I Have a House

[Merusk]

They then live in that for 20 years until the kids leave and then sell that to buy a house in Arizona for 500k.

There's no reason, other than RL Peen Waving, to own a 500k+ house after the kids are gone.  Of course, these idiots are the ones I make a living off of as they are who my company is selling houses to, so you all go right ahead and do that.  I'll be living in a 1500sq ft ranch, townhome or patio home enjoying my equity.  :-D

Then again, there's no good reason to live in one place for 20 years in the midwest, either.  Unless you're living in a really desirable area in a densely populated city, chances are you've lost a lot of your cash anyway when new subdivisions were put in over that 20 years.  This happened to my parents, who could have gotten $125k for their house in the late 80s and their subdivision was where all the affluent folks in the city lived. Now, 15 years and at least 5 new subdivisions later with all the newer homes that offer features owners these days want, they will be lucky to sell it for $165k.

[Arthur_Parker]

Currently selling one house and buying another.  UK property leveled out for a couple of years but is on the increase again.  The house we are selling cost £56,000 in November 2001, we accepted an offer for £132,000 a few weeks ago after working on it a lot last year (new kitchen, bathroom, totally redesigned the living room and discovered a covered up inglenook fireplace) .  That seems a pretty good profit but going up the property ladder means we have go from an affordable mortgage to stretching to pay for the new house at £217,000.  It's also going to cost about £5000 just in fees for the move.

[Strazos]

I remember walking past a real estate office in London. They had prices for things in their window. I boggled.

[Sky]

I'm all about contingency clauses. Not too many, but enough to cover my ass. I intend to cozy up to a couple buyer brokers in the area (my ex-step-sister is an agent and married to a broker in another region, she may know a few here with integrity) and a real estate lawyer. Inspection I've got covered, our maintenance guy is tight with most local contractor types, I'll be able to find someone qualified.

Almost jumped on a decent house near my mothers, with a pool and large outbuilding built by a friend of the family. And a poolhouse with full kitchen :) But a huge yard (mowing endlessly) andlack of privacy eventually halted me. I want a nice private country pad on a forested mountain!

[bhodi]

I want a nice private country pad on a forested mountain!

Not a problem! I have just the house for you!

I think this is awesome and would love to live there.

[Morfiend]

I'm curious what you get for 570k. My house at 158k was a duplex, each unit was 2br/1bath around 1100 sq.foot. Total house is around 2400 sq. feet. Only about .1 acres of land though on a street of mainly duplexes.

For that price he got about 1500 square ft home, with 3 bedrooms, 2.5 bath, and a small backyard. Prices are completely out of hand here in Orange county. But then in my area, we have one of the lowest crime rates in all of america, some of the cleanist air, and are about a 5 minute drive to the beach.

[Lantyssa]

I don't plan to sell, so it's not an investment so much as a financial drain.  If you want to invest in land, do it around Atlanta.

I never planned on selling either.  Life sucks, things change.  Trust me, it is an investment.

[UD_Delt]

But then in my area, we have one of the lowest crime rates in all of america, some of the cleanist air, and are about a 5 minute drive to the beach.

Hehe I live less than a mile from a beach as well but I wouldn't go swimming in Lake Erie in anything short of a biohazard suit.


As to the rest of the thread. In general it sounds like people are pointing out that stupid people never get ahead in real estate. Everyone is pointing out all the common mistakes people make when buying a house and buying their next house.

The point is a stupid person would probably lose less money in real estate than a stupid person would trying to throw money at random stocks. An intelligent person with a plan on the other hand will do perfectectly fine with both investment vehicles.

Personally I have made A LOT more over the past 3 years in real estate than I have in my stock account, 401k, or savings account and that's in a market without outrageous growth. I am also not worried about realizing the profit as I am perfectly content to count equity as part of my overall value.

It all boils down to what goals you set. Personally, I have a goal of living in a house I cannot currently afford sometime in the future. The best vehicle to do that is to purchase a starter home and build equity rather than rent. If you are content with where you are now then renting could be a perfectly viable option.

The same strategy could be applied to moving up tiers when buying a car. If you constantly lease a vehicle you can move up tiers but it's going to mean more money out of pocket. If you purchase and pay off your car before rolling into a new one you now have that vehicle to use as an asset to move into a more expensive car at the same price as what you were paying before. The biggest difference in the two strategies is cars a a depriciating asset vs. real asset is almost a guaranteed appreciating asset.

[Merusk]

Hehe I live less than a mile from a beach as well but I wouldn't go swimming in Lake Erie in anything short of a biohazard suit.

Yeah I originally from Lorain County, North Ridgeville and we'd joke about Lake Erie, too.  Thenl I moved to Cincinnati. Let me tell you, even though the Cuyahoga caught fire that one time, it's got nothing on the Ohio these days. (And damn do I miss the Metroparks)

[Morfiend]

Hehe I live less than a mile from a beach as well but I wouldn't go swimming in Lake Erie in anything short of a biohazard suit.

My beach.

[Miguel]

For that price he got about 1500 square ft home, with 3 bedrooms, 2.5 bath, and a small backyard. Prices are completely out of hand here in Orange county.

I would *kill* to pay 575k for that kind of house.

Here in the Silicon Valley (just south of San Francisco), I recently looked at a 800sq ft 2 bedroom house for $625k, and it was over 50 years old.  Complete shitholes in San Jose are going for $700k to $800k in the ghetto, and in nicer parts of Palo Alto or Mountain View 1 million gets you a 3 bedroom 25y+ fixer upper.  There's a nice four bedroom just two houses down from my rental apartment that just went on the market at 1.3 million.

I'm quickly realizing that at these prices, you have to be making $250k a year just to sustain the mortgage payment, property taxes, and insurance which I don't think I'll be doing anytime soon.

Those who can afford to buy should feel blessed! ;)

[Polysorbate80]

Advice #1:  Pay to have a camera run down your sewer line.  We've bought two houses, both turned out to need repair to the line.  Fortunately, we learned from the first one and caught the second one before the purchase.

Advice #2:  Move *everything* when you're having the inspection done.  Anything that's left behind by the owners probably isn't sitting there because they're lazy, it's there to hide that crack/hole/gaping portal to hell.

Advice #3:  Expect to have plenty of "WTF?" moments when you discover previous remodellers have done something mind-bogglingly stupid.  Again.

[Signe]

It's true.  A relative of mine bought a house a couple of years ago.  He began having terrible migraine headaches but the doctor's couldn't figure it out.  It turns out that whoever had installed the hot water heater and system didn't bother to put in vents to the outside or something.  He was being poisoned.  He actually landed in the hospital several times.  Recently he had a whole new heating/ac systems installed.  This is good because that's whose house we're going to live in while he's away in Japan.  You really do have to make sure the inspector inspects EVERYTHING.

[Abagadro]

Stuff

That is just plain crazy.

[UD_Delt]

Here in the Silicon Valley (just south of San Francisco), I recently looked at a 800sq ft 2 bedroom house for $625k, and it was over 50 years old.  Complete shitholes in San Jose are going for $700k to $800k in the ghetto, and in nicer parts of Palo Alto or Mountain View 1 million gets you a 3 bedroom 25y+ fixer upper.  There's a nice four bedroom just two houses down from my rental apartment that just went on the market at 1.3 million.

Here's what you get in my city at the same price:
http://www.realtor.com/FindHome/HomeListing.asp?snum=33&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=300000&mxprice=99999999&js=off&pgnum=4&fid=so&stype=&mnsqft=&mls=xmls&areaid=76004&poe=realtor&ct=Lakewood&st=OH&sbint=&vtsort=&sorttype=&typ=1&x=33&y=0&sid=06DC64E161CDC&snumxlid=1057288195&lnksrc=00002


This is more like what we'll be looking at in a year or two:
http://www.realtor.com/FindHome/HomeListing.asp?snum=59&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=150000&mxprice=200000&js=off&pgnum=6&fid=so&stype=&mnsqft=&mls=xmls&areaid=76004&poe=realtor&ct=Lakewood&st=OH&sbint=&vtsort=&sorttype=&typ=1&x=37&y=6&sid=06DC6619DE91C&snumxlid=1057762715&lnksrc=00002

[Signe]

That second house is cool.  It looks like a cuckoo clock!

[Hanzii]

-Property values tend to be constantly on the rise.  In some places, the rate is so fast as to be ridiculous.   RIDICULOUS.  An interesting truth with this is that the rates of increase in value are probably higher near large cities, and lower as you get further out into the suburbs (I am sure there are exceptions).
-Interest rates fluctuate.   More than likely, there will come a point where rates are lower than what you are currently paying on a loan.

I bought my house in October 2005 with 100% borrowed money. $250.000 at 4% interest and $85.000 at 7%.
Prices here (the capitol) are crazy and we made a good deal on the house. We spent around $10000 fixing up essentials and putting in better heating. In march we got an appraisal and refinanced the house to get rid of the 7% loan. It was now valued (conservatively since we weren't trying to sell) at $385.000.

Sure I won't realize that profit as long as I try to get bigger/better housing within this area and I'll even have to borrow even more, if I try to move closer to my work. But once we get old and move to a condo or to the countryside, we can cash in (my parents house in the country which is roughly 5 times as big with a huge garden - ours is the size of a postage stamp - is valued at $133000). Of course this scenario only works if prices don't drop, but I bet that it would take a nuclear strike or severely rising sea levels to provoke a price drop in this area. Prices are levelling up - my equity is only increasing  about 15% since march... but that's still more than taxes and interest on the loans.

And with rising interest rates my 4% loans increase in value and by converting them, I can pay greater interest (6%-7%) but chop off more than $15.000 of the money owed. The trick is of course to do this just before interest starts falling again and then reconverting once the cheaper 4-5% loans are offered again. But predicting interest rates is the same as gambling.

[Strazos]

Don't you have to pay some sort of fee to refinance?

[Hanzii]

Sure, about $1500 a pop, so you shouldn't do it all the time, but with the current market near Copenhagen I know people that refinance yearly and still makes a profit.
If I refinance right now, I'll owe the bank $13.500 less but pay $1000 more each year in interest - but I think the interest will rise more before dropping, so I'm biding my time.

But if you get on the market here now, you'll make money. Not as much as I did, but still more than the average stock investment and with much less guesswork involved. If you bought a house in or near Copenhagen 10-30 years ago you'll be selling with $250.000+ profit if you move away.

Just to show how crazy the market is: Our secretary bought one half of a then expensive villa midtown for $365.000 five years ago. She sold it last winter for $950.000 and bought a smaller house closer to work, that she dind't have to share and still had a cool million DKR in cash ($166.000) left. Tell me again how that is not an investment?
And the markets are similar close to most bigger European cities - Copenhagen might be the craziest, because we have no room to build and society don't want highrises in our historical city, but buy a house in/near London, Berlin, whatever and you have to be stupis not to make a profit.

My advice to any young person  in such an environment. Buy! Buy whatever you can afford as soon as you can afford it. Borrow all the money if necessary, but buy now. Upgrade later. And pay waht it costs to have a professional check out the house before you can (if you got the time - the market is slowing down, but when we bought our house, whenever we wanted to see a house a second time, perhaps with a builder friend in tow  it was allready sold).

[Yegolev]

I don't plan to sell, so it's not an investment so much as a financial drain.  If you want to invest in land, do it around Atlanta.

I never planned on selling either.  Life sucks, things change.  Trust me, it is an investment.

I do agree, but it's small comfort come tax time.  On the flip side, were I to sell my house and any land my wife inherited, I could get that condo in Tokyo I always wanted.

Here in the Silicon Valley (just south of San Francisco), I recently looked at a 800sq ft 2 bedroom house for $625k, and it was over 50 years old.  Complete shitholes in San Jose are going for $700k to $800k in the ghetto, and in nicer parts of Palo Alto or Mountain View 1 million gets you a 3 bedroom 25y+ fixer upper.  There's a nice four bedroom just two houses down from my rental apartment that just went on the market at 1.3 million.

Why do people live in that state?

[ClydeJr]

MrsClydeJr and I are finally getting out of an apartment (lived there for 3 years) and are getting a house. We looked at a bunch of existing homes but just couldn't find anything we liked. We decided to go the "build" route instead. Its not a custom house, but we were able to pick out the options we wanted like counter tops, tile, etc. It has a huge kitchen and pantry which the wife is really excited about. The entire house will be prewired as well. Here's our house so far:



Its cool to watch how they slowly turn that piece of ground into a house. The really nice thing is there's several houses around that are in various stages of being built. We can walk into those and see how they are planning on doing our home. There's not much of a yard which I'm torn about. On one hand, I'm glad to not have a lot to lawn to maintain. On the other hand, it would be nice to have a bigger yard to enjoy, maybe put a small vegetable garden in. If we do become blessed with some rugrats in the future, I definitely want a bigger yard for them to play in.

[Yegolev]

Lawns are overrated.  If my wife would let me, I'd get a bunch of chickens and sweep it instead of mow it.

[Polysorbate80]

Chickens are annoying; just pave your yard.  Or if you have kids, put down some nice sharp gravel for them to play on :)

I couldn't ever buy one of the newer homes around here simply because they've got postage-stamp size yards.  Fortunately, I have a father-in-law (a farmer) who's willing to sell us 10 acres for a price that's low enough to almost make me feel bad for paying it.

Now I just need some kind of eeee-vil plan to keep my mother from trying to move in with us after it's built; she's mean enough to keep living long enough to do that no matter how long I take to build it...any suggestions?

[Rasix]

Lawns are overrated.  If my wife would let me, I'd get a bunch of chickens and sweep it instead of mow it.

I don't fix the flaws in the chicken-wire barrier near the base of my fence (it's wrought iron and blocks, big hole which animals can get through) and just let the desert rabbits eat my lawn. They keep it pretty trim and they're cute.. even when they dig holes under my lemon tree to rest in. 

[Lantyssa]

Now I just need some kind of eeee-vil plan to keep my mother from trying to move in with us after it's built; she's mean enough to keep living long enough to do that no matter how long I take to build it...any suggestions?

Don't giver her your address.

[Merusk]

You live in Texas, Clyde? That looks like any of the hundreds of subdivisions I used to see going up around Dallas. 

 The really fun part about those subdivisions was knowing that the couple who was building their $500k plus house with the jacuzzi tub and large clear-glass picture window above it was going to be 15' from the neighbor's living room window.  That never seemed to sink-in to people's heads until they actually moved-in.

[Yegolev]

Now I just need some kind of eeee-vil plan to keep my mother from trying to move in with us after it's built; she's mean enough to keep living long enough to do that no matter how long I take to build it...any suggestions?

Our current tactic is to talk up homes in other areas as a pre-emptive strike.  Truly, there are nicer places to live than next to me if you are nearing retirement.

[Hanzii]

[quote author=ClydeJ. There's not much of a yard which I'm torn about. On one hand, I'm glad to not have a lot to lawn to maintain. On the other hand, it would be nice to have a bigger yard to enjoy, maybe put a small vegetable garden in. If we do become blessed with some rugrats in the future, I definitely want a bigger yard for them to play in.
[/quote]

We movbed from a 2nd floor apartment to our current house with a postage stamp size lawn - it's the perfect size with 2 small children and me working/commuting 10 hours a day. There's a sandbox, some grass, BBQ and chairs, and room for a inflatable pool in the summer and not much maintenance. When the oldest is 10, I might start looking for somewhere with room for a treehouse, but until then it's really perfect.

Out front I have parking for three cars and until recently only owned bikes - I'll turn some of that into a plot for herbs and all will be perfect (on my second floor balcony I have a tiny greenhouse with a my chillies). I don't need any bigger garden.

[Polysorbate80]

Now I just need some kind of eeee-vil plan to keep my mother from trying to move in with us after it's built; she's mean enough to keep living long enough to do that no matter how long I take to build it...any suggestions?

Don't giver her your address.

Heck, I'd do that now if my father weren't still alive; he's cool enough to mostly balance out my mom.  Unfortunately, barring any freak meteor strikes she'll outlive him.

[Lantyssa]

[Polysorbate80]

Can you arrange that for me? :)