Buying/Owning a House

[Snuitje]

Is this something that you should focus on or want to accomplish? People around me are all talking about this and how important this is to have. When I ask them why? they say for their retirement.

What I see people do is that in their early twenties they couple and together get a morgage and buy a house. When they're sixty they have paid for it and are 'free' so to speak. Someone from Personal Training also did this and used it to rent out the rooms for passive income. Again asking them about it they all say: retirement.

In my heart I have no desire to own a house or get a morgage for one, In fact, I don't plan on ever going into debt again. Also have no desire to 'retire.' But I'm living slighty above minimum wage (which is just fine for me) so to get enough money to buy a house just like that is not doable. I rather spend that money on retreats, workshops, books, seminars etc.

I also think I want to move to another country in a couple years for life experience. Like Sweden or somewhere in the middle east, like Jerusalem. Not hopping around the world, but just one more country for atleast 10 - 20 years.

Just looking at the recent house pricing it's getting absolutely ridiculous. I don't see how this is ever going to normalize (here in The Netherlands). Prices went up like 20% in corona times. For a normal house you're talking about 300k. The demand in houseing here is also enormous, plus gas, water and electricity prices are also going through the roof.

How do you guys look at this? I'm not looking for advice or what I should do I'm just curious what you guys think. I'm looking for perspectives.

[LastThursday]

I'm ambivalent about buying a house.

I ought to do this for future financial stability. House prices keep increasing, so negative equity is not a thing any more, all your money is yours in the end except for the cut the bank gets. This situation is better than renting, where your all your money goes down the sink. But once you've bought the house you are chained to the mortgage and the bank "owns" you, realistically this means you need a steady income for long periods: probably wage slavery and having a partner who also works (in case you lose your job), banks get jittery about lending money to the self-employed. You will be paying more for a house than for rent in most areas, maybe 1.5 to 2.5 times.

Saying all that, you can just sell the house at any point, you take a penalty for breaking the mortgage early, but there's nothing stopping you. Or alternatively you just let your house out if you're going to be away for long periods - although the norm is 18 month rental contracts (in the UK), but unlikely less than six months. However, there are a lot of regulations around letting a property and being a landlord, unless you have some informal arrangement with a friend.

It's swings and roundabouts. It's a commitment to pay for and maintain your own home, but most of the money you get back at the end. On balance, the older you get the more it makes sense to do.

In my case I don't have a partner to share the risk of defaulting, and I will essentially double my payments each month, which means reduced money for leisure.

Edited October 8, 2021 by LastThursday

[Derek White]

If you have some money left over you can buy a house by getting a mortgage, and your monthly expenses may just be around the same as your rent. You can also rent it, which will help with mortgage and extra income. If you buy wisely you can expect the price to go up, then you can sell for more and buy a bigger house or two smaller homes that you can rent for more.

I don’t know where you got this idea that all debt is bad or that being mortgage free is good. That’s not true. Quite frankly, you have some childish ideas about these things. I suggest you educate yourself about how these things actually work. You can be richer and live a better life than folks who are mortgage “free”.

For eg. you can get a student loan and save the money for downpayment to get a mortgage in the future. You can get a house, now you have rental income. And guess what? If it was a good investment you can sell it for more, and earn a profit. You can buy more houses or buy a smaller one and be mortgage free. If instead you didn’t take the student loan, just paid the tuition, you won’t have money saved up for downpayment and you probably won’t be able to buy a house at all.

Of course, if you don’t have a stable career you need to focus on that first. Goes without saying.

Edited October 8, 2021 by Derek White

[Terell Kirby]

10 hours ago, Snuitje said:

In my heart I have no desire to own a house or get a morgage for one,

This is all you need in determining what to do. Don't let your friends and family guilt trip you into anything, most young adults have a herd mentality, and shack up/get married/have kids for validation from their social groups.

[Derek White]

15 minutes ago, Terell Kirby said:

Don't let your friends and family guilt trip you into anything, most young adults have a herd mentality, and shack up/get married/have kids for validation from their social groups.

That can be true, but other people can also be doing things for good reason. In which case it’s wise to learn from them. If you don’t prepare early, you just won’t be able to do some things. Your parents guilt tripped you into going to school, and it turns out reading and writing is helpful in life, even though many of us didn’t want to go to school. If it was up to me, I could never recognize the importance of school in childhood, I would never have gone and probably stayed illiterate.

[laurastarla]

Buying my apartment 5 years ago was the best financial decision I ever made. I just paid it off in April, so now living rent free; and it's worth 40k € more than when I bought it. With no rent, much of my salary is being saved for a down payment on a 2nd apartment. That one I will rent out, and the renter will pay the mortgage. Why is all this especially so great? Because I can quit my job, and dedicate my life to long term service in Vipassana centers, while I receive 1000 € a month renting my 1st apartment, and the 2nd one will be paid off by the renter in 15 years. This is all right outside Paris where home prices will only continue to grow.  I guess the choice is give up some freedom now in exchange for freedom for the rest of your life. I don't see it as 'going into debt', it's investing, and if I had figured this out in my 20's I'd already be at Vipassana long term now!

[Derek White]

2 hours ago, laurastarla said:

Buying my apartment 5 years ago was the best financial decision I ever made. I just paid it off in April, so now living rent free; and it's worth 40k € more than when I bought it. With no rent, much of my salary is being saved for a down payment on a 2nd apartment. That one I will rent out, and the renter will pay the mortgage. Why is all this especially so great? Because I can quit my job, and dedicate my life to long term service in Vipassana centers, while I receive 1000 € a month renting my 1st apartment, and the 2nd one will be paid off by the renter in 15 years. This is all right outside Paris where home prices will only continue to grow.  I guess the choice is give up some freedom now in exchange for freedom for the rest of your life. I don't see it as 'going into debt', it's investing, and if I had figured this out in my 20's I'd already be at Vipassana long term now!

Inspiring. 

[Leo Gura]

Owning a house is great, if you can afford it.

But consider whether you want to settle down in one area or you want to move around to gain more life experience.

Houses also tend to come with quite a few yearly expenses, taxes, fees, and maintenance costs.

[Bando]

@Leo Gura Didn't you live in an apartment for many years and recently moved to your house, how come you didn't get a house even though you could have easily afforded one?

[Snuitje]

Thanks all for the reply's.

On 8-10-2021 at 10:05 PM, Derek White said:

I don’t know where you got this idea that all debt is bad or that being mortgage free is good. That’s not true. Quite frankly, you have some childish ideas about these things. I suggest you educate yourself about how these things actually work. You can be richer and live a better life than folks who are mortgage “free”.

Not sure what gave you the impression that I find being in debt is bad. I prefer it not, which is I think a very mature thought. But you're right, I will have to spend the next years educating myself on money, and I will master it in my life.

@laurastarla Thanks for sharing. Very similar how some others are doing it around me. I understand how you see it as an investment, which is something I've contemplated a lot actually.

@LastThursday I agree with your story. Thanks for sharing.

[Leo Gura]

On 10/8/2021 at 8:15 PM, Bando said:

@Leo Gura Didn't you live in an apartment for many years and recently moved to your house, how come you didn't get a house even though you could have easily afforded one?

Finding the right house takes time.

[archi]

On 10/8/2021 at 11:21 AM, Snuitje said:

Is this something that you should focus on or want to accomplish? People around me are all talking about this and how important this is to have. When I ask them why? they say for their retirement.

What I see people do is that in their early twenties they couple and together get a morgage and buy a house. When they're sixty they have paid for it and are 'free' so to speak. Someone from Personal Training also did this and used it to rent out the rooms for passive income. Again asking them about it they all say: retirement.

In my heart I have no desire to own a house or get a morgage for one, In fact, I don't plan on ever going into debt again. Also have no desire to 'retire.' But I'm living slighty above minimum wage (which is just fine for me) so to get enough money to buy a house just like that is not doable. I rather spend that money on retreats, workshops, books, seminars etc.

I also think I want to move to another country in a couple years for life experience. Like Sweden or somewhere in the middle east, like Jerusalem. Not hopping around the world, but just one more country for atleast 10 - 20 years.

Just looking at the recent house pricing it's getting absolutely ridiculous. I don't see how this is ever going to normalize (here in The Netherlands). Prices went up like 20% in corona times. For a normal house you're talking about 300k. The demand in houseing here is also enormous, plus gas, water and electricity prices are also going through the roof.

How do you guys look at this? I'm not looking for advice or what I should do I'm just curious what you guys think. I'm looking for perspectives.

Jump onto real-estate train as soon as possible in the area that is going to stay desired in the next 10-15years.

Whether it is a flat or house does not matter too much unless running costs differ dramatically.

It is your inflation protection.

Ideally, buy one where you want to live and another one in the country that has young(er) population ;).

You can thank me later.

 

[bliss54]

Isn't it a bit unethical to own more than one house?

If everyone has atleast one then sure, but not before then

[RobertZ]

Location of residence significantly impacts the calculus of home ownership because residential property ownership is an investment. The global environment contextualizes a local decision. Of course there are other criterion, like living near family.
 

First, consider the local housing economy. Is the local property growing over the next 50 years? In Canada, you can refer to the Economic Conference of Canada, for example, to get basic information about a city’s prospect of growth over the next 50 years (a ECC report costs about $1000.00 but is free for many university students). For example, Vancouver, Canada has nowhere to grow and houses are extremely expensive. Buying a home in Vancouver is high risk, and a residential property in Vancouver  might well be worth hundreds of thousands of dollars less in a decade than it is today. By contrast, a residence in an area likely to develop will probably be worth more than its value plus inflation in the future. 
 

Next, compare the total financial advantage of ownership versus rental and an alternate investment. You can use a spreadsheet.

Create a spreadsheet listing the accumulation of property (a) buying, and (b) renting. Get information about your eligibility for a mortgage at a given price point from a bank or mortgage institution; and get advice about investment from a trusted advisor at a reputable investment agency (NOT a bank). E.g., “No guarantees, but this portfolio gained an average of 12% over the last 8 years,’ or whatever. There might be other factors like first time buyers tax deductions, but whatever—do your best. 

Under (a) renting, list the months of principal payments and interest payments per month. You can easily see your principal accumulation of equity (principal payments) over time. You might also be able to estimate the future value of your property compared to inflation, depending on your info.

Under area (b), you can calculate you financial prospects by renting.   Enter the cost of rent for your (similar or different) property. With the difference in the cost between renting and buying, you invest that money (I.e., the down payment plus the difference between rent and mortgage (assuming rent is cheaper than mortgage)) and invest that money with a REPUTABLE global investment agent.

Then you can forecast your balance renting versus buying  over time.

The answer for “buy of rent?” is not black and white for everyone everywhere. the financial advantage depends on your location and rate opportunities. 

Edited May 10, 2022 by RobertZ