Home ownership seems like such a daunting aspect of life. We are currently working on getting out of $17,000 in student loan debt, but I can’t even imagine tackling a $300,000 in debt. It seems like home ownership only makes sense if you are going to stick around for 30 years. When I use a mortgage payments calculator it helps me to break down my payments, and see what amount we would owe at a particular interest rate. If you’re interested in investment properties check out the buy to let mortgage calculator.
My real concern though isn’t necessarily the monthly payment, or the property taxes. My concern is the amount of money that it costs to maintain a house. If you buy an older home then you’ll have annual maintenance that you cannot ignore. Plumbing, foundation, termites, yard, fencing, painting, windows, gutters, and the roof all come to mind when I think about what it takes to keep up a house. All of those items can be extremely expensive, so you must be prepared to cover those costs.
The location that you choose is important. Like I said earlier, if your going to buy a house you should be prepared to live there for 30 or so years, and you also better be sure that you like where your living and that you like your neighbors. Nothing can be more discouraging than having difficult neighbors. If you have college students who rent next door, and they throw parties every other weekend, you might not enjoy your weekends at home. If you buy on a busy street, you better be prepared to deal with the traffic noise for 30 years.
All I can say is that once my wife and I get to the point that we are serious about buying a home, it is going to be a slow and arduous process. I want to take our time and research the area and the market for a house. I want to have a large chunk of cash that we can rely on for a down payment, and plenty left over to be able to make the changes we need around the house.
Are you a home owner? What has been your experience with home ownership? Is it the best decision you ever made, or is it one of those things you regret and just live with? Looking forward to your comments below.
-Matt
[Photo Credit: tucsonazrealestateblog.com]
Hello Matt -
I read your post about home ownership and find it interesting. I understand how home ownership is something to be carefully considered. My wife and I started out in (what we call) a 2-family house that we bought with a minimal down payment.
Our strategy was to buy the the most disheveled (that’s being kind) house in a decent neighborhood, improve the operation and peddle it in a couple of years. A 2-family in these parts is a house with an upstairs “flat” and a downstairs flat. We let the upper flat be vacant until we got it in shape (needed some work) and then we went to work on our lower flat.
We had the benefit of renting out one unit which helped pay the mortgage. It took three years to get the place in shape and sell it for a profit. We then bought a bigger house consisting of four units and did it again. We were there for just under ten years.
The nice part was that as the apartments got fixed up and the operations were improved upon, the rents went up. By the time we were there a few years, the rents were covering about 80% of the monthly mortgage. (That won’t always be the case, but the rents will contribute quite a chunk).
Interest rates are the lowest they’ve been in my lifetime. We were paying 8.5% on the first one (in 1976) and 9.5% on the second one. That is a nice advantage today.
The decision to invest in a home is something to consider long and hard -as I see you are doing. You will need funds to fix up and repair, etc. It might be something to do after you get the travel bug out of your system. (If / when). However there are nice tax advantages with owning income property -which could help finance your travels.
All things considered, I would not want to rent if I could buy. I have a little (not so little) independent streak. I feel home ownership is a lot more freeing than renting. It feels more like home to me. A rental doesn’t feel any more like home to me than a hotel suite. That’s just me. If I want to change something, I don’t want to ask permission first. It’s a “being in control” thing with me.
My parents owned their home that I grew up in. I wanted to set the example for my sons the same way. They grew up watching and helping me work on and around the house. Now, they are enabled and can do it for themselves.
Finally, nothing is carved in stone. If you carefully select the right property, buy it at the right price and decide somewhere down the line that home ownership isn’t for you -sell it and go wherever you want. If you buy it right (a fixer-upper in a nice neighborhood) -whether it is income property or not, you should be able to sell it at a profit two or three years down the road. Granted, the market is depressed right now. There are still good buys out there.
I suspect you’ll find an ample supply of people willing to give you advice on the topic. Best advice I can offer is to take your time. Ask a lot of questions so you can form a solid opinion. When you know what you want to do, find someone who is doing it and copy what they are doing.
Our tastes and wants and needs change over time. Dealing with that is what keeps it interesting. By the way, I am not one to be content in one place for thirty years. Many people are, of course. But, as I said above, if you decide, or if your needs change, or if you outgrow your house, you can shift gears and find someplace else. We went from a small two bedroom flat (where our two kids were born) to a big four BR flat (in the four unit house) and then to a three BR ranch style house. Kids are gone. We’re back to a smaller house again. Things change.
I hope this discussion is useful to someone. Best of luck.
Dave from HomeandGarden911.com
I won’t get too into it, but I believe home ownership is a myth, a more cruel myth than paying obscene amounts for a college education.
I’m not so sure there are even benefits to owning a home anymore….
To me, David W, it’s about controlling my environment (to the extent that is possible). There are, of course, valid arguments for renting. It may boil down to personal preference.
The aspect of appreciation over the long term (emphasis on long) was an attraction for me. Granted, since 2008 and with the circumstances that contributed to the present depressed home buying market, it might be difficult to buy into that thought. I’ve been around long enough to know that this is just a ‘stretch of road’ we’re going down. Things will improve and values will again rise (over the long term).
With the depressed market and interest rates at historic lows, it seems like an ideal time to buy. Everything is on sale at bargain basement prices.
Around 1979 or 1980 or so, mortgage interest rates were up around 14%. Everyone was running around like Chicken Little (the sky is falling). In due time, it passed. This, too, shall pass.
Dave from Home and Garden 911
My question to you is this: why do you feel it is so important to own a home?
I like the idea of owning something and putting effort into it to make it great. I want to be able to raise my kids in the same home, and have them enjoy that consistency of having a place to call home. There accomplishment in working on a home, and making it yours…not to say owning a home is the right way to live, but there are some positives to home ownership. I guess just need to balance my priorities and goals.
How about because after 30 years (if not way sooner) you stop paying a mortgage and have a physical asset on top of it. Rent for 30 years, and you are still paying rent and have nothing to show for it. Your Mortgage wont change over 30 years. Can’t say the same for renters.
Granted, home ownership is definitely not all it’s cracked up to be, and it definitely is not the awesome short term investment that people pretend it is, but it would be ignorant to say their are no long term benefits to home ownership.
*there
I agree ninja… I think it’s a balance of understanding that home ownership is a huge decision that you should never rush into.
I own a house with an ex-boyfriend. Worst idea ever. Now it’s been 1o years, the market sucks and we still own it together. It’s a lot of work to own a house… I can’t say I would ever do it again.
You’re right home ownership comes with sooooo many extra costs I think most people don’t consider when they first buy.
Personally home ownership has never really been the holy grail of life accomplishments for me, but I’m warming up to the idea. A cute condo where I live would be $200,000 to $300,000 so I still have to come up with a huge lump sum if I want to put 20% down, but that’s becoming more and more attainable.
What I would really like is just being able to decorate and renovate to my liking! I am so sick of living in all-white abodes with old rickety appliances =p
I am a homeowner (age 25) and I am available to talk via email/phone about the pro’s and con’s any day you want. I write about home ownership all the time on my blog.
My house was appraised in Sept for 160k and I owe 117k — but I put about $20k and about 1000+ hours into rehabbing. Don’t forget I’ll lose 6% selling the home as well. I think a realistic selling price would be about $150k.
I would never buy into an expensive home (300k+) — ever. It simply is too financial insane. There are so many reasons that the housing market is going to suffer in the next decade or so, tread lightly.