Yikes! I know that this is "normal" here in the U.S., but the guy paid over $26K just to sell his home. We sold our home with a "quit-claim deed" and only paid a lawyer $600 to write it up and make it kosher. Buyer was THRILLED not to have to pay all the ridiculous fees a normal sale entails...
(and yes, I know that a bank might have a hard time creating a loan for that type of sale, but it worked for us)
The real cost of owning a home
301–310 of 901 posts
Re: The real cost of owning a home
#302Earlier quoted context omitted.
But the same argument applies to landlords too. Why are they willingly losing money?
I’m a landlord. I’m losing money because the Seattle market went to shit and nobody will buy this place. I bought for $850k in 2017. Selling now asking $899k and no-one’s buying. Think of my ARR with inflation and opportunity cost here. I sold Facebook shares to get this. I have made zero return from rents overall. I’d likely have earned $1M if I hadn’t sold those shares.
That's pretty contingent. If you had Snapchat shares instead you'd be ahead.
Re: The real cost of owning a home
#303The benefit of owning a home is almost always psychological, not financial. If you take the money you'd use for a down payment and mortgage and invest it instead (after paying rent) you end up in about the same place. But the psychological benefits can be huge. You have much greater control over the place you spend most of your time. You can change it to your liking. You don't have to worry about rent increases or ow…
> If you take the money you'd use for a down payment and mortgage and invest it instead (after paying rent) you end up in about the same place.
That is not the right way to see it.
If you have the cash to buy upfront, then yes, real estate is not that good an investment, unless you have a loaded portfolio already and want to diversify a bit, get some high inflation hedge, etc.
The real value of buying a home is leverage. That is, most people cannot go to a bank and borrow $500k. The bank will just not make a blank loan like that without any idea of what you're going to do with it.
Buying a home though is well understood and borrowing is made relatively easy.
For most people, buying a home is the only way they have to actually get significant leverage from borrowing.
Re: The real cost of owning a home
#304Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…
“Extremely predictable payments” - I don’t own a home, so I don’t know about this - I have heard mostly horror stories about HOA. Can they hike maintenance fees arbitrarily? Also, what about insurance? Last I read, at least in FL, insurance cost is out of control, is that still true?
As others said, try to avoid HOAs if you can. But if you can't (in my area it's hard to do), our realtor gave us good advice when we were in the process of buying our current home. The HOA bylaws are a legally binding document as to what the association can and can't do, so if you're going to purchase a home in an HOA neighborhood, read the bylaws. That will give you confidence as to whether some of the situations you mention can occur.
Re: The real cost of owning a home
#305Completely missed the tech-heavy features of owning your own home:
Wire your network however you like. Those walls are yours.
Invest in as much solar power as you want. The only limit is the sun itself.
Want to be a Ham? Be a ham. The antenna goes wherever you want.
Charge your EV as long as you want. The EV charger is yours and only yours.
Also, do you want a cat? A dog? A massive tree? Just get it. Nobody can say no.
Re: The real cost of owning a home
#306Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…
> I redid/improved
I said it this way to my GF this weekend: "If I own the home, I can choose to do irrational things like demolishing things that are perfectly fine".
She was like "Perhaps you should rent, LOL."
Re: The real cost of owning a home
#307Financially, in very few cases renting actually makes sense.
Assuming of course you make an informed purchase of a home given your particular circumstances.
Most homes in the US appreciate in value, unless you live in rural Pennsylvania.
I also believe buying early forces you to be more financially responsible and makes purchasing your first family home later in life a lot easier.
So I always recommend young people to make the sacrifice and buy a place.
Your first home doesn’t need to be your dream home.
My first place was 700 sqf in a very shady area of the city, but it came with sweet tax abatements for several years and the area improved a lot but the time I sold.
There are always opportunities like that in almost every city in America, even in today’s market.
Re: The real cost of owning a home
#308Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…
There’s also a psychological benefit of not having to worry about most problems. Sink broke? Call landlord to fix. Roof leaking? Call landlord to fix. And so on. You never have an unexpected $20k repair show up. And while I agree that it’s nice to customize things to your preferences, this has a downside in that it’s easy to get carried away and overspend. Might as well get the nicer finishes when you are remodeling,…
My experience is that getting a landlord to fix things is a nightmare. They say "oh I'll send someone over" and then when there is a no-show you have no idea what happened and its days of back and forth to get somebody out to fix things.
I don't think I have ever once had a positive "hey this is broken let me call the landlord and they'll fix it quickly" experience.
Re: The real cost of owning a home
#309Earlier quoted context omitted.
Yeah, but it's also one of the downsides. "Care about the plan of their surroundings" can just as easily turn into the HOA drama that many prefer to avoid.
HOA drama sucks for sure, but just outside of my HOA controlled neighborhood, I see also the houses with junk cars in their yards and grass gone to seed. As much as I hate many stupid rules and seemingly unfair application of them, I do like that it mitigates against people that just don't give a shit about their property or the impact of their life choices on others.
> HOA drama sucks for sure, but just outside of my HOA controlled neighborhood, I see also the houses with junk cars in their yards and grass gone to seed.
You don’t need a potentially abusive and/or rent-seeking HOA for this. My locality controls for all of these potential issues through local ordinances.
Re: The real cost of owning a home
#310Completely missed the tech-heavy features of owning your own home: Wire your network however you like. Those walls are yours. Invest in as much solar power as you want. The only limit is the sun itself. Want to be a Ham? Be a ham. The antenna goes wherever you want. Charge your EV as long as you want. The EV charger is yours and only yours. Also, do you want a cat? A dog? A massive tree? Just get it. Nobody can say n…
You must not live in California. A lot of these are actually regulated by the state.