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People keep telling me to buy a house. I'm currently single and I just don't feel like buying a house will benefit me anyway at all. I want to wait until I'm married then buy a house. Is it a good idea?
 

trailerpark

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You should only buy a house if you want to buy a house. Read Suzy Orman's "The Money Class" and learn to stand in YOUR truth.


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mentos

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Nope terrible idea. If you're young and single then chances are you'll probably move, switch jobs, find a spouse, etc in the next few years. When you get married then your wife will want a different house anyway. There's no need to be tied down to a place when you have no idea if you're going to be there in 10 years. Can't go on many nice vacations when you have a mortgage. Plus, if you get laid off how will you pay for it? At least when you're married there are 2 incomes (hopefully). I would say 7 years is the minimum amount of time that you should own a house before selling, if you sell prior to that then you hardly gain any equity after the fees and taxes.

My wife and I can hardly keep our 1-bedroom apt clean, imagine how much more work an entire house w/yard is by yourself.
 
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Depends... If you like to stay in the same area and have no intention of moving for a very long time then you can buy a house. House severely limits your ability to pack up and move. You might get a different job, your spouse might get a job far from you, you might have kids and you are convinced your house school district sucks, you might not want to stay in the same area forever. House carries tons of additional expenses: mortgage, property taxes, home Insurance, HOA, mello-roos, furnitures, gas, electricity, phone, cable/TV, internet, water, landscaping, repairs, pest control, emergencies. It ain't cheap to own a house. Are you ready for to pay for all of that?

Most people just don't stay long enough with the same house to make money off a house investment. You can, however, turn it to a rental if you decide to leave the area if you don't mind to be a landlord. You have to stay at least 5-10 years to make a good chunk of profit because whenever you buy a house you take -10% hit immediately from the purchase price (3% buyers agent commission+3% seller commission+3% closing cost+1% MISC fee). If you sell it immediately, you will lose a LOT of money.

A nice tidbit, sometimes it's nice to have a separate property before marriage. That house you buy before marriage can be yours only, not community property as long as you don't commingle the property with your future wife (don't pay the mortgage from joint account,don't fix the house with joint money, don't live in there together - buy another house after marriage). If your wife decides to divorce you 20 years down the road for whatever reason, guess what? She can't have the house you bought before marriage.
 
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BidingMyTime

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If you don't want a house and the responsibility that goes with a house (maintenance, yardwork, etc.), then don't buy a house. Financially, if you plan to stay in an area for several years, then its better to buy a house--you will be building equity, instead of building equity for your landlord. So like anything, the best decisions for you, will be the decision that fits your lifestyle, not just the decision that looks the best on paper.
 
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DaftRx

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I bought my house in 2013 as a single guy 2 years after graduating and it has served me very well. There are certain factors that you should consider before buying, though. Don't be forced into it, it's a big commitment.

I'll use my situation as an example. I was working retail and my store was 15 minutes from where I was currently living and where I was looking to buy. My budget (135k) allowed for a decent mortgage payment and the rates were great. I qualified for an FHA loan which required very little money down.

First and foremost, I was happy with the area I was living in. Growing population, near a major city and great schools. I was fine with pulling the trigger to move to somewhere more permanent. I was tired of apartment living and wanted some place quieter. I didn't have any desire to pick up and move to another part of the country. The job market was still good if I wanted to get out of retail.
Second, the amount I was looking to mortgage would result in a payment less than what I was paying in rent. To me, why throw away more money on a lease when I could pay less, for a bigger space, while building equity.
Third, the home I ended up buying, a town house, had little upkeep. Everything outside my door is dealt with by HOA.
Lastly, resale potential. The home I bought was in a great area with great schools. It was on the lower end of the price bracket for the area and a good pick for first time buyers or down sizers.

I got married 2 months ago. My wife and I decided to build a home near where we live. We sold my home in under 30 days and are netting close to 20k on the sale.

tl;dr Evaluate your wants and needs, your budget and the market you're potentially looking at buying into.
 
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confettiflyer

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It depends, there's no hard and fast advice, you're gonna have to calculate based on your numbers and plans (as stated above already).

Google "New York Times rent vs. buy calculator" for a pretty decent link NYT put out last year as a start.


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ldiot

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If you have a stable job and you have paid your student loans I don't see any reason not to. It really depends on your financial situation and your priorities. Don't buy something just because someone told you it's a good idea.

I personally plan on living at home or renting as cheap as possible until I at least pay my loans off. I will probably start off as a floater anyways so seeing as there is the possibility of being placed in a permanent store the flexibility is important.

Once my loans are paid I will only assume I will be single at that point so I'll just buy something small and cheap and upgrade it/redesign/renovate at my own pace for fun. Maybe I'll sell it for a profit and buy something nicer or maybe I'll stay; it just depends on my priorities and situation at that point.
 
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i brought a 2 bedroom condo this year. currently renting it out to a young couple with a kid (property is right next to the elementary school). PITI + condo fee and gas/water payment is 1350. renting for 1800. I am single.
 

PharmDBro2017

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If you don't want a house and the responsibility that goes with a house (maintenance, yardwork, etc.), then don't buy a house. Financially, if you plan to stay in an area for several years, then its better to buy a house--you will be building equity, instead of building equity for your landlord. So like anything, the best decisions for you, will be the decision that fits your lifestyle, not just the decision that looks the best on paper.
I agree. It's a better investment to own a house rather than throw money out the window renting an apartment, and having nothing to show for it when you move out god knows when later, imo.

It does come with pros and cons though.
 

gwarm01

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I agree. It's a better investment to own a house rather than throw money out the window renting an apartment, and having nothing to show for it when you move out god knows when later, imo.

It does come with pros and cons though.
I've heard the "throwing money out of the window" argument my entire life, but it's really not that simple. Whether you rent or have a mortgage, you are paying a monthly fee to have a roof over your head. If you plan to never leave your current city, then owning makes a lot of sense because you will gain equity over time. However, as a young professional early in your career, there is a good chance you will change jobs and move cities more than once. Getting a mortgage requires significant upfront investment that you could easily lose due to a layoff or job change. In the past three years I have moved three times, and I am grateful that I didn't buy a house each time.

I say this as someone who lives in the South and bought a house at age 22 while still enrolled in college because it's just that cheap here. I actually moved back into this house after taking a job in my original city after a getting a few years of experience elsewhere, so it has worked out nice for me. I'm about 8 years in on my mortgage and have finally accrued enough equity to make selling viable, but I plan to stay here as long as possible because it's very affordable and suits my needs (aside from the crappy DSL).
 

confettiflyer

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There are definite financial advantages to "throwing away money on rent" each month (I've always hated that phrase).

But that usually entails investing the remainder cash you have, which usually doesn't happen.

Homeownership, for most people, becomes a forced savings plan in an asset that barely keeps up with inflation.

Houses aren't investments...well, they are, but they're really bad investments.


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Houses aren't investments...well, they are, but they're really bad investments.
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I wouldn't say that. Depending on your location and if you have the money upfront, you can make a decent profit from it.
 

ldiot

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People always say that renting is throwing away money while with buying you are building equity, but it's not that black and white in my opinion.

When a title is transferred there are fees. The realtor is taking a commission, taxes are paid, closing costs, etc. In essence, money is lost to third parties whenever a house is bought or sold. So if you are moving every couple of years any equity you would have built is eaten up by the cost of the transaction. When you account for property taxes you may even lose more money than if you were renting, even if the house is bought and sold at fair market value.

When you buy a house for the long term, the cost of the transaction is less significant because the proportion of equity built to transaction costs is much greater.

For example, you buy a house for 500k. You build 30k in equity over 2 years, then sell the house for 500k. Your realtor charges you 30k (6%) so all equity is lost, plus you paid property taxes, mortgage origination fees (up to 2%, which would be 10k), mortgage interest, closing costs, upkeep, utilities, etc. Renting a cheap apartment may have actually been cheaper and offers greater flexibility. Don't get me wrong, I am in favor of buying for the long term, but if you are unsure of your goals and have student loans to worry about there is no reason to buy a house right away.
 
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Momus

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I wouldn't say that. Depending on your location and if you have the money upfront, you can make a decent profit from it.
Historically, house price goes up around 3% a year. To think that houses everywhere will go 15-20% up year over year is foolish. In very select market, it will experience fast boom due to surrounding economy in that locale. Houses right now are predicted to only return 3% price increase next year.

The more money upfront, the less profit you make on an appreciating house. House only gets 1 thing going as investment vehicle. Leverage. 5-10x depending on how much you put downpayment. Learn that word before you "invest" in a house.
 

confettiflyer

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I wouldn't say that. Depending on your location and if you have the money upfront, you can make a decent profit from it.
That's like saying...depending on how lucky you are and if you have the money, you can make a killing in the stock market.

Except you can't just decide to buy a house on Monday and sell it on Friday when it jumps 25%.

That's why a house is a terrible TERRIBLE investment. Don't buy a house to invest, unless you're really out there to speculate and take fees/carrying costs into account. Buy a house because it gives you a place to live in a place you want to live that is close to work, in a good school district (if applicable, and obviates the need for private school tuition), and brings you joy.

Don't sink $$$ into a single asset thinking it's your ticket to easy street.

But I get it, there's a TON of TV shows on buying/flipping and being a real estate flipper mogul is kind of sexy....buying and holding SPY for 30 years...really isn't sexy.
 

TheBlaah

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Historically, house price goes up around 3% a year. To think that houses everywhere will go 15-20% up year over year is foolish. In very select market, it will experience fast boom due to surrounding economy in that locale. Houses right now are predicted to only return 3% price increase next year.

The more money upfront, the less profit you make on an appreciating house. House only gets 1 thing going as investment vehicle. Leverage. 5-10x depending on how much you put downpayment. Learn that word before you "invest" in a house.
Eh. I basically started buying/leasing after the housing crash, so for a little while it was a major boon (houses basically doubled in the first 2 years). But's it's definitely slowed down, but it can still be done with certain houses in a select area. My property prices have been increasing, on average, around 15% a year the last two years. If you're able to establish a relationship with a good maintenance crew and realtor, you can cut a lot of costs there as well (4% total for buyer/seller agent).
By money upfront, I was referring to the down payment to eliminate PMI and other possible fees.

In any case, to the OP, you *could* save money by buying a house, but that reason alone doesn't justify it especially in your situation.
 

Momus

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Eh. I basically started buying/leasing after the housing crash, so for a little while it was a major boon (houses basically doubled in the first 2 years). But's it's definitely slowed down, but it can still be done with certain houses in a select area. My property prices have been increasing, on average, around 15% a year the last two years. If you're able to establish a relationship with a good maintenance crew and realtor, you can cut a lot of costs there as well (4% total for buyer/seller agent).
By money upfront, I was referring to the down payment to eliminate PMI and other possible fees.

In any case, to the OP, you *could* save money by buying a house, but that reason alone doesn't justify it especially in your situation.
I love when people talk based on their own particular lucky experience, at a specific location, and at a specific time line vs. the general trend 100 year history in the US on a very long time line. It makes them sound really really smart.
 

confettiflyer

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I love when people talk based on their own particular lucky experience, at a specific location, and at a specific time line vs. the general trend 100 year history in the US on a very long time line. It makes them sound really really smart.
Eh. I basically started buying/leasing after the housing crash, so for a little while it was a major boon (houses basically doubled in the first 2 years). But's it's definitely slowed down, but it can still be done with certain houses in a select area. My property prices have been increasing, on average, around 15% a year the last two years.
That is essentially saying "I was alive in 1985 and bought 1000 shares of AAPL."

I mean I get your point and I see you've acknowledged this about pockets of area, but honestly, most people ignore this and all they see is the glory of 15% appreciation per year and doubling their "investment" in a bubble.
 

TheBlaah

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I love when people talk based on their own particular lucky experience, at a specific location, and at a specific time line vs. the general trend 100 year history in the US on a very long time line. It makes them sound really really smart.
I never said it was ubiquitous. All I said was that houses are not always a bad investment. If you do your research and offset your costs (live in it, rent out other rooms/lease it, learn how to property manage, tax deduct costs, ect), you should come out ahead (especially so compared to renting) in terms of finances.

But yes, I'd say it's probably not as passive as 401k or stock markets. It'll require more time and effort depending on their circumstances.
 
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wow a lot of pessimistic nay-sayers over here about housing investments. no true real estate investor is pouring all their money into a property and solely counting on heavy appreciation 5-10 years from now. experienced investors know that the profits from owning and managing as well as the equity accrued is the cake while appreciation should be seen as the icing.
However, I do agree that you must tailor any investments to your situation. How much disposable income do you have? how much student loans do you have to pay off? how much capital do you have saved up? what other investments are better for your to sink your money in at the moment? do you have a rent free place to live at the moment? just the fact that you are single is not enough information to answer this question
what people here are failing to tell you as well is the extreme tax benefits you get from home ownership. like the person above who mentioned taxes, utility payments, mortgage interests, forgot to mention that you get a chunk of that back on your tax returns. You can also claim many deductibles from any purchases for your home. not to mention the massive chunk you get from depreciation of a rental property.
In the end, you have to crunch the numbers and do the work before you make any decisions. Don't listen to general blanket statements like "All housing investments are bad investments" or "everyone who rents is throwing money out the window".
 
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Carol is Alpha

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There's an old saying in the radio industry, " Don't buy a house," due to the flakiness of gigs. Same applies to pharmacy. To take on any kind of long term liability as a pharmacist is not prudent. Oh you might have a cake job at a low volume grocery store now, but there's going to be consolidation as this retail bubble unwinds and paradigms shift with drones and Big Data ( Google Health & Amazon).

Stay liquid and heal your balance sheet during the fat years. There will be grand opportunities to buy later.
 

rxdawg21

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I think people are discounting the tax benefits of home ownership and are not comparing apples to apples in terms of same price rental and home. In the 3 major area's I have lived in my short time, I could buy a nicer place then I rented and pay the exact same amount in insurance, mortgage, and property taxes (talking about a place for 150k, compared to renting a place for 900-1k) or a 200-250k place compared to renting for 1300+. My state income taxes alone make up for the personal exemption so every dollar I pay in real estate taxes and interest saves me about 30% in taxes. That is several thousand dollars a year you get to keep, granted both places I have owned have been new and not much upkeep, one is now a rental I plan to sell in the next 2-3 years and was a unique situation that I got lucky in. The biggest expense to me is lifestyle creep, in an apartment I was okay with cheap furniture and lack of decorations, in a house (and with a wife) our furniture and decoration costs have gone up. However all things equal I am saving several thousand dollars a year, live in a better place, and am building equity slowly but surely. Unless you live in booming market you need to keep a place you buy 5+ years minimum and make sure you don't buy the nicest house on the lot, and that you are in an area of town that won't be difficult to sell out of and is priced to keep out the riff raff that comes with lower income areas. The only way renting would come out ahead for me personally is to have roommates, and heck I did that even as a homeowner for my first 2 years.

In my current town I was renting a house worth about 90k for $850 a month with a $200+ power bill monthly due to it being built in the 60s and just an awful bathroom and kitchen. Now my mortgage with everything is 1400 a month, place 3 times the value, and I'm the smallest house in a very nice neighborhood for my town (one of the best in the mid-smallish town). My savings in taxes alone amounts to over 200 a month in mortgage payments and my power bills has been half the cost and I no longer have a water bill (well water). So I'm really paying 150-200 more a month for a way nicer place that I get to build equity in and that I'm not miserable living at. Comparable price rent wise would be a place that is worth about 150k to buy (yes our rental market is awful, supply sucks, cost is ridiculous for the size/income of the town). I noticed this same trend in the other two towns I have lived in, one being one of the bigger cities in Georgia, and another a big one in SC
 
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Carol is Alpha

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There are other variables to throw into the calculus.

1. RE tax creep. In reality, unless you have allodial title, you will always be paying rent even after the note is paid off. It's sad to see retirees have to sell homes long paid-off b/c depleted nest eggs couldn't generate the cash flow to cover ever increasing prop taxes. Imagine the pickle some are in now after 8 years of ZIRP. All the 5 year CDs have rolled over at 1-2% and SS hasn't been meaningfully raised. Yet that hasn't stopped municipalities from having 3 fire chiefs on the payroll. 1 active, 2 retired collecting mucho pensions. Take Illinois and Shytown as examples. Utter mess. Just the first to have the pension crisis.

2. What if government subsidies are pulled? The tax reform packages usually have the mortgage deductions pulled.

3. What if Fannie/Freddie are no longer there to provide the liquidity? What if finance reform curtails securitization of mortgages? What happens to home equity across the board if the easy money spigot is no longer there?
 

confettiflyer

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I think people are discounting the tax benefits of home ownership and are not comparing apples to apples in terms of same price rental and home.
I disagree, I think most people (in general, not SDN), overstate the tax benefits of home ownership and underestimate the carrying costs ("You mean I need to clean my gutters every year?)

I think most of the advice filled out here implies tax benefits need to be accounted for.


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pezdispenser

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I'm interested in seeing some actual home ownership costs to compare, so here's mine:

Annual
$4,400 property taxes
$900 insurance

Monthly
$360 HOA includes lawn & yard maintenance, cable TV, alarm monitoring, clubhouse, pool, tennis court, gate security
$60 average electricity ($35-$85 range)
$42 water
$52 internet and home phone line

Total $956/mo

Edit: Forgot to say that I've already paid off the mortgage but the house is worth around $420k so a 20% $84k downpayment plus a $336k 30 yr 3.5% mortgage would have a payment of $1,509.

So PITI would be $1,951 and the grand total would be $2,465.

Edit: Since I don't pay any state income tax in Florida, my housing deductions ($4k property taxes, no mortgage interest) and $1k state sales taxes don't add up to more than the $6,300 standard deduction, so I'm not receiving any specific deduction from owning a home.
 
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rxdawg21

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Mine:

Property 1: 3 bed/2.5 bath
Down payment/closing costs: $<1k
PITA payment: $950
Rent Payment coming in $1200 plus an annual event in the city that nets me another 4k a year in addition to rent for month.
I do not pay utilities, water averages $50, internet is $30, power $90
HOA $520 yearly
Total is 1163.33 a month if I paid utilities and added HOA.
Very little equity~10k, hope to sell in next 2-3 years as my ARM is eligible to increase at that time, will have close to 20k equity at that time or >10% of home value.

Property 2: 4 bed/3bath
Down Payment 10%
closing costs ~6% of house (one realtor got just over 3% plus normal closing cost fees)
Equity >10% close to 15-20% (got a good deal added a covered screen porch for very cheap)
Power 110
Internet+cable 110'
Gas 25
HOA 250 yearly
PITA +PMI 1400 (PMI is 79 a month)
Total: 1665

Property Rented in same town as property above (before we bought) 3 bed/2bath (master bath was a sink, shower, toilet all in a tiny crammed room, awful kitchen etc)

$850 Rent
$200 power
$40 water
$30 gas
$110 cable/internet

Total: 1230

To rent a comparable property would be $1700 in my town, to rent a comparable property to my 1st property would be $1200, $1100 if lucky (very rare only 8 I know of ( a complex of duplexes). The $1100 would be 2 bed 2 bath where my property 1 is 3 bed/2.5 bath

Tax savings year 1 of property 2:
8400 in interest payments, 2000 in tax for a total of 10400 in itemized deductions (above the 7k state tax we pay)
total of 3536 a year in tax savings at 34% rate at that income level it is reducing (reducing income from 28% tax bracket, plus 6% state) or $294 a month in tax back to me effectively lowering my monthly payment to : $1371.

So Mortgage plus utilities (all something I would pay on a comparable house to rent) -tax benefit is 1371 a month.

Rent on comparable house $1700 a month+about $300 in utilities.
Net savings of $630 per month to own, plus building equity. No brainer in my neck of the world (obviously if you live here for 2-3 years the transaction costs of buying and selling is eating at that logic)


Even if I stepped down to the $1200 a month property that is smaller, but comparable to property 1 I own, I am still coming out with a monthly savings.

Forgot to throw in the $4k a year in Principle reduction on year 1. Obviously principle increases, and interest decreases each year.
 
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BMBiology

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I disagree, I think most people (in general, not SDN), overstate the tax benefits of home ownership and underestimate the carrying costs ("You mean I need to clean my gutters every year?)

I think most of the advice filled out here implies tax benefits need to be accounted for.


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Agreed especially if you live in a high cost of living area. After paying the mortgage, most of my friends don't have money to max out their 401 k.


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Who are these "people?" Individuals who make less, the same, or more than you?
A crucial point. The best advice I ever received as a young man was to only accept the advice of people who have achieved what I wish to. I always heard advice from family members who were very unsuccessful and all I could think was "why would I do what you are suggesting?"
 
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A crucial point. The best advice I ever received as a young man was to only accept the advice of people who have achieved what I wish to. I always heard advice from family members who were very unsuccessful and all I could think was "why would I do what you are suggesting?"
But was that advice from someone who had achieved what you want to achieve?
 
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BMBiology

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A crucial point. The best advice I ever received as a young man was to only accept the advice of people who have achieved what I wish to. I always heard advice from family members who were very unsuccessful and all I could think was "why would I do what you are suggesting?"
So you are saying...you should listen to me!


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gwarm01

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But was that advice from someone who had achieved what you want to achieve?
Yes it was! I was fortunate enough to meet a distant family member who was an MD right when I was floundering in life after high school. He gave me a lot of good advice and motivation that really steered me away from a bad path. When you come from a family full of negative people that feel sorry for themselves and never try to better their situation it can twist the way you see the world.
 
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yungnaira

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Very interesting thread! I guess it would depend on the real estate market in your area?

I'm thinking about buying property in CA (Inland Empire to be specific) although I'm not sure if we are in the beginning, middle or end of the "bubble"
 

Momus

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Very interesting thread! I guess it would depend on the real estate market in your area?

I'm thinking about buying property in CA (Inland Empire to be specific) although I'm not sure if we are in the beginning, middle or end of the "bubble"
I'm not one to call bubble, and NO ONE can. But banks/people are not as heavily leveraged anymore. No one getting 5 houses and put 0-5% down with no income to bring down the economy/house market with massive foreclosures as the standard getting a loan is stricter nowadays. I can see this coming down only if we hit a recession but right now prices probably rises slowly or stagflation. It's almost not affordable for normal people to buy houses nowadays in Metro CA, even Riverside/SB county is getting expensive (they used to be dirt cheap almost 1/2 off). Who gets 10-15% pay raise a year? Party has to stop eventually when people can't afford these houses.
 

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Oct 26, 2007
1,162
300
You not it dates Summer kuh
Status
Academic Administration
They make the same as I
That's good. At least it isn't someone who makes 1/3 of your annual income and lives month to month. Just perform your due diligence, be realistic about the numbers and go with what you feel is right. It's easy to look back and say, "oh I shouldn't have done that," but that's life...

Someone mentioned Inland Empire. Lots of growth there, I know someone who owns a dessert franchise out there and is doing well. But... some parts are very sketch.
 

stoichiometrist

7+ Year Member
Aug 2, 2011
2,228
2,259
Very interesting thread! I guess it would depend on the real estate market in your area?

I'm thinking about buying property in CA (Inland Empire to be specific) although I'm not sure if we are in the beginning, middle or end of the "bubble"
I wouldn't doubt that there is a bubble in some areas, but whether we are in the beginning, middle, or end really depends on what the Fed decides to do with interest rates. They are supposed to go up, but right now it seems that they are using any little excuse (i.e. Brexit) to not raise rates.
 

Chriskahn

5+ Year Member
Feb 2, 2013
258
166
PNW
Status
Pharmacist
Live in a tiny house if you dont want to throw money away on rent. You can buy a decent one for under 50k and sell it once you are ready to buy a house. Better yet keep it once you get a house and rent it out or list it on air bnb and make some extra money on the side.

I stayed in a really nice air bnb tiny house for a couple nights while vacationing last week and it was way cheaper than getting a hotel. The host was charging $65 a night plus a one time $35 cleaning fee. The tiny house was booked the entire summer up til mid September so I know the owner is making some serious money on it.
 

confettiflyer

Did you just say something?
10+ Year Member
Dec 19, 2004
9,357
2,661
Best Coast
Status
Pharmacist
Live in a tiny house if you dont want to throw money away on rent. You can buy a decent one for under 50k and sell it once you are ready to buy a house. Better yet keep it once you get a house and rent it out or list it on air bnb and make some extra money on the side.
Those are closer to $60,000 and don't include land lease fees + since it's technically mobile, there's probably local zoning and permit issues that need to be dealt with (unless you live at an RV park long term). Don't forget the trailer/foundation ($5k) & interest rates on RV's tend to be higher.
 

ldiot

2+ Year Member
Oct 7, 2015
1,624
923
Miami, FL
Status
Resident [Any Field]
Those are closer to $60,000 and don't include land lease fees + since it's technically mobile, there's probably local zoning and permit issues that need to be dealt with (unless you live at an RV park long term). Don't forget the trailer/foundation ($5k) & interest rates on RV's tend to be higher.
Just get an actual mobile home as opposed to a "tiny house". Even then renting might still be better.
 
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