rent vs mortgage

[H4ck]

I want to hear some insight in regards to renting versus mortgaging a house.....

I still rent to this day.....partly because i cannot get a home loan because I am self employed.....and its hard to show documentation for my income.......

some real rich people i know say that you should buy a house in cash. rule of thumb in fact is always buy everything in cash. Renting a house is smarter until you can buy a house in cash because you get freedom as an asset......and dont incur a crazy liability like a huge house loan.

I see people who bought in like many years ago at 300k in hawaii and now their homes are worth 950k if they sold today........

I read just about all the arguments between buying and renting already.....
what do you people believe?

[ebaystealth1974]

Originally Posted by jarsky541

I still rent to this day.....partly because i cannot get a home loan because I am self employed.....and its hard to show documentation for my income.......

Pay taxes on that money and you won't have that big of a problem. lol

[dallis]

I'm involved in real estate and I have to agree, your 1040's and bank statements tell all to the knowledgeable mortgage broker.

If you're self-employed it is harder to get a mortgage, but usually that's because self-employed individuals hide a lot of their income.

[H4ck]

Originally Posted by ebaystealth1974

Pay taxes on that money and you won't have that big of a problem. lol

yeah...........about that.......not going to happen anytime soon.......

[ebaystealth1974]

Anyone who doesn't use bank leverage is a moron. Unless they are have plenty of money. And not many people do...

[H4ck]

Originally Posted by ebaystealth1974

Anyone who doesn't use bank leverage is a moron. Unless they are have plenty of money. And not many people do...

yes, and look at how that mentality worked out in 2007-2008 housing crisis subprime mortgage debt that led to a recession........

[ebaystealth1974]

Not sure what point you're trying to make, but most of those people couldn't afford their payments. Also morons.

Help me out.... I'm drinking, here! haha

[rsot]

Originally Posted by ebaystealth1974

Not sure what point you're trying to make, but most of those people couldn't afford their payments. Also morons.

Help me out.... I'm drinking, here! haha

Drinking....nice what drink?

[ebaystealth1974]

Any kind of beer, plus lime! haha

Michelob Ultra in this case.

[H4ck]

I kind of believe renting is better for me at the moment and if in the future it is possible I would buy a place in cash. Let's hope crypto will be widespread so I can buy a house in bitcoin lol. Us government will never allow me to buy a house in cash

[H4ck]

I never liked dealing with banks at any given situation

[aspkin]

Eh, owning a house vs renting depends on your situation.

I own a few investing properties. They don't make much money, they're expensive and the headache makes me think otherwise anytime I think of buying another one.

A personal house however... that makes sense.

I would rather own than rent; it's cheaper and it's an asset that usually increases in value.

Now if you don't see yourself staying in the same place more than 5 years.. than rent until you find a place you want to settle. Renting enables you to pick up and leave at anytime. If something goes wrong with the house.. you have someone to take care of that for you.

You will be paying more than if you owned the place but that's the cost of renting.

I'm self-employed.. and I do my taxes every year. I don't have any trouble getting loans.

[H4ck]

Originally Posted by aspkin

Eh, owning a house vs renting depends on your situation.

I own a few investing properties. They don't make much money, they're expensive and the headache makes me think otherwise anytime I think of buying another one.

A personal house however... that makes sense.

I would rather own than rent; it's cheaper and it's an asset that usually increases in value.

Now if you don't see yourself staying in the same place more than 5 years.. than rent until you find a place you want to settle. Renting enables you to pick up and leave at anytime. If something goes wrong with the house.. you have someone to take care of that for you.

You will be paying more than if you owned the place but that's the cost of renting.

I'm self-employed.. and I do my taxes every year. I don't have any trouble getting loans.

the house is only an asset if you literally own it outright.....until then its a liability until you pay it off.......

it does increase in value........but i heard you have to pay for things like interest, insurance, property taxes.....these things you have to pay......so your still throwing money away.....

if you look at this amortization schedule example of a 300k property,

https://www.mortgagecalculator.org/?q=AymDy

the first 10 years your paying on average 10-12k in just interest payments yearly towards your home loan on a 300k property.......money you will be giving to the bank.....

[aspkin]

Originally Posted by jarsky541

the house is only an asset if you literally own it outright.....until then its a liability until you pay it off.......

Not really, you build equity as you pay it off. You can use that as collateral in future loans (I know). It's an asset. And the longer you have it the more you build.

it does increase in value........but i heard you have to pay for things like interest, insurance, property taxes.....these things you have to pay......so your still throwing money away.....

Yes, mortgage interest (which is tax deductible), house insurance (which has a use and is again deductible), property taxes (which I'm pretty sure is deductible as well)

You're not throwing money away; you're investing into a property. You don't have 300k to put down so you borrow that. Inflation along with property appreciation and tax deduction generally take care of all these costs. You pay 1,000 month mortgage for example.. what is 1,000 25 years from now? I'm sure it's not worth the same as it is day. Appreciate and tax savings throughout the years adds up. The longer you have a property the better..

You have to look at it long term. If you can't see it long term than don't buy a house; you're not ready.

[H4ck]

I have an uncle that owns property, he told me that yeah the value of the property does go up but the issue as well if the value of the properties around him go up as well, and you have to requalify with the bank for the higher loan amount.....they put you through the ringer and they may not allow you to get the more expensive house if your income does not meet the requirement......

[aspkin]

Originally Posted by jarsky541

I have an uncle that owns property, he told me that yeah the value of the property does go up but the issue as well if the value of the properties around him go up as well, and you have to requalify with the bank for the higher loan amount.....they put you through the ringer and they may not allow you to get the more expensive house if your income does not meet the requirement......

If he takes out another loan? I guess that makes sense. But if he's not upside down on the property it shouldn't be that big of a deal.

Real estate is tricky.. I know people who make bank with it.. they buy property for cheap and flip it.. but you have to find the property. That's the tricky part.

[glacier922]

Originally Posted by jarsky541

yes, and look at how that mentality worked out in 2007-2008 housing crisis subprime mortgage debt that led to a recession........

However, if you buy something with debt with high confidence level that what you buy is a huge discount than what you can sell at whatever market you're in, it's totally fine. Just collect the proceeds and pay back that debt right away.

[dealagreeproceed]

nice topic jarsky... i tend to lean towards avoiding huge debt at all costs

[H4ck]

i am not a supporter of getting any type of loans from the bank....

i know people who have loans for just about everything car, phone, house, and medical......and they work and work and work.....

little weird that people finance such an expensive house yet they never are at home to really enjoy it......they are too busy hustling all day long......

then theirs me, where I have a lot of free time on my hands to work on my business with straight cash......no real stress live well within my means....

[yankee]

If you want flexibility and don't need a whole lot of room(my situation) only buy real-estate when it makes $$$$$ and move into a Keystone Montana or Alpine fifth wheel and work whenever and wherever you want

Of course this does not work for everybody and it certainly has its downsides and upsides as well

[nate]

Im from South Florida and ran a cash only business for 15 years that frequently gave out credit. I feel the same way you do about credit or loans. If I cant pay for it in cash I shouldn't be getting it.

A home doesnt apply to that. Even if you had the cash, youd make more off the cash than you would save in interest off the mortgage. As long as you know how to flip money and aren't JUST a 9-5 slave.

It all comes down to the interest rate too. A lot of people who bought homes prior to 2008 had adjustable mortgages and got f#cked when they adjusted.

I would be paying the same to rent a two bedroom 1 bath apartment as I am paying a mortgage on a 3 bedroom 2 bath house with 9 foot ceilings and a 2 car garage.

Paying a mortgage is like putting money in the bank or buying BTC every month. There's risk involved. I might loose, I might break even, or I might make a few bucks...

But my odds of making a few bucks are good. The house I financed is only 9 years old. Its in a good neighborhood with a piece of undeveloped land a half mile long by a quarter mile wide across the street in a growing mini city on the beach with a port.

If your buying or building a home in the woods in the middle of no where its a different ball game..

The best advice anyone could give is to buy a duplex for your first home if you can find one. That way you can rent out one side and live in the other so as long as you paid a few dollars less than it appraised at and you got a good interest rate and the duplex isnt falling apart. You'll have most if not all your mortgage paid by your renter and you can stack your money to buy a second permanent home for yourself. (with 9ft ceilings, marble or wood floors, and granite counter tops).

You will make and save more money on a home by getting your credit straight by over paying taxes and showing more than you actually made for 3-4 years than you would save in taxes. After you get your home loan, you can go back to doing business as usual.

[yankee]

To add to what Nate is saying, you can pretty much live free and clear if you buy a 2-3-4 unit. Bank wont care what your income is as long as rent covers the mortgage. Now keep in mind, buy this, live 1-2 years, rent your spot and now this income can cover your new mortgage.....

Hire someone to handle the rentals. A good property manager is worth the fee by a long shot. It is also easier to get a loan this way.