Hey friends! It is great to be starting to return to UA-cam. Hope you enjoy this video. There are multiple ways to analyze a home purchase and this is one way. Other factors to consider include: 1. Repair/maintenance costs 2. Utilities. 3. How you use the property (Personal property vs a rental) could completely change how taxes impact your purchase. 4. What can you realistically afford Overall the goal is to think things through before taking the leap.
Nice informative video. I appreciate the example given. However, there are a couple of additional costs (and benefits) associated with home ownership that were not covered in the video and pinned comment. 1. Opportunity cost of your down payment (investing in the S&P500 could potentially net you ~7%/year) 2. HOA fees (~36% of Californians live in a HOA community) 3. Price appreciation of the purchased property
About 2 years ago, I suggested to my parents to not sell their first home, but to rent it out and use the rent for their retirement as a means for extra income. They were skeptical at first, but when my brother and I ran the numbers for them and we had a hunch that interest rates were going to be really high down the road for the next few years, they agreed. The demand for renting their property was so high that my parents increased the price to weed people out. They haven't raised the rent since because it's at that sweet spot where it still benefits the tenants to stay and rent, and in addition the tenants like that the rent price hasn't gone up compared to other property owners in their area.
That does not factor in all the money that you pay to own a home. I recommend a home owner record for one month or year, every penny spent just for the home, including home owner's insurance. I think you will be surprised. This amount is normally not included in the increased value of the home over time. Normally, you come out ahead but by less than you think. Not to mention all your time and money that could have been spent on other investments.
Great poinot Disch972 all of these factors must be taken into consideration. If you are able to buy at a great price then usually it is a no brainer, but with everything so expensive it is a bit of a gamble at the moment.
I think Chipper ought to fly away and look for twigs and build his own nest in a tree for free. 😂 I’ll say kids grow up fast when they buy their first home and have a monthly mortgage to pay. The latest tax act makes it harder to itemize, being that State income and Salt deductions are capped at 10K, a lot of married folks still can’t itemize. It should be part of the equation. Great to have you back on the air and a nice video to get things started. You’ve been missed here.
Normally, I would say buying is better than renting. Right now, there is nothing in my area I would buy. I'm looking for rentals outside of my area. So far, nobody has accepted my offers. I think winter will be a better time to buy. Even though I'm like everyone else and hate buying during a time I want to sit in front of the fireplace with a cup of coffee. The future of interest rates is a little scary. I think they are already too high. Boomers have already began to die off and freeing up homes. Imagine when that escalates and Gen z has a choice between lots and lots of homes.
Hi Annie! Agreed I could not imagine buying right now unless I could do a very small mortgage. Great points about Gen Z fully agree. Best of luck in your rental search :)
Chipper also needs to save for retirement so you need to knock another 15K off his income, so now he only has $60-65K to work with. As someone else pointed out, what about home improvements and repairs, appliances and lawn maintenance? 😊 Utilities??
Normally you build equity by buying but with interest so high and seemingly increasing in the future an uncomfortable majority of your house payment goes to interest rather than paying off your mortgage. So unless you are able to pay off a good chunk of your mortgage fairly quickly then you might as well be renting something cheap until the interest cools off if ever. And sadly the majority of my clients as a tax preparer [95%] are never able to itemize anything home related.
Hey friends! It is great to be starting to return to UA-cam. Hope you enjoy this video. There are multiple ways to analyze a home purchase and this is one way. Other factors to consider include:
1. Repair/maintenance costs
2. Utilities.
3. How you use the property (Personal property vs a rental) could completely change how taxes impact your purchase.
4. What can you realistically afford
Overall the goal is to think things through before taking the leap.
Nice informative video. I appreciate the example given. However, there are a couple of additional costs (and benefits) associated with home ownership that were not covered in the video and pinned comment.
1. Opportunity cost of your down payment (investing in the S&P500 could potentially net you ~7%/year)
2. HOA fees (~36% of Californians live in a HOA community)
3. Price appreciation of the purchased property
About 2 years ago, I suggested to my parents to not sell their first home, but to rent it out and use the rent for their retirement as a means for extra income. They were skeptical at first, but when my brother and I ran the numbers for them and we had a hunch that interest rates were going to be really high down the road for the next few years, they agreed. The demand for renting their property was so high that my parents increased the price to weed people out. They haven't raised the rent since because it's at that sweet spot where it still benefits the tenants to stay and rent, and in addition the tenants like that the rent price hasn't gone up compared to other property owners in their area.
Nice! Win win
Thanks Mike! Great to see you again. Lynn
Thanks Lynn! Thanks for checking out the video :)
It’s hard times right now for everyone. Very good information on having to make life decisions!
Yes, thank you!
Very educational! Thank you.
Thank you Marion!
That does not factor in all the money that you pay to own a home. I recommend a home owner record for one month or year, every penny spent just for the home, including home owner's insurance. I think you will be surprised. This amount is normally not included in the increased value of the home over time. Normally, you come out ahead but by less than you think. Not to mention all your time and money that could have been spent on other investments.
Great poinot Disch972 all of these factors must be taken into consideration. If you are able to buy at a great price then usually it is a no brainer, but with everything so expensive it is a bit of a gamble at the moment.
Thanks for replying!
I guess with the higher interest rates it will be easier to take the itemized deduction versus the standard?
Exactly, we will see more people itemizing who just purchased homes due to the higher property tax and interest rates.
I think Chipper ought to fly away and look for twigs and build his own nest in a tree for free. 😂
I’ll say kids grow up fast when they buy their first home and have a monthly mortgage to pay.
The latest tax act makes it harder to itemize, being that State income and Salt deductions are capped at 10K, a lot of married folks still can’t itemize. It should be part of the equation.
Great to have you back on the air and a nice video to get things started. You’ve been missed here.
Thank you Dan!! Love the comment about Chipper building his own nest. It is a lot cheaper haha.
Thanks 🤝🤗🤝
What do you think will happen to interest rates and the housing market in the next few years?
Does it depend on who wins next presidency?
Going up i fear.
Normally, I would say buying is better than renting. Right now, there is nothing in my area I would buy.
I'm looking for rentals outside of my area. So far, nobody has accepted my offers. I think winter will be a better time to buy. Even though I'm like everyone else and hate buying during a time I want to sit in front of the fireplace with a cup of coffee.
The future of interest rates is a little scary. I think they are already too high. Boomers have already began to die off and freeing up homes. Imagine when that escalates and Gen z has a choice between lots and lots of homes.
Hi Annie! Agreed I could not imagine buying right now unless I could do a very small mortgage. Great points about Gen Z fully agree. Best of luck in your rental search :)
Jeez. Really miss those 2.9% rates.
I can't believe rates around 7.5% now and expected to go even higher.
Chipper also needs to save for retirement so you need to knock another 15K off his income, so now he only has $60-65K to work with. As someone else pointed out, what about home improvements and repairs, appliances and lawn maintenance? 😊 Utilities??
Great points! Which is why I would not suggest purchasing a property that consumes more than 20% to 33% of one's net take home pay.
Normally you build equity by buying but with interest so high and seemingly increasing in the future an uncomfortable majority of your house payment goes to interest rather than paying off your mortgage. So unless you are able to pay off a good chunk of your mortgage fairly quickly then you might as well be renting something cheap until the interest cools off if ever. And sadly the majority of my clients as a tax preparer [95%] are never able to itemize anything home related.
Spot on! Thanks for commenting. Ya I would say about 8 out of 10 my clients cannot itemize as well.
Good video
Thanks Desy!
I know that there are rent versus buy calculators online but if you shared your Google sheet that would be so helpful!
👍👍👍👍👍👍
Thanks Ken!
Thank you