It can be done John but I don't think to the extent that a ton of people were able to do it from the 70's-90's or so. The prices and availability of houses/land is farther out of reach for people starting out and trying to build wealth.Originally Posted by n2ratfishin
Paying off the house early is an entirely different question, and a good one. I subscribe to an arbitrage theory where I'm borrowing at 4% on my house but making 6-8% on some low-risk dividend stocks. So ideally I'd never pay it off.
But some like that peace of mind and don't want to owe anyone anything, and I think there's value in that as well. And if/when risk-adjusted returns fall below my 4% then it would make sense to pay that note down quicker.
I live in one of if not the hottest real estate markets in the country. We paid $300k for our house in 2009. My neighbor listed his home for $869k last Friday and accepted an all-cash offer of $969k. He had 23 written offers in three days. I hope it holds for two more years when I will retire, sell and move. Buying this house and paying it off was the second best financial decision we’ve ever made. The first was funding our 401ks for 25+ years.
You say you have to sell it to realize the wealth, or use the money. Think about it this way. You could have a mortgage and pay $1000 a month for 20 years, then live payment free (minus taxes, repairs etc) the rest of your life, or you can pay $1000 a month for a few years, with rent increases every few years, possibly/probably a move or 2 as the rental sells etc, and after 20 years you still are paying rent, only now the rent is probably $2000-3000 a month. You get to keep paying this until you die.
After 20 years of paying your mortgage, you can sell your house for 2-3x what you bought it for. You can downsize, move, or just rent (which you would be doing if you never bought it). You now have access to your wealth.
My parents followed this exact plan over ten years ago. Mom passed a couple of years ago, but Dad (95) is still in his nice two BR-2BA apartment with lots of people around. They all eat in a nice dining room with wait staff and cloth table covers and fresh flowers. There are two pools, a gym, a small library, game rooms etc. It is like a little cruise ship. They had a buy-in option when Dad moved in but now they are all rentals. There are no plug-ins for bass boats.
https://www.sagora.com/brennity-melb...endent-living/
I don't see this ad being true. It may be for your area, but on average it is not true. Young people are buying houses all the time. Anyone willing to work here can afford some kind of housing. It's getting harder to find places for under $150k, but not terribly hard. It may take some sweat equity to make it perfect, but $120-150k would buy a pretty liveable place.
My in-laws are wanting to move back to my area. She called me yesterday and asked me to look for a 5+ bedroom house, in good shape, for $250k or less. I told her that would be a challenge. I punched it into Zillow and had quite a few options for her to choose from.
Housing in general will always be a good investment. Certain areas it won't be, and you don't know that when buying. Look at Detroit where whole neighborhoods are vacant. In general though, housing will increase in value. You are going to pay for it anyway, might as well pay yourself. Now if you can live somewhere else for free it might not pay.
The one factor that people tend to ignore with homeownership is the cost of maintenance. They know what they bought the house for and know what they sold it for but probably can't give an accurate cost of everything they paid along the way. A new roof, new air conditioner units etc.
He won't dig up one of those cans he has buried in the back yard for less than 2 million.Send me one then
Honora Primum Vel Nullum Omnin Honorem
My wife can on our house. She started a folder and everything bought to maintain the house goes in the folder.
Depending on your age you might be better off investing that extra money vs. putting it toward the mortgage. Personally, I'd rather have more money in my retirement account vs the house paid off faster. Because like you said, the only way you are realize any gains is to sell the house and then you have to buy another house that has also seen the same gains assuming you stay in the same area.
Brandon
1996 Ranger 362XT
Johnson Faststrike 150
Shoot our whole monthly budget will just about fit into 1 monthly mortgage payment so if our house is paid for vs having mortgage we are living for free month to month - kind of if you don't mind that kind of logic.
We use a spreadsheet and Dropbox. Either way works. Maintenance and taxes never go away. You never truly own the house with no payments.
Do the math, some times your way ahead to rent than buy a house. Figure in interest, maintenance, improvements and taxes.
when you see this on the water stop and say hi.
So true. It costs a lot more than people realize. I just spent 14,000 on a roof.
Do the math on interest paid over 15/20/30 years of a mortgage. You aint "making" any money when you sell. Then add years of insurance.....and maintenance.
This "dream" is really just sales pitch for the banks/insurance compaines making money. You see, what better investment is there for them but a primary residence.
Get Licensed & Bonded and You can become a 'caretaker' that way You can get paid and live rent free.
Isn't that the case with pretty much any asset you accumulate other than cash? Stocks? Land? Bass boats?
There definitely is something to that...I have a friend that did it for years. But with each "passing" client...he became more depressed. Eventually, had to leave the profession. Just took too much out of him. My wife's aunt had a live in caretaker for the last 4 or 5 years of her life. She became like family. After my aunt in law passed the caretaker withdrew from us. Made it painful on everyone.
2016 Nitro Z21
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." Benjamin Franklin
Sure you can rent a 1 bedroom apartment and you'll come out ahead vs. owning a 2000 sq foot house.
Now compare renting a 2000 sq foot house to owning a comparable 2000 sq foot house. The landlord has all the expenses you just mentioned and are factored into your rent and he still making a profit or he wouldn't bother renting it out. You are paying the same expenses when renting PLUS the owner's profit, only you are paying it a month at a time vs. one big expense when it pops up. Nobody is renting out houses for charity, they do it because it makes them money.
I never understood why expenses owning a home is considered a negative. It's just like anything else you own, it all has maintenance and needs to be replaced or repaired eventually. Life is expensive, you are going to pay one way or another no matter what path you chose.
Brandon
1996 Ranger 362XT
Johnson Faststrike 150
I would add in Texas alot of people do not consider there taxes paid on the property. In urban areas I seriously doubt anyone is really making money on a house. I know what I could sell my home for now, but that does not exceed the property taxes plus initial purchase + interest paid. In this market it would be a wash for me to sell, if I use a realtor I would loose overall.
Bryan McDonough
2023 Nitro Z21 XL
Nitro Team
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