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Show HN: Should I Get a House? a better rent vs. buy calculator

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Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#101

Post by kube-system »

chrisseaton wrote: post #92
waylandsmithers wrote: post #43

One piece of millenial defeatism I hear a lot is "Ugh, I'll never be able to afford a 20% down payment, home ownership is impossible" I'm not sure where this myth came from, but as a millenial who went through the buying process in 2012 and again in 2016, I remember both times the lender just asked how much we wanted to put down. We could have gone as low as 3%, or maybe even lower. Yes, you have to pay PMI (private…

> I remember both times the lender just asked how much we wanted to put down Well then why doesn't everyone say zero? Why is it even a thing?

Because more equity = lower risk

and lower risk = more options and lower borrowing costs

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#102

Post by Domenic_S »

mandeepj wrote: post #33
Aulig wrote: post #25

Earlier quoted context omitted.

No it's not. In many cases it can be beneficial to rent and invest your money instead, as stocks have a higher longterm ROI than property.

Does it have to be mutually exclusive? My current mortgage and previous rent are almost the same. A friend of mine bought his house in 2011-2012 for $200k. Now, it's worth ~$500k. >stocks have a higher longterm ROI than property. That's debatable. And, it depends at what point you were in and for how long you can stay as there'll be set backs during the ride. Unfortunately, if you have to cash out due to emergency du…

Assume he paid cash. If he had instead invested $200k in the S&P 500 in 2011, his account would be worth ~$756k today. So he essentially paid $256k, or roughly $2k/month, for housing over 10 years. If he could have gotten a similar place for an average over 10 years of $2k/mo, it's breakeven. That's before paying property tax but also before writing off interest & tax.

Although this ignores the fact that you can make what's essentially a $200k investment with only $40k, and you still have to find a place to live - and the rent is virtually guaranteed to go up -- if you go the S&P route.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#103

Post by asdff »

anomaloustho wrote: post #49
bachmeier wrote: post #27

There's no way to put this into a calculator, but this decision isn't purely monetary. Do you enjoy having to maintain a home and property? If not, maybe buying a house isn't for you. Even if you hire someone, that can be a massive hassle, you have to worry about being ripped off, ... If you're not settled in your career to where you can comfortably take off long stretches of time during the day, you probably shouldn…

Being in a unique position of renting out properties that I own while simultaneously renting, it seems like some of this is taken a little out of proportion. My net experience is that the burden of dealing with said landlord to get something fixed or maintained is roughly similar to fixing it yourself with equal pros and cons on both sides. Consider a $150 repair for your AC going out in 95F weather, 70% humidity. La…

>Whereas you can easily call and have it fixed within 5 hours if you owned it.

The caveat with these sorts of fixes is these service companies will sometimes upcharge a big fee for "emergency work" to have it fixed within 5 hours rather than in two weeks. I literally had water shooting out of my ceiling and the property manager admitted as much to me when I asked why the owner left me without water for days.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#104

Post by 1123581321 »

duped wrote: post #90
waylandsmithers wrote: post #43

One piece of millenial defeatism I hear a lot is "Ugh, I'll never be able to afford a 20% down payment, home ownership is impossible" I'm not sure where this myth came from, but as a millenial who went through the buying process in 2012 and again in 2016, I remember both times the lender just asked how much we wanted to put down. We could have gone as low as 3%, or maybe even lower. Yes, you have to pay PMI (private…

I mean this is the definition of a strawman argument. Whether it's 10 or 20% down payment is not that significant. Even 5% is un-affordable. The median sale price of a home was $347,000 last month (0). 5% down on that is $17,350, accounting for closing costs you're going to need around $24,000 in cash to purchase a home. Which isn't all that much money, except if you consider that it's more than 1/3rd of the median f…

5% is not not 3x the median savings balance of families seriously trying to buy a home. That’s setting aside that lower income families tend to live near lower priced homes.

Lower down payments meaningfully increase access to real estate. It matters hugely to be able to accelerate purchase timing by years, or decades.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#105

Post by mikepurvis »

alach11 wrote: post #5
reggiepret wrote: post #3

Earlier quoted context omitted.

this is great!! The final cashflow amount of the house graph (in the example) ends in the negative, s this accurate?

It is accurate! While the house cashflow is negative in the example, it's at least less negative than the apartment cash flow. Maybe the moral of the story is living with your parents for free is better than either option!

Depending on your circumstances, it may not be possible to seriously consider it, but another alternative to rent-vs-buy might include various van/camper/coach options, which can be parked for months at a time at "seasonal" campsites, often for $500-1000/month.

Obviously equipment like this isn't going to appreciate either, and you'll be subject to all the same maintenance costs of owning, so in some ways it's the worst of both worlds— but it may still be cheaper than trying to rent if you can't or won't enter the market right now and mooching from family isn't an option.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#106

Post by kube-system »

asdff wrote: post #96
seattle_spring wrote: post #82

Earlier quoted context omitted.

FHA loans in a competitive market put the buyer at an extreme disadvantage versus conventional or cash.

You still hear of people in these markets snagging homes for like 5% down even with the competition. Maybe I misunderstand, but you don't pay any realtor any money until you buy the home. Seems that there isn't any pain being 'in the market' continually getting out offered 99 times out of 100, if it means you get an offer that one time and are going to be renting anyway until then. Plus the whole time you are presuma…

Yes, but if you make an offer contingent on bank financing, and someone else makes an offer contingent on nothing, which offer would you choose as a seller? Guaranteed money now? or probably getting money after the bank completes their paperwork? Many people selling a home already have another home somewhere else, and they're not interested in keeping around another empty house to make payments on.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#107

Post by staticman2 »

chrisseaton wrote: post #92
waylandsmithers wrote: post #43

One piece of millenial defeatism I hear a lot is "Ugh, I'll never be able to afford a 20% down payment, home ownership is impossible" I'm not sure where this myth came from, but as a millenial who went through the buying process in 2012 and again in 2016, I remember both times the lender just asked how much we wanted to put down. We could have gone as low as 3%, or maybe even lower. Yes, you have to pay PMI (private…

> I remember both times the lender just asked how much we wanted to put down Well then why doesn't everyone say zero? Why is it even a thing?

You usually can't put zero down. You have options but zero is not one of them.

But in answer to your question putting more down can get you a better interest rate on the loan or less fees.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#108

Post by yboris »

Everyone should consider a manufactured home (mobile home) as an option. I lived in New Jersey where house prices were very high ($200,000 minimum for anything on the market). I bought a mobile home (1st house for me) for $50,000 and lived there for 6 years. Thanks to the crazy prices recently, I was able to sell it for more (this is not typical). But during the time, I paid significantly less in per-month costs than I would have, had I been renting.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#109

Post by TomVDB »

anotherman554 wrote: post #93
mattgibson wrote: post #40

These calculators seem to miss the point for me. If I spend less overall by renting, I don't care because I can't pass the property as an inheritance to my kids. If I buy, they get a house for free when I pass on. Also, if I rent, I have to continue to pay the same (high) rents through retirement where my income will likely drop drastically once I stop full time work. The aim of buying is to be mortgage-free when you…

The more sophisticated calculators allow you to compare buying and spending more on housing per month vs renting at a cheaper price and investing the extra money you have in the stock market. (Although many people may not have such discipline, and renting costs verse purchase costs are going to vary from market to market.) There's no advantage to passing on a house to kids verse passing on stocks. Also, similarly, th…

> There's no advantage to passing on a house to kids passing on stocks.

Except for Proposition 13 in California, which allows you to pass on your real estate tax to your inheritors once.

In the case of my neighbors, that means their son will pay ~$1200 in taxes per year vs ~$30k for us who own an identical house.

Re: Show HN: Should I Get a House? a better rent vs. buy calculator

#110

Post by irrational »

anotherman554 wrote: post #89
alach11 wrote: post #2

My wife wants to buy a house, but I'm unable to make life decisions without trying to minmax them. I wasn't satisfied with existing rent vs. buy calculators, so I decided to build my own! I'm not a developer, so I apologize if it's a little rough looking... Some things it takes into account: - The actual rate of return on your down payment and extra costs of a house - Inflation - Itemized deductions on your taxes - T…

The best/ most powerful rent vs buy calculator I am aware of is the one offered here: https://michaelbluejay.com/house/rentvsbuy.html browsing it might give you some ideas of features you can add to your calculator. It's also a small thing but having the choice to select the downpayment based on percentage down might be nice. I don't know why your calculator tells me getting a house is not worth even if it thinks the…

I wonder if it is purposefully biased towards renting so he can use it to convince his wife to rent when he says that she wants to buy.
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