A house seems like a horrible investment

Trump2020OP-the real one........ wrote:

Reasons why Jamin needs a large house:

Plenty of rooms for all his anxieties.

Plenty of closets for all his fears.

Plenty of rooms for his Ukrainian wife's relatives that she forgot to tell him about until after they married.

Special quiet room needed so he can troll without wife's nagging.

Special room with couch he can sleep on frequently when wife is not in mood.

S.O.S.W.P.

This is not relevant to whether he should rent or own this house.

Jamin, stick with trying to break 4:16 next month and being a social retard, but you are clueless in your assertion.

By stating ‘income’ from stocks, you are not referring to dividends, which are taxable just like interest is, because of your return expectations. Thus you must be referring to capital appreciation.

However, for this to be ‘income’ as you state, then this means you must sell the stock(s).

Capital gains fool.

Not every house appreciates like that. Stock Market is the best way to create wealth for the long run.

Again, you haven't considered leverage. You have to weigh the return on X in equity vs 10 times X in property bc it is leveraged. Nobody is loaning me 900k to add to my 100k capital for stock investments. But, I can borrow 900k on my 100k for a house purchase.

Also, people will always need a roof over their heads. I feel like the demand isn't going anywhere barring massive population decline.

houseinvestt wrote:

So I'm curious if someone can explain to me if I made a good or bad investment?

I just bought my house outright for cash $190,000 and put about $30,000 into improvement. It is probably only worth $200k but I'm not planning on selling it.

My property taxes are around $2000. I live in the mountain-west where it is still reasonable and is actually a pretty nice place to live.

I have to live somewhere. I didn't get mortgage this time for fear of the market and I had some cash sitting around.

Since the home is paid off you should rent it out and use the rent payments to fund the purchase of a second property and that will help you get to owning you're second property quicker and propel you onto buying tertiary properties.

This post smells suspiciously of !!!COMMUNISM!!!

What's your youtube?

jamin wrote:

"I just spent $60k replacing the roof on my AT&T stock," said no one ever

AT&T stock lost 28% of its value in 2018.

"Jamin has a great point," said no one ever.

UnregisteredUsername wrote:

jamin wrote:

"I just spent $60k replacing the roof on my AT&T stock," said no one ever

AT&T stock lost 28% of its value in 2018.

"Jamin has a great point," said no one ever.

I just spent 60 seconds with a girl. Said Jamin never.

whateverdude11 wrote:

Twenty years ago I bought my house for 119,000. Today it is worth 800,000. Horrible investment

Congrats, so you either:

A.) Sell, and move somewhere cheaper so you can buy your next house in cash and invest the rest

B.) Sell, but downsize so you can still live in the same location and reap some of the benefits of appreciation

C.) Stay put, but swing major BDE because you have a house worth 800k

No matter what, you don't have ~680k in the bank until you sell. Then you have to figure out where to live, because as you know, a starter home in your location now costs upwards of 800k.

jamin wrote:

I feel like everyone here is repeating the same mantras and never understood my original points.

* The debate isn't whether $X towards rent yields more return than $X towards a mortgage. Obviously $X towards rent yields nothing. Because a mortgage plus taxes, maintenance, insurance, etc. is about $2X for a comparable house or apartment, the debate is whether $X towards rent plus $X in the market is better than $2X towards the total cost of a house.

Yes, your logic makes sense if your very questionable $2X-to-buy-v.-assumption holds. An assumption of $1X would be more sensible.

Where I bought it is about $0.8X.

And you never acknowledged the obvious issue of leverage that someone above mentioned. Or the tax-free profit potential.

I know how to do the math, and on my three home transactions I made a 200% return in 7 years (tax free after commissions, taxes, expenses), a 7% return in 4 years, and a 40% return in 6 years.

The calculations above come from: down payment + all upkeep and improvements / change in price - commissions + additional equity.

My monthly payments including property taxes, insurance, equity, and interest was ALWAYS lower than comparable rent. Significantly.

ck out... JL Collins...

https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/

1%er wrote:

1%? No.

3-4% is right range. You obviously forgot all the little things that add up. Most people just remember the large number expenses.

You are suggesting that I am somehow overlooking $6k-9k worth of maintenance expenses per year for 15 years.

Um, no.

When comparing owning a home to renting plus investing the difference between rent and mortgage, taxes, maintenance, insurance, etc., the investing will always out perform home values because you get the benefit of compounding interest. My 401k grows well because I get nice dividend checks at the end of each year that are reinvested in stocks that grow. That does not happen with real estate values unless you leverage equity to buy other properties. But very few people have the means to do that.

Where home ownership wins hands down from an overall financial perspective is if you pay off your home and own it outright. At that point, taxes, maintenance, etc. is usually half the cost of renting. Also, rent goes up, but mortgage payments stay flat. The bet against inflation on mortgage payments can really pay off after 15-20 years.

This logic makes sense. I'll go ahead and return the ~$250,000 I've earned tax-free in real estate.

jamin wrote:

Storehouse of wealth wrote:

A lot of people's 401k's dropped 20% in value since the start of the year. Much of it in the past month. When does your house lose that kind of value? Never.

Your house doesn't have to lose value for you to lose money. You are losing money all the time. If the price stagnates for 10 years, as is common, you are paying 40% of the value of the house during that time. If your house is $1 mil you lose $400k to taxes and maintenance. If your 401k stagnates for 10 years you don't lose any money.

Do you know that you can deduct property taxes?

Also, $400k in 10 years in property taxes and maintenance is laughable, even on a $1MM house.

Precious Roy wrote:

Also, rent goes up, but mortgage payments stay flat. The bet against inflation on mortgage payments can really pay off after 15-20 years.

But taxes in absolute terms go up proportionally to the house price, usually more than proportionally because the tax rate gets raised over time. Many people end up taxed out of their house after they've paid off the mortgage.

jamin wrote:

Precious Roy wrote:

Also, rent goes up, but mortgage payments stay flat. The bet against inflation on mortgage payments can really pay off after 15-20 years.

But taxes in absolute terms go up proportionally to the house price, usually more than proportionally because the tax rate gets raised over time. Many people end up taxed out of their house after they've paid off the mortgage.

So totally right! I forgot that landlords don't have to pay taxes, and even if they did theirs don't go up, and even if they DID go up a landlord would NEVER pass that cost onto the renter.

Jamin! Jamin! Jamin!

King!

You don’t buy a house as an investment. You buy it to live in.

You lock in the “rent” (to the bank) for the term of the loan. You own it at the end. When you retire you can live off your SS/Pension, 401k & savings “rent free.”

You lock in property taxes at the purchase price of your house in CA.

Where I live rent went from $2400 in the downturn of 2008 to $3850 in 2018. Your mortgage won’t do that.

Landlords are awful. Mine took the whole $3500 deposit to “replace” a floor he installed wrong then sold the house without repair.

Just own bro. No baller rents.