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I just bought a house and it will cost half as much to own vs rent same house
2012 Oct 12, 8:54am 133,376 views 412 comments
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PockyClipsNow
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2012 Oct 12, 9:03am
calculator says actual property value is 1.6m
and 'ok to buy'. not sure what intrest rates you put on that link.
one large factor is that I AM NOT MAKING PRINCIPAL PAYMENTS which I believe are for chumps. That would add 1k a month to the payment and its not a tax write off. also zero HOA on this house (hoa is not a write off)
Also I believe getting a 30 year fixed at a higher rate (it would be liek 3.6% for me) is for chumps.
IO ARMS are the way to go since if rates rise or the payment adjusts up you can always get a loan mod - they are doing 2% intrest only loans with 100k principal reductions by the million right now. That is not likely to change. If I were more daring I would quit my job, get a low paying job, get a loan mod, then get a better paying job but that is too much ifs lined up for me.
PockyClipsNow
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2012 Oct 12, 9:05am
Sounds too optimistic.
what is optimistic? I locked the loan in already.
the rent might be optimistic. who is paying 4k in rent? i guess people who own horses or want a 5 bedroom custom home with the big tits kitchen remodel.
"I AM NOT MAKING PRINCIPAL PAYMENTS.... IO ARMS are the way to go"
Zombie needs to eat more brains.
That does make them smarter right?
No? Oh well.
PockyClipsNow
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2012 Oct 12, 9:14am
Principal payments in a loan are stupid for two reasons:
1. If prices tank and you walk away you lose DP+all principal payments made
2. Most people just get a heloc anyway after a number of years to buy a dumb car or send kids to school.
3. the principal payment will blow up your debt to income ratio which limits your acquistion of other loans/mortgages. (we are year one of the next up cycle of real estate, time to buy quality properties located well at a good price - if you can find them, not easy)
4.If you think you can pay off a gigantic 500k+ loan rotsa ruck buddy, i am relying on future price appreciation then selling to make money.
bubblesitter
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2012 Oct 12, 9:15am
the rent might be optimistic.
Yes. That's what I mean...come on 4K continuous flow? I doubt it...
Patrick
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2012 Oct 12, 9:19am
I also seriously doubt the $4K rent for an $875K place. Even around here you'd pay only $3K for that place.
Even at $4K it doesn't work though, unless you put in unrealistic appreciation assumptions, as bubble buyers are wont to do:
http://patrick.net/calculator.php?uaddr=%2C+&rent=4000&price=875000
Comments 1 - 9 of 412 Next » Last » Search these comments
I hope this is a real world math lesson for some of the 'should I buy now' crowd. Its a tough decision.
Price: 875k
$ Financed: 700k
Loan: 5/1 Interest Only ARM at 2.875 with .25 points (union bank)
Payment: 1677
Prop tax: 912
total: 2588
(im in 28% effective tax bracket so 2588 * .72 = 1863 'after tax write off payment')
Add fire ins of 129 per month and total pmt after tax write off = $1992
This is a custom built, recently remodeled huge estate home on acreage and zoned for horses - would rent for 3800 to 4200 based on craigslist comps.
If I change jobs I can make 1k per month easy in profit when renting it out. Its not a great rental though, but an awsome to live in property.
I sold four homes off in 05/06 and the plan was wait for 50% drop then buy back in. Well prices only came down to 70% of peak fraud prices - close enough with the low intrest rates (which I am betting are permanent, as in the rest of your life. If rates spike in 5 years I will simply pay off the loan, refi, or get a loan mod - no worries here.)