Is a home an asset or liability?

[Homeslice]

Originally Posted by Flexin

Or you find one with a built in apartment and have the renter pay most if not all of the payment while you live in the other part. When you have enough money you buy another house and rent the other part of the first house and put that towards the new house.

James

I like your style.

[Flexin]

Originally Posted by TIGGER

When did I say that? Oh and I'll have $300,000+ in an IRA if I were to put the entire difference away. Weren't you paying attention? Look, take your scenario. Your house appreciates 10% every year like clockwork, say $10,000 on an $100,000 house. Do you honestly mean to say that you believe that your house will be worth about $500,000 in 30 years? Right... I can say without a doubt that IF you run the course of the loan, you will pay about three times the original cost of the house or $300,000. That doesn't include taxes, repairs, etc. Yes I know that some people pay extra, I also know that a lot of people take out second mortgages as well. I know that there can be mitigating circumstances in any hypothetical situation. My criteria is IF you rent just the space you need, are single, childless and invest your "extra" money VS buying a house. At the end of 30 years, who will come out ahead? I think the renter will have more money in pocket. In fact, I believe that you will be selling me your house for about $150,000-200,000 and I will still have thousands of dollars in the bank.

Once again you need to compare the same monthly payment. $1000 to rent vs $1000 to mortgage. Over 25 years both pay the exact same amount.it doesn't matter if that works out to be 2 or 3 times the asking price of the house because they spent the same amount as you. Then at the end od the 25 years when the house is paid off they can use that money for what every they want or sell the house. They can sell the house house to you for $200000 (you said that you have a few thousand left in the bank but I hope you still have more income then that because you still have to pay utilities remember? You said houses are expensive) and then the hosue owner can take that $200000 and put it in the bank. So you have a few thousand in the bank but the home owner now has $200000 in there. Plus because the home owner didn't pay much more then you did per month they can same amount of investment as you did, who won? I would ask ask the home owner who he\she thinks won but they can't be reached at the moment. They are on a beach talking to a guy that said he made his money renting to some guy name Tigger. Thet said "hey that's funny they guy that bought our house had that same name". I will try them again latter.

James

[Amber Lamps]

Originally Posted by Flexin

Once again you need to compare the same monthly payment. $1000 to rent vs $1000 to mortgage. Over 25 years both pay the exact same amount.it doesn't matter if that works out to be 2 or 3 times the asking price of the house because they spent the same amount as you. Then at the end od the 25 years when the house is paid off they can use that money for what every they want or sell the house. They can sell the house house to you for $200000 (you said that you have a few thousand left in the bank but I hope you still have more income then that because you still have to pay utilities remember? You said houses are expensive) and then the hosue owner can take that $200000 and put it in the bank. So you have a few thousand in the bank but the home owner now has $200000 in there. Plus because the home owner didn't pay much more then you did per month they can same amount of investment as you did, who won? I would ask ask the home owner who he\she thinks won but they can't be reached at the moment. They are on a beach talking to a guy that said he made his money renting to some guy name Tigger. Thet said "hey that's funny they guy that bought our house had that same name". I will try them again latter.

James

James, bro I don't have to consider anything... I set up this scenario in the first place. Let me narrow this down for you. I understand that there are ALL KINDS of scenarios where you are absolutely right, 100%. I know that. You can move the parameters around any way you want but this is the situation that I am trying to work with, from the start btw...

You have two single guys, who make the same money. One guy rents a small apt and one buys a house in this area, for control reasons only. Average 1 bedroom here is about $500 plus elect/gas (about $100/month), average house price is about $100,000+ (I've looked). The house guy pays $1,200 per month total to live there, fair enough? The apt guy pays his $600 and invests the extra in a 5% account of some kind. 25 years later who is better off?

I do agree about buying a duplex and renting the other side. My Mom did that and the renter paid her payment and all of her utilities!

[Smittie61984]

If you bought a house for $100,000 and say after 20 years it is now valued at $300,000. If you decide to sell it for $300,000 to make $200,000 you'd want somewhere to live so to get an equal house you'd have to spend $300,000. How is that an investment unless you plan to sell a $1,000,000 NYC townhome and move to Mexico?

As for wether a house is an asset or liability. I'd consider it an asset as long as it will gain economic value but liability if it loses economic value.

[Flexin]

Originally Posted by Smittie61984

If you bought a house for $100,000 and say after 20 years it is now valued at $300,000. If you decide to sell it for $300,000 to make $200,000 you'd want somewhere to live so to get an equal house you'd have to spend $300,000. How is that an investment unless you plan to sell a $1,000,000 NYC townhome and move to Mexico?

As for wether a house is an asset or liability. I'd consider it an asset as long as it will gain economic value but liability if it loses economic value.

If your selling you have a reason. One could be to upgrade but I can't see that after 20-25 years unless you bought young. You can be down grading because all of the kids have moved out so that means you should be paying less. Or you moving somewhere to retire. I worked with a woman the had bought and sold about 5 homes over 15 or 20 I think. They would fix it up a bit as they lived in it. After a few years or so they would sell it and put that money into a bigger house. The second last one was pretty big and nice. Then the kids moved out so they decided that they didn't need that much house. They put it on the market to sell and then build a smaller house. It sold for more then they were asking and they built the new house. She passed away around the time it was really finished which was sad. I think she said they would have enough made from this to be mortgage free on this house.

James

[Amber Lamps]

Originally Posted by Flexin

If your selling you have a reason. One could be to upgrade but I can't see that after 20-25 years unless you bought young. You can be down grading because all of the kids have moved out so that means you should be paying less. Or you moving somewhere to retire. I worked with a woman the had bought and sold about 5 homes over 15 or 20 I think. They would fix it up a bit as they lived in it. After a few years or so they would sell it and put that money into a bigger house. The second last one was pretty big and nice. Then the kids moved out so they decided that they didn't need that much house. They put it on the market to sell and then build a smaller house. It sold for more then they were asking and they built the new house. She passed away around the time it was really finished which was sad. I think she said they would have enough made from this to be mortgage free on this house.

James

See? No matter how you do it you'll be dead before you pay off your house.

[fasternyou929]

Originally Posted by TIGGER

Average 1 bedroom here is about $500 plus elect/gas (about $100/month), average house price is about $100,000+ (I've looked). The house guy pays $1,200 per month total to live there, fair enough?

Fair? No. The payment on a 100k mortgage at 5% APR would be $536.82. Close though!

[Flexin]

Originally Posted by Smittie61984

If you bought a house for $100,000 and say after 20 years it is now valued at $300,000. If you decide to sell it for $300,000 to make $200,000 you'd want somewhere to live so to get an equal house you'd have to spend $300,000. How is that an investment unless you plan to sell a $1,000,000 NYC townhome and move to Mexico?

As for wether a house is an asset or liability. I'd consider it an asset as long as it will gain economic value but liability if it loses economic value.

If your selling you have a reason. One could be to upgrade but I can't see that after 20-25 years unless you bought young. You can be down grading because all of the kids have moved out so that means you should be paying less. Or you moving somewhere to retire. I worked with a woman the had bought and sold about 5 homes over 15 or 20 I think. They would fix it up a bit as they lived in it. After a few years or so they would sell it and put that money into a bigger house. The second last one was pretty big and nice. Then the kids moved out so they decided that they didn't need that much house. They put it on the market to sell and then build a smaller house. It sold for more then they were asking and they built the new house. She passed away around the time it was really finished which was sad. I think she said they would have enough made from this to be mortgage free on this house.

James

[Flexin]

Originally Posted by TIGGER

James, bro I don't have to consider anything... I set up this scenario in the first place. Let me narrow this down for you. I understand that there are ALL KINDS of scenarios where you are absolutely right, 100%. I know that. You can move the parameters around any way you want but this is the situation that I am trying to work with, from the start btw...

You have two single guys, who make the same money. One guy rents a small apt and one buys a house in this area, for control reasons only. Average 1 bedroom here is about $500 plus elect/gas (about $100/month), average house price is about $100,000+ (I've looked). The house guy pays $1,200 per month total to live there, fair enough? The apt guy pays his $600 and invests the extra in a 5% account of some kind. 25 years later who is better off?

I do agree about buying a duplex and renting the other side. My Mom did that and the renter paid her payment and all of her utilities!

My house was $100000 and I paid much much less then you $1200 quote. Around here anyone looking for $450 rent can't afford a house at any price. My sister pays about $1000 for her apartment. If you had two people do exactly as you said then you could be right but they guy in the house could still put money away. People that live in $450 a month apartments have very little money or they go low rent so they have the money to buy big ass tvs, stereos and Beemer bikes. . Nice bike btw. And I'm not changing thing to make my way look better I'm just being real. I know people in low rent apartments (I don't think they have as good of a deal as you do but...) And they are not there so they can invest money, they are there because that is all they can afford. Trust me not one of them is living they way you are.

James

[Homeslice]

Originally Posted by TIGGER

See? No matter how you do it you'll be dead before you pay off your house.

How do you figure? She was getting a smaller house this time, not a bigger one.