Explain to me why I'm wrong

amother

OP ↓

Tue, Nov 21 2023, 7:47 am

I know officially I'm wrong but I don't really understand finances enough to know why and right now I'm annoyed.
We used to live in a beautiful apartment in the center of our community and paid rent. All we had to do was pay rent and the rest of the the worries were taken care of by the manager.
We saved up so much money, bought a house on the outskirts of our community where it is affordable and now we are constantly needing to spend money on house things.
I have siblings who still rent like we used to and I wonder if we are the idiots who were so determined to buy a house because it's the right thing to do but we are always spending. They have so much more available funds because they don't have to repaint or fix the plumbing or have lawn equipment, the list is endless.
I wish we didn't buy and lived blissfully in an apartment. We could have used the money we spent on the house for lifestyle choices or savings for simchas.
Why is owning a house the better choice?????

HonesttoGod

Tue, Nov 21 2023, 7:51 am

In theory you are right, but having a house is having an asset. It adds to your net worth.
If things go belly up you have your house to sell and you can move back to a rental. If you need you can always remortgage.

If you rent, you don’t have that.

amother

Anemone ↓

Tue, Nov 21 2023, 7:55 am

I may be 40k in debt right now, but I also own a house that’s worth a million dollars and the bank only owns about $300K of that. So I may feel like I am struggling (I am) but I am actually way better off than my friend who is renting and may have $50k liquid assets in the bank

watergirl ↓

Tue, Nov 21 2023, 8:13 am

You have the stability of knowing your landlord will never decide to sell the apartment and leave you with the high stress and cost of moving.
You know your rent won't suddenly be increased (read the threads here re: high rent increases).
You can repair any issue without having to justify it to the manager.
You don't have to worry about a change in management.

You have the asset of home security. It's priceless.

amother

Glitter ↓

Tue, Nov 21 2023, 8:18 am

Just to delve into the asset part more- you can save let's say $80,000 to put down 20% on a $400,000 house because you're saying it's on the outskirts of your community and it's small.

Usually especially in Jewish neighborhoods even the outskirts become the center and before you know it that house is worth $600,000.

That means that you suddenly have $200,000 to dip into if you need to. That's 120k more than u put in. In general real estate tends to be the best investment.

My parents were not able to save a lot of money but they used the Equity of their house to marry off nine children over 20 years, without borrowing money from a single person. The way my father always put it- dipping into your home equity is borrowing money from yourself.

People in my neighborhood bought their houses for $300,000 and then sold them for eight at the height of real estate recently! Other people refinanced based on the new value and walked away with 5/ 600,000 to help build a new home or a large extension

amother

Thistle ↓

Tue, Nov 21 2023, 8:28 am

The equity in your house is worth it. I bought 9 years ago for 525k. Now my house is worth 1.3 mil.

You also are paying towards your own and can't be kicked out of an apt. At a certain point it's very hard to move apts and they keep going up as well.

amother

Camellia

Tue, Nov 21 2023, 8:34 am

Some people don’t want to own. It is indeed a huge expense to own and maintain a house.

The greatest benefit of home ownership is owning something of great value.
If you can keep up with the monthly payments, you hold on to the house. If not, then you have to let go of it.

amother

Steel

Tue, Nov 21 2023, 8:35 am

amother OP wrote:

Simply put, it's short term pain for long term gain.

As others have pointed out, you're investing in an asset which has significant long term returns. (Even the Torah advises a person to own real estate.) Your family members are choosing to enjoy their money now, but will having nothing to show for it later.

amother

Birch

Tue, Nov 21 2023, 8:43 am

On one hand you're right. It's simpler and probably cheaper to rent. I don't think it's a right or wrong situation. It's pros and cons...
Some benifits to homeowning.
1. I bought a house about 3 years ago. The value has gone up a lot so I can now take out a 300,000 dollar loan if I would need. Think marrying off kids. Or investing that money...
2. If chas vshalom I'm once in a really bad situation financially, I can sell my home and get back what I put into it plus how much it went up in value and rent an apt. If I get back what I put into it it's almost as if I was living for free.
3. I know someone that is renting for years in brooklyn. They are getting older and would love to move to Monsey. They simply can't afford to buy a home now. Had they paid their mortgage all these years instead of rent, they could've sold their home now and buy in Monsey. Now they have nothing.

Lastly I just want to validate you. It's hard to keep putting money into a house. For the same price you could rent something much nicer and newer. It's not an instant upgrade in quality of life to buy.

amother

Outerspace ↓

Tue, Nov 21 2023, 9:11 am

I am not sure how wrong you are.
I too bought a house because it was the financially “right” thing to do.

My house has not doubled or tripled in value. It is 20 years and I can maybe get 25% more out of it. Between property tax (ours is very high), interest fees, and maintenance/ repair costs, I don’t think we vac are saving that much on disposable (you don’t get back) costs.

When I sell my house, I will have other fees -like a broker and the cash is not just mine.

My parents never bought a house and they were able to invest in many other things with a much greater return on investment. I do not know that I would buy again.

mfb

Tue, Nov 21 2023, 9:16 am

And I know a couple who had to move to a new rental in their 70s because the landlord was niftar and the kids sold the house.
That is hard and also at that age their rent suddenly went up much higher than it was until then

amother

Stoneblue

Tue, Nov 21 2023, 9:21 am

I don’t know where you live but in the last few months I heard from tenants the following stories;

Landlord doubled rent (2500 to 5000)
Landlord gave 6 weeks notice to someone in third trimester to move
Landlord promised tenant they can have apt long term and kicked them out after 4 years (they put a lot of money into apt)
Landlord started charging for parking after living there 5 yrs….

The list goes on and on…. And for all those saying is illegal…. Court and bais din also cost money and they can always say they need it for themselves…

So yes, stability is a good investment

amother

↑ OP ↓

Tue, Nov 21 2023, 9:22 am

amother Glitter wrote:

Can you explain to me how equity works? What does it mean to dip into? What gets better if the value gets better if you don't plan to move?

amother

Natural

Tue, Nov 21 2023, 9:24 am

I am friendly with a woman in her upper 70s. Her husband is 80. They recently had to move because the landlord wanted the apartment back.
They had to find something suitable for them, and in their price range. It was very difficult.
And they couldn't do the move themselves and their children don't live nearby.
She was a mess for weeks.

Home security is a huge thing.

I hated renting and I'm so happy no one can kick me out of my house now.
And my home tripled in value in under 10 years.

amother

↑ Anemone ↓

Tue, Nov 21 2023, 9:30 am

amother OP wrote:

Im referring to living in buildings. That's what people live in near me and they are rent stabilized. You can have a large 3 bedroom beautiful apartment forever and there are many people who do.

That may be true.
But I bought my house for 500k 3.5 years ago. Now it’s worth 1 million.
You tell me who’s better off. I literally got free money if there is ever a time I really need it.

amother

↑ OP ↓

Tue, Nov 21 2023, 9:35 am

amother Anemone wrote:

That may be true.
But I bought my house for 500k 3.5 years ago. Now it’s worth 1 million.
You tell me who’s better off. I literally got free money if there is ever a time I really need it.

Can you explain what this means - got free money?

amother

Darkblue

Tue, Nov 21 2023, 9:35 am

Personally I prefer to live in a house with property than an apt. But putting that aside, I agree with the posters who mentioned taking out a loan to marry off kids. My house is worth double what I paid, and while I hope we have enough to marry off our kids without taking out a loan, I know I can rely on it as a backup. Same with retirement - if needed can sell the house and downsize.