guy that has some money in the bank and a great relationship with his family - he's a keeper".  It was all positive thinking for me.  Now, once we got married there was some slight adjusting for him ("I know your mom ironed your underwear, buy that's just not going to happen").   Point being, I think it may actually be a plus when dating.

MissStache

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Re: Do I need to buy a home?
« Reply #9 on: March 18, 2014, 01:06:42 PM »
I'm with James on this one.  I think your best bet is to rent out a room in someone's home (sounds like you would be a great roommate since you aren't there much!) or to get a small studio apartment or something that is cheap.  If you aren't home a lot (and probably don't have a lot of stuff since you've been living with your parents), then a small space would be ideal and cost-effective.

Also, this is a huge red flag:
. Coming home from work to fix things around the house isn't my idea of relaxing

Ask anyone who owns a house, there is always something to do.  And if you're gone all week working, guess what you'll be doing on your weekends...it won't be relaxing!

THIS! +100! 

hybrid

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Re: Do I need to buy a home?
« Reply #10 on: March 18, 2014, 01:09:21 PM »
Also, FWIW, my husband was living with his parents when we met at 26.  He had the same sweet deal you do.  My take on it was, "wow, there's a guy that has some money in the bank and a great relationship with his family - he's a keeper".  It was all positive thinking for me.  Now, once we got married there was some slight adjusting for him ("I know your mom ironed your underwear, buy that's just not going to happen").   Point being, I think it may actually be a plus when dating.

Agreed with Sindy, amend my statement to 1/3 of rent, some more on top and iron your own damn underwear....  ;-) 

Prairie Stash

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Re: Do I need to buy a home?
« Reply #11 on: March 18, 2014, 02:17:21 PM »
Pros #1 owning, and #5 Rent money are better done by buying a rental property, while living at home. You can also tell people you own a house, while living at home (if you care about prestige). 

Could you buy a rental? If you can't handle a rental a house isn't any easier. I'm with the majority so far on living at home, in your situation.

FIRE2034

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Re: Do I need to buy a home?
« Reply #12 on: March 18, 2014, 02:33:38 PM »
As a mother, I would tell you to stay at home.  I would much rather my kids save as much as possible.  I would absolutely refuse any money from my kids as long as I knew they were responsibly saving.

Emg03063

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Re: Do I need to buy a home?
« Reply #13 on: March 18, 2014, 06:31:09 PM »
Pros #1 owning, and #5 Rent money are better done by buying a rental property, while living at home. You can also tell people you own a house, while living at home (if you care about prestige). 

Could you buy a rental? If you can't handle a rental a house isn't any easier. I'm with the majority so far on living at home, in your situation.

This gets my vote.  Find an agent that's willing to work with an opportunistic buyer for a long time horizon, and keep an eye out for a killer deal (20% below retail market or more) for a place you can rent but wouldn't mind living in eventually.  Rent it out until you're really interested in being out your own, and then move into it.  Make sure the rent will comfortably cover the mortgage and anticipated maintenance expenses (find someone with experience managing investment property in the area you will be looking to get a comfortable estimate).  The target return on your real estate down payment should exceed your anticipated return on the money in the stock market, with comfortable allowances for vacancy factored in.  If the numbers don't work, be patient.  Time is on your side.  Good luck & happy hunting.
« Last Edit: March 18, 2014, 06:34:01 PM by Emg03063 »

2527

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Re: Do I need to buy a home?
« Reply #14 on: March 18, 2014, 06:36:53 PM »
When I was in the military and moving every 1-2 years, I always rented because it made sense, but I wanted to own my own home for the typically "feeling" reasons (almost every adult wants to own his or her own home, especially without a mortgage).  Sometimes I felt bad because I was missing out on appreciation in home prices.  In the end, I came out way ahead renting small places and plowing money into stock mutual funds. 

You've got a good thing going, for you and your parents.  Keep it going.  When it is time to buy a home, you will know it and you will have the money to do so.