Learn me houses?

In reply to ¯_(ツ)_/¯:

No problem just figured I'd offer since I had a very good experience with them and they were able to answer all my financing and purchasing questions.

A couple things to add. If you can swing it 10+ acres out here allows you to apply for a 319 exemption (if there isn't one in place) which substantially reduces your property taxes. You may also apply if you do more than 2000 dollars in agricultural revenue a year or have a solar farm which is large enough to supply the primary power to your residence.

As you probably know property taxes are a drop in the bucket since school taxes comprise two-thirds of the tax burden every year, but every reduction helps. I think the 10-acre property I looked at was equivalent to my 4 acres currently (~$1500/yr property. School is ~$4400.) Supposedly there's some legislation working its way through to reduce the school tax burden on homeowners but I have zero faith it'll a) Actually be good for homeowners b) Not be some stupid complex scheme.

You know this already but unincorporated areas tend to be lax compared cities or incorporated towns so really pay attention to municipal boundaries. Townships generally leverage an EIT but if you're in an incorporated area you can get hit with the EIT plus a Town tax plus State and federal.

Then there's the building ordinances. Where I purchased in Monroe county I can build as many unpermitted 1000 sqft "sheds" that I want. If I was further north in Stroudsburg I could only have one 200sqft shed.

We were able to purchase our house because we didn't have a contingency of selling our old house. We came in at asking price, which was below what three other offers were, but since we were ready to go right then the sellers took our offer.

Dr Ribs Revere wrote: Any reason why you can't put in an offer to buy out your current landlord? It doesn't sound like you are chasing any particular advantages at another property.

This. Knowing where you live, I actually find that rent amount rather shocking. Whoever owns that property isn't making a lot after taxes and whatever upkeep they are paying for.

I would recommend getting together a down-payment and being ready to jump on the next property similar to the one you missed comes along.

Damn... looking at the driving distances between there and the NJ and PA offices, I'm tempted to start looking for something near where you are if property values are that cheap.

Edit: You know... you have an RV. Buy land. While still renting, build a garage with RV hook-ups. Move into garage & RV. Build house. Win!

The house we live in we rented for a couple years before we bought it from the landlords. It was a pretty simple transaction, it was coordinated by the mortgage broker person and went down as for sale by owner. Our motgage payment (taxes and all) is $100 per month less than our rent was.

The freedom of ownership is a nice thing. Having to fix E36 M3 is not.

I might know an electrician that can help with questions you may have

I quote my mom.

"Houses are a full-time hobby the rest of your life"

Ian F wrote:

Dr Ribs Revere wrote: Any reason why you can't put in an offer to buy out your current landlord? It doesn't sound like you are chasing any particular advantages at another property.

This. Knowing where you live, I actually find that rent amount rather shocking. Whoever owns that property isn't making a lot after taxes and whatever upkeep they are paying for.

Yeah, like I said, we're getting a sweet deal. We couldn't afford to buy this place, and our rent is set where it is because the landlord wants us here- their farm is nearby and having somebody who knows how to fix animals (SWMBO) and vehicles (me) on call is worth it to them.

Ian F also said: Edit: You know... you have an RV. Buy land. While still renting, build a garage with RV hook-ups. Move into garage & RV. Build house. Win!

I like this idea but is it possible without having a big pile of cash on hand?

In reply to ¯_(ツ)_/¯:

Not so much, land requires a much larger down payment

I'd continue renting as long as you're happy there, and the landlord likes having you. If there's extra money left every month, try to save up as much as you can to be used for your future place. Downpayment size can affect everything from your price range, to types of financing, to how quickly you can get the deal closed or how quickly you can make it into what you want it to be. The more money you have saved, the more flexibility you'll have when it comes to future places. Save. A lot.

In reply to ¯_(ツ)_/¯:

I looked at doing the land/RV thing.

Land requires a big down payment for financing any significant portion. After that you still have to deal with the whole well and septic issue which are aren't cheap either and you'll have to ensure they're somewhere that you can use them for the house.

Bonus points: Even in unincorporated areas townships often have ordinances against this. I found that out in Monroe county which is what killed it for me.

Get land cheap, build SIPS home with friends, hire contractor to finish what you don't like, build YUGE garage, be happy. I wish I would have done this.

I found out and so did a family member, me to the tune of -$40k and him to a tune of -$180k. Never buy the nicest house in a neighborhood/area (me). Never buy a very expensive home in the country (him). Both have the same problems. It is hard to find comps that are similar to your home for appraisal time.

If you buy in the country get in as a cheap as possible. The cheaper the better. Not just from a payment point for you, but for the ability to get out from under it later.

¯\_(ツ)_/¯ wrote:

Ian F wrote:

Dr Ribs Revere wrote: Any reason why you can't put in an offer to buy out your current landlord? It doesn't sound like you are chasing any particular advantages at another property.

This. Knowing where you live, I actually find that rent amount rather shocking. Whoever owns that property isn't making a lot after taxes and whatever upkeep they are paying for.

Yeah, like I said, we're getting a sweet deal. We couldn't afford to buy this place, and our rent is set where it is because the landlord wants us here- their farm is nearby and having somebody who knows how to fix animals (SWMBO) and vehicles (me) on call is worth it to them.

Ian F also said: Edit: You know... you have an RV. Buy land. While still renting, build a garage with RV hook-ups. Move into garage & RV. Build house. Win!

I like this idea but is it possible without having a big pile of cash on hand?

Don't just assume you can't afford the place. If the owner truly likes you there they may make you a deal. Maybe even owner financed. Get your down payment ready and go talk to them about it.

When the wife and I couldn't find what we wanted to buy we started looking for land to build on. One day while driving around we saw some property without a for sale sign on it. There was a guy washing his car out in front of his new house next door so I stopped and went up and asked him if he knew who owned it. He did, but said that he had just sold it to a guy and that guy was going to start building soon. However, he also owned the piece behind his house that was actually bigger and was willing to sell. He offered it to me for about two thirds of what it was worth. 17 years later we are still neighbors, and I'm sure he sold it to us because of the wife and two little kids sitting in the car. Our boys are still best friends to this day, and the chain link seperating our properties in back has a gate.

You never know unless you ask. You don't know the value he puts on you living there.

Buying your first house is kinda like starting up your first business; until you have done it once, you cant begin to imagine the many things that nickel and dime you to death. Similarly, once you are in, successful short term exit strategies are the exception.

Buying a house is really just renting it from the bank and having a landlord that does not have to do any maintenance and assumes zero liability for anything.

If you are banking money at the end of every month now, you will be hard pressed to maintain that same saving rate if you buy a comparable property and keep the current hobbies.

Dwellings can be an investment, but not if you live in them yourself.

In reply to ¯_(ツ)_/¯:

You're young. Let me give you my perspective.

There's a lot going around in the news lately about younger buyers not buying houses. Millenials and such. many have student loans that are the size of mortgages. The percentage of younger people who own the place they're living in is going down. But, real estate prices continue to rise.

The other part of what's trending is that more and more, large companies are buying up houses- hundreds and thousands of them- to rent out. We're becoming a nation of renters. And yeah, while some people may whine about "renting from the bank" (mortgage), or "you never really own your house because you have to pay property taxes forever or they take it from you", the bottom line is, owning a house is still the #1 predictor of wealth.

I'm not talking wealth as in fancy cars and bling. I'm talking about old wealth- the kind of wealth that allows you to be stable and secure and not worry about money. A significant number of people in this country could not come up with $2,000 in cash to meet an emergency. Wealth is the luxury of not worrying about stuff like that.

Buying a house- saving, having a stake in life, and "getting into the game", as I like to say, is a significant step in building real wealth. Can you be wealthy without owning a home? Sure. But often, for people of more modest means, its the main path towards doing so.

I think, long term, your goal to buy a place over renting (even at the screaming deal you have now) will pay off for you. I bought my first house when I was your age. I have bought two others since. Two of them I still own (One I live in, One I rent out). I can say categorically that when I bought my first house, I was in much worse financial shape than when I bought my most recent one.

The rental companies know what a lot of people seem to be forgetting- or, because of their personal situations, can't afford to "remember"- that owning a home makes you an owner in society. Renters will always be renters.

I'm going to disagree firmly about a mortgage being "renting from the bank". A mortgage is like having a car loan instead of a lease. When you pay it off, it's yours to keep. Yes, you are paying interest. Yes, even at a low rate, you're a paying a bunch of interest - it's a big purchase. But if you manage your money well and pay it off, then you get to live in it without that regular payment, just like you get to keep driving the car you own without turning it in for another lease.

Owning a house is exactly like owning a car on a larger scale. It requires consumables. It requires regular maintenance and a knowledge of its shortcomings and strengths. You need to budget for stuff you know is going to need replacement as either a car or a house ages.

I am surprised at the number of people here who wouldn't even consider leasing a car who also think that owning a house is a terrible decision. Hell, ALL cars depreciate and only a scarce few ever appreciate again. But if you live anywhere with a remotely sane real estate market, your house is unlikely to depreciate unless you let it. You may not make a lot in appreciation, true... but value should keep pace with overall inflation.

I have had 2 real mortgages on my house (not counting a couple of rate-reduction-only refinances). I bought the house in 1992 on a 30-year mortgage, when I was 27 years old. By 2009 I had paid it off, 13 years early. At that point, I refinanced the original amount to take capital out for some fairly comprehensive renovations. In that time, the house had appreciated a bit, so it was nowhere near back to ground zero in equity. Also, the renovations added notable value to the house (it's never dollar-to-dollar, of course, just like car mods). The 2009 mortgage was for 15 years, and I will have it paid off in full by mid-2018 - 6-1/2 years early, with corresponding reduction in total interest paid.

In 2018, I will own the house outright, at the age of 53. That means I anticipate at least 20-25 more years of living without rent or a mortgage payment. It will be worth at least the principal amounts that I have invested. Yes, I will pay a substantial amount of interest over the 26 years I will have a mortgage, but nothing like what it would have cost to rent a comparable house for those same 26 years... and I will own an asset I can live in for another 26 years at only the cost of utilities and routine maintenance.

In reply to Duke:

Excellent points, all.

As a real example of this, the place I rented when I was in college was $325 per month, for a 1 bedroom apartment. Now, that exact same place rents for 3 times that (I happened to google it a while back when i was curious, and saw it still being rented).

Now, imagine 20 years from now, whatever you're paying in rent- triple that. But your mortgage payment doesn't- it'll go up a little, as your taxes go up due to rising assessments and insurance gets a bit more costly- but we're talking maybe a percent a year.

The ideal is to buy a house soon enough in life such that when you retire, the mortgage is paid off. At that point you can live off of minimum wage (social security) plus whatever few coins you've stashed aside while working. All you have to pay every month is the insurance, taxes, and utilities.

D2W wrote: I like Zillow. gives tons of information about what is for sale in your area. Decide what you want to spend and start looking in your area for homes that fit price and wants.

As a practicing statistician, I absolutely despise Zillow…so much so that I’m keeping history files on their activities (they’re big on revisionist history) to possibly sue their a$$es off.

Being too stupid to construct a competent regression model and/or having a flawed data collection method isn’t a crime but nefariously providing preferential treatment “tell us more about your home so we can better appraise it’s value” is extortion and I’m positioning myself to be their worst Berking nightmare.

Math is beautiful and anyone that mistreats it for selfish gain risks finding themselves right in the middle of my crosshairs.

In reply to RX Reven':

Interested. We've had a few situations where Zillow wildly inaccurately "guessed" the value of a property we had an interest in, for one reason or another. It's a terrible tool for anyone who doesn't know what it is or how to use it. Sort of like an oxy-acetylene torch.

2 points

1) Buying is cheaper in the long run vs. renting, unless you are getting a crazy deal on rent. Some landlords do this. They are losing money on their rental property (or not maximizing profit), but they don't know better. I shared a house for $2k in NOVA with 3 other car guys. It was a $750k-ish piece of property, even if you bulldozed the house. No berkeleying way would owning that be a better deal. I was always shocked the landlord didn't just sell it and take the cash.

2) As I always mention in these threads, early mortgage payoff is a silly thing. You'll make a lot more investing your money than you will save in interest by paying off mortgage early. I could pay my mortgage next week... but I'll ride it out another 27 years or until I sell my house, because it leaves me with wayyyyyy more cash in my pocket.

I'm one of those people who would never lease a car. I don't think home ownership is a terrible decision, I just don't think its a wise investment. Its one of those things that most people grossly underestimate the costs of.

ProDarwin wrote: 2) As I always mention in these threads, early mortgage payoff is a silly thing. You'll make a lot more investing your money than you will save in interest by paying off mortgage early.

This is an entirely separate discussion, though. I agree you have very valid reasoning behind your method, and you and I have discussed it here before, but it is tangential to the concept of owning v renting.

In reply to ProDarwin:

It depends on a lot of factors (including one's tolerance for risk), but in general, yes, I agree- borrow as much as you can, for as long as you can- especially while money is still (relatively) cheap. You can still get a mortgage in the 4%-5% range, and that interest (as well as Home Equity interest) is tax deductible, so in reality it's only 3%-4%. Pretty hard to do worse than that investing, if you dollar-cost average.

However, if you take PMI into account, you could be paying 8% or more "effective" interest when you include the PMI payment, so it can be worth while to aggressively pay down principal, at least until the PMI can be wiped away.

A fyiw point to consider. Purchase your home using just one person's income for the calculations. That way short/long term disability, job loss, or divorce will be limited in it's destruction of your life. Hope for the best, we all do. Plan for the worst, not enough of us do and it can bite one in the proverbial ass pretty hard.

That all said I've bought three houses now and rented two (and a bunch of apartments). Owning is a way better experience.

To bring this back from the dead, we're looking at a place with a massive shop- does anyone know about renting out storage space for cars/motorcycles? I understand I could rent it out for storage of other things, but vehicles are easy to move around and I could offer the owners more than just storage since they would have an onsite mechanic (me) as well.

¯\_(ツ)_/¯ wrote: To bring this back from the dead, we're looking at a place with a massive shop- does anyone know about renting out storage space for cars/motorcycles? I understand I could rent it out for storage of other things, but vehicles are easy to move around and I could offer the owners more than just storage since they would have an onsite mechanic (me) as well.

That is a home business in and of itself. How many cars can you store? If you do work on them you need to get insurance to cover you and theft/damages.

If it is temperature controlled even better.

Having the ability to be onsite, with cars that can be started and ran for the owner with a battery tender would be a service needed, depending on where you live.

You can fob the door and you can control people paying storage fees because you have the car as collateral.

It is heated, and subtracting the space I'd like to keep for myself I can probably store 8 cars or about a zillion motorcycles. Plenty of outlets for battery tenders... the insurance side I need to read up on, just kicking around the idea for now.

My first house, I rented out part of the garage to another guy to store cars. It had it's own separate entrance (locked) and I made the "tenant" sign a lease. I can email you a copy of that if you end up going this route.

Didn't do anything special with the insurance. In the lease it specifically stated that the tenant was not covered under any insurance policy, but they could get their own if they desired.

I rented out a 24 x 24 garage space for $200/mo, which was a good deal for everyone involved.

In reply to volvoclearinghouse:

I was thinking about insurance in case he gets sued. I should have been more specific.