Author Topic: Is buying a house just a form of buying a job?  (Read 2321 times)

StetsTerhune

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Is buying a house just a form of buying a job?
« on: January 20, 2019, 11:01:00 AM »
I'm a lifelong renter/traveler. Been vaguely considering settling down, maybe renting, maybe buying. Obviously (in some markets especially) there is more availability to buy than to rent, or vice versa. And probably there are markets where the prices are out of whack one direction or the other. But in general, the trade-off seems to be that I would save some money buying a house, in exchange for taking on a bunch of work and taking on some financial risk. Am I right in thinking about it this way? People talk about buying like it's this amazing thing, but it seems like a bunch of work to me, and who knows how well I'd come out financially as a result of that work.

Cranky

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Re: Is buying a house just a form of buying a job?
« Reply #1 on: January 20, 2019, 11:19:40 AM »
I donít know that you will save money buying a house, but your housing costs may be more predictable over the long haul.

Otherwise, a house is a Lifestyle Choice - no upstairs neighbors, bang all the nails you want into the wall, plant a garden, get 10 cats...

2Birds1Stone

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Re: Is buying a house just a form of buying a job?
« Reply #2 on: January 20, 2019, 11:22:21 AM »
You don't sound like a good candidate for buying. In general if you're buying you a) plan on being somewhere for 10+ years anyway b) are willing to put in a lot of sweat equity into a less than desirable house in a good area c) know your income growth will greatly outstrip the delta in investment returns d) you're locking in your hosing costs (if you are worried about being priced out of an area in the future).

All that being said, I am with you on enjoying the freedom of renting. Being able to get up and go is so nice. Not having a ton of capital into a geographically dependent investment is also nice.

Buying a house is a big commitment, with no guarantees of immediate (or otherwise) gain.

Ecky

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Re: Is buying a house just a form of buying a job?
« Reply #3 on: January 20, 2019, 03:52:45 PM »
Food for thought: In the area I live in, someone might have bought a house in 1990 and locked in a 30 year mortgage. Mortgage might have been 4-500 per month for said house, and renters might have been paying similar monthly for a similar house in the same area.

Fast forward 29 years. Renters are now paying 1900/month for the same house. For the homeowner taxes have gone up, but PMI  is gone and they're still paying that same 4-500 per month on the mortgage. Better yet, they're only a few months away from that disappearing entirely. Sure, they've done work on the roof, had some plumbing issues over the years and needed to repave the driveway, but over the next 10 years the renters will see around $300,000 disappear to rent while the homeowner may only see $50,000 disappear in taxes. Best of all, if they decide to move, they can cash in what the house is worth.

I don't think owning a home makes sense if you're not going to stay there a while, but if you're in it for the long haul it can be a tremendous financial boon.

Dibdab

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Re: Is buying a house just a form of buying a job?
« Reply #4 on: January 20, 2019, 06:01:27 PM »
The answer YES. Buying a house is just a form of buying a job.
I will be selling my house after 19 years of ownership this spring/summer.  Rate of return calculates to only around 2% after repairs and no major upgrades.  Sure I will get a tidy sum at sale which is nice to finally get that forced savings back but I doubt it was a financial advantage owning a home.  If I were to enter in all my time doing building maintenance return would be much lower still.  However, I did save quite a bit versus rent the last 10 years or so because I could refinance at historically low interest rate, your chances of accomplishing that are diminished .
Had I to do it over again, I probably would have rented and contributed more to tax deferred accounts instead of housing!
I also own rental property where the return has been more equity like.  If you want to put down roots, consider an owner/occupied that you might later convert to all rental.  That is how I started out and will end up also after selling home and firing this year, living in and remodeling apartment, then traveling.
« Last Edit: January 20, 2019, 06:03:57 PM by Dibdab »

Capt j-rod

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Re: Is buying a house just a form of buying a job?
« Reply #5 on: January 20, 2019, 06:59:19 PM »
If you are a handy person and gifted with the trades... Buy. If you aren't? Rent. I love working on my house and rentals. I do contracting work for others when I am not doing my own properties. Repairs cost money. Those trades make a great living for me and my family. I plowed and cleared snow for the last 2 days and made mad cash. Many home owners paid me to clear their snow.

COEE

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Re: Is buying a house just a form of buying a job?
« Reply #6 on: January 20, 2019, 07:06:42 PM »
Just like any investment - you never know what the environment will be like when you sell.

I've been getting around 5.85% ROI over the last 10.5 years of home ownership in CO.  It's very location and time specific.  At times my home value has outpaced my investments.

There is value in renting and being able to move around as you'd like.  So maybe you need to have $2000/mo for RE... that equates to $2k*12mo*25 = $600k more in investments when you retire.  That's fine.  Guess what, ultimately a homeowner will pay ~$600k for a $300k home with a 30 year note at 5%, plus taxes.  Pot-a-to, pot-ah-to.

You're starting to convince me to sell my home!

pudding

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Re: Is buying a house just a form of buying a job?
« Reply #7 on: January 23, 2019, 11:03:03 PM »
Hey, I think I was like you when I naively bought my house 11 years ago.

I'd been travelling around for about 12 months out of the previous 24 months. Then my mum died and it threw me for a curve.

Around that time my accountant a smart successful real estate investor then asked me if I wanted to buy her rental house that we'd once talked about me buying. 

The house has 8 bedrooms and is in a fairly boring part of the city.. but my idea was to  live in it and rent to roommates that were here in Vancouver from around the world to study English here. Then travel with the leftover rent after I'd paid all the bills.

So that's what I ended up doing, I bought the house in the quite boring part of the city and moved out fo my rental place a block from the beach and in the heart of the city and excitement.

My friends thought I was nuts, and after about a year of doing it I agreed with them! as it became this albatross around my neck. My travelling ground to a thumping stop! and my happy go lucky days said "see ya square pants, we're off to Thailand" and left me for good.

But I stuck with it and lucky for me in some ways that i did as I could sell it today for around 800 thousand more than what I bought it for.

However it's forever been a kind of 'weird' state of mind that I have to hold.   

It's like there are so many little pros and cons that I find I have to constantly weigh up and find myself doing it all the time.

Pro's and cons are things like... the $ from roommates pay all the bills + mortgage and then some -v- the roommates are a pain in the butt sometimes -v- actually only 1 is a pain in the butt and a couple of them have become good friends, but the pain in the butt one is a real pain, but I need them to pay the bills.      I have a great view off the back deck, a workshop, tons of space -v- my situation has changed since I bought it 11 years back, family has moved thousands of miles away and I feel stranded here. 

I'd sell now BUT, the area is likely to be redeveloped and in that case I'll potentially get a huge windfall... it may even be a million bucks more. But it's kind of when and if and how long etc...

It kind of became that Pudding (that be me) was this happy go lucky guy, that travelled around and worked some but not too much..... he then stumbled naively into buying a big house and sort of put his own handcuffs on.

Being as he was he made the best of it, but due to the cuffs had to become this guy he wasn't really cut out to be. So sort of always trying to justify it to himself.

Then lady luck shone on Pudding and the property boom hit. But then family moved away for important work, pudding was alone in the city....  and still is.

I'd sell now and move closer to them, live a traveller life again from the proceeds of the house sale,  but now it's become this high stakes game of cards where the pot potential from redevelopment is huge!   

It's almost foolish to throw in the towel now! But as a travelling type yourself , it's like you compromise your life so much that it's sort of sucks!! and for adventure travel you can only be so old before you don't really want to do it.

Instead of being Mr 'wind in his hair' that's free and easy, I became Mr 'uptight' that mutters to himself about the neighbours parking outside his house and has to tell others in the house when they're being 'too noisy'

But I've also ended up with this really valuable asset.

Hoping to cash in soon and then live the life ;)   

(starts to weigh all the 'pros' and 'cons' up again)

Car Jack

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Re: Is buying a house just a form of buying a job?
« Reply #8 on: January 24, 2019, 10:54:58 AM »
If you rent and want to downsize (reduce cost), you find a new place, wait for your lease to end and move.

With a house, you have big selling costs, so if nothing else, your downsizing should figure all that in.  You really don't want to sell the big house, move and buy the little house, then do the math and find out that you saved nothing.

BicycleB

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Re: Is buying a house just a form of buying a job?
« Reply #9 on: January 24, 2019, 11:28:23 AM »
@StetsTerhune, whether people save money by buying instead of renting depends on many factors. Some buyers lose money, some gain. Generalizing is a poor way to approach this. A wiser way is to think of buying vs renting as a financially significant means to the end of living a in a certain place.

So the big decision is whether the buyer wishes to buy the good of "living in a certain place for a long time." That is the case for which buying a home or condo is financially efficient.

A house is usually large compared to an apartment and usually comes with additional land. So it's usually more expensive than an apartment. Again the consumer decides whether they want to pay for this.

The "job" part is that if you do buy, work is involved in maintenance. You do it or pay for it. If you rent out some of the rooms to other people as I do, that too involves some work (advertise, interview, maintain behavior boundaries, maybe do some extra cleaning, increased repairs).

Whether renting or buying is cheaper depends wildly on rent vs price ratios within different cities. In your shoes I'd rent. If you rent in one place for several years without moving, and everyone there says it's cheaper to buy, post a case study.

Fishindude

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Re: Is buying a house just a form of buying a job?
« Reply #10 on: January 24, 2019, 12:14:51 PM »
If the maintenance and upkeep work required to keep a home that you own in good shape seems too troublesome and a pain in the rear, then you should probably just continue to rent.   

JLee

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Re: Is buying a house just a form of buying a job?
« Reply #11 on: January 24, 2019, 12:20:00 PM »
I bought my first/last (maybe only?) house in February 2013, near the bottom of the Phoenix housing market.  I ended up moving across the country 3 years later, held onto the house for a couple of years and then sold it when I realized I wasn't going back anytime soon (and because I was nearing the end of my capital gains exemption).

The Phoenix market exploded during the last five years and I had a 78% gain on the house. Granted, I put north of $20k into it, but overall I really can't complain.

The reason I bought instead of rented was because my monthly cost was about 60% of what renting an equivalent place would have been.  I've been in NJ for 3 years now and mostly due to absolutely insane property taxes, I do not foresee myself buying anything here (ever). It's also not notably cheaper to buy vs rent, and the transaction costs in buying and selling $500k houses are significantly more than on $150k-250k houses.