General > General Technical Chat
First house for a young man
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tszaboo:

--- Quote from: blueskull on July 03, 2017, 10:26:42 pm ---
--- Quote from: nctnico on July 03, 2017, 10:19:47 pm ---
--- Quote from: blueskull on July 03, 2017, 10:17:15 pm ---
--- Quote from: cdev on July 03, 2017, 10:03:25 pm ---I would not buy a townhouse or in a neighborhood ruled over by a "homeowenrs association". Ive heard a great many horror stories about them. Also, the quality and integrity (or lack of it) of local government varies a lot from town to town.

--- End quote ---
A real house here would be 300k+, still with HOA. Unless you build a house in a remote place, or buy a house built decades ago, you simply don't have non HOA managed houses, let along townhouses.
My primary goal is to get a house that doesn't need much of my attention, rather than a house I need to work on it every quarter, if not month.

--- End quote ---
Then put the money in an investment fund with a good spread of risks and rent a home. With HOA you will be worse off then renting. HOA is what we would call 'a trap for young players'.

--- End quote ---

The park I was looking at is not a rental park -- the construction company doesn't own houses and rent them. They sell them all, to actual buyers.
I am estimated to spend $180/mo on HOA fees ($100/mo plus $240/qt), plus $1.9k property tax, $3k utility and $1k on repairing and insurance that's $8.1k. My rent is $6.7k, so by owning a house, as long as I can rent only 1 bedroom, I still save more money.
In fact, even if I along live in it, by conserving energy and water, I can still break even.

--- End quote ---
So you want to invest 300K of your own money to save what? Few K a year? What is the ROI of that, 60-80 years?
If you rent out a room. IDK about you, but I dont want to live with someone in a subrent, not for a long time anyway.
If you want to rent out places, make a limited liability company (so you dont play with your own reserve) and buy a bunch of places and grab as much loan as you can. And buy a house with mortgage. Ask anyone who ever invested in real estate about your plan.
rstofer:
The price question comes down to whether or not we are in another 'bubble'.  Sure, prices are going up but they're coming off some pretty ridiculous lows.  In many areas, the prices are still 30% or more below the 'frothy' highs.

In the days of the real bubble, everybody bought a house with the intent to sell it later for more.  But not much later because they had ARM loans with increasing interest rates.  As much as the buyers were greedy, the banks were worse!

The "greater fool theory" didn't hold up and there were no buyers and the loans were getting more expensive and people just couldn't afford the house.  Had they been realistic, they couldn't afford it in the first place.  Then the government doubled down and cancelled the taxes on the 'gains' of the short sales.  This allowed everybody to just walk away without owing tax on the mortgage amount minus the short sale price.  Since there was no penalty, a lot of people walked away.

The idea of Freddy Mac and Fanny Mae making risky loans started under Reagan and later spread through the entire banking industry and we all know how that worked out.

We are still seeing ARM loans and these simply shouldn't be allowed.  Even Greenspan made comments about the risk of these loans.

In the end, there's only so much dirt and we're not making any more (except China and Singapore).  Owning a piece of it is generally a good thing.  For one thing, you build wealth (equity) at a far better rate than you can get on most low risk investments.  In '86, I bought a small house for about $80k.  In 2003 I sold it for $290k so I made a decent return.  In 2006 it was offered back to me for $130k so timing is everything.  The point is, I had a place to live for 17 years, no HOA, virtually no maintenance and I made a few bucks out of the deal.

So, look at buying the more expensive house but try to make sure prices haven't topped out.  I live in California and prices never top out - well, hardly ever.

I didn't play with the numbers but would the house be self-supporting if you had to leave the area and selling wasn't an option?  It's one thing to take a paper loss, that is, losing theoretical equity but it's quite another to lose real money!


rstofer:
Incidentally, I just checked on Zillow (real estate prices) and that house I bought for $80k in '86, sold for $290k in 2003, got offered back for $130k in 2006 (or so) is now estimated at $360k.

It's a tiny house at just 952 square feet with 3 bedrooms and 1-1/2 baths.  It's 50 miles from Silicon Valley and the commute is UGLY.  It wasn't bad back in '86 but I sure wouldn't want to drive it today.

No HOA, no amenities except a small park a block away.  But the prices in Silicon Valley are even more insane so that pushes up prices in neighboring areas.  If 50 miles can be considered a 'neighboring area'.

What do I know?  When I moved to Silicon Valley in '76, I thought $50k for a house in Milpitas was insane!  Now even the tract houses are more than $900k.

https://www.zillow.com/milpitas-ca/houses/

Palo Alto is a little closer to the action:

https://www.zillow.com/homes/palo-alto-ca_rb/

Some of these are ordinary tract homes - nothing special.  Some aren't much larger than the crackerbox I had.

Check out this duplex:

https://www.zillow.com/homes/for_sale/Palo-Alto-CA/pmf,pf_pt/house_type/2099372804_zpid/26374_rid/globalrelevanceex_sort/37.538043,-121.857262,37.225407,-122.413445_rect/10_zm/

Like every market, there are 'corrections' but if the owner can just hold on, everything will work out ok.  It may take several years but real estate will recover in most areas.  Particularly areas with education, technology or industry.

rstofer:

--- Quote from: cdev on July 04, 2017, 01:14:27 am ---What would happen in this world if suddenly, we all started caring about one another's countries, and trying to improve the quality of life for each other, as well as ourselves?

--- End quote ---

It's a zero-sum game!  One person's gain is another person's loss.  Assets in one hand, liabilities in the other.
Only the best and brightest win!
tszaboo:

--- Quote from: rstofer on July 04, 2017, 03:38:07 pm ---
--- Quote from: cdev on July 04, 2017, 01:14:27 am ---What would happen in this world if suddenly, we all started caring about one another's countries, and trying to improve the quality of life for each other, as well as ourselves?

--- End quote ---

It's a zero-sum game!  One person's gain is another person's loss.  Assets in one hand, liabilities in the other.
Only the best and brightest win!

--- End quote ---
No its not.

See, if wealthy individuals would stop the over-consumption, we would all be happier.
I'll go, get my pitchfork.
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