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The Home Ownership Thread

Discussion in 'Fine Living, Home, Design & Auto' started by Douglas, Jan 31, 2012.

  1. dcg

    dcg Senior member

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    Philly
    

    Unlike most of the masterminds in this thread, I bought my first place at about the worst possible time, just over 10 years ago. Only put 5% down and it's definitely dropped; I'm going to have to pay to get rid of it.

    New place is much pricier, so (at least this is what I tell myself) it was worth it to find out what I DIDN'T like so I didn't make the same mistakes on a much larger scale the second time around. We were triangulating a location that needed to be in proximity to 3 different places, so didn't have much flexibility to look for an up and coming area where the market might really take off. Mix of what we wanted and investment, but more of a focus on finding what we wanted (still didn't get everything, of course, but happy with where I am at this stage in my life).

    That said, thinking of buying a lake house in a few years as more of an investment, but much research to be done before that happens.
     
    2 people like this.
  2. RedLantern

    RedLantern Senior member

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    The Brooklyn of Seattle
    

    Combination of not being able to customize a rental, not wanting to move for a very long time, lack of rentals with nice private outdoor space, and long run costs would be lower.
     
  3. MrG

    MrG Senior member

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    The Medicine Spring
    



    Similar situation here. Bought in 2010, at what I thought was the bottom of the market, but it turned out that the area I bought in still had a bit more to fall. We didn't lose much value, especially because that area didn't see the enormous drops the rest of the country saw, but it was enough that we're just now recovering the value because the area has also been slow to recover. We moved out after just over three years for a job change (so a bit less than three years ago), and, similar to Piob, converted it to a rental. We have been fortunate to have decent renters in the house from the day it was available. Right now, I actually make a modest profit every month, even after property management fees. This profit covers smaller repairs and such, but bigger stuff comes out of my pocket. Excluding the tax implications, I'm probably pretty close to cash neutral, but knowing I'm building equity helps.

    Just bought a new primary home in the last month, and, at least according to the various real estate websites, our value has already increased a bit. We're in a highly desirable area where homes spend very little time on the market, so I'm hopeful we made a good decision.
     
  4. jbarwick

    jbarwick Senior member

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    I viewed purchasing a home as a lifestyle choice. It is hard to explain but I can't capture any investment type value of property appreciation unless I sell but I will always need a place to live. Also I couldn't imagine spending over $X on a house and this was within range. I grew up in a house with 1,200 sq ft and one bathroom at some point 6 of us would have to share. Now I am in a house with 2,700 sq ft 5 bedrooms and 3 bathrooms and at times it feels way too big. I have a formal living room I only walk in to open and close the curtains.

    I do go back and forth as to why people buy huge houses and sometimes I get it, sometimes I don't. I don't know if this rambling helped.

    It depends really. I have 1.65 acres partially wooded so I only mow maybe .75 - 1.00 acres. I push mow due to the slope of the lawn and I treat it like a workout. While a riding lawnmower would be nice, it would only work for a small section of yard. Part of me wants to see what a professional crew would do while cutting my lawn but it would be about $100 according to some neighbors who have a lawn service.
     
  5. MrG

    MrG Senior member

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    As to the "why buy" question, I don't view it as an investment at all. I know it technically is, but, aside from doing my best to buy a place I'm confident will hold/increase its value, it was an immaterial consideration when I decided to buy.

    I like the ability to customize and do whatever I want with the house, and that was a consideration, but for me it came down to three things: Control, location, and a sense of permanence. I figured this all out as a result of renting for a few years after owning.

    By control, I mean the ability to oversee everything that happens with the house. When we were in the rental, we had a great landlord, but he was still a landlord. If something broke, we didn't have to pay to fix it, but we also didn't control how it was fixed. That meant everything was "good enough," but not great.

    For location, there aren't a lot of rentals in the areas we liked, and the neighborhoods that do have rentals aren't as nice as their primarily-owner-occupied counterparts. After living in a neighborhood with a larger rental population, you can really see the difference from areas that are mostly owner occupied, and the latter is superior in every way.

    The clincher for me, though, was the permanence thing, and this was largely psychological. MrsG and I have been somewhat itinerant in our marriage. We've moved something like eight times in the ~13 years we've been married. Now that we have kids and school on the horizon, that much bouncing around just isn't an option. We didn't like where we were renting, and we know we like where we bought, so this was our way of forcing roots to be planted. This is our home, and we need to really build our life here. The house we bought is definitely "forever home" material, but we intentionally bought in an area where there are a lot of upgrade options nearby (e.g. in the same school district), just in case we decide to upgrade again.

    Honestly, if I were single, or even a DINK, I'd strongly consider renting in perpetuity, and it was still something I considered at length for our family before we bought again, especially because I was pretty strongly put off of buying again after not having a great experience last time around. But the stuff above was just enough to nudge me toward buying again, especially when combined with 3.xx% interest rates and a market on the upswing.
     
    Last edited: Apr 12, 2016
    2 people like this.
  6. brokencycle

    brokencycle Senior member

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    Location:
    The Old North State
    I didn't view my house as an investment per se. I hated living in an apartment which always smelled like a mix of 10 different curries, and the constant noise of neighbors. There were other advantages to buying such as customizing and being able to get a dog.

    The "investment" part is I looked at it like this: I could buy a house for what I was paying for in rent. As a result, I figured that my house wasn't going to depreciate to zero, so I would wind up ahead. I didn't factor in how expensive some of the repairs/maintenance stuff would be, but I will still come out ahead over renting.

    My next house, I hope to either find a place I can rebuild the way I want or start from scratch, but that's probably not a reality.
     
  7. GreenFrog

    GreenFrog Senior member

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    Oct 20, 2008
    I just turned 27 and the whole permanence aspect MrG raised is huge for me. I've been moving around a lot to be flexible for job opportunities and the result is that I never have a sense of "ah this is home."

    I want to set roots but I fully anticipate moving again this summer / fall for a new job. I'm trying to move to NYC next to live there for maybe 3+ years and the thought of buying a decent 1 BR apartment for $500k there sounds ridiculous. I guess I could rent it out after leaving the city, but I don't think I'd be comfortable with that.

    I hope we get a housing crash soon, selfishly speaking.
     
  8. Find Finn

    Find Finn Senior member

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    Unless they change the legislation in London, New York etc., I don't see the market crashing anytime soon.
     
    Last edited: Apr 12, 2016
  9. dcg

    dcg Senior member

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    Philly
    

    Pretty flat here, but do have a fair amount of landscaping/etc that eats up some space. Raining this morning, but hopefully it dries up tonight so I can get it mowed and get a sense for how much of a pain it is with a push mower.

    Had the same though re: pro crew, but $100 per week x 6-7 months equals about $2,600 per year....about the cost of a nice lawn tractor.
     
  10. Mr. Moo

    Mr. Moo Senior member

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    Location:
    Bay Area, CA
    Reasons we purchased our home (second home - first was purchased in 2009 and sold 2015):

    1. Larger space and yard. We've added a dog and 2 kids since our first home purchase, and quickly found ourselves in tight spaces with our first home.
    2. Ability to customize and do what we wanted with the space without limitations.
    3. Schools. Although the school where we lived before were excellent, our new schools are even better, Kindergarten to 12th.
    4. Crazy prices. We bought sort of at the bottom of the market the first time (by sheer luck), and did well with the sale of our first place. This allowed us to purchase what we wanted in an area that we wanted and talked about living in for years. We felt that we had to make a move given the likely downward trend in the market in the near future.
     
  11. sinnedk

    sinnedk Senior member

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    Location:
    San Francisco
    my purchase reasons were:
    1. Baby was on the way and we had a one bedroom apartment that i did not want to raise a kid in.
    2. Family is in the city where i bought. Good for kiddo and us.
    3. We saved up for a long time and it was time.
    4. i love where i live.
    5. better investment than rent (my rent went up 2 months before i bought). the way i see it i'll drop whatever is needed into my home, but i won't drop that cash on say a car. the house already gained some value, while other items lose.
     
    Last edited: Apr 12, 2016
  12. Piobaire

    Piobaire Senior member

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    Our purchase reasons were basically a crazy low, bank repo'ed price, perfect house for us, and awesome location/neighborhood.
     
  13. nootje

    nootje Senior member

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    Netherlands
    For us it was that the rents here where through the roof, and mortgage interest very low.
    Decided on a city center apartment at a stones throw from the train station with parking as both our lives require a lot of travel, so flexibility in transport modality was key.

    I specifically bought this with the option to rent it out in mind if we can get the mortgage down enough in the coming 3 years, at which point we'll own it 5 years. At that point kids will be just there or on the way hopefully, so the 900sqf won't do then and we'll move to something bigger. Looks like it will all work out as planned so far..

    Lastly, im a BIG advocate for only buying/renting space you need, and when there are no kids in play (or in the near future) I don't see how it makes sense to fork out a lot of cash for a lot of space.
     
  14. jbarwick

    jbarwick Senior member

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    Are 1 bedrooms for $500K possible in NYC? We have some luxury condos going in downtown for $500K+ so I figured NYC would be more. I know a couple of people who rent in NYC for $2,000 a room so basically a $4K mortgage for a 2 bedroom which would be something like a $600K mortgage or more.
     
  15. GreenFrog

    GreenFrog Senior member

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    I'd have to look closer but there are quite a few. They're not luxurious, but just decent ones. I'd probably look at one in Brooklyn or maybe even Harlem if I expect greater price appreciation due to dat gentrification.

    Also depends on how much I'd want to put down. These are all early thoughts. I don't know if I'd go through with it. Need to find a gig I really like in the city first and foremost.
     
    Last edited: Apr 12, 2016
  16. Joffrey

    Joffrey Senior member

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    Location:
    Pennsylvania Ave/Connecticut Ave
    

    Not a fan of having bragging rights?
     
    1 person likes this.
  17. MarkI

    MarkI Senior member

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    Sep 11, 2007
    Maybe not the right place to asks, but is a mortgage under 100,000 something a bank would do, it would probably be closer to around 80k. Is that veering into personal loan territory?
     
  18. ChrisGold

    ChrisGold Senior member

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    They should still do it without any issue, they write mortgages for condos all the time, in the same range.
     
    1 person likes this.
  19. ChrisGold

    ChrisGold Senior member

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    I never looked at home purchases as investments, more like a forced savings that would guarantee me a place to live in retirement, and hopefully the appreciation outpaces interest paid. I see all the time people talking about "profit" on their real estate transaction, but they often leave out many of the true costs involved. I am a big fan of home ownership, as a lifestyle decision but I try not to get too caught up in the potential for profit, because it's often an elusive dream. Just a typical hypothetical that might otherwise get someone excited:

    500K home with 100K down, sold in 4 years for 600K

    $3K closing cost on purchase
    $48K interest
    -$15K tax savings
    $10K upgrades and maintenance (this doesn't cover many upgrades obviously, just fixtures)
    $36K closing cost and real estate fees on sale
    $10K for 2 local moves

    $92K in costs added to the initial purchase, and obviously these are all hypotheticals, and really doesn't cover any work done to personalize the home except maybe paint and some fixtures. Not trying to be super accurate, just to paint with a broad brush. Simply showing that 100K appreciation is the break even point after 4 years, and doesn't include the opportunity cost on the money used for the down payment. If you actually upgraded any baths or the kitchen, break even goes much much higher. Use a full service mover to move a 3,500 - 4,500 square foot home, and the moving costs go through the roof too. 4 or 5 year break even on a home where you invested significant sums could be 200K appreciation, which for most would leave you disappointed in the investment.
     
  20. Fueco

    Fueco Senior member

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    Fair point, but you also have a place to live for those four years... Around here, four years of rent in a house is something upwards of $144,000....
     

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