[duedue]

It's been quite a while I've been thinking of buying a house. About half of my savings would go into the down payment and closure fees. After tax deductions the monthly payments won't be much more than the current rent I pay but the bought house will be nicer.

However as I've mentioned in another thread I'd like to leave for a more interesting place, possibly out of country, but am not yet sure when I'll be able to do so. Since the town hosts a big university I should not have much difficulty renting the house (at least before the higher education bubble bursts ).

[AneroidOcean]

(11-30-2017 09:15 PM)duedue Wrote:  

It's been quite a while I've been thinking of buying a house. About half of my savings would go into the down payment and closure fees. After tax deductions the monthly payments won't be much more than the current rent I pay but the bought house will be nicer.

However as I've mentioned in another thread I'd like to leave for a more interesting place, possibly out of country, but am not yet sure when I'll be able to do so. Since the town hosts a big university I should not have much difficulty renting the house (at least before the higher education bubble bursts ).

Did you search?

thread-3653.html
thread-28623.html
thread-57941.html
thread-20515.html

It takes a lot of research to make a sound large, complex purchase such as a home. If you haven't bothered searching the forum, perhaps it's not for you.

I'd also mentioned that while owning a home and renting it out can be a solid source of income, that young students are probably some of the least desireable renters as they are likely to damage the place and besides that the turnover is nearly guaranteed.

[duedue]

I've done a little bit of research. Different people have different opinions on this. For example Financial Samurai is all for real estate investment (in the US) while Nomad Capitalist is against it (as you may expect).

There are also things that nobody can predict with accuracy:
Is the housing market going to crash again soon? It seems to be at a high now.
How many rentless months I may have in each year?

I've already contacted the property management that would be taking care of the rental and they rent almost exclusively to professionals.

Pros of buying:

The interest rates may soon go up. However if a deflation happens then a low interest rate will not mean much.
I will have a solid investment.
I won't have to kowtow to my landlord. Where I live there's no 3 month termination policy. I can sublet the place if I move before the lease ends however I'll be responsible for any damage or if they don't pay the rent.

I'll live in a larger and nicer, better insulated place, at least before I move elsewhere. This can increase my productivity.

Cons:
I'm not a US citizen and I probably won't stay here for too long so buying a property and keeping it for at least 10 years (to get a return on investment) can make things unnecessarily complicated for me.

Apocalypse can happen (and a lot of guys warn about it, from Caleb Jones and Nomad Capitalist to Singularity2050). The town hosts a large university, true. But if you get out of the town it's just farms and forests (and other small towns) for at least 100 miles. People in manosphere warn about upcoming bachelor taxes, asset seizures, the bursting of the higher education/student loan bubble and what not.

[Sonoma]

I'm of two minds on this

High prices on the property mean high taxes and a lot of exposure

Low priced areas might include margins that just aren't worth your time

In my mind owning a rental property isn't really worth the hassle, but a primary residence seems worth it

[edlefou]

(12-01-2017 09:49 PM)Sonoma Wrote:  

In my mind owning a rental property isn't really worth the hassle, but a primary residence seems worth it

I completely disagree. In my opinion, the only advantage of a primary residence is the capital gains tax exemption and that's not enough for me since I never plan to sell. A primary residence doesn't generate monthly cash flow, whereas rental property does.

To answer the OP's question of whether having the tenants pay the mortgage has worked: for me, yes. It's given me location independence and a decent net worth (very low seven figures).

It's not easy and not that profitable unless you're a do-it-yourselfer, but it's almost guaranteed to pay off in the long term. Avoid condos.

[Hypno]

on the primary residence, US citizens can deduct their mortgage interest and property taxes. So you can often own at half the cost of renting. But that is an apples to oranges comparison. Owning has certain benefits, like stability, the ability to make changes, benefit from appreciation etc. but comes with the burden of repairs, being tied to one place.

On the investment side, it all depends on the price you acquire at, the price the market bears for rent, and whether your tenant actually pays. If you assume they pay the rent, its easy to make the numbers work. But finding tenants who will reliably pay the rent is like getting laid, its nice when it happens but is not something you can necessarily count on.

[edlefou]

(12-02-2017 10:03 AM)Hypno Wrote:  

on the primary residence, US citizens can deduct their mortgage interest and property taxes. So you can often own at half the cost of renting. But that is an apples to oranges comparison. Owning has certain benefits, like stability, the ability to make changes, benefit from appreciation etc. but comes with the burden of repairs, being tied to one place.

On the investment side, it all depends on the price you acquire at, the price the market bears for rent, and whether your tenant actually pays. If you assume they pay the rent, its easy to make the numbers work. But finding tenants who will reliably pay the rent is like getting laid, its nice when it happens but is not something you can necessarily count on.

I wish I could get laid as reliably as I can find tenants who will reliably pay the rent. In 16 years I've only had one guy not pay and I got the cash back by suing him.

Tenant selection is key and I've pretty much perfected the process. I'd rather fly back home to do it myself instead of relying on an agent (who wants to get anyone in there as soon as possible and collect their commission). A flight home costs much less than the commission, which is usually one month's rent.

Picking the right tenants will make the difference between being able to sleep at night while abroad versus having to babysit and worry while you're halfway across the world.

[polar]

If you might relocate in 10 years:

Does your country have a developed property management industry, or can you find someone to manage property on your behalf? If not, you'll want to consider selling prior to departure.

[Kona]

(12-01-2017 08:12 PM)duedue Wrote:  

I've already contacted the property management that would be taking care of the rental and they rent almost exclusively to professionals.

Don't believe that for a second. The property management company doesn't care if the people are "professionals" or ditch diggers. They probably do a credit, background, and employment check and that's it.

I've had a lot of success renting places out. This advice sounds basic, but listen carefully: Make sure the place you are renting has a garbage disposal, dishwasher, new toilets and preferably not septic.

You don't want hundreds of calls over clogged drains, savage backing up and the people not telling you for fear of losing their deposits, or stacks of dirty dishes bring roaches.

Aloha!

[h3ltrsk3ltr]

How is this troll still here?