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The real cost of owning a home

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Re: The real cost of owning a home

#501

Post by bradleyjg »

asdff wrote: post #470
dividefuel wrote: post #315

Beyond financial costs, I was caught off guard at how much time home ownership took up. House maintenance and projects have taken up most of every single weekend of mine for the past few years. Part of it is simply that I bought a house with more space than the places I usually rented. More to clean, more to maintain, more things that can go wrong, etc. But the biggest thing is that I'm the only one in charge of main…

>But the biggest thing is that I'm the only one in charge of maintenance. There's no one person I can call for every single problem. Keeping track of regular maintenance, performing that maintenance, and learning how to DIY things takes a lot of time. And even if I want to pay someone to do it for me, I still have to research contractors, coordinate estimates, and schedule the project. And I still need to learn enoug…

> Not easy I'm sure,

Can confirm it’s not easy. If you want to describe a method of finding one, I’m all ears.

Re: The real cost of owning a home

#502

Post by tomjakubowski »

shadowpho wrote: post #109
mholm wrote: post #6

Beyond 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…

> and having extremely predictable payments for years I’d argue rental is more predictable. Housing has a huge amount of upkeep — $10k ac, $5k water heater, $20k roof…

If you don't have cash savings as a homeowner, you can leverage a home equity loan or line of credit to cover those emergency bills. In times of extreme low interest rates, it may even be beneficial to do that vs. paying with cash.

If your household is a typical HN high earner, and you are early in your mortgage's amortization schedule, the tax money you save by deducting interest can fund a $10k emergency repair fund too. Maybe even in less than a year.

Re: The real cost of owning a home

#503

Post by pixelatedindex »

jedberg wrote: post #164

The 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…

> But don't do it for financial reasons.

I think I disagree on this front, but that’s probably because I ended up buying a home due to a mix of FOMO, bad landlords and rent not being too far from mortgage.

Plus from a psychological perspective it’s hard to say don’t do it for financial reasons when anyone who bought a home in the last 10 years (forget 20+) has seen insane appreciation. I’m jealous of everyone who got practically free money (2-3% mortgages) on an asset that has increased at least 50%. Life probably doesn’t get better than that and makes me wish for such nice things.

At least my “rent” is “set” for the next 29 years (I just bought last year) so hopefully at some point my mortgage would be something to be envious of.

Re: The real cost of owning a home

#504

Post by asdff »

jeremy151 wrote: post #49

I am a DIY-er by nature with construction experience, I enjoy it, so when we wanted a bit more outdoor space, we moved from a suburban cul-de-sac to a slightly more rural property on some acreage, and chose an aged luxury home, feeling comfortable generally in my ability to be able to rehab it over time. After all, we're not in any sort of rush, and wanted the kids to experience putting work into the place where they…

Hate to admit it but it is self imposed what you are doing. You don't actually need a brand new driveway. You don't have to manage all 10 acres. You can keep up a little half acre of it same as you used to, and let the rest go to woods and whatever wants to grow. Maybe you can get goats and chickens to help manage the brush. Or lease land to someone keeping goats and chickens.

Re: The real cost of owning a home

#505

Post by Ntrails »

asdff wrote: post #473
m463 wrote: post #467

Earlier quoted context omitted.

I don't think home ownership is an "every single weekend" thing unless you bought a fixer-upper. Honestly, it sounds like you enjoy it. If you are doing it with that frequency I think you just are "into" your house.

Depends where you live. In the midwest you might legitimately need to mow 3x a week and you might have a huge lot. If you say screw it and let it go to knee high weeds, city might show up and cut your grass and fine you for it.

Buy a house without grass :)

Re: The real cost of owning a home

#506

Post by at-fates-hands »

funksta wrote: post #325
Galanwe wrote: post #303

Earlier quoted context omitted.

> 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 lever…

Leverage is great when prices are increasing, but not when prices are moving in the opposite direction. The recent 40-year trend of decreasing interest rates lulled a lot of people into the belief that real estate leverage is an unalloyed good.

>> Leverage is great when prices are increasing, but not when prices are moving in the opposite direction.

This.

I worked for a medium sized company in the early aughts. It was a family owned business. The eldest brother was the owner and we often had lunch and he would tell me that once I make x amount, then I should buy this kind of real estate. When you get to this xx amount, then buy this kind of real estate. Fuck the stock market, only real estate goes up in value every year like clockwork. At the time he had several rental properties and three or four houses located all over the country.

That was until 2008.

Its funny, I ran into him at an architecture conference a few years back and one of the first things he said to me was, "Remember that real estate advice I was giving you? You can completely ignore that now!" and we both had a good laugh about how drastically the market had changed since 08'.

Re: The real cost of owning a home

#507

Post by Sparkyknows »

For me, it is about stress and time (and money). I hate to say this because I don't want to upset anyone (really just trying to help, not perfect), but we created HomeSpark.AI to try to reduce the stress/time/money blackhole from personal experience. What my contractor was doing didn't feel right, so I had to hire a "auditor" of sorts who wrote a 47 page report of the issues. Didn't relief the stress but did relieve the uncertainty. Then I said that has to be an easier way with AI. I just ran into this issue with an oil pressure gauge for my whole house generator. The AI gave me the part, video and where to buy/cost for part. $30 and 20 minutes later installed - before that I had no idea other than call a guy. Sorry not trying to shill anything , just hope to be helpful.

Re: The real cost of owning a home

#508

Post by Havoc »

archagon wrote: post #92
Havoc wrote: post #43

The numbers miss a key aspect - risk management Landlords do whatever the hell they like with zero consequences. Thats not a game I’d like to play with a 40 year horizon of unknowns. With a mortgage the risk is interest rates. And on that I’m confident I can carry far more exposure than my peers. So if that blows up in my face then the entire country’s financial system is cooked anyway

And that’s why we have rent control.

And by "we" you mean what random cities making up a couple percent of accommodation globally?

Re: The real cost of owning a home

#509

Post by bombcar »

brabel wrote: post #386
funksta wrote: post #325

Earlier quoted context omitted.

Leverage is great when prices are increasing, but not when prices are moving in the opposite direction. The recent 40-year trend of decreasing interest rates lulled a lot of people into the belief that real estate leverage is an unalloyed good.

> I bought my current home in 2011 for $420k, and the Zillow currently estimates its value at $757k. Well yeah, in the last 20 to 30 years in most countries the story has been the same. My parents bought a house in Brazil in the early 90's for 30k and we're now selling it for 400k. My relatives in Australia bought a house in Adelaide for 400k around 5 years ago. Prices exploded there and it's now around 700k. They go…

You also have to factor out inflation over those periods of time, as often it turns out the return is relatively anemic, but the time periods are long.

Re: The real cost of owning a home

#510

Post by bombcar »

Eridrus wrote: post #414
Galanwe wrote: post #303

Earlier quoted context omitted.

> 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 lever…

This is only relevant when rates are low. Rates are currently higher than the growth you can expect in housing prices. I have done repeated financial models of this over the last 15 years and it has never made sense to buy a house for me. When rates were low, if I had bought a house and then stayed in it a long enough time to counteract transaction costs, it could have been ok, but in expectation, basically everyone…

Transaction costs are killer and never factored in correctly, I’ve found.
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