Home buying thread

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ZyyzYzzy

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Looking for a new home but extremely conflicted. Want to get a single family because fuck a 4 level town home with all hard wood. My legs are tired, but also fuck stupid Alexandria and surrounding area prices. I literally physically cannot make myself buy a 70s/80s split level for 700-800k
 
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Lanx

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Looking for a new home but extremely conflicted. Want to get a single family because fuck a 4 level town home with all hard wood. My legs are tired, but also fuck stupid Alexandria and surrounding area prices. I literally physically cannot make myself buy a 70s/80s split level for 700-800k
cheaper just to buy a roomba per floor instead
 

TJT

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Agree. When I buy a property it’s as little cash outlay as possible. Let’s say I want $7500 off, I just make offer for asking price with $7500 to closing costs.
This is a good point. Thank you.

I can sell my current house for a profit of $175k or so if I sold it today. I want to keep it though as the price will only increase. But I also am a bit apprehensive about the asspain of renting. All I hear are nightmare stories.
 

Control

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But I also am a bit apprehensive about the asspain of renting. All I hear are nightmare stories.
I rented my house for a while, and it was pretty painless because I got a great property manager who basically did everything for 8ish% and decent tenants. I got lucky on that part though. It sounds like there are FAR more bad property managers than good. I wouldn't necessarily mind doing it again, except that renting large, single family homes is a pretty sub-optimal way of doing it. Buying with the intention of renting is way better than just renting the house you bought because it was what you wanted to live in.

Having said that, with eviction moratoriums now being a thing, it's hard to imagine going down that path. If it's ok for tenants to just stop paying rent for a year, the rental market is going to change dramatically (it probably already has, I just haven't been paying attention).
 
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Burren

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Looks like we're going to be gearing up to buy another house in Texas. Most likely in Leander as we want a bigger lot. Secondly we want to get ahead of the coming wave of Oracle/Apple/Tesla/etc hires coming in the next few years. My goal is to get a house within walking distance of the Austin Metro Rail as prices are surprisingly low in Leander area and this will only increase in value.

My current home is on the VA home loan but I'll be going conventional this time. Will just be paying down 20% to avoid PMI and shit. Might turn to builders to avoid the aids competition for existing inventory I've already dealt with back in 2016. But IDK.

If you intend to stay there for a long time, then building the house you want will be a better choice. We're doing the same cost/benefit analysis right now and looking at architects and builders.
 
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Aychamo BanBan

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Why you feel this way?

This is how I look at it. For this example, a $300,000 house. The 20% down payment is $60,000. 30 year fixed at 3% gives P&I (principal and interest, which is the bulk of your mortgage, not counting homeowners insurance, etc) of $1,011.85. You won't have to pay PMI.

Now, assume you make a 10% downpayment, which is $30,000. Your P&I is now $1,138.33. You saved $30,000 on a down payment, but it costs you 126.48 extra in P&I per month. Now we will have to pay PMI, and assuming a PMI of 1%, that is an extra $225 per month. So by making the 10% down payment, it costs you $351.48 extra per month, so we have to beat that. By the way, $30,000 divided by $351.48 is 85 months or 7 year break even. From what I can tell, you would hit the 80% LTV and terminate PMI at month 60.

So, let's beat $351.48 with a real world example. Instead of doing the 20% down, we will assume we paid 10% down on that house, and use the other 10% ($30,000) to make a better investment.

I'm looking at a beach house, it's $309,000, but for the sake of this argument let's say its $300,000. I'm going to buy it with 10% down for $30,000, and I'm offering their asking price minus $7500 that will go towards closing costs, so it will literally cost me $30,000 out of pocket. The house is a new construction 3 bedroom, 2.5 bath, in a wonderful beach community, on the second row back from the beach, right in the part of town that has a nightlife. There will be monthly fees of approximately $875 (PMI on this loan, property tax, flood/wind insurance, homeowners insurance, utilities, etc). It should earn around $200 per night on AirBNB/VRBO, and average 17 nights of occupancy throughout the year. This gives a gross monthly average income earned from the house of $3,400, minus $1,183.33 P&I, and $875 in fees, coming out to $1386.67 profit per month, or if I'm really lazy and don't want to work the house, pay a property management company 20%, and my monthly net profit is $706.67. Yearly profit of $16,640.03 (without management) or $8,480.03 (with management.) Summer months and holidays demand a premium and your nightly rate will be much higher, and during the winter may be much lower. These are average numbers from comps in the area. So this house is paying it's own mortgage, all of it's bills, and still putting money in your pocket.

So, my point:

Option 1: Pay 20% down payment, save yourself $351.48 per month, but have $60,000 in your house that you can't easily use.

Option 2: Pay 10% down payment for your house, and use the other 10% to purchase a "second home" investment property (mortgage companies will let you do 10% down for a second home) and turn that second home into a cash generating machine. That second home can almost pay the full P&I of your primary home. So by making the lower down payment, you were able to leverage that second 10% of your original down payment and purchase another home that renters will pay the mortgage of, and that home will generate a profit that helps pay off your personal home's mortgage.

I know there are exceptions, but I think it's almost always better to leverage other peoples money to make money. ... And isn't it crazy that the different in P&I between a $30,000 and $60,000 downpayment is barely $100?
 
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Fogel

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Why you feel this way?

So this works out for several reasons:

1. Interest rates are at historic lows and will be for awhile. It'd be one thing if we were talking about mortgages at 5-6% but I got my last two mortgages at 3.75% and after one year refinanced my current one down to 2.75%. At that point there's no reason to pay off the mortgage early if you know how to invest.

2. Unless you already have an ungodly amount of money laying around, in which case these points are moot, having 10-30k extra money in your bank is good for shit hits the fan moments like if you get layed off just after getting your mortgage

3. I payed 195k for my house so 20% would have been 40. I put 19500 down and put the other 19500 in my brokerage account in the SP500 index fund. The SP500 has been averaging 8% for its lifetime and in the last decade it's been 10+%. So in one year I generated almost 2k in the index fund, while my PMI is only about 30-40 dollars a month, so even if you're subject to capital gains on the index fund, you'll still be ahead by over a 1k each year
 
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Kinner

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Thanks floor explaining it to me. Really made me stop and think about this since I was about to put down 20% on a new house I am buying as a primary residence. Think I am going to pay less now and invest in something that is giving me a really nice rate of return and just deal with the higher payment.
 
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TJT

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If you intend to stay there for a long time, then building the house you want will be a better choice. We're doing the same cost/benefit analysis right now and looking at architects and builders.
We have a handful of hard requirements and a general area (like 5 square mile location) we are dead set on. Looking to move quickly.

All of our friends used the same realtor and said the guy is rock solid. Knows all of the builders and can get things done so we've contacted him. Going to move on this as soon as we can. I know we are in a strong spot relative to others because we can put a downpayment and secure a deal now but do not need to sell our current house or have any other time table to when we need to move in. As in, we can purchase now and can wait a year for them to build it. Most people I talk to need to not only have a definite time table on construction but also need to sell their current house in order to close the new house's mortgage.

Got pre-approval rolling on two lenders as I heard conflicting results. Austin favors UFCU and my friends who bought recently got hands down the best rates just from the zillow search tool.
 
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TJT

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I rented my house for a while, and it was pretty painless because I got a great property manager who basically did everything for 8ish% and decent tenants. I got lucky on that part though. It sounds like there are FAR more bad property managers than good. I wouldn't necessarily mind doing it again, except that renting large, single family homes is a pretty sub-optimal way of doing it. Buying with the intention of renting is way better than just renting the house you bought because it was what you wanted to live in.

Having said that, with eviction moratoriums now being a thing, it's hard to imagine going down that path. If it's ok for tenants to just stop paying rent for a year, the rental market is going to change dramatically (it probably already has, I just haven't been paying attention).
I asked the realtor we contacted about this and his recommendation is that if you have property in Austin, TX and don't absolutely need to sell it to secure your next house or something then don't do it. Said he's willing to teach us how to find tenants and stuff so I'll try it out. Our current house is in a really good location for North Austin also. I am definitely down to try I guess.
 
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Control

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I asked the realtor we contacted about this and his recommendation is that if you have property in Austin, TX and don't absolutely need to sell it to secure your next house or something then don't do it. Said he's willing to teach us how to find tenants and stuff so I'll try it out. Our current house is in a really good location for North Austin also. I am definitely down to try I guess.
It can make sense in some cases, just run the numbers both ways. There are ups and downs on both sides. In our case, selling the house and buying a 4-plex or two would have been much better cash flow, albeit with less expectation of appreciation. And multi-units are more of a hurdle to sell as well. You'll be able to get better tenants in a nice house, but the potential downside is higher too. Even disregarding nightmare tenants, there's just a lot of shit that can cause maintenance calls in a nice home full of modern amenities. "Oh, the in-door icemaker broke and fixing is almost as much as a new refrigerator? Great, there goes x months of cashflow"

Also, being able to spread your risk and vacancies over 4 or 8 units is nice. That would be more work if you're managing everything yourself, but if you're going to use a property manager either way, then that's less important.
 

Nija

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We have a handful of hard requirements and a general area (like 5 square mile location) we are dead set on. Looking to move quickly.

All of our friends used the same realtor and said the guy is rock solid. Knows all of the builders and can get things done so we've contacted him. Going to move on this as soon as we can. I know we are in a strong spot relative to others because we can put a downpayment and secure a deal now but do not need to sell our current house or have any other time table to when we need to move in. As in, we can purchase now and can wait a year for them to build it. Most people I talk to need to not only have a definite time table on construction but also need to sell their current house in order to close the new house's mortgage.

Got pre-approval rolling on two lenders as I heard conflicting results. Austin favors UFCU and my friends who bought recently got hands down the best rates just from the zillow search tool.
Ask the realtor who his recommended lender is. That got me with a local place that beat the big guys by quite a bit.
 

LachiusTZ

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Ask the realtor who his recommended lender is. That got me with a local place that beat the big guys by quite a bit.

This.

I was getting "ok" quotes by big entities, local came through with about as low as I've seen anyone else here quote.
 

TJT

Mr. Poopybutthole
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Should be able to see
This.

I was getting "ok" quotes by big entities, local came through with about as low as I've seen anyone else here quote.
I have a local, an online and I have to qualify with the builder's in house lender whoever it is too.

Apparently 95% of people take the in house lender as doing so waves about $5k in closing costs. Austin is so batshit right now you have to bid on empty lots btw. That and the sellers are trickling "available" lots to drive up prices. Like they will only sell 10/200 lots at a time because of lead time.
 

Aychamo BanBan

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So I've mentioned that I am selling my house and using the equity to pay off another house and downgrading my lifestyle. If anyone wants a sobering experiment:

For my house, if I keep paying the note, there is about $150,000 of interest payments left, which is money paying the bank, and for me I may as well be throwing this in the trash. So I did $150,000 / 30 years which is $5000/yr.

So I went here:


If you invested $5000/yr for 30 years with 6% return that is $424,000.. 7% is $510,000.. 8% is $616,000!!!

So buy paying off a lower priced house, and not paying interest for 30 years, and investing that money, I can earn an extra $500,000, and that's not even counting that I wouldn't have to pay the remaining $330,000 principal. So this move could generate a million dollars almost... Fucking insane.
 
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