I Have a House

[Morfiend]

So, I have nowbecome a homeowner. I just bought my first house. Its in southern California. It is 2k square ft with 3 bedrooms, 2.5 bath, 2 story house. It has a decent sized backyard (for socal) it has an above grownd hottub.

Since housing down here is so expensive, I went half on the house with my father (he buys older houses, remodels them, and resells for his job). We are going to split all the costs of upgrading the house, and then we are going to split the profits.

We are planning on redoing the kitchen, the downstairs living room (it has two, with the downstairs one being the media room) the master bathroom, and probably putting a pool in the backyard.

So, ding grats to me. Ill post some pics soon.

If any of you guys have any advice for a new homeowner, I would be glad to hear them.

[Broughden]

So, I have nowbecome a homeowner. I just bought my first house. Its in southern California. It is 2k square ft with 3 bedrooms, 2.5 bath, 2 story house. It has a decent sized backyard (for socal) it has an above grownd hottub.

Since housing down here is so expensive, I went half on the house with my father (he buys older houses, remodels them, and resells for his job). We are going to split all the costs of upgrading the house, and then we are going to split the profits.

We are planning on redoing the kitchen, the downstairs living room (it has two, with the downstairs one being the media room) the master bathroom, and probably putting a pool in the backyard.

So, ding grats to me. Ill post some pics soon.

If any of you guys have any advice for a new homeowner, I would be glad to hear them.

a) Congrats!

b) Advice? Never EVER EVER try to go cheap/shady when hiring a contractor to do work on your house. Make sure they are liscensed and call the Better Business Bureau to see if they have any reported horror stories involving the company you are looking at hiring.

[Abagadro]

Cool.  Since you are going to flip it my advice would be to plan it out ahead of time, including down to the dime budgeting, and try real hard to stick to it. Remodeling can get out of hand. In my previous house, me replacing a washer on a leaky faucet rapidly turned into a $4,000 remodel of the whole bathroom.

[Morfiend]

b) Advice? Never EVER EVER try to go cheap/shady when hiring a contractor to do work on your house. Make sure they are liscensed and call the Better Business Bureau to see if they have any reported horror stories involving the company you are looking at hiring.

I dont have this problem my father is going to provide all this type of stuff. Like I said he runs a custome remodel (or spec house) construction company. So he will have his guys do the majority of the work, and that we all the labor and such is going to be at cost.

[Lantyssa]

Congrats.

[Sky]

I'm in the market. I wouldn't mind hearing details leading up to buying it, I'm building credit (I had none, I never borrowed before) and saving for downpayment/points down/closing.

[WayAbvPar]

Congrats!

 I have begun the preliminary work on becoming a homeowner myself soon. Hate to give up my 6 minute commute, but we need more room and some actual equity.

[Morfiend]

Well, I know that over most of America prices are dropping. But when the rest of america drops, that just means Southern California (Orange county in perticular) doesnt go up for a little bit. Homes are VERY expensive here, and I am scared to even post how much I paid. Some of you reading it might go in to shock.

Since my father buys a lot of property, he has a very good broker/realtor he works with, and he just had me work with him, so I wasnt as involved in the proccess as a lot of people are. He took care of almost every thing for me. Great guy. Crazy as fuck. But great work.

[Soln]

sweet, gratz

I got my first mortgage in Dec.

equity FTW

[Signe]

Gratz to you!  I suppose I should send you some sort of plant.

[WayAbvPar]

Gratz to you!  I suppose I should send you some sort of plant.

I don't think those are legal to ship.

[Signe]

Ok... a basket of brownies muffins, then.

[HaemishM]

Congrats. Buying a house was one of the best decisions my wife and I ever made.

[Broughden]

b) Advice? Never EVER EVER try to go cheap/shady when hiring a contractor to do work on your house. Make sure they are liscensed and call the Better Business Bureau to see if they have any reported horror stories involving the company you are looking at hiring.

I dont have this problem my father is going to provide all this type of stuff. Like I said he runs a custome remodel (or spec house) construction company. So he will have his guys do the majority of the work, and that we all the labor and such is going to be at cost.

Yeah when I was a kid my dad tried to skimp on having a pool installed. The "contractors" dug right into our septic tank with the backhoe. Then they wanted more money to fix the mess they created, which my dad refused to pay so they packed up and left. It took him about a week to find a certified, liscenced contractor to come out to the ranch, fix everything and finish the pool. So during that week we had a large shit filled pond in the back yard.

I learned my lesson early.

[WayAbvPar]

Congrats. Buying a house was one of the best decisions my wife and I ever made.

So it would feel even better to buy one for me, right? I could really use the extra space (and extra cash!)  :-D

[HaemishM]

Congrats. Buying a house was one of the best decisions my wife and I ever made.

So it would feel even better to buy one for me, right? I could really use the extra space (and extra cash!)  :-D

As long as you don't mind living in YouGotAPurtyMouth, MS.

[WayAbvPar]

Congrats. Buying a house was one of the best decisions my wife and I ever made.

So it would feel even better to buy one for me, right? I could really use the extra space (and extra cash!)  :-D

As long as you don't mind living in YouGotAPurtyMouth, MS.

As tempting as that sounds, I think there are some lovely bridges under which I can live locally...

[Yegolev]

There isn't much advice I can give, I think, due to your particular situation.  You have the construction thing taken care of and you won't be staying there.  I guess I'd say to get one of those built-in vacuum systems, those kick lots of ass.

[Signe]

My advice is to rent the house out to a nice, elderly couple.  Make sure the lady loves to cook and the man always wanted a son.  Live in the basement.

[Strazos]

Congrats.

I, on the other hand, have absolutely no desire to ever deal with the headaches of homeownership. Ever.

[Lantyssa]

Owning a home isn't too bad.  Selling one kind of sucks though...

[WayAbvPar]

Congrats.

I, on the other hand, have absolutely no desire to ever deal with the headaches of homeownership. Ever.

Good luck selling that line to any woman who should deign to marry you.

[Mr_PeaCH]

2000 sq ft in OC, huh?  Yeah, a pretty penny I'll bet.  Congrats!  Nothing says "I'm somebody!" quite like homeownership.     And props to your pops for helping make this happen.  Good luck and have fun with it. 

[Strazos]

Congrats.

I, on the other hand, have absolutely no desire to ever deal with the headaches of homeownership. Ever.

Good luck selling that line to any woman who should deign to marry you.

Marriage....heh...Heh...rofl.

I don't even plan to Consider such a thing until I'm...I don't know...30 is a nice round number. I've got bills to pay, and toys to buy with which to play. Also, more overseas travel would be nice.

[Johny Cee]

Some tax advice:

The Homeowner exclusion on capital gains from selling a residence kicks in if you've lived in a house as a primary residence for any 2 of the last 5 years.  You can save yourself a bunch of tax liability by holding off on the sale if you're cutting it close to the 2 year limit.

Essentially,  you meet the exclusion and you won't have to pay any tax on capital gains from the sale of your home.  There is a limit to how much you can exclude in your lifetime.

No idea on how long you intend to hold it before you flip it, though.  Keep track of invoices/materials used to renovate if you're going to flip it in less than 2 years:  those expenses could go to the basis of the home. (Not 100% on this,  as it may not go to basis if you spent the money during the course of renovating a personal residence.  I do Corps, non-profits, and canadian/US/interstate corp stuff mostly,  so my individual taxation knowledge is kind of bare.)

[Hanzii]

Congrats.

I, on the other hand, have absolutely no desire to ever deal with the headaches of homeownership. Ever.

Good luck selling that line to any woman who should deign to marry you.

Marriage....heh...Heh...rofl.

I don't even plan to Consider such a thing until I'm...I don't know...30 is a nice round number. I've got bills to pay, and toys to buy with which to play. Also, more overseas travel would be nice.

Don't turn this into yet another 'Strazos is just a kid'-thread.
Let the adults talk about homeownership, please.

Bought mine in october in one of the countrys most expensive areas.
Good news is that the value increased 33% in less than a year. Bad news is that both bathrooms more or less fell apart and contractors around the capitol are ridiculously expensive and so overbooked, that a small job like mine entails at least a three month wait. I'll have to do it myself...

[Merusk]

Big grats, Morph.  I'd offer some suggestions, but I need pics first.  I also expect that since your dad does this for a living, he's got plenty of ideas already.

All I can say off the cuff is you get the most bang for your buck with landscaping.  Too many folks in my neighborhood have invested tons into upgrading their interiors while ignoring the exterior.  All the houses were built 3 years ago, but the exterior of several of them languish with bad patches of grass, a few badly-kept plants and no trees at all. (Ahh, low-budget Production Housing, how I love thee.)   It's funny watching the owners try to sell them at the same price as the well-landscaped homes, and always come in under.

To the rest of you homeowners; plan your upgrades.  If you're going to move in a few years, you don't need to build that $25k deck. Chances are you are /not/ going to get your money back when you sell.  One of my other neighbors did exactly this, including an additional $3k for hardwood flooring after the purchase.   Now they're moving to SC and sold the house for $178k, but they bought it for ~$152k.  The wife was genuinely irritated she couldn't sell it for $190 and make big bucks.

[Strazos]

Don't turn this into yet another 'Strazos is just a kid'-thread.
Let the adults talk about homeownership, please.

On a more serious note, I simply don't plan on needing a house because I don't plan on needing that much space. Happy?

[UD_Delt]

Landscaping, Kitchen, and Bathroom(s)....

Spend most of your money there. Everything else can be freshened up enough with minor changes like new flooring or even just a new coat of paint. Don't skimp on nice appliances and countertops all around.

[Merusk]

Don't turn this into yet another 'Strazos is just a kid'-thread.
Let the adults talk about homeownership, please.

On a more serious note, I simply don't plan on needing a house because I don't plan on needing that much space. Happy?

You can get houses that are not much bigger than an apartment.  They also have the double plus of tax-benifits and not throwing your money to someone else who builds equity in addition to the rent profit for the property you're living at.

A house is a much wiser investment once you know the city you'll be in for a while.  As a college student, no, it doesn't make much sense.  Once you've got your first job, though, you'd be better served by purchasing one than paying rent into your 30s.

[HaemishM]

Congrats.

I, on the other hand, have absolutely no desire to ever deal with the headaches of homeownership. Ever.

Then you might as well take an asston of money, light it on fire and roll around in the hot coals.

Seriously, all the headaches of home ownership are nothing when compared to pissing your money away on apartments that are run with all the humanity of a fucking roach motel. Not to mention the tax breaks, credit breaks and investment advantages.

[Strazos]

Or, I could keep a low rent, and use the money I would be throwing at a 30-year mortgage to invest in....something else. Heck, even a simple IRA would give me more actual money in 30 years than paying for a house would. Sure, I would have "equity" in the house, but what am I going to do with it, take out a home equity loan? That puts you right back to where you started. Or you could sell the house, but you don't really profit from it unless you move downmarket. And who moves downmarket anyway? I'm guessing the vast majority of people who move from one house to another move into a more expensive house, so that just puts them right back into debt.

So what's the point? The only way I see to make actual money from a hosue is to buy property that you don't actually need, just to flip it, and I have no desire to ever play that game.

EDIT: Plus, they all come with those fucking "lawns" that you have to constantly fuck with, or pay someone to deal with it. It's a bunch of grass, BFD.

[UD_Delt]

Or, I could keep a low rent, and use the money I would be throwing at a 30-year mortgage to invest in....something else. Heck, even a simple IRA would give me more actual money in 30 years than paying for a house would. Sure, I would have "equity" in the house, but what am I going to do with it, take out a home equity loan? That puts you right back to where you started. Or you could sell the house, but you don't really profit from it unless you move downmarket. And who moves downmarket anyway? I'm guessing the vast majority of people who move from one house to another move into a more expensive house, so that just puts them right back into debt.

So what's the point? The only way I see to make actual money from a hosue is to buy property that you don't actually need, just to flip it, and I have no desire to ever play that game.

Hmmm... let's see...

Bought my house 3 years ago. It's a duplex and we paid $158,000 for it. We rent out the bottom and live in the top. We charge $675/month for rent. We did an upside down mortgage w/ no down payment to buy the house. This puts our mortgage payment + insurance + property tax at $450/month. We then have a second mortgage that runs us about $750  per month. So, total monthly payment on the house is $1200/month.

Because we're running a rental we can depreciate the assets and write off a bunch of stuff and basically pre-home-owner I would get about $400 - $500 back from the fed. Now I get back almost $3000/year.

So, without looking at equity at all I earn ($675 * 12) + $2500 (difference in tax return) around $10,500 or $880/month from the house. $1200 - $880 = $320 per month that comes out of my pocket.

I'm guessing you'd have a hard time finding an apartment for $320 per month.

Now looking at equity. The house now appraises (roughly from zillow.com) for $180,000. That's an immediate profit of $22,000 assuming we got full value if we sold. Add in the fact that we now only owe around $140,000 on the house and we've earned another $18,000 in equity.

Over 3 years we've paid $11,520 in "rent" but now have around $40,000 in assests. So, taking those variables into account you'd actually have to find an apartment that paid you around $700 per month to live there for us to be even.

Of course I left out repair and maintenance costs in materials and time but I guarantee they don't add up to more than $700/month.


So, now what's better?

[Strazos]

So let me get this straight:

By your figures, you're paying about $14,400 a year for mortgage, etc.

You get back $3k, so drop the previous amount to $11,400.

But then you rent out another part of the house (which works for you, but it's not something I would do), so you only end up paying $320, which is cool. (just to get something straight, you only paid $158k for what is essentially 2 residences? You must live in a pretty cheap area or something, because prices would be....a lot higher where I live I reckon (you don't see duplexes in my immediate area). But I guess the math would still be roughly the same, as you would just charge more for rent, though the taxes/insurance would probably be higher, and I don't imagine your tax return would go up much, if at all).

Now, you say you have 40k in "assests," but how would you actually realize that money? With the rise in real estate prices, you would probably have to move into a somewhat lesser home in order to get something of equal value to what you paid for your current home and actually turn a profit. But like I said, most people would probably move Up into something more expensive. You could take out a loan against the equity I suppose, but to what end? That just puts you back into debt.

[Merusk]

You're missing the final step of home ownership, the empty nester.  Yes you keep buying-up in value,  but you let equity take care of the difference in price so your payment stays about the same.  When all your kids have moved out you don't need as large of a house, so you do, in fact, move down.  There's several people like this in my neighborhood living in Ranches and smaller footprint houses.  They made their profit and took the tax-break for selling it and voila.. they have someplace ot live that's paid off as well as a chunk of money in the bank. *

* Greatly simplified for brevity.