patrick.net

Owning has been a big load off my mind.

I know the bank isn't going to come to me next year and say, my rent is going up, or they sold the place, or inform me to let Realtors in to view the place to potential buyers. If something breaks, I don't have to fight with a landlord to get it fixed. Only to have him installing the cheapest shittiest replacement that he could find, that is ugly as hell and cheap as shit.

Bought in 2007 for just over $700k Paid a bit over $4k/mo in ITI (interest only loan)

Found out my neighbor was renting a similar house for just under $2k/mo. Realized I was paying way, WAY too much!

Short sold in 2011 for $530k eating 5% DP but did not get stuck with fed and state tax bills for the $150k in forgiven debt. That would have been at least $70k out of pocket loss on top of the lost 5%.

OUCH!

Now renting a larger, nicer house for just under $2.5k/mo.

As you say YMMV.

Bought in 2009, ~$3K PITI. Later refinanced to ~$2400. Probably cheaper than renting.

CaptainShuddup says

If something breaks, I don't have to fight with a landlord to get it fixed. Only to have him installing the cheapest shittiest replacement that he could find, that is ugly as hell and cheap as shit.

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.

I agree it's more stressful, but overall I'm glad I did it. If I could go back, I may have gotten something smaller. It's a lot of work to maintain a big house.

So, I bought a short sale in 2012, 8 year old complete rebuild, beautiful house, just shy of 3000 sq ft. I got pretty lucky, threw out a lowball offer in the middle of winter and the bank accepted it. It didn't hurt that I let the RE agent double dip. My mortgage is less than $1800 a month @ 3.5%.

Granted I live in BFE, but it's a beautiful and quiet place (most of silicon valley is a shithole imo). But, it takes a special kind of person to live up here; I grew up here and my family is here, so I'm used to it.

I work in Campbell, so my commute is not too bad.

CrazyMan says

Granted I live in BFE, but it's a beautiful and quiet place (most of silicon valley is a shithole imo). But, it takes a special kind of person to live up here; I grew up here and my family is here, so I'm used to it.

I know it's beautiful up there. How are the roads?

Roads are fine tbh. I drive Bear Creek everyday in a TT and you just get used to it. It's nothing.

Highway 9 is less windy and if you need to get to Cupertino or Saratoga it's usually faster.

They both have a reputation for getting closed for a short time if there's mud slides, but it's pretty rare. If it does happen, I just work from home that day anyway :)

I love it up there. As a matter of fact, I'm going home now :) Have a good weekend!

CrazyMan says

I agree it's more stressful, but overall I'm glad I did it. If I could go back, I may have gotten something smaller. It's a lot of work to maintain a big house.

So, I bought a short sale in 2012, 8 year old complete rebuild, beautiful house, just shy of 3000 sq ft. I got pretty lucky, threw out a lowball offer in the middle of winter and the bank accepted it. It didn't hurt that I let the RE agent double dip. My mortgage is less than $1800 a month @ 3.5%.

Granted I live in BFE, but it's a beautiful and quiet place (most of silicon valley is a shithole imo). But, it takes a special kind of person to live up here; I grew up here and my family is here, so I'm used to it.

I work in Campbell, so my commute is not too bad.

How long is that commute?

LA is crazy. I've never had a mortgage payment over $1000 for a decent house.

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.

Howdy There says

LA is crazy. I've never had a mortgage payment over $1000 for a decent house.

House made of cardboard maybe. Or in Compton

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.

Uh, they sold our place 3 months ago for $699,000. Which other story on patricia.net are they telling? How they traded up for a better place? Any other "dumb post" predictions?

JH says

Confuckinggrats for being old enough to buy then.

You seem pretty bitter. Like you said, I attributed this to LUCK. Twice. I'm not here crowing about being so smart in timing the market.

I'm GenX, dude. Like a lot of us, we have been on the short end of the stick on a lot of things. We really enjoyed things like being latchkey kids,recessions, AIDS, tremendous debt handed to us, and other goodies. Would you like to make another assertion without knowing anything about me?

The point of the post is that your house is not always a terrible investment. It depends on a lot of factors. One of the factors in my case is I bought in a highly desirable place, with good schools, and near the ocean. If I had bought in the Inland Empire, it likely would not have turned out so well.

Even if my home did not rise one penny, in my case I still would be better off than renting in this area. You did read this part, right?

Make another prediction for me. What will $4K/month in rent look like in 27 years when my mortgage is paid off? At 1% annual increases, it is $5200. (When was the last time rent increased by 1%/year?) At 2%, $6827. Meanwhile, everyone who buys and gets a 30 yr mortgage is tied to the same monthly for a long time.

My take is that if you are comfortable paying for something you like to live in for at least 5-7 years, it is possibly a good idea to buy.

JH says

At least you admitted luck and timing.

Luck comes to those who take chances wisely. Do not discard it as a possible sign of ingenuity.

On the other hand, the housing market in the past 15 years has been scary. It is not unreasonable for someone to abstain.

Peter P says

On the other hand, the housing market in the past 15 years has been scary. It is not unreasonable for someone to abstain.

I agree 100%. I'm not sure I would buy now in our area considering where prices are. In other areas, maybe. Each situation is unique, so saying everyone should buy or rent isn't right.

As another poster said, YMMV.

New Renter says

How long is that commute?

It's 35 minutes door to door for me, 45/50 minutes on Friday nights coming home. It takes basically 20 minutes to get from downtown BC to Lexington Reservoir (a little quicker if you're rolling).

CrazyMan says

New Renter says

How long is that commute?

It's 35 minutes door to door for me, 45/50 minutes on Friday nights coming home. It takes basically 20 minutes to get from downtown BC to Lexington Reservoir (a little quicker if you're rolling).

20 min? You must drive like a crazyman!

lol not really, though I do know the road like the back of my hand.

I drove my Tacoma each day for a while and I must admit it's not that pleasant. You definitely want to do it in a small car.

Waitingtobuy says

Uh, they sold our place 3 months ago for $699,000. Which other story on patricia.net are they telling? How they traded up for a better place? Any other "dumb post" predictions?

Shouldnothavewaiteduntil2008tobuy says

We bought for $620k and sold after six years for $699k, making a 2% annual profit on our house. This did not line up with the stories our friends had told us of how they doubled their home values in six years from 2000 to 2006. Well, at least we weren't throwing money away on rent!!! We had build solid equity in this home. 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. But hey, we were DONE throwing money away on rent!!

Well, the 2% profit was disappointing, but the real kicker was when we looked under the hood. When we looked at all the costs associated with this purchase that was going to make us instantly rich and help us move up, we found some troubling numbers:
-$15k buyer closing costs in 2008
-$40k seller realtor fees in 2014
-$40k (1%) maintenance costs over 6 years
+$40k principle pay down

Reality is that we netted an annual profit of 0.6%, measly in comparison to our friends who made 20%/yr. And this is ONLY because we paid down principle...otherwise it's a loss.

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.

Peace out y'all...time to pull the slot machine lever again!!

Waitingtobuy says

How they traded up for a better place?

Yeah, with all the equity they built up, I'm sure that is their story.

Waitingtobuy says

You seem pretty bitter.

Waitingtobuy says

I'm GenX, dude. Like a lot of us, we have been on the short end of the stick on a lot of things. We really enjoyed things like being latchkey kids,recessions, AIDS, tremendous debt handed to us, and other goodies. Would you like to make another assertion without knowing anything about me?

Wow genX has been screwed a lot, eh? How do you think Y feels? I could identify with X, being born late 70s, but I identify with Y because of a career change in 2001, so yeah all that shit you mentioned? America fixed it all for Y. Y's are so damn privileged:
-no latchkey kids anymore because everyone lives on one income again and eats mom's beef and potatoes for dinner, just like the 50s
-nobody has suffered from the recessions like Xers...nobody...
-AIDS is cured, along with ebola, west nile, h5n1, h1n1
-US debt is wiped clean so that Yers will never feel that pain...whew!!!!!!

Waitingtobuy says

What will $4K/month in rent look like in 27 years when my mortgage is paid off? At 1% annual increases, it is $5200. (When was the last time rent increased by 1%/year?) At 2%, $6827.

I understand that. And I understand your predicament. And so does the government. They helped fuel the 2000s boom and then 2010s boom. Now there is more wealth concentrated with a few than ever before. Please give some credit to the government. Actually, I don't really care if you do, but I won't attack you as much if you do...haha.

It is not likely that rents will continue on an unsustainable path forever. It is equally unlikely that home values will. Bulls can show all the charts they want. But 1984-2014 is not equal to 2014-2044. Believe it is at your own risk.

JH says

Yeah, with all the equity they built up, I'm sure that is their story.

That was my story.
JH says

Wow genX has been screwed a lot, eh? How do you think Y feels? I could identify with X, being born late 70s, but I identify with Y because of a career change in 2001, so yeah all that shit you mentioned? America fixed it all for Y. Y's are so damn privileged:

-no latchkey kids anymore because everyone lives on one income again and eats mom's beef and potatoes for dinner, just like the 50s

-nobody has suffered from the recessions like Xers...nobody...

-AIDS is cured, along with ebola, west nile, h5n1, h1n1

-US debt is wiped clean so that Yers will never feel that pain...whew!!!!!!

I'm sympathetic to Gen Y. My nieces are both Gen Y and their job prospects suck too. But you brought up how I was lucky enough to be born at a certain time. It's not like I was born into a great fortune with all these awesome things happening to my generation. But timing was definitely on my side, as was luck.

Like I said, every person is different. I'm just providing a counterpoint post to Patrick's post which was about How a House is a Terrible Investment. For some, yes, for others, no.

Waitingtobuy says

JH says

Yeah, with all the equity they built up, I'm sure that is their story.

That was my story.

Your thread says that your home was not a terrible investment. It was and it wasn't. When you 'owned' it, it was not. When the next buyers 'owned' it, it was. You also suggested that the buyers of your home probably are telling a story of how they 'moved up'. Impossible unless they fell upon some huge increase in wages or wealth some other way.

Waitingtobuy says

But timing was definitely on my side, as was luck.

Indeed. To find a home a good investment on the scale of 3-6 years, there is somebody on the other end taking a loss somewhere because we are talking about very serious boom-bust cycles. Long term it's a different story to be sure, but it is much more muted.

You just explained exactly why buying is better than renting. Recent report suggests the healthiest buying season in three years and until construction picks up to meet the demand, the appreciation will continue: http://www.marinhomelistings.com/blog...

Behzad says

You just explained exactly why buying is better than renting. Recent report suggests the healthiest buying season in three years and until construction picks up to meet the demand, the appreciation will continue: http://www.marinhomelistings.com/blog...

Marin county? Geez, could you choose a more NIMBY to new construction part of the country?

Behzad says

You just explained exactly why buying is better than renting.

Somebody can't read

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.