Teach me about buying a house

[nisryus]

For several years, buying is not a good choice. I agree with others that renting is a better choice, if you will be moving after 3 to 5 years.

 

[Fenixgoon]

unless you and the gf are ready to settle in the area, i wouldn't both buying. too much can change too quickly. me? i've circled the country in the last 10 years. i'm tired of moving and never really feeling like my house is truly a home. i'm tired of making friends only to say goodbye a short while later. i'm ready to spend the a good while in one spot.

so having just bought a house (closing is next friday), here are my thoughts:

1) be conservative on what you can afford. mortgage calculators told me i could afford a 350k house. i laughed (and cried a little on the inside). my goal was to keep my mortgage, taxes, AND interest combined, the same as my current rent. i think i may have gone over by $100, that's not a make or break scenario.

2)err on the side of a higher quality house unless you are a super hardcore DIYer. houses are expensive, and there will be some things you can't do yourself (like a roof). my house has a lot of little things that need to be fixed - faucets and stuff - and i'm completely willing to do it myself (and it's not that hard). especially if you're limited on cash, you don't want to buy a fixer upper only to have to dump 50k cash in renovating and remodeling (as is often the case, cash is king).

3)resale - you'll want to buy a house you can sell later on without a ton of effort.

4) don't let perfect be the enemy of good - know what you're willing to compromise on. one of my #1 factors was minimizing commute time. i opted for something that i wouldn't call perfect, because i either have a 5 minute drive to work (mostly due to traffic lights) or a 10 minute bicycle ride.
the layout of the house isn't perfect (though it's very good), it has a lot more carpet than i'd like, the garage is 2x single door instead of 1x double door, the appliances are all old (i'm getting a home warranty so in some ways i hope everything breaks within a year, haha)

6) buying a house is not just a mortgage and down payment. there's inspections, closing costs, deposits, etc. you need to be financially prepared for ALL of it. and once you're in? be prepared to maintain it, too. as i mentioned cash is king, i'm making sure i have a nice savings buffer just in case shit hits the fan, whether that's a new roof or losing my job (both at the same time would really, really blow)

 

[Blackjack200]

"Balls deep in keyboards"?

Sounds like you have some problems there bud.

No kink shaming in here.

 

[Zeze]

You can always rent that home when you move out to NC. Perfect opportunity.

 

[Lost_in_the_HTTP]

One thing no one has really touched on is maintenance. When you rent, somebody else pays for all of that. When you buy, it's ALL on you.

For example, if the roof starts leaking, expect a bill for at least $5K, maybe $10K.

Plumbing or electrical problems can also be expensive to fix. Even those who are handy enough to do their own work still have to buy the materials and tools.

 

[nakedfrog]

6) buying a house is not just a mortgage and down payment. there's inspections, closing costs, deposits, etc. you need to be financially prepared for ALL of it. and once you're in? be prepared to maintain it, too. as i mentioned cash is king, i'm making sure i have a nice savings buffer just in case shit hits the fan, whether that's a new roof or losing my job (both at the same time would really, really blow)

Not to mention if it's only for 3-5 years, when you go to sell, unless you're doing FSBO the realtor's fee could easily take a big chunk out of whatever profit is there to be made.

 

[Muse]

When I bought my house I got a copy of home buying for dummies (still have it). It helped quite a lot.

 

[Muse]

Fyi ymmv, at least in California, commissions and closing costs (taxes, inspections, more taxes, etc) are ~10% of the sale price. Expect to pay a few thousand a year maintaining the property unless you diy (paint, pests, plumbing, saving for bigger repairs i.e. new roof, etc). Then you might want to get fire/flood/home owner insurance which might be 500-1k+/year. And property tax is ~1.25% of the sale price per year. It's generally not recommended to buy a house with the intention of selling in 5 years. As 3-5 years is generally the break even point of renting vs buying in California. Obviously things might be different in philly.

I'm paying about 3% in property tax. Besides homeowner's insurance, I'm buying earthquake insurance... about about 2.5 miles from very dangerous fault.

 

[zinfamous]

You can always rent that home when you move out to NC. Perfect opportunity.

"perfect opportunity" based on....what exactly?

 

[funboy6942]

buy right, work on house upgrading it over the 4-5 years, make sure to finish projects in that time, sell, profit for moving into next house. Pretty much do it to flip it, so you can buy cheap, upgrade, sell high. Look for homes selling cheap because they are out dated, need a few minor repairs, update the kitchen and bath(s), and you will make your money back and then some in that time frame. Also look for homes in up and coming areas, for then it will be worth more when more yuppies move into that area as well.

The house Im in now I bought back in 2005 for $49K, did some minor upgrades, nothing much, just general repairs, its worth $90K now. If I had all kinds of money, Id buy houses here cheap and flip them for a profit.

 

[Zeze]

"perfect opportunity" based on....what exactly?

I don't know. I'm back from a BBQ and few drinks in. Check back tomorrow.

 

[Zeze]

"perfect opportunity" based on....what exactly?

Assuming he's really in a proper philly area that's not a craphole, his place will..

1. always rent
2. always appreciate
3. OPs is around 25 or younger it seems, if he can pull it off (which he can, if he's determined and acts as a good LL) - that home will appreciate like mad when he's still super young as late 30s/early 40s.

He'd be so so glad he kept it rent rather than sell.

Source:
- My bff buddy is a realtor all he's life and is a LL of 40~ tenants total.
- Another bud who's a LL of 10, and his day job is CEO/owner of 15 mil valuation IT managed services firm.

My parents bought a property for 100k in '94. Worth 900k now (greater boston). In mere 7 yrs, The CEO bud's 667k home is 1mil

@T_Yamamoto you're literally getting amazing consult/advice from real life professionals.

I remember @RossMAN taught me about loss-leader pricing of cars, forum taught about salary negotiation, write powerful resume, etc.

This forum rock sometimes. Literally saved/made me money.

 

[Red Squirrel]

buy right, work on house upgrading it over the 4-5 years, make sure to finish projects in that time, sell, profit for moving into next house. Pretty much do it to flip it, so you can buy cheap, upgrade, sell high. Look for homes selling cheap because they are out dated, need a few minor repairs, update the kitchen and bath(s), and you will make your money back and then some in that time frame. Also look for homes in up and coming areas, for then it will be worth more when more yuppies move into that area as well.

The house Im in now I bought back in 2005 for $49K, did some minor upgrades, nothing much, just general repairs, its worth $90K now. If I had all kinds of money, Id buy houses here cheap and flip them for a profit.

I was going to suggest this too, but 4-5 years goes by FAST and with a full time job you have less time to do projects than you realize. Though it could be an option if you pick one thing at a time and just do it full tilt on days off.

 

[zinfamous]

Assuming he's really in a proper philly area that's not a craphole, his place will..

1. always rent
2. always appreciate
3. OPs is around 25 or younger it seems, if he can pull it off (which he can, if he's determined and acts as a good LL) - that home will appreciate like mad when he's still super young as late 30s/early 40s.

He'd be so so glad he kept it rent rather than sell.

Source:
- My bff buddy is a realtor all he's life and is a LL of 40~ tenants total.
- Another bud who's a LL of 10, and his day job is CEO/owner of 15 mil valuation IT managed services firm.

My parents bought a property for 100k in '94. Worth 900k now (greater boston). In mere 7 yrs, The CEO bud's 667k home is 1mil

@T_Yamamoto you're literally getting amazing consult/advice from real life professionals.

I remember @RossMAN taught me about loss-leader pricing of cars, forum taught about salary negotiation, write powerful resume, etc.

This forum rock sometimes. Literally saved/made me money.

RE does not always appreciate, and it isn't monolithic in specific areas, either.

That is garbage advice.

Also, do you think he wants to manage a property in PA when he is living in NC for x number of years later, expecting to have no real family or foundations left behind in Philly? It's the definition of a temporary existence.

 

[Lost_in_the_HTTP]

OP hasn't even had time to come back to this thread, so why do people think they'll have time to fix up a house and manage it?

 

[snoopy7548]

OP hasn't even had time to come back to this thread, so why do people think they'll have time to fix up a house and manage it?

He did on Thursday. Maybe he's enjoying the weekend rather than posting on ATOT?

 

[funboy6942]

or doesnt live on line with the phone next to the hip?

 

[Brainonska511]

The house Im in now I bought back in 2005 for $49K, did some minor upgrades, nothing much, just general repairs, its worth $90K now. If I had all kinds of money, Id buy houses here cheap and flip them for a profit.

That's not that great of a return overall considering the potential amount of work involved in home ownership. It looks like you have ~4% rate of return per year. It's fine if you live in the home and a 4% rate of return isn't that bad, but there are also substantial risks involved: it's a single asset and there are the ever-looming risks of home repairs.

The primary goal with owning a home, especially a first-time purchase, should probably be focused on buying a place to live long term, not as some abstract investment vehicle. With the short time span the OP is looking at and the desire to move far away after a few years, it seems like owning a home in Philly will end up becoming more of a hassle than anything else.

 

[funboy6942]

Thats my rate of return with doing NO upgrades to my home, bath, kitchen, or other rooms. Just painted the walls and patched them, and kitchen and bathrooms are still from 1942
If I was to do some upgrades, hardwood floors redone, update kitchen/bathrooms, it be worth a heck of a lot more
So if he were to buy a home thats on the older side, in need of some minor repairs, and could update a few rooms, his rate of return from buying it cheap, updating it, then reselling it, would net him a good chunk in the 4-5 years, if he lived there, and did all the work himself durring that time, for it doesnt take years to redo some rooms and paint, fix walls, live there pretty much rent free then, and get his investment back, and then some, using that for his downpayment, and pay off the house loan there where he stayed for that 4-5 years.

 

[Zeze]

RE does not always appreciate, and it isn't monolithic in specific areas, either.

That is garbage advice.

Also, do you think he wants to manage a property in PA when he is living in NC for x number of years later, expecting to have no real family or foundations left behind in Philly? It's the definition of a temporary existence.

Im sorry you're wrong. Your assessment is garbage. For OP to put in the effort or not, thats not my biz.

I didnlt sat the area is monolithic. Read again, forum boy.