patrick.net

You should change your username to "waitingtosell"

bubblesitter says

You should change your username to "waitingtosell"

I like prayingtodump.

:)

bubblesitter says

You should change your username to "waitingtosell"

Yeah, I thought about that. Too lazy, but I need to do so.

New Renter says

I like prayingtodump.

Me too. Funny stuff.

Peter P says

But now every little creaking or dripping noise worries me. Could it be a leak?

Instead of dealing with a landlord, I have to deal with the plumber/contractor. Definitely more stressful than renting.

There's a difference between needs repair, and not working.

Many things around the house last longer in a needs repair state, than they do in a pristine functional state. It's like if you want a repair to last for ever then repair it with duct tape, string, and use generic hardware and Dremel.
If you want to repair things in predefined intervals, then use OEM parts and do it the RIGHT way.

But when it does come to things you must replace, that you can't screw around with and you must use the best quality of materials and workmanship. Roof, Plumbing and Electric fits in that category.

If you buy quality and have it done right, then any three of those repairs should only be a once in a lifetime repair, for the time that you own your home.

CaptainShuddup says

But when it does come to things you must replace, that you can't screw around with and you must use the best quality of materials and workmanship. Roof, Plumbing and Electric fits in that category.

Yes Captain, but I worry most about the BIG things like behind-the-scene plumbing or foundation.

A water heater costs quite a bit, and it only lasts a few years. I don't want to wait until it leaks before I replace it. (Lo and behold, my neighbor's water heater bursted open suddenly one day.)

Peter P says

A water heater costs quite a bit, and it only lasts a few years.

A good quality 12 yr water heater runs about $600. Installation is not difficult and can be done with basic tools.

http://www.homedepot.com/p/Rheem-Performance-Platinum-38-gal-Tall-12-Year-40-000-BTU-Energy-Star-Natural-Gas-Water-Heater-XG40T12DM40U0/204318409?N=5yc1vZc1tzZ2bcu0t

By my math that breaks down to $50/yr. a bit more with maintenance - yes they do need maintenance:

http://www.waterheaterrescue.com/pages/WHRpages/English/Longevity/water-heater-anodes.html

Replace the sacrificial anodes on their schedule and the heater might outlive you.

Oh and be careful not to directly connect copper to galvanized plumbing, and make sure there is appropriately piped drain should it ever fail.

Definitely one of the cheaper home maintenance items.

Next!

New Renter says

A good quality 12 yr water heater runs about $600. Installation is not difficult and can be done with basic tools.

Too bad I needed the power-vented variety. It is closer to $1200-$1500. :-(

Peter P says

New Renter says

A good quality 12 yr water heater runs about $600. Installation is not difficult and can be done with basic tools.

Too bad I needed the power-vented variety. It is closer to $1200-$1500. :-(

Well here is a NG powered one for $825 (with free shipping):

http://www.supplyhouse.com/AO-Smith-GPVT-40-40-Gallon-50000-BTU-ProMax-Power-Vent-Residential-Gas-Water-Heater-NG

Only a 6 yr warranty but I'm not sure that really means much anyway.

Regardless this is all (hot) water under the bridge. Replace the anodes on schedule, and make sure the installer didn't mix metals on the pipes and you should be good for many years.

My jaw kept dropping lower with every response to this post, chiming in as if they all had a clarion vision of the logic in the winning economics you had when you bought.

Thanks for bringing things back to earth, JH. Volatility in house prices is a bust for most and boon for some, particularly those who don't have other factors such as job opps, growing or shrinking families or other inconveniences called life getting in their way.

Not to be sour grapes, but these circumstances that you had come all too infrequently. Glad waitingtobuy finally worked for you "waitingtobuy."

What would you do if your ability to buy happened now and not in 1999? Are you still bullish? (Forgive if you've answered this later down in thread, I haven't read those yet) JH says

At least you admitted luck and timing. Otherwise this is a dumb post. Whichever idiot you sold to in 2008 is on patricia.net telling a very different story. Everyone who bought in 1999 is attempting rape when they put their house on the market today. Confuckinggrats for being old enough to buy then. And everyone who either bought a CA house or AAPL in the last few years is orgasmimg every 5 minutes and showing the world. Your 2 experiences occurred in 2 of the greatest run ups in home values EVER. If you think this is normal and your home is going to continue skyrocketing in value you are out of your mind.

I bought my first home in 1999 for $329K. This house I bought three years ago for $799K.

Like I said, it worked for me. Even if my house's value had not increased one penny, it still would have been a boon at the price we paid, with interest rates as low as they are. Otherwise, I would have had to settle for renting a lesser home for the same I pay in my mortgage and maintenance.

Renting a place like ours costs about $3800-$4000. My mortgage is $3077/month, with property taxes being $850 or so. All of the property taxes come back to me in the form of mortgage and property tax deduction, which is much more than the standard deduction. So I am paying $3077 to live in a $1M house. I also have insurance for our two on a lot which is $600/yr. Sure, I put in about $20,000 in renovations (hot water heater, dishwasher, stove, painting, and flooring), which brings it up about $500 if I sold now, which I wont. That stuff lasts at least 8 years, so figure $100/month.

I look at the $1000 in monthly principal payment as forced savings that I will get back one day, or my kids.

Therefore, my choices are $4K/month in rent, or $2100/month in owning. Not counting any increase in property value.

Next June, it will be 4 years here. Compare this to the 4 years paying $3800/month in my last rental from 2007-11, and there is no comparison. I left with nothing to show for $180K, part of my security deposit taken by an unscrupulous landlord (who I am just now taking to small claims court together with the successive tenant), and the choice is obvious which I would take.

Would I buy the same $1M home now? If I could qualify (and I cant now), then maybe, but probably not. That window has closed for me. It is too close to break even for me to feel comfortable.

In your neighborhood, maybe renting is less, a lot less, than owning/renting from the bank, the same place. Here, it isn't. You have to work the numbers, and save for a down payment if you decide to purchase. To say, "Buying is always a good investment", or "renting is always better", is not true.

Timing and luck, as well as some judgment on which neighborhood to pick, is everything in housing, just like it is in the stock market.

Waitingtobuy says

Next June, it will be 4 years here. Compare this to the 4 years paying $3800/month in my last rental from 2007-11, and there is no comparison.

I have no other conclusion than that you are completely blinded by kool aid intoxication. You are just repeating the same numbers again. Did you read anything anyone else posted?

The people who bought your first house from you in 2008 have nothing to show for the over $300k they spent on it from 2008-2014!!! FOR THE SAME HOUSE!!!

You may think that patnet is full of bitter grizzly bears. Maybe, just maybe, it is full of people who can do math. Specifically, addition and subtraction.

Peter P says

A water heater costs quite a bit, and it only lasts a few years. I don't want to wait until it leaks before I replace it.

The guy I bough the house from bought a monster of a water heater. It's about 7 feet tall and about 3 feet in circumference. I just hope it doesn't go through the roof one day. It will leave one hell of an exit hole. Plus it will put out of a few grand to have that one replaced when that day does come.

I just try to hope that I have money to cover these things as they come up. All my life I've lived with a "If it's not one thing, then it's another" mentality. Something always comes up. It just sucks when you're not prepared. But I refuse to live my life worry about expenses that I haven't inured yet.

CaptainShuddup says

Peter P says

A water heater costs quite a bit, and it only lasts a few years. I don't want to wait until it leaks before I replace it.

The guy I bough the house from bought a monster of a water heater. It's about 7 feet tall and about 3 feet in circumference. I just hope it doesn't go through the roof one day. It will leave one hell of an exit hole. Plus it will put out of a few grand to have that one replaced when that day does come.

I just try to hope that I have money to cover these things as they come up. All my life I've lived with a "If it's not one thing, then it's another" mentality. Something always comes up. It just sucks when you're not prepared. But I refuse to live my life worry about expenses that I haven't inured yet.

Pay attention to the anodes, make sure there are no mixed metals in the plumbing and you should be good for a long time.

Oh and install a good whole house water filter at the main input to the house if you don't already have one, particulate filter at a minimum, but I recommend adding a charcoal filter as well to remove organics.

JH says

The people who bought your first house from you in 2008 have nothing to show for the over $300k they spent on it from 2008-2014!!! FOR THE SAME HOUSE!!!

I read everyone's posts. What are you talking about?

The people bought our house for $620K in 2008 and sold it for $699K. They likely spent about $10K in maintenance and insurance, etc over the past 6 years (I went in and saw very little changed, other than a new fridge and dishwasher). We sold them a house with very little to do.

Let's say after the $10K in maintenance and improvements, property taxes (they break even after deductions), and 5% real estate commission, escrow, transfer taxes, etc, they clear $30K from the sale price. Over 72 months, that is $415/month.

Their mortgage was likely in the $2500/month range at 4.5%. Of that, approx $775/month went to principal. So after the $34K in profit and principal paydowns, that's $2500-$775-$415= $1310/month.

I rented the house out from 2007-2008 for $3400/month. Let's be conservative and say $3200/month is typical rent in the area.

So $3200-$1310= $1890 is what they saved monthly. They would have spent $230K in rent over seven years @$3200/month. This assumes very little opportunity cost with their down payment.

Ask me again about the $300K please. Enlighten me on where you get that amount. (and by the way, like us, according to their agent, they used the proceeds from the sale to buy a bigger place in town. Remember, unless they tapped their equity with a HELOC, they got their down payment and principal payments back)

You do realize, unless you live with mommy and daddy, that you have to pay rent in this life. The choice is renting from a landlord, or putting down money and renting from the bank. Or buying with no mortgage (good luck in our area)

I've been accused of a lot of things. Being bad with math is not one. I'm what you call a supersaver for retirement, plan to retire at 55, and have nearly both kids college expenses paid for in their 529 plans, and the first won't graduate high school for 7 yrs. All with a salary between me and my wife of $120K/yr. The only debt I have is my mortgage, and I will likely downsize to live overseas in my wife's home country.

New Renter says

Replace the sacrificial anodes on their schedule and the heater might outlive you.

Oh and be careful not to directly connect copper to galvanized plumbing, and make sure there is appropriately piped drain should it ever fail.

Uhhhh... Will you come down south and inspect our next house before we buy?

You are making up numbers, and you come up with the numbers through koolaid intoxication. When prices are high and easy (free) money is to be made, everyone thinks this way. It is very reminiscent of 2005.

You didn't read my post about the cost breakdown for the people you sold to, or completely ignored it in favor of your own numbers, which are not possible. they are too low, but I"m not going to waste my time rebutting them again, since I already did. For someone who has owned twice (at least), it is surprising that you don't understand the cost of ownership. But with the appreciation that dropped in your lap, I guess I can see why.

Waitingtobuy says

You do realize, unless you live with mommy and daddy, that you have to pay rent in this life.

And here it is. Exactly why I don't respect or identify with older Gen Xers. The condescending attitude, of "I got mine, you have no idea how to live life because everything has been handed to you." Couldn't be farther from the truth, but believe what you want.

lahossain says

My jaw kept dropping lower with every response to this post, chiming in as if they all had a clarion vision of the logic in the winning economics you had when you bought.

Yes, there is a clarion vision: buy when low and sell when high. Oh, and it really helps when you have the largest bubbles in the history of the American housing market (OPs first house) AND when that bubble pops, the government enacts policy that prevents a reversion to mean and artificially inflates values (OPs second house). I'm sure we could glean a lot of valuable information from these posts as to when the next six year period of mania will set it to make sure we are all on board. Because, really, when gambling on markets, there are no losers...

JH says

Our friends who bought in 2000 were able to put 20% down (approx $70k). Well, since our wages were not much better in 2008, we also managed to put $70k down, or 10%. That made our monthly payment $5k, which was about $1k more than renters were paying at the time in this LA beach community, and it would have only been $4k if we had 20% down.

I read your sarcastic post. Your numbers are way off. $5K on a $550,000 loan? Which interest rate are you using? 10%? The mortgage is just under $2800/month.

JH says

You are making up numbers, and you come up with the numbers through koolaid intoxication. When prices are high and easy (free) money is to be made, everyone thinks this way. It is very reminiscent of 2005.

Your post made up numbers. I used this thing called Excel and a mortgage calculator. I gave you real world numbers. You gave me prose and mockery. Your numbers are way off. I even proved to you that even in your house doesnt appreciate, depending on rents, you could still be better off owning. Low interest rates work this way.

Are you going to also tell me this image of the home is fake too?

JH says

Confuckinggrats for being old enough to buy then.

JH says

And here it is. Exactly why I don't respect or identify with older Gen Xers. The condescending attitude, of "I got mine, you have no idea how to live life because everything has been handed to you." Couldn't be farther from the truth, but believe what you want.

When all else fails, make sure you play the age card. You are the one who twice mentioned age. I made zero comments telling you how to live life. I said unless you (read anyone) lives with their parents or family, you have to pay rent or buy.

Again, the point of the OP, and every other one, is that sometimes it is better to buy than rent. Other times it is not. Timing and luck are a part of it, as are running the numbers. That's it, dude. For some reason, you went in with guns blazing, like I was attacking you personally. It isnt an attack on you or anyone else.

One last thing...Im one of the last guys you can accuse of "I got mine". I spend a ton of time serving my community.

Waitingtobuy says

$5K on a $550,000 loan?

Do you know they put down $140k? Twice as much as you did 6 years before that? If they did, that was painful, but they are paying $4k monthly. If they put down as much as you, they are paying $5k monthly. Now my monthly includes everything. I know, I can find the calculators that only include P&I. But those ignore some of the real costs of ownership, like insurance and taxes. Some of those may be neutralized depending on your tax situation, but that is case by case.

Waitingtobuy says

I even proved to you that even in your house doesnt appreciate, depending on rents, you could still be better off owning.

And I "proved" to you that even if your house DOES appreciate, you could lose your shirt.

Waitingtobuy says

Low interest rates work this way.

Yup, low interest rates work to inflate home prices. Think 2007 and 2014, for example.

Waitingtobuy says

When all else fails, make sure you play the age card.

Is it a wash if we both play the same card?

JH says

Just think...if we had taken that $70k downpayment, and the extra $1k per month and pumped it all into AAPL stock over the past 6 years, the dp would be worth $550k and the extra $1k would be $200k. Now THAT is profit. I'm going to tell all my friends about my luck, jump into AAPL now, and expect to become filthy rich in 6 years. Well, once I get my hands on $70k again, that is.

You forgot capital gains taxes at 15%-20%. And where did you live that entire time for free? Didn't you pay $230K in rent? That $480K in profit is now more like $150K.

(And yes, I know this is sarcasm).

JH says

Do you know they put down $140k? Twice as much as you did 6 years before that? If they did, that was painful, but they are paying $4k monthly. If they put down as much as you, they are paying $5k monthly. Now my monthly includes everything. I know, I can find the calculators that only include P&I. But those ignore some of the real costs of ownership, like insurance and taxes. Some of those may be neutralized depending on your tax situation, but that is case by case.

No, you are still off. Check out the screen shot included. Downpayment of $70K. 1.25% property taxes and $1200/yr in insurance, which is high. I will even give you PMI. Still not $5K/month.

Waitingtobuy says

JH says

Just think...if we had taken that $70k downpayment, and the extra $1k per month and pumped it all into AAPL stock over the past 6 years, the dp would be worth $550k and the extra $1k would be $200k. Now THAT is profit. I'm going to tell all my friends about my luck, jump into AAPL now, and expect to become filthy rich in 6 years. Well, once I get my hands on $70k again, that is.

You forgot capital gains taxes at 15%-20%. And where did you live that entire time for free? Didn't you pay $230K in rent? That $480K in profit is now more like $150K.

(And yes, I know this is sarcasm).

Well, I was talking about the difference between paying $5k/mo and $4k/mo. Most of the value is from the 70k downpayment, anyway.

I forgot PMI, which adds in another $300. However, if you only put down $70K, most of the extra interest is deducted, so it is close to a wash.

Got the $4K vs $5K difference.

Im very worried about the next generations. My kids' generation is really going to have it rough. Doubt they will be able to live where we do, unless we leave them the house when we die. It's crazy how expensive everything, including buying and renting, has become. My folks bought their first place in the Midwest for $11K in 1963. They made $500 of profit in 5 years, and thought they were in heaven.

Waitingtobuy says

I forgot PMI, which adds in another $300. However, if you only put down $70K, most of the extra interest is deducted, so it is close to a wash.

Mine is giving me $420, but whatever. There is an awful lot being deducted here, repeatedly. I think it highlights the difficulty in extracting large sums of money with which to 'move up'. You were fortunate to sell and rent during the crash. This is how I would like to time housing...or any market. But I don't know that it's worth the hassle. The gains you made 2011-present would not have happened if you stayed in your $620k house from 2008-2011.

Btw, the other key factor is the interest rate. It was over 6% in 2008. With 20% down, your buyer might have scored a 6.2% loan late in the year, but probably not with 10% down.

Waitingtobuy says

Make another prediction for me. What will $4K/month in rent look like in 27 years when my mortgage is paid off?

After the global panic of 20XX, way before your 27 years of payments are done you will be handed your eviction notice :-)

Waitingtobuy says

$20,000 in renovations (hot water heater, dishwasher, stove, painting, and flooring), which brings it up about $500 if I sold now, which I wont. That stuff lasts at least 8 years, so figure $100/month.

Only 8 years? Should it be at least 10 years? Hardwood floor can last over 100 years, engineered woods over 30 years, etc. A Bosch dishwasher should last at least 10 years.

Waitingtobuy says

I've been accused of a lot of things. Being bad with math is not one. I'm what you call a supersaver for retirement, plan to retire at 55, and have nearly both kids college expenses paid for in their 529 plans, and the first won't graduate high school for 7 yrs. All with a salary between me and my wife of $120K/yr. The only debt I have is my mortgage, and I will likely downsize to live overseas in my wife's home country.

Sucks that you are good at math because so am I. You say you make 120k/year between you and your wife and you are a SUPERSAVER for retirement. Lets do some math.

$17500 saved for both you and your wife in 401k accounts = $35000/year

$14000 per child for both you and your wife into 529 plan = $56000/year

$3077/month mortgage = $37000/year

GRAND TOTAL BEFORE LIVING EXPENSES AND TAXES $128000

So unless your salary is 120k for BOTH you and your wife, not between you and your wife I would say you are full of shit!

yup1 says

Sucks that you are good at math because so am I. You say you make 120k/year between you and your wife and you are a SUPERSAVER for retirement. Lets do some math.

$17500 saved for both you and your wife in 401k accounts = $35000/year

$14000 per child for both you and your wife into 529 plan = $56000/year

$3077/month mortgage = $37000/year

GRAND TOTAL BEFORE LIVING EXPENSES AND TAXES $128000

So unless your salary is 120k for BOTH you and your wife, not between you and your wife I would say you are full of shit!

You're pretty accurate with the 401k, although I have a PSP and I401K, not 401K. I own a business and can deduct a lot to minimize my YE taxes.

As for college, no one saves more for college than retirement. $56K is more like $12K-$15K/year these days. I've been saving since 2001. You can always borrow for college, but not for retirement. Below is proof. Notice the name of the 529 plan is included in the image.

hanera says

Only 8 years? Should it be at least 10 years? Hardwood floor can last over 100 years, engineered woods over 30 years, etc. A Bosch dishwasher should last at least 10 years.

Yes, you are right. I only put 8 years to be conservative. Carpeting is an 8-10 year deal. Hot water heater the same. Appliances the same. We have engineered hardwoods. Figure to paint every 8-10 years.

turtledove says

New Renter says

Replace the sacrificial anodes on their schedule and the heater might outlive you.

Oh and be careful not to directly connect copper to galvanized plumbing, and make sure there is appropriately piped drain should it ever fail.

Uhhhh... Will you come down south and inspect our next house before we buy?

Sure if you make some brownies for the post-inspection celebration ;)

Waitingtobuy says

Carpeting is an 8-10 year deal. Hot water heater the same. Appliances the same. We have engineered hardwoods. Figure to paint every 8-10 years.

Carpeting varies wildly depending on quality and how its cared for. My BIL's parents still have their 30+ year OEM nylon plush carpet from when the house was built, it seriously looks brand new!

Go with a quality nylon or better yet Triexta carpet and you could be looking at a 50+ year floor. 20+ with kids and pets. Triexta feels softer than wool, wears as well or better than nylon and shrugs off any water based spill including BLEACH.

And no I don't sell carpet.

JH says

You were fortunate to sell and rent during the crash. This is how I would like to time housing...or any market. But I don't know that it's worth the hassle. The gains you made 2011-present would not have happened if you stayed in your $620k house from 2008-2011.

True. Timing is everything here. One thing I didnt mention is where I got my downpayment on my first house. Cashed stock options. Again, I have been fortunate and I realize not everyone has that opportunity. Some people save, others get money from their family for a downpayment.

I thought renting was the bomb. After dealing with my crummy landlord, including raw sewage backing up and leaking into my office, and other "non professional" actions, I changed my mind.

It's true I wouldnt have made the same gains if I held on to my other place, but I would also probably have about $200K left to pay on my mortgage, rather than $600K. When I sold my place, my mortgage was $1441/month and property taxes were $4200. I've doubled both my mortgage and prop taxes to live in a nicer area.

To me, it wasn't about the gains, although that's great. When I bought, I was worried that my house value would go down. With rents as high as they are here, apples to apples, it's still a better deal owning than renting. Dont focus on the gains. Focus on renting vs a mortgage with no appreciation.

Waitingtobuy says

hanera says

Only 8 years? Should it be at least 10 years? Hardwood floor can last over 100 years, engineered woods over 30 years, etc. A Bosch dishwasher should last at least 10 years.

Yes, you are right. I only put 8 years to be conservative. Carpeting is an 8-10 year deal. Hot water heater the same. Appliances the same. We have engineered hardwoods. Figure to paint every 8-10 years.

This is a common flaw in calculators, whether using Excel or otherwise. All we include is the few maintenance items we think of off the top of the head. Or the repairs we did when we owned. Reality is that there is more maintenance then an itemized list. And we don't know what or when we will need to do the repairs for minor items although majors are more predictable. The fact that most calculators show 1% of the purchase price (and this is low end estimate) should not be overlooked. When we bought years ago in a different state, we believed the koolaid intoxication that rents would keep going up and eventually make buying a good idea. And looking through koolaid colored glasses, we didn't budget 1-2% for the maintenance that we should have (on a 20 year old home!).

When a home increases in value 20% a year, none of this matters.
When a home increases in value 2% a year, all the little bits matter: the couple hundred here and there (per month) make all the difference in the world between building equity or losing money.

I have heard all this conversation before, and I will continue to warn people of the true costs of ownership because a lot of people don't consider them. History is a bitch.

JH says

This is a common flaw in calculators, whether using Excel or otherwise. All we include is the few maintenance items we think of off the top of the head. Or the repairs we did when we owned. Reality is that there is more maintenance then an itemized list. And we don't know what or when we will need to do the repairs for minor items although majors are more predictable. The fact that most calculators show 1% of the purchase price (and this is low end estimate) should not be overlooked. When we bought years ago in a different state, we believed the koolaid intoxication that rents would keep going up and eventually make buying a good idea. And looking through koolaid colored glasses, we didn't budget 1-2% for the maintenance that we should have (on a 20 year old home!).

True, but it depends like you said on the age of the home. Things like bad foundations can add up. It's not likely that my 13 yr old townhouse has this. Nor is it likely I will need to replace the electrical wiring or plumbing. Also, we live without AC, and use the heater sparingly so not likely it will need replacing. I think 1%-2% for maintenance/remodeling is high, but it depends on the price of the home. 1% of a $1M home is $10K/year. For a $400K place, it is $4K. Painting my place ran me $4K. That's every 8-10 years.

My neighbors down the street remodeled their kitchen and did their floors and painting after 18 years. Probably spent $70K for really nice finishes. That still works out to less than $4K/year over that amount of time.

Waitingtobuy says

I think 1%-2% for maintenance/remodeling is high, but it depends on the price of the home.

And the location. In coastal CA, the price of the home could be 50% to 75% land value. There's not much maintenance required there. In other places, the land value is less.

So, the maintenance on a $1m house in "Fortress" Silicon Valley (1200 sq ft) would be much less than on a $1m house in the Midwest (6000 sq ft). Really need to calculate it out vs assuming 1%.

Waitingtobuy says

Dont focus on the gains.

The OP is that a house is a good investment. Therefore, you talked a lot about gains. And I countered with: 1) investment quality gains are not guaranteed (and your own house proved that) and 2) cost of ownership is a bitch.

Waitingtobuy says

Focus on renting vs a mortgage with no appreciation

Let's use your numbers. $4,400/mo payment vs renting the same unit at $3,400/mo. That's $1,000/mo extra they are paying. Most expensive areas don't up rent if there is not turnover, but that would cut into it, sure. Ok, so over 6 years, that is $72k more they paid to own than to rent.

But they made $80k in appreciation (fact). Lost $15k in closing costs (my #) on the purchase and $35k in realtor fees in the sale (your #). Paid $10k in maintenance (your #). They paid down $40k in principle (my calculator's estimate based on your monthly payment). Net $60k in equity, $40k of that from their own pockets.

They paid $12k more to live in your house for 6 years as owners than renters, and they had $70k liquidity tied up in the downpayment for those 6 years.

Sure there are write offs, etc, and you get more as a business owner. But there was nothing to be gained from buying and selling your house from 08-14 like there was from 99-0X. I contend that your numbers are low, and the longer one stays in a home, the more the maintenance costs build up. But there is no doubt that, if they were to stay in the home until 2038, they would have made a good decision financially. But leaving when they did was a wash, at best. Probably why they left when they did...they were expecting a huge profit from which to move up. Instead, they cut their losses at close to zero and moved up on their own volition. Anytime prices 'recover', this is normal behavior...but not many can move up on their own volition, so the move up market is weak.

SiO2 says

Really need to calculate it out vs assuming 1%

If somebody cares to calculate it out for a $1M home I will listen, but I will also counter argue. I completely understand that 1% is an overestimate, but I've already heard on this thread of a totally non exhaustive list: water heater, appliances, kitchen, paint. This hasn't included anything exterior, and it is non exhaustive on the interior. The number I used in the previous post was the OPs, which is less than $2000/yr. I for one will not be buying a $1M home from someone who paid less than $2000/yr on maintenance, unless it is sitting on a 3/4 acre lot. There are some here...and I have my eyes on them!! :)

JH says

Let's use your numbers. $4,400/mo payment vs renting the same unit at $3,400/mo. That's $1,000/mo extra they are paying. Most expensive areas don't up rent if there is not turnover, but that would cut into it, sure. Ok, so over 6 years, that is $72k more they paid to own than to rent.

You're conflating the two. My former place had PITI of about $2K (not $4400) and I rented it out in 2007 for $3400. I would bet you could get at least that in rent. Even if you bought it now at $699K, the PITI is $3600 or so. This assumes no deduction or principal paydown. You get the deduction, which is better than the standard deduction, or else you wouldnt qualify for the loan. Ignoring this messes up the numbers. Just like ignoring maintenance messes up the negative side of owning.

Current place for me is the same. $3077 for mortgage, $300 for ongoing maintenance and insurance, $850 for prop taxes. About $200 more than renting at $4K, but I get all the prop taxes back in a deduction, or else I wouldnt qualify for the loan based on income limitations. So not counting forced savings, it is $3377 vs $4K.

Of course if I bought now, my mortgage would be a good $800 more/month, and prop taxes would be higher. After the deduction for prop taxes, you are looking at breakeven, not counting principal forced savings.

If you have PMI because you didnt put down 20% and have a bigger mortgage, dont get the tax break from interest writeoff, etc, then it likely is better to rent.

JH says

If somebody cares to calculate it out for a $1M home I will listen, but I will also counter argue. I completely understand that 1% is an overestimate, but I've already heard on this thread of a totally non exhaustive list: water heater, appliances, kitchen, paint. This hasn't included anything exterior, and it is non exhaustive on the interior.

I said I paid $4K to paint the outside of my house. I also threw in FieldTurf at $2500 in my numbers. Figure both last 8+ years. At 1% of a $1M house, what are you annually spending $10K on?

JH says

SiO2 says

Really need to calculate it out vs assuming 1%

If somebody cares to calculate it out for a $1M home I will listen, but I will also counter argue. I completely understand that 1% is an overestimate, but I've already heard on this thread of a totally non exhaustive list: water heater, appliances, kitchen, paint. This hasn't included anything exterior, and it is non exhaustive on the interior. The number I used in the previous post was the OPs, which is less than $2000/yr. I for one will not be buying a $1M home from someone who paid less than $2000/yr on maintenance, unless it is sitting on a 3/4 acre lot. There are some here...and I have my eyes on them!! :)

Totally get this, and it is a personal choice. I grew up on a 1/3 of an acre, which is a big lot in our town, but not where Im from. I have a rooftop deck here, and go to the beach every weekend for 5 months of the year. Sometimes I miss not having a lawn, but my kids seem fine. They still play basketball with our neighbors' kids in both driveways. Kids are resilient. They find ways to have fun no matter the size of the lot.

Waitingtobuy says

You're conflating the two. My former place had PITI of about $2K (not $4400) and I rented it out in 2007 for $3400. I would bet you could get at least that in rent. Even if you bought it now at $699K, the PITI is $3600 or so.

You are comparing apples to oranges. First, your PITI from 1999 purchase vs. the $4400 that is in your calculator for a 2008 purchase. Second, buying in 2014 vs 2008. Same monthly payment because the interest rate is lower now pretty much no matter the downpayment.

Not sure where you are getting $4400 from for a house priced at $699K with 20% down, but it isnt my calculator. My calculator says $3661. Again, no deductions, and no principal payments included.

I cant even get that for a house priced at $799K.

Call it Crazy says

If the median house price today nationwide is like $275K, then 1% ($2750. a year ) would be low. If you had to replace big ticket items (roof, HVAC, kitchen, bathrooms, carpet, etc) over a period of years, you'd blow through a lot more then that...

Sounds right. Depends on the type of roof. Tile and concrete shingle roofs last 25-30 years. HVAC is what, $6K-$7K? (dont know..we dont have AC and heat isnt on a lot). Carpeting a 2000 sq foot place is $2500. Bathroom reno every 15 years for 2 baths is $20K. Kitchen reno is $40K every 15 years.

If you stay 15 years, then maybe an average of $5500/yr. Still not 1% of a $1M house. Likely 2% of a $275K house.