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Forum
-> Household Management
-> Finances
amother
OP
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Tue, Jun 16 2020, 7:49 pm
Looking for some advice and opinions on whether it’s worth it for me to even consider buying a house which is such a big expense just for the sake of owning something and having equity if my family and kids are currently happy with the status quo? I currently live in a wonderful neighborhood with friendly neighbors, and great school for my kids. I have a small family. Our income is reasonable for our family size, but don’t have much savings for a down payment nor for house repairs and maintenance. We live in a rent stabilized apartment building so our rent is very reasonable for my neighborhood for a very spacious apartment. We only pay for electricity. Really don’t want to move out of my neighborhood for the above mentioned reasons. The only thing missing is a yard for my kids to play in and big size kitchen. (My nice neighbors let my kids play in their back yards.) Is buying a house really such a necessity?
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Fave
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Tue, Jun 16 2020, 7:51 pm
If you don’t want to move then you can considering buying a house for an investment.
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Amarante
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Tue, Jun 16 2020, 8:22 pm
Many people with rent stabilized apartments they are happy with don’t move to buy homes. Think of all the relatively affluent renters in NYC. Some might buy a vacation home.
But do consider financial ramifications. For many people, a home which is paid for is a significant asset when they retire so you should be thinking about saving money you would be spending on a home to build other assets. Also, for some people the actual cost of a home is less because of tax savings but this has become less important under the new tax laws.
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mra01385
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Tue, Jun 16 2020, 8:31 pm
Yes we just started investing in a mutual fund.
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amother
Gray
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Tue, Jun 16 2020, 9:38 pm
If you don’t have savings, how do you plan to pay for the down payment? And housework? And maintenance which will come up over time and there’s no longer a super/lanlord to call to fix it.
If everything is fine now aside from the backyard (which understandably is a big deal) is start saving as aggressively as possible (use a budgeting app if needed) until you have at least a down payment and some extras for emergency saved
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Radish
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Tue, Jun 16 2020, 10:21 pm
Wouldn't advise to start looking until you have the funds. And renovations/repairs always costs twice as much as you anticipate.
But if it's something you're considering, (if it's bothering you) you should definitely start saving toward it.
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amother
Tan
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Tue, Jun 16 2020, 10:36 pm
If I were you I would not move. You are happy with what you have. If you want assets then buy something and rent it out or buy a vacation home.
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amother
Beige
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Tue, Jun 16 2020, 10:46 pm
I would not buy in your situation. I would focus on saving enough for a down payment, emergency nest egg and invest a little money too. Once you’ve done that, then it would make more sense to buy.
I chose to buy because it made sense in my situation. I live in an area that does not have rent control. I bought when the market dropped 10 yrs ago. And I only bought what I could afford. I’m glad we bought when we did because rents have doubled in my area. We couldn’t afford to rent a house now, not with also daycare and tuition costs.
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mra01385
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Sun, Jun 28 2020, 12:36 am
My question is how important is it to ever buy a house? What are the main reasons people buy a house?
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BH Yom Yom
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Sun, Jun 28 2020, 1:09 am
mra01385 wrote: | My question is how important is it to ever buy a house? What are the main reasons people buy a house? |
Important? Depends on the person and their circumstances. Some of the main reasons could range from stopping having to pay rent, to avoid possible eviction, to avoid neighbors making loud noises directly above your head at random hours, building equity, a home base and the security that comes with it, the freedom to make your own rules rather than being bound by apartment complex regulations.
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mra01385
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Sun, Jun 28 2020, 8:34 am
What if I’m happy paying rent and don’t mind living in apartment building, is it an unwise decision to never buy a house and not have the equity buildup?
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amother
Aqua
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Sun, Jun 28 2020, 8:44 am
mra01385 wrote: | What if I’m happy paying rent and don’t mind living in apartment building, is it an unwise decision to never buy a house and not have the equity buildup? |
So invest the money elsewhere. You might even want to invest in real estate, if you already own stocks. Many people buy a house because it forces them to put money into the equity. If you are disciplined enough to save without it, you should be fine.
The downside is that you may have to move at an inconvenient time, and you can't renovate to your taste. But if that doesn't bother you, by all means, keep renting.
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mra01385
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Sun, Jun 28 2020, 9:00 am
To aqua, we just started investing in mutual funds and we are putting in a little bit every month.
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amother
Bisque
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Sun, Jun 28 2020, 9:35 am
I’m in your situation I do pay low rent though. And we’ve been chewing over it but logically and financially it does not pay for us to buy a house! I refuse to borrow money for a down payment that would put me in massive debt. Now I’m paying my bills living decent. Buying a house would cost me a minimum of $2,500 more a month.
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amother
Cyan
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Tue, Jun 30 2020, 12:22 am
I don’t think that there’s a right or wrong answer to this question. It’s about your own preferences. Would you feel bad if you miss the window of opportunity, and then come to the stage of marrying off kids be”h without owning a home? Will you feel left behind if and when all of your friends and siblings own and you don’t? Try to think ahead.
If home ownership provides financial assets, maybe work out a different financial plan for long- term if that’s feasible.
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amother
Silver
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Tue, Jun 30 2020, 12:45 am
We've rented for the past 15+ years. Sometimes apartments, now a house.
I will not even consider buying unless the purchase will significantly improve our quality of life. I have my eye on a house that would do that, and if/when IY"H it goes on the market we will do all we can to buy it!
But if not, renting is good enough.
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amother
Vermilion
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Tue, Jun 30 2020, 7:30 am
For most people, their mortgage payment is built in savings- when they pay it off after 30 years, they are sitting on the value of their home, and they can sell it and walk away with cash.
Nobody stops paying their mortgage to go on vacation.
But some people do pause on their savings and investing to go on vacation. That's where the gap really is.
OP, you can't just put a little into the mutual funds, you have to put a lot. And you have to view it as important as your monthly rent payments.
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amother
Salmon
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Tue, Jun 30 2020, 7:41 am
Perhaps buy something you can rent out, an apartment, bungalow in the mountains (summer rental) etc.
In Israel this is common
For example parents buy for their kids. The kids rent it out and they rent somewhere else that makes financially more sense to them
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mra01385
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Tue, Jun 30 2020, 9:20 am
To vermilion after my monthly bills and expenses I don’t have that much money extra money to put into the mutual fund.
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SixOfWands
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Tue, Jun 30 2020, 11:18 am
amother [ OP ] wrote: | Looking for some advice and opinions on whether it’s worth it for me to even consider buying a house which is such a big expense just for the sake of owning something and having equity if my family and kids are currently happy with the status quo? I currently live in a wonderful neighborhood with friendly neighbors, and great school for my kids. I have a small family. Our income is reasonable for our family size, but don’t have much savings for a down payment nor for house repairs and maintenance. We live in a rent stabilized apartment building so our rent is very reasonable for my neighborhood for a very spacious apartment. We only pay for electricity. Really don’t want to move out of my neighborhood for the above mentioned reasons. The only thing missing is a yard for my kids to play in and big size kitchen. (My nice neighbors let my kids play in their back yards.) Is buying a house really such a necessity? |
Bubbles aside, real estate usually increases in value, so its a means of accumulating wealth.
That said, you're in a rent stabilized apartment, so your rent will not be increasing precipitously, and you're happy where you are. So there's no reason not to use other avenues of investment. If our rent stabilized apartment had been big enough, we never would have moved.
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