Help - Need to Make a Decision about a House

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JamesR
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Re: Help - Need to Make a Decision about a House

Post by JamesR » Fri Jul 22, 2016 5:58 pm

Don't forget about the 1% rule.

If the rent is less than 1% of the purchase price, it's cheaper to be a renter and invest the difference into index funds. If the rent is higher than 1%, then it's a good deal to buy.

So that means the $650k house should rent for $6.5k/mo.

But it sounds like you can rent a $650k house for $3k/mo, it's vastly cheaper to just be a renter, and invest the difference (the downpayment etc) in index funds

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tylerrr
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Re: Help - Need to Make a Decision about a House

Post by tylerrr » Sat Jul 23, 2016 9:44 pm

JamesR wrote:Don't forget about the 1% rule.

If the rent is less than 1% of the purchase price, it's cheaper to be a renter and invest the difference into index funds. If the rent is higher than 1%, then it's a good deal to buy.

So that means the $650k house should rent for $6.5k/mo.

But it sounds like you can rent a $650k house for $3k/mo, it's vastly cheaper to just be a renter, and invest the difference (the downpayment etc) in index funds
thanks for the 1% rule.

SimpleLife
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Re: Help - Need to Make a Decision about a House

Post by SimpleLife » Sun Jul 24, 2016 7:06 pm

tylerrr wrote:
SimpleLife wrote:I'm sure this isn't the answer you are not looking for, but you're asking us for input into something very vague, that you say is designed to satisfy an emotional need for a dog and having people over more often. I don't see the correlation between how often you can have people over in a house you own vs. an apartment or house you rent.

You also don't specify where this 5K in guaranteed income is coming from and whether it is or is not tied to the house, though you mentioned AirBNB earlier. I think you want to buy a house and are looking for people to lean in that direction, as you are clearly rationalizing the decision to buy this house. It serves no purpose other than to allow you to have a dog and a yard. You can get that renting, but what is the benefit to cost ratio? No rational person buys a 650K house to satisfy a subjective emotional need to have a dog or so they can have people over more often....You can do both in an apartment or a rented house as well, and neither provide strategic benefit.

At the end of the day, 5K "guaranteed" income (nothing is guaranteed other than our deaths) and 3.5K just for a mortgage rounded up to 4K when you factor in maintenance, leaves you spending 80% of your so called guaranteed income on having a dog and having "people" over more...Does that sound like something YOU would tell someone to do?
I'm sorry you felt moved to use a nasty tone towards someone simply soliciting for helpful advice and thoughts.

I'm not looking for justification, I was looking for non-hostile opinions. I have 5k guaranteed income and it's not from property. You can choose to believe that or not. If the home goes up in value and I have additional income from doing work that I love, it very well may make sense in my situation.

I haven't made a decision yet.
I posted objective facts and a logical numbers based argument, founded on what he said his reasons were for spending this money, the cost of the house payment, and the income he is guaranteed. Telling him that no reasonable person would spend 80% of their income to satisfy an emotional want of having a dog and people over more often, when you can do the same renting an apartment is good advice in the context of a FIRE board, not an insult. You may do what you like with your money, but this is a FIRE board after all, and spending 80% of your income on a dog and having guests over more often is not congruent with FIRE, especially when you can rent and achieve the same. My advice stands, and you seem to like my advice since you have repeatedly emailed me with questions about real estate and whether I think you should buy a house or not.

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tylerrr
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Re: Help - Need to Make a Decision about a House

Post by tylerrr » Mon Jul 25, 2016 2:18 pm

SimpleLife wrote:
tylerrr wrote:
SimpleLife wrote:I'm sure this isn't the answer you are not looking for, but you're asking us for input into something very vague, that you say is designed to satisfy an emotional need for a dog and having people over more often. I don't see the correlation between how often you can have people over in a house you own vs. an apartment or house you rent.

You also don't specify where this 5K in guaranteed income is coming from and whether it is or is not tied to the house, though you mentioned AirBNB earlier. I think you want to buy a house and are looking for people to lean in that direction, as you are clearly rationalizing the decision to buy this house. It serves no purpose other than to allow you to have a dog and a yard. You can get that renting, but what is the benefit to cost ratio? No rational person buys a 650K house to satisfy a subjective emotional need to have a dog or so they can have people over more often....You can do both in an apartment or a rented house as well, and neither provide strategic benefit.

At the end of the day, 5K "guaranteed" income (nothing is guaranteed other than our deaths) and 3.5K just for a mortgage rounded up to 4K when you factor in maintenance, leaves you spending 80% of your so called guaranteed income on having a dog and having "people" over more...Does that sound like something YOU would tell someone to do?
I'm sorry you felt moved to use a nasty tone towards someone simply soliciting for helpful advice and thoughts.

I'm not looking for justification, I was looking for non-hostile opinions. I have 5k guaranteed income and it's not from property. You can choose to believe that or not. If the home goes up in value and I have additional income from doing work that I love, it very well may make sense in my situation.

I haven't made a decision yet.
I posted objective facts and a logical numbers based argument, founded on what he said his reasons were for spending this money, the cost of the house payment, and the income he is guaranteed. Telling him that no reasonable person would spend 80% of their income to satisfy an emotional want of having a dog and people over more often, when you can do the same renting an apartment is good advice in the context of a FIRE board, not an insult. You may do what you like with your money, but this is a FIRE board after all, and spending 80% of your income on a dog and having guests over more often is not congruent with FIRE, especially when you can rent and achieve the same. My advice stands, and you seem to like my advice since you have repeatedly emailed me with questions about real estate and whether I think you should buy a house or not.
I don't remember "repeatedly emailing you" and I just looked in my history and can't find it.

Even if I have emailed you, the fact you would state that publicly on this board shows the size of your ego and crass demeanor.

Don't need your comments anymore. You don't understand my situation completely like others have....

I like the fact I can openly post feelings on this board and get feedback(possibly during a moment of consumer weakness and vulnerability) and not get attacked by another poster, such as yourself.

JamesR
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Re: Help - Need to Make a Decision about a House

Post by JamesR » Tue Jul 26, 2016 5:48 pm

BTW, Jacob had some sort of rule for how he decided to buy his house in Chicago, I forget what it was based on. Could be worth looking at his posts about it. (on the forum somewhere)

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tylerrr
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Re: Help - Need to Make a Decision about a House

Post by tylerrr » Wed Jul 27, 2016 3:34 pm

JamesR wrote:BTW, Jacob had some sort of rule for how he decided to buy his house in Chicago, I forget what it was based on. Could be worth looking at his posts about it. (on the forum somewhere)
yes, and the 1% rule was quoted in this thread too.

Jehdlh
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Re: Help - Need to Make a Decision about a House

Post by Jehdlh » Sun Mar 12, 2017 12:47 am

double post, sorry server error
Last edited by Jehdlh on Sun Mar 12, 2017 12:56 am, edited 1 time in total.

Jehdlh
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Re: Help - Need to Make a Decision about a House

Post by Jehdlh » Sun Mar 12, 2017 12:56 am

i lived in cambridge mass for 10+ years during ugrad, phd and afterwards... go buy a 2-3 family house (traditional duplex or triple decker) in belmont or arlington (you're babyproofing too since the schools are excellent) and rent half of it out and/or do airbnb in your unit as well for some extra income. you won't get anything in cambridge for under $1M and belmont is a 5 min bike ride to harvard sq and buses (71/73) run to/from belmont every 10 mins to harvard sq mbta. you can get a nice triple decker in belmont for close to your $650K mark (and with rental income, you can use that to qualify for the higher loan). the yard won't be *huge* in belmont (arlington will probably be bigger, but arlington is a longer trip and down mass ave which SUCKS) but it was big enough for my full size poodle (we fenced in the yard)...we lived off school street, a five min walk to the huge park/playground/dog park.

in belmont the unit will be an entire floor, what we call in manhattan a "classic six", i.e., 2 bedrooms, 1 office (well, to be specific, the office is only called an office now, before it was the maids room, attached to a small full bath), living room, (separate dining room), full size kitchen and 1.5 baths. plus you'll have a basement and usually those triple deckers have a deck that people have walled off for a 3 season sunroom (i used this as the airbnb room, and bonus, they entered from the rear staircase so they stayed out of my unit except for the kitchen and bath...really cuts down on the foot traffic. if you *REALLY* need more space than that, live on the third floor of your triple decker and renovate the attic...i did this and i'm 6'4 and could stand up without ducking my head in the middle 25% of the attic floor, i installed an extra bathroom and one large "loft" area, behind the bathroom was another "bedroom). if that still isnt' enough space, a triple decker in arlington may be your best bet (as a bonus, you'll get more yard space). i rented out the 3 season sunroom year round (thanks to a space heater) to a postdoc for $700 a month (including utilities) and the third floor attic which was two bedrooms if you pushed it but really people just used that bedroom in the rear of the house as an office, or not at all, for $1000-1300 a month (depending if i rented it on a semester basis or academic year or summer only...shorter stays made more money). the downside of the attic reno was the person had to enter through my unit, but they'd come thru the front door, take an immediate right into my "office" room, and take the door (which they can lock) up to the attic. it was worth it for the rental income.

the nice thing about belmont especially is no shortage of wealthy grad students, postdocs, vistiing scholars, vistiing profs, etc wanting to rent in belmont. the trick was to include utilities in the rent and furnish the place in (go on craiglist, people give away everything, even expensive ethan allen etc furnitrue for free, or at most, say $80 for a $8k couch, it's absurd what people will do when they redecorate, agree on everything you want and then on a saturday, rent a uhaul, pay two guy sto help you $15/hr each and spend the day picking all the furniture up and moving it into your new place...for no more than $500-1K, you've furnished the rental areas of your unit and your space too, if you want).

lmk if you want any boston area specific advice. i live in brooklyn ny now but i wish i lived in cambridge again every day.

i hope this helps!

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BRUTE
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Re: Help - Need to Make a Decision about a House

Post by BRUTE » Sun Mar 12, 2017 11:03 am

when the server error occurs, the post still goes through 99% of the time. jacob just isn't willing to pay market rates for an admin to fix the error ;)

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tylerrr
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Re: Help - Need to Make a Decision about a House

Post by tylerrr » Mon Apr 10, 2017 9:26 am

@Jehdlh ,

thanks!

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