OCC: Waaah

[ungeheuer]

Interesting point of view.  Answer me this:

1.) When you're paying a note on a car, do you pay the insurance and registration?
2.) If you have a mortgage, do you have the title for your home in your possession?

Insurance is compulsory in certain mortgages to protect the asset (read: the collateral backing up the note).  They could care less about it once you've paid it off.  You're also paying taxes for the use of the property, just like you would with a financed vehicle.

You can say "fail" all you want, but a mortgage is nothing more than renting money from a bank.  Until the debt is paid, you don't own anything except equity in the home.   Acting like people are "homeowners" when they put down 3.5%, or have interest-only loans, or any of the rest is completely false.  Foreclosure is the bank seizing an collateral asset because a borrower couldn't afford their financial obligations.

Period.

Cheers,
Adam

The truth ^^.

For some it may indeed be the awful stark truth.  But the truth nonetheless.  Welcome to planet reality (pun intended).  Debt is not an asset.

[Speedbag]

For a while now I've really been questioning how wonderful an "investment" owning a home really is.

You pay the loan principal, plus a shitload of interest, insurance well above and beyond that of a renter, upkeep and maintenance, taxes, and so on.

Then, at the end of the day, you might get to enjoy it for a few years at a slightly reduced ding per month (post-loan, but still covering all the rest) before you die and whomever you left it to reaps the benefits.

[ungeheuer]

Yup. You dont own the home, it owns you.  Even if the bank no longer does.

[ducpainter]

For a while now I've really been questioning how wonderful an "investment" owning a home really is.

You pay the loan principal, plus a shitload of interest, insurance well above and beyond that of a renter, upkeep and maintenance, taxes, and so on.

Then, at the end of the day, you might get to enjoy it for a few years at a slightly reduced ding per month (post-loan, but still covering all the rest) before you die and whomever you left it to reaps the benefits.

At today's property values, even though they are in the toilet from our perspective, it isn't a bad inheritance...

from my perspective at least.

My son may feel differently when I'm gone.

[ducatiz]

For a while now I've really been questioning how wonderful an "investment" owning a home really is.

You pay the loan principal, plus a shitload of interest, insurance well above and beyond that of a renter, upkeep and maintenance, taxes, and so on.

Then, at the end of the day, you might get to enjoy it for a few years at a slightly reduced ding per month (post-loan, but still covering all the rest) before you die and whomever you left it to reaps the benefits.

Rent:  Pay monthly premium (rent per sq ft is almost always higher than buying), get maintenance, place to live.  Move out, get nothing.

Buy:  Pay monthly, pay your own maintenance, get up to 35% of your interest as a tax deduction, get place to live.  Move out, get something.

Put it this way.  Either way, you have to have a place to live.   When you rent, you are paying a premium to have someone take care of your home, appliances, yard etc.

But when you buy and then sell the home, if you get ZERO profit, you walk away with only having paid the interest to live there and that is reduced by the amount of your deduction.

Of course, this assumes the cost of renting and buying is in parity.  You should expect to pay a 10-20% premium per sq ft for renting over buying the SAME property.    If you get a deal either way, it changes the calculus.

Generally though, renting is a bust.  You get an abused property, most property managers do the minimum amount of maintenance legally necessary, no choice as to the look of the outside of the house, and no choice as to the state of the interior.  With a rental, you're going to get whatever was on sale at Home Depot for the kitchen and bathroom and God-knows-what in your carpet.

I've owned three residences and all of them I renovated to my tastes. 

[gregrnel]

When you add everything up, in most states and especially here in WI with fairly steep real estate taxes, home ownership is a break even business. This assumes average market conditions of a 1% or 2% annual increase in property value, not  in a bubble or slump.

Rent:  Pay monthly premium (rent per sq ft is almost always higher than buying), get maintenance, place to live.  Move out, get nothing.

Buy:  Pay monthly, pay your own maintenance, get up to 35% of your interest as a tax deduction, get place to live.  Move out, get something.

Put it this way.  Either way, you have to have a place to live.   When you rent, you are paying a premium to have someone take care of your home, appliances, yard etc.

But when you buy and then sell the home, if you get ZERO profit, you walk away with only having paid the interest to live there and that is reduced by the amount of your deduction.

Of course, this assumes the cost of renting and buying is in parity.  You should expect to pay a 10-20% premium per sq ft for renting over buying the SAME property.    If you get a deal either way, it changes the calculus.

Generally though, renting is a bust.  You get an abused property, most property managers do the minimum amount of maintenance legally necessary, no choice as to the look of the outside of the house, and no choice as to the state of the interior.  With a rental, you're going to get whatever was on sale at Home Depot for the kitchen and bathroom and God-knows-what in your carpet.

I've owned three residences and all of them I renovated to my tastes. 

[TAftonomos]

I've rented several places in school and while waiting on my job.  After buying a home, and even being upside down on what I owe/what it's worth, and all the corners the builders cut, blah blah blah.... 

I wouldn't go back to renting unless it was absolutely necessary for the survival of my family.


Period.


So there 

[ducatiz]

When you add everything up, in most states and especially here in WI with fairly steep real estate taxes, home ownership is a break even business. This assumes average market conditions of a 1% or 2% annual increase in property value, not  in a bubble or slump.

it depends on how you want to live.

If you rent, you take what you get:  don't like the carpet color?  too bad.  wood floors worn out?  too bad.  Old refrigerator?  too bad.  etc etc.

We re-did our kitchen.. custom zebrawood cabinets, quartz countertop, 18" square marble flooring, ran gas for cooktop and double oven -- and on and on. 

In a year or so we are going to add another wing to the house.  already got the architect and designer in.  redoing the facade of the house so it will be brick/wood paneling in a mid-century modern style, adding a bedroom, bathroom and a walk-in master closet with an extra garage under.

renting, you can't do that, or if you do, you are throwing the money away.

[Privateer]

hey so yeah back to the topic at hand.

Do I understand that they stopped paying because they're upside down on it? 

I wish it worked that way for all of us.

[badgalbetty]

I have bought and sold 6 houses in the last 25 years since coming to America.I rent a room now it costs me x amount per month. I actually like the idea of not owning. I dont pay any utility costs dont pay any taxes on it, no ins on it other than my renters ins and no maintainence costs. I come and go as I please with zero commitment. For me,this is a perfect situation. I live in a very nice home with a super guy and everything is extremely zen and nice.I also get a garden to pay in and that is a plus!
Plus this arrangement helps the guy I rent from pay the bills which keeps someone else in a home in these uncertain times.I wont ever hand have no intention of ever buying a home again. They are money pits which you never really own. If after it is paid off you fail to pay your property taxes for 3 years the state will take it from you. So really it begs the question ................do you really ever own. If you spend 30 years paying it off why then does the state have the power to take something from you that is not theirs to take? You dont own it they do. Just my opinion and I know that some of you will agree and some of you wont. Sorry about the threadjack.

[ducatiz]

Good points on property tax... 

Around here, if you are over 65 or a disabled vet, you don't pay property tax.

I don't have a problem with prop tax ~in principle~ because (for example) you don't own the road in front of your home, but you use the hell out of it.  The state has to maintain that.  Plus, your property values are affected by things like how good the local schools are, etc, so I choose to look at it as maintenance on one's home.

That all being said, it has to be administered in a just manner.  That story of that woman with 5 kids in idaho being evicted (and the boy coming out with a gun to protect their home) always kicks me.  She was sick, they were destitute, but they had long paid for the house, they were just in arrears on the taxes.  To kick them out was simply unjust.

[Popeye the Sailor]

Did you guys hear OCC is going to start selling Ducati's?!?

[Speedbag]

Maybe they'll get one of those Hypermotards I've been hearing rumors about.

[The Architect]

Maybe they'll get one of those Hypermotards I've been hearing rumors about.

I haven't seen it yet and I hate it already!    

[Popeye the Sailor]

I haven't seen it yet and I hate it already!    

It's too heavy and look how ugly that exhaust is that I would replace anyway!

It needs a dry clutch!