"To buy a house or not to buy a house" |
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NickR
First Time Poster
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Location: Abbotsford, Canada |
"To buy a house or not to buy a house" |
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Hello, I was wondering if you all can give me advice on whether I should buy a house or not. Here is my complete situation:
I am 23, married, and we are both full-time students. An unfortunate car accident of my wife's money-smart brother has left us with 50k and we are pondering using it to help us buy a house. I have 4 years of education ahead of me and she could work full time or get her master's in another 2 years.
We are looking at a 3 floor townhouse that costs around $290,000 CAD. The idea we have is to rent it out immediately to a family for maybe $1200 CAD a month and use that to help us make the payments. Meanwhile we will be going to school about 100 km's (62 miles) away, and living in a trailer. So we figure that buying a house now is like gold in our pockets and if we need to we can use student loans to help us along since they have excellent rates.
One thing that helps us as well is that we know the developer of the townhouse complex and my wife's father owns a successful landscaping company (30 employees).
So my question is this: Is this a smart thing to get into at this time of my life?
I look forward to all the replies,
Nick R
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Fri Nov 12, 2010 1:52 am |
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kimmydesouza
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According to me you should not buy a house. You are just 23 years old. You have such a long life to leave and buy your own home. Now a days you and your wife just do hard work and saving your money. Best of luck ! for your bright future.
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Fri Mar 25, 2011 12:50 pm |
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littleroc02us
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What is your montly income?
Risk comes from not knowing what you're doing. (Warren Buffet)
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Fri Mar 25, 2011 1:16 pm |
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oldguy
Senior Member
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Location: arizona |
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quote: buying a house now is like gold in our pockets and if we need to we can use student loans to help us along since they have excellent rates.
Good that you are planning ahead. I've had rental houses for about 35 yrs, and they are good investments. However, I use the houses for seed money - every time a house grows some equity, I refi it, remove the equity, and invest the equity in stocks. And over the years, the stocks have made more money than the houses.
You are on the right track - the two appreciating assets are equities and real estate - and they are the key to outpacing inflation and building wealth. Conversely, you cannot 'save' your way to wealth, savings accounts and CDs are designed to provide safe storage of money and to offset inflation (not add purchasing power).
In your case, the cash-flow on the $290k house is negative, you will be paying $1800/m and receiving only $1200/m in rent. Quite a burden when your primary & immediate focus is on getting your education. So I would begin by investing the $50k in equities and growing it to $100k (usually takes 6 to 7 yrs) before adding RE.
Here is a tidbit - many winners of lottery, inheritances, etc lose their money in 7 years. Instead of keeping the money intact, they fragment it to what they perceive to be 'good' things - ie, payoff credit cards, payoff car, buy new car, payoff mom's car, yada. And then it's gone. A better plan would be to invest at 10% to 12%/yr.
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Fri Mar 25, 2011 3:34 pm |
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yor12ks
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Nice Information. You have to post here really great and very useful information about that. This Information is very useful for me and also all of us. Thanks for this information.
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Sat Apr 02, 2011 12:32 pm |
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savana
Full Member
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How it will be better to look for other investments and how it will be beneficial if the things are positive as, getting good returns are utmost important.
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Tue Apr 05, 2011 1:52 pm |
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davebeall2003
New Member
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Joined: 04 Apr 2011
Location: Southern California |
The way I see it |
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It seems to me from your post you will go into more debt than you realize. You commented that you have 4 years a schooling ahead of you and you are banking on your wife to get a job. You also mentioned that you could use this property as an investment property but the math will put you into the negative.
When purchasing a home there is a lot to consider in figuring out the monthly payment: 1) PITI or Principal, Interest, Taxes, Insurance. 2) HOA fees monthly. 3)Utilities cost per month.
If you consider those basic items and you want to still rent the place out, are you going to be the property manager or are you going to get a property manager whos fees are, on average, are 7-10% of the monthly rent. Add that to your monthly cost. If they are any good they will keep your tenants in check though. You also need to build into your rental income upkeep cost so you are not coming out of pocket for carpet cleaning/replacement, paint, and broken plumbing and electrical. Which typically happens at least once with every tenant. Be prepared!
Lastly, when buying a home there will always be the comments, "Oh we could replace that." or, "We can paint that." or, "We can get some more furniture to fill the space up." This all equates to you purchasing more and more and more stuff because we all want our house to have our personal touch on it.
I don't mean to discourage anyone from purchasing their first home but there should always be a plan in place for the future of the family. $50,000 at 5% interest over 4 years will bring you $60,775 an increase of over $10,000.
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Tue Apr 05, 2011 6:35 pm |
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martindevid5
New Member
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For buying house it is better to look for some online resources that are mainly for auctions and through this we can better look foreclosed houses.
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Thu Oct 04, 2012 11:00 am |
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leemike
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HI,I think you should not buy a house. You are young and you have a lot of time for and opportunities for getting home.this is the time for doing hard work and saving the money.so I also have plane if you have extra time and some money for investing and approach as you mentioned above so then you must should invest in the real estate for profit.so may it prove useful for you.
Best of luck ! for your bright future.
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Last edited by leemike on Fri Oct 11, 2013 9:33 am; edited 1 time in total |
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