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REAL ESTATE Uncle G: Is Buying a House The American Dream?

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Ismails

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I have come accrossed this video: Is buying a house the American Dream?

Here is the hypothetical scenario:
I buy a house = $150K
Downpayment = $15K
Years: 30 Years
Monthly Mortgage: $1300 excluding renovations

My Question: If I buy a house and get equity (depending on years) from it ? Is it a bad deal?
 

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PizzaOnTheRoof

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I have come accrossed this video: Is buying a house the American Dream?

Here is the hypothetical scenario:
I buy a house = $150K
Downpayment = $15K
Years: 30 Years
Monthly Mortgage: $1300 excluding renovations

My Question: If I buy a house and get equity (depending on years) from it ? Is it a bad deal?
Depends on your end goal.

Do you see the house as an investment or your “forever” house?

Buying and living in a house expecting it to make you money over 30 years is stupid unless you’re lucky and buy in a hot area.

However, buying a wedge deal on a 30 year mortgage to rent out for passive income is one of the best ways to grow wealth over time.
 

GigMistress

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I have come accrossed this video: Is buying a house the American Dream?

Here is the hypothetical scenario:
I buy a house = $150K
Downpayment = $15K
Years: 30 Years
Monthly Mortgage: $1300 excluding renovations

My Question: If I buy a house and get equity (depending on years) from it ? Is it a bad deal?
Why would you pay $1,300/month? That leaves you paying more than triple the home value across 30 years. A 30-year fixed rate mortgage at 4% (slightly above the current average) would run you less than $800/month. Switch that to a 20-year with the same down payment and you'd still pay less than $1,000 and the full amount you'd pay is about half of what you show in your breakdown above.
 
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Ismails

Ismails

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Depends on your end goal.

Do you see the house as an investment or your “forever” house?

Buying and living in a house expecting it to make you money over 30 years is stupid unless you’re lucky and buy in a hot area.

However, buying a wedge deal on a 30 year mortgage to rent out for passive income is one of the best ways to grow wealth over time.
That's my problem because I haven't gone through the end goal. I was just thinking about house.
This is the hypothetical scenario.
Usually 15 years is ideal, not 30 years unless if there is any long term plan to stay in the city or something.
Thanks man. I appreciate you.
 
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Ismails

Ismails

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Why would you pay $1,300/month? That leaves you paying more than triple the home value across 30 years. A 30-year fixed rate mortgage at 4% (slightly above the current average) would run you less than $800/month. Switch that to a 20-year with the same down payment and you'd still pay less than $1,000 and the full amount you'd pay is about half of what you show in your breakdown above.
It's just a hypothetical scenario.
I just came up with that $1300 from one of my cousins.
I know there is something missing puzzle/variables in the process.
Yes you are right either 15 to 20 years is the ideal way to have the timeline.
Thanks for the response. I appreciate you.
 

minivanman

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It was not in my dream. We do have a house but it's not my idea, we had a beautiful apartment atop a hill that had a beautiful view but the lil woman wanted to move. I'm currently trying to talk her in to a 'condo' downtown on one of the highest floors. Or, if that doesn't work, I'll settle for a house built on top of the highest peak in that area...... but I'd prefer the 'condo'.
 

MoreValue

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I have come accrossed this video: Is buying a house the American Dream?

Here is the hypothetical scenario:
I buy a house = $150K
Downpayment = $15K
Years: 30 Years
Monthly Mortgage: $1300 excluding renovations

My Question: If I buy a house and get equity (depending on years) from it ? Is it a bad deal?
Why don't you pay at least 20% down? In my area that is a bad deal, for a 150k home here I can charge about $1200 single family, 2bed/1bath. But if you pay 20% down, you can actually have positive cash flow. Down payment too small, no cash flow.
 

PizzaOnTheRoof

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That's my problem because I haven't gone through the end goal. I was just thinking about house.
This is the hypothetical scenario.
Usually 15 years is ideal, not 30 years unless if there is any long term plan to stay in the city or something.
Thanks man. I appreciate you.
Why not 30 years?

You do know you don't have to sell the house...
 

elusive97

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I'd personally not get a mortgage. I bought a house outright years ahead of my goal which should've been a dream but it's ending up being my biggest financial regret.
 
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Ismails

Ismails

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Why not 30 years?

You do know you don't have to sell the house...
Damn. You read my mind

When it comes to equity and kids, then yes

For some reason, I have second thought which jacks me up
 

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Ismails

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I'd personally not get a mortgage. I bought a house outright years ahead of my goal which should've been a dream but it's ending up being my biggest financial regret.
You haven't got your equity from it ?
 

PizzaOnTheRoof

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Damn. You read my mind

When it comes to equity and kids, then yes

For some reason, I have second thought which jacks me up
You should. It's a big purchase.

I'd personally not get a mortgage. I bought a house outright years ahead of my goal which should've been a dream but it's ending up being my biggest financial regret.
I think it's all about expectations and goals.

My plan is to own real estate for passive income. I LIKE working on house projects. Some people get a headache from them.

If that's you then you should probably rent.

That said, I think finding a good property manager is highly UNDERRATED.
 

elusive97

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You should. It's a big purchase.


I think it's all about expectations and goals.

My plan is to own real estate for passive income. I LIKE working on house projects. Some people get a headache from them.

If that's you then you should probably rent.

That said, I think finding a good property manager is highly UNDERRATED.
This. If you're just buying a home for yourself to live in I'd honestly only do it when you had like 150% of the house price. That way you have money for the house, and anything that comes up unexpectedly after the purchase, and even after that you still have a good amount of savings to invest in your business or give you some security.
 

PizzaOnTheRoof

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Better than paying rent and watching money disappear into thin air.
I’m all for buying a house to rent out, but I disagree that renting a house is a waste of money.

You’re paying for shelter and convenience of never having to worry about repairs and a mortgage.
 

Silverfox148

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If you are planning to "own/buy" a house in the traditional American sense you should think twice. Traditional means that you will pay the minimum mortgage every month, live in it, when something goes wrong you will call a repairman/plumber/painter, etc, you will be upgrading the home , etc. The above will get expensive quick and I doubt any money can be made over holding the home long term.

In these cases it's a tough call, honestly you are better off renting. If however you actually want complete ownership(to the degree this is possible, yes the government still owns it via taxes) of the home as soon as possible and are willing to do whatever it takes to secure it, it makes absolute sense.
This means you will make significant extra payments on the principal and ideally have a plan to pay off the home in 5-10 years. In order to pull this off you will need to make big sacrifices if you are just a regular earner.

A home can help you stabilize and launch further ventures and push yourself outside your comfort zone, but if you are planning on traditional American home ownership it's not that great of a deal.
 

WJK

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I have come accrossed this video: Is buying a house the American Dream?

Here is the hypothetical scenario:
I buy a house = $150K
Downpayment = $15K
Years: 30 Years
Monthly Mortgage: $1300 excluding renovations

My Question: If I buy a house and get equity (depending on years) from it ? Is it a bad deal?
Like all of this type of question -- It depends! You don't have enough information to make a decision about your question.
 

Roli

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I have come accrossed this video: Is buying a house the American Dream?

Here is the hypothetical scenario:
I buy a house = $150K
Downpayment = $15K
Years: 30 Years
Monthly Mortgage: $1300 excluding renovations

My Question: If I buy a house and get equity (depending on years) from it ? Is it a bad deal?
If you buy a house, buy it to live in. Using property to make money should only be after you have already secured somewhere to live.

Whether it's a good idea or not will depend on your personal circumstances.
 

MattR82

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I hated it. Felt like it was locking cash away from me that I could use towards things that would make me money, and keeping me locked into a slowlane job for longer.

Started off as a cash neutral investment but a few bad tenants later and I couldn't wait to get rid of it.

I enjoy the freedom and flexibility in renting.
 

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I'd personally not get a mortgage. I bought a house outright years ahead of my goal which should've been a dream but it's ending up being my biggest financial regret.
why?
 

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CaptainAmerica

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YMMV, but here's my scenario:

I bought a house for zero down in 2011, at the very bottom of the housing market, for $147K. The house across the street was fixed and flipped a couple of months ago, and sold for $320K.

I bought it as a home base for my young adult children, and I've been renting out their rooms as they come and go. Now I'm about to move out and rent it fully to my youngest, who is keeping the long-term housemates.

I've been paying a bit extra on the mortgage every month, so I can use the equity (or cash) to do major repairs. In 5 years, when he moves on, I can sell it for $$$.

I didn't buy it to sell it, I bought it to live in. But my circumstances changed, and it's become both a liability and an asset. Selling when he doesn't need it anymore just makes sense.

There are a LOT of items that go into your specific 'should I buy it' algorithm.
 

Imgal

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Here's where I'm totally backwards on everything. I know in theory I should be all about the real estate game, but the truth is I'm also something of a wanderer / explorer who lives a very minimal life so it's always felt like a weight to me to own a place.

Having commitment issues is a real thing for me - whether it be people or homes! Sure when I eventually mature and settle down the roots will come with it!
 

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I will never NOT have a mortgage. Seems like I get richer every time I take out a mortgage. That being said, I wouldn't take out a mortgage unless that mortgage is going to make you money, and I don't mean "barely enough to cover the mortgage" money. Make sure you have a plan to utilize that house for more than just eat/sleep/sex. You can buy an RV if that's all you need.
 

Kevin88660

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I have come accrossed this video: Is buying a house the American Dream?

Here is the hypothetical scenario:
I buy a house = $150K
Downpayment = $15K
Years: 30 Years
Monthly Mortgage: $1300 excluding renovations

My Question: If I buy a house and get equity (depending on years) from it ? Is it a bad deal?
Depends on your financial position.

Do you have consistent income to support a mortgage?

Are you settled down in one city?

Do you have other investment options that yield a higher return than buying a house?
 
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Ismails

Ismails

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Depends on your financial position.

Do you have consistent income to support a mortgage?

Are you settled down in one city?

Do you have other investment options that yield a higher return than buying a house?
The Answer is yes except the last question. My focus & curious is on Equity.
Is it a good deal to have equity if I stay 5 to 8 years - something like that?
 
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Ismails

Ismails

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YMMV, but here's my scenario:

I bought a house for zero down in 2011, at the very bottom of the housing market, for $147K. The house across the street was fixed and flipped a couple of months ago, and sold for $320K.

I bought it as a home base for my young adult children, and I've been renting out their rooms as they come and go. Now I'm about to move out and rent it fully to my youngest, who is keeping the long-term housemates.

I've been paying a bit extra on the mortgage every month, so I can use the equity (or cash) to do major repairs. In 5 years, when he moves on, I can sell it for $$$.

I didn't buy it to sell it, I bought it to live in. But my circumstances changed, and it's become both a liability and an asset. Selling when he doesn't need it anymore just makes sense.

There are a LOT of items that go into your specific 'should I buy it' algorithm.
Thanks for the reply.
Thanks for the calculator
 
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Ismails

Ismails

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I’m all for buying a house to rent out, but I disagree that renting a house is a waste of money.

You’re paying for shelter and convenience of never having to worry about repairs and a mortgage.
Man you raised the great point.

When it comes to repairs/renovations, it costs extra money
 
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Ismails

Ismails

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Depends on your end goal.

Do you see the house as an investment or your “forever” house?

Buying and living in a house expecting it to make you money over 30 years is stupid unless you’re lucky and buy in a hot area.

However, buying a wedge deal on a 30 year mortgage to rent out for passive income is one of the best ways to grow wealth over time.
When you say "Wedge Deal" - like buying a house below market price ?
 

PizzaOnTheRoof

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When you say "Wedge Deal" - like buying a house below market price ?
Yes, below market price, usually around the 60's-80's era when construction standards were still relatively modern.

The shaggier the carpet and popcornier the ceilings the better ;)

First time home buyers won't go near them and flippers can't pay as much as you since they need that margin built-in.

When you wedge and rent, you're in for the long haul. That's where the money is made.
 

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