[MMM]

Is the 28/36 ratio based solely on the mortgage, or are they using PITI?

[captain_shane]

(03-29-2017 04:34 AM)MMM Wrote:  

Is the 28/36 ratio based solely on the mortgage, or are they using PITI?

PITI. And I would recommend lower than that based on market volatility.

[PapayaTapper]

Owning real estate is the cornerstone of almost any wealth creation strategy.

Ive been investing in and developing SoCal RE for the last 23 years... (almost exclusively in luxury properties in the beach city where I live most of the year).

The first step should really be to speak to a good lender.You really need to know what price point you could shop for before anything. This costs you nothing but a little time

There are numerous first time buyer programs out there that can get you in for 3% down payment (FHA) or even 1% (VA).

I'd also recommend speaking to your tax adviser re the benefits...but start with a lender. PM for referrals if you like

[Lunostrelki]

This seems like a useful thread. After some annoying interactions with landlords (mostly related to bureaucracy), and a resignation to the fact that I'm not likely to ever make a decent wage on my career income alone, I'm planning on roughly doing it this way:
- spend own money and borrow from elders to buy a cheaper house (<100K) in a high-rent area, then take out a loan to fix it up for another 40-50K.
- around the end of Trump's first term, take the rent income from House A and take out a loan to acquire a second home in a place of my preference.
- pay off long-term loan for House B (residence) with rents from House A.
- wife now freed from unfulfilling job and empowered to have and raise kids.
- acquire third home in same pattern as House A, depending on how the housing market looks at the time (if Trump is still going strong, things should be okay). This will allow me to reduce rents and increase competitiveness, and provide some extra financial security.

[Ranch Hand]

(03-30-2017 09:46 AM)Lunostrelki Wrote:  

This seems like a useful thread. After some annoying interactions with landlords (mostly related to bureaucracy), and a resignation to the fact that I'm not likely to ever make a decent wage on my career income alone, I'm planning on roughly doing it this way:
- spend own money and borrow from elders to buy a cheaper house (<100K) in a high-rent area, then take out a loan to fix it up for another 40-50K.

--------
- acquire third home in same pattern as House A, depending on how the housing market looks at the time.....

I understand the plan and it makes sense, but make sure that each individual deal passes a test of individual viability.

There are times to buy, hold, and sell. I do not recommend for a young guy to get wrapped into multiple mortgage situation unless he has deep equity embedded in the deals.

You must be able to withstand a meaningful market downturn (2008) without losing everything. This is the difference between risk management and gambling.

Risk takers can survive a catastrophic loss of any given deal (granted with pain). Gamblers cannot.

[Scuba_Instructor]

An oft-overlooked benefit of owning your own home is that maintaining and improving it (not to mention cleaning the damn thing) prevents you from wasting time and money on wasteful pursuits. Renters are far more likely to blow cash on unnecessary shit (eg. overpriced nights out, $100 t-shirts made in China for 50 cents) simply by virtue of not having a better place to put their cash.

As stated a number of times in this thread, to ensure the property is a worthwhile investment it must be the right property, in the right place, at the right price. Buying too much home to impress others is ridiculous and weak and will have a significant negative impact on your future cash flow. Outside of financial crises, some of the best buying opportunities come from buying from people who have made this mistake. As with most things, timing is everything.

[duedue]

Most of the (negative) advice given about buying homes is for when you want to get a mortgage. I am in a position that I can buy a house paying cash although it will take all my savings. The idea doesn't seem to me as bad as it is usually depicted in manosphere. For example not having to pay rent I'd save about $10K a year. So even if I decide to sell it after one year (still don't know what exactly I'm doing with my life), I've not lost any money. I can rent it out too.
The house is pretty old though (but looks good on the surface) and I'm going to have it inspected.

[Malone]

Fuck buying a house, buy LAND.

I have a dream of one day knowing the direction of my nearest neighbors, and describing how far they are in terms of how many days it would take to walk there.

Practically speaking, I just don't want to be able to see or hear them.

[jamaicabound]

Couple things with home ownership. First off not sure where you are in your life and career, but your first home isn't always your dream home. My first home was a small duplex, not super nice, not in the best area but I could afford it. I moved in with some buddies, they paid the mortgage and I doubled down on my payments and after a few years of doing that eventually turned it into a rental and went and bought my own home. The rental brings in $1400 per month and mortgage is only $700 so been making a bit of money with that, plus since it's been on my tax returns 2 years can use it as income on buying future properties.

I think your biggest problem is the market your in. In Dayton Ohio you could buy a house for $20,000. I'm in Chicagoland area so not as bad as LA but still kind of pricey. In most nicer burbs I'd want to be in your not going to find much under like 250k in a SFH, if your willing to do a TH or condo you can find some deals.

I'm not sure what your budget and price range is but in your market from what I understand not only are home prices high but stuff gets bid up by multiple people people and often goes for over asking.

The issue with a foreclosure or short sale is in a hot market your not really going to get a huge discount. In my area I may be able to get a 200k house for 110k, however in your area a 200k house on a short sale or foreclosure may only be discounted to like 185k so probably not a ton of savings, plus you'll probably have to do some work to the property and if you're planning on doing an FHA mortgage it may or may not even be approved for such as oftentimes something like a missing screen, missing GFI outlet etc won't allow an FHA loan to close. Even if it's a $50 fix, oftentimes banks will refuse to do anything.

If you are looking at short sales keep in mind they will want ernest money and may sit on your money for 6 months just to come back and say the deal isn't approved or someone else bought it and after sitting on your ernest money for 6 months your back to square 1. At least with a foreclosure you know the price and the process is fairly quick.

[jamaicabound]

(03-27-2017 06:29 PM)TheFinalEpic Wrote:  

I'm a real estate agent. Don't do it.

Unless you really want the responsibility of a mortgage, and love the place you live, it's not worth it. It's for regular people, and I sell to regular people. Like Leonard pointed out, people find out the hard way that real estate is not a liquid asset by any means, and that it also doesn't always go up in value. You actually must do heavy research both in your city, and specific neighbourhood to understand the investment, and please treat it like an investment; 98% of my clients don't.

I would argue home ownership is for "real people". I get LA is a different market than the rest of the country but assuming you plan on staying in the same area for 5-10 years I don't think it's risky by any means. I would say understand the rental market in your area and as long as you can buy in at a point where if you had to or wanted to a renter would pay the entiremortgage plus 20% it's a no brainer.

I have a house I didn't want to live in anymore, rather than sell it I rent it for $1400 per month, mortgage taxes insurance is $700. I'm building equity and pocketing a cool $560 per month. I use a property manager who charges $140 per month so it's completely passive, I have emergency reserves for a new furnance, new roof, plumbing issues, etc.

I'm not one of these people who says buying is always better than renting, it's definately situational, if you want to be mobile, don't want to be tied down, don't want to do yard work or repairs then definately rent but at the end of the day in my area a place where a mortrage is $1000 is going to rent for closer to $2,000. Landlords are in the business of making money so whatever they have to pay property tax, insurance, etc you as a renter will be paying all those things plus some.

This guy seems to have ties to the LA area and is talking about starting a family so I'd say he's potentially a pretty good candidate for home ownership assuming he's got the bread

[jamaicabound]

(03-27-2017 10:24 PM)Ranch Hand Wrote:  

And to really answer your question: foreclosure homes selling at auction for very low prices are usually going to cash buyers. I have not done this but know a little about it.

This is a hard game for a young guy to play, but there are occasionally cash investors looking for willing and able "flippers" to do the dirty work and share profit. It kind of craps on the dirty work guy, because they expect to flip and sell the home ASAP, so don't expect to "settle in" someplace.

Very true about cash buyers. I must have had a dozen foreclosure, short sale and auction deals fall through. This is back around 2008 so banks were kind of overburdened with them, it's probably a bit less like this today but basically I'd put in a financed offer of say 70k and the bank would accept a cash offer of 35k because they didn't want any chance of a deal falling through, plus wiht FHA something like a missing screen or cracked sidewalk could kill an FHA deal and they didn't/don't want to have to put money or time into the place, they'd rather sell it for 20k less than spend $100 on an electrician to put in a GFCI outlet and get an additional 20k

[mammal]

(03-28-2017 07:18 PM)The Beast1 Wrote:  

Honestly, this whole thing was really driven by the fact that my new apartment complex has explicit rules about fixing cars in the garage which is BS because it's not a big garage or complex.

I don't "change my oil." I "add oil because it was running low."
I don't "work on my brakes." I "replace a tire that went flat."
And I do what I'm not suposed to be doing in a part of the parking lot that gets less traffic and not near the management office.
Of course, I do this on weekdays when neighbors are at work, though you may do it on Sunday afternoon when the management employees aren't around.

What if your car were to "break down" in your office parking lot on a weekend when you went to do extra work?

[DJ-Matt]

I would say if you're in an apartment or renting right now:

CONDO

CONDO

CONDO

(and buy one, not rent!)

I rented one for about a year and a half when I lived in Louisiana and it was a great experience. Pool, security, inside entrances, it was like living in a hotel. Although my rent was cheap, paying a mortgage and HOA monthly would have been even less!

Had a house for several years here when I moved to another state, after a while the outside maintenance and lawn mowing annoys the shit out of me. But it all depends on your personality, if you like that sort of thing then by all means buy a house!

In either case my advice would be to BUY, DON'T RENT! It's always cheaper to own than rent no matter if it's a house or condo or townhome. I'm getting ready to close on a condo deal shortly for a 740 sq ft unit that is going to cost less per month than the 550 sq foot house I'm renting at the moment! That's how much cheaper it is to own!

[Oz.]

One of my closest friends is selling me his house for 100k. The house is in a great neighborhood, it has 3 bedrooms, 2 bathrooms and a small backyard. The official cost of the house is 160k, but, being that it's me he is willing to let it go for that low. He is only selling the house because he is a single guy and it is simply too big for him, he also plans to buy a boat with the money and start a business.

I've never bought a house and know absolutely nothing about the process. Can you guys point me in the right direction here?

[Chavo]

Cant you buy a cheap ass home and then rent it out for like 800 bucks a month to a struggling family?

I have an uncle who does this. He bought 3 houses in the ghetto in the Black neighborhood for no more than 40,000 dollars each. He rents all 3 houses to people at 700 dollars each. That's 2,100 dollars extra cash a month. He is traveling the world collecting money every month.

I might do this.

[jamaicabound]

(06-05-2017 05:27 PM)Chavo Wrote:  

Cant you buy a cheap ass home and then rent it out for like 800 bucks a month to a struggling family?

I have an uncle who does this. He bought 3 houses in the ghetto in the Black neighborhood for no more than 40,000 dollars each. He rents all 3 houses to people at 700 dollars each. That's 2,100 dollars extra cash a month. He is traveling the world collecting money every month.

I might do this.

There used to be a dude on this forum, I forget his name something about motorcycles if I remember correctly. He did a lot of houses in the midwest, specifically Ohio if I remember correctly. He was buying places for 15k maybe 20k and rents were actually quite high at like $800 to $1000 if I remember correctly. Essentially the house could be paid off in something like 3-6 years and you'd still have a healthy monthly check comming in.

I have a house, not really in the ghetto, but not the best area. For 4 years I had a nice family living there, made good money good jobs, had a kid in private school. Once they moved out every rental application I got was section 8. I was kind of freaked out about the rules in my state, I think your not allowed to discriminate and say no section 8. Obviously there's ways to subtly get around this but literally had about 80 applications/inquiries and everyone wanted section 8. That's teh only issue about the ghetto.

I got off to a rough start, 6 adults living in my place and their portion of the rent was $115, total rent was $1400 so state paid the difference. First month they were a month late on their $115 portion. I was like great 6 adults can't pay $115 and obviously you would think at least be on time with first month. Fortunately since then they've been paying their portion on time and I guess I'm still sitting pretty good even if they don't. My mortgage, taxes, Ins all in is about $700 so even if I only get the states portion I'm still getting my nut covered and making a few hundred.

[worldtraveler3]

Unless you want to be location independent and do what digital nomads do, renting iswastijg money.

[RatInTheWoods]

I put off buying a house for a decade.

When I finally entered the housing market, it was scary and stressful.

It was however, the first steps to my financial freedom.

In Australia, you can get 4% rental returns and 8-9% capital gains per year. So its a no brainer investment, nothing gives those kinds of returns, if it keeps going, and it has.

So if you have stability in income, spare cash, and have a long term investment view, I recommend buying a house.

[worldtraveler3]

I think Those of who are saying no are mainly concerned with:
1) will you move around? If you are moving around in the near future then real estate is quite a large game to play. But it seems like you are wanting to raise a family.

2) will you have enough cash? ( the higher the equity the lower the interest rate), so if you are actually buying in LA you would need a substantial sum if you want to be within driving distance and closer to work. If you don't have enough, can you borrow some from relatives?

We don't know your personal financial circumstances so we can't really judge what's really best for you.

But LA market is never cheap( with few exceptions), everyone wants to be in Southern California. And the market is very different to the ones in mid west and auction things you are reading. I would say forget about that and check out prices in the neighbourhoods that you can afford and see how much you can borrow. LA is a big game, you might consider taking a job outside California with better pay and lower costs for few years if that saves you more money.

[Ballr]

Is anyone else bothered by the idea of a property tax for the rest of your life? Despite the home paid off.

*Strictly to live in forever, not as an investment. In order to raise a family.

Am I looking at the bigger picture?

[lavidaloca]

Renting out a property you own carries heavy risks. Tenants causing substantial damages is a frequent issue. I know your thinking well you can afford to repair it easily if its a few k. But the problem is it can and is frequently much worse than that. Most cases I take on in relation to this are sub 25k but its not uncommon to see 100k+ in damages caused by a renter.

The biggest problem is collecting. If they are renting how much assets do you think they have? Garnishment is great but what do you do when they make income that's not declared etc or a family member owns the business they work at etc. It can be a total disaster.

One of the things I'd personally do if I ever rented a place is not rent to anyone with pets. Not sure whether that's legal where you are.

I've owned two condos both which were honestly shit investments. I bought one for 180k sold for 195k (I think as this was several years ago) By the time real estate and everything is factored in that's a pretty non existent return for living their 3 years.

Bought another for 50k and sold for 65k. Owned for about 2.5 years. This one was a better investment but still not very good considering the fees were 400 a month.

I also admittedly made the mistake of paying the entire purchase value on both of these and not just getting a mortgage. If it wasn't for these 2 shitty investments I'd probably be worth a sizeable amount more.

So for me, buying property was a shitty investment.

If your the end buyer rather than the creator though I question how good of investment it is. The right property can be fantastic returnwise if your willing to take on a lot of leverage though with that said.

[Troller]

A house is an investment. Like any other investment it can be a good or bad. Depending on an imense variety of factors. Like a stock, bond, currency, etc. What diferentiates real estate from other class of investments is the possibility of mortgages.

[Sonoma]

I think some of the anti-home crew are looking at the short term. Home ownership is effectively locking in a monthly rent payment for 30 years, using mostly the banks money. Renting might have advantages in mobility or worry of ownership, but it ultimately leaves a person at the mercy of the inevitable rent hikes.

[Darkwing Buck]

Can someone with experience comment on condos for rent vs an actual house/apartment?

I want to buy a condo in a year or two but be able to rent it out for passive income if I move elsewhere.

Thoughts? Experience?

[RoastBeefCurtains4Me]

If you want to be able to potentially rent it, I'd get an apartment in the most walkable area near you, and try to optimize its potential as an airbnb rental. Make sure any HOA or local city regulations allow this. If not, find a different building or municipality where you can.