Explain to me why I'm wrong

↑ watergirl

Tue, Nov 21 2023, 6:40 am

amother OP wrote:

Im referring to living in buildings. That's what people live in near me and they are rent stabilized. You can have a large 3 bedroom beautiful apartment forever and there are many people who do.

But it's not forever. Apartment buildings sell and are bulldozed to the ground. They are sold and the owner decides to renovate to make it all luxury apartments. A fire could destroy the building. Home ownership protects you from those things. If chas v'shalom a homeowner has a fire, your insurance covers your losses. If you rent, you are homeless and you've lost the rent stability.

I don't know a lot about rent stabilization, but I googled and it seems there are a few ways in which that can change.

amother

Cherry

Tue, Nov 21 2023, 6:44 am

It’s like having kids. Some people say it is so worth it. All the mess and hard work is worth it for the Nachas when they grown up. Some people decide not to have kids and when they grow old different things bring them joy.

amother

Vermilion

Tue, Nov 21 2023, 6:45 am

Your feelings are valid

I'll give you my perspective

Everyone here is speaking from their own experience

What it boils down to is that the One Above orchestrates for each person that which is his lot in life.
And each person's work is to be happy with his lot. And to recognize that He pulls the string.

So while the merits of owning and renting can be argued endlessly with some heavy weight statistics and big wigs supporting both sides of the equation - what can't be argued is that a Yid's obligation in this world is to earn kosher money; give maaser; not borrow more than he can return etc. etc.

If you want another anecdotal evidence as to why owning may be a good choice - my rent doubled and it's not fun or funny. That said - I do not have a downpayment for a home and never had a downpayment and didn't have from whom to borrow so it's clear that this is where The One Above wants me in this moment.

May you merit enjoying your lot in life

imaima

Tue, Nov 21 2023, 6:51 am

amother OP wrote:

I know officially I'm wrong but I don't really understand finances enough to know why and right now I'm annoyed.
We used to live in a beautiful apartment in the center of our community and paid rent. All we had to do was pay rent and the rest of the the worries were taken care of by the manager.
We saved up so much money, bought a house on the outskirts of our community where it is affordable and now we are constantly needing to spend money on house things.
I have siblings who still rent like we used to and I wonder if we are the idiots who were so determined to buy a house because it's the right thing to do but we are always spending. They have so much more available funds because they don't have to repaint or fix the plumbing or have lawn equipment, the list is endless.
I wish we didn't buy and lived blissfully in an apartment. We could have used the money we spent on the house for lifestyle choices or savings for simchas.
Why is owning a house the better choice?????

It’s not always a better choice. It is smart to invest the money and you could have invested in stam real estate and not necessarily in a house for yourself. It depends on actual numbers.

doodlesmom

Tue, Nov 21 2023, 6:59 am

I find that while your mortgage mostly stays the same rent always goes up.
You also have an asset to either sell or borrow towards.
If you need a bigger house eventually you can sell this one for a down payment for the next one….. if you need a bigger rental you all of a sudden find yourself with a huge rental increase with nothing to show for it.
No one can kick you out.

Some people buy property and rent it out while continuing to live in the center of town in a rental etc, and only move once their property is more central, or they need the bigger place etc….or if the value goes up they can sell the old property and get a down payment for a property in a more preferred area.

amother

Seagreen

Tue, Nov 21 2023, 7:08 am

this is all worth it under the assumption, that your house doubles in value.
for those of us that bought after the huge real estate boom I’m not so sure.

we bought a house on the outskirts of town for 600 K about a year and a half ago. I am not convinced it’s going to double to 1.2 mil in the next 5 to 10 years..

amother

Waterlily ↓

Tue, Nov 21 2023, 7:09 am

I disagree op. If you buy youngish you can finish paying a 30 year mortgage by the time you retire, never having a rent increase in 30 years. Then you may chose to stay, or to sell & downsize with a nest egg left over & no rent payments for as long as you live. Of course if you live in a high tax district you will still have a decent amount to pay... bh we're not in a high tax district.

It's very hard to be a senior & suddenly need to move & be stuck with a huge rent increase. That's a way bigger problem then being young & having an unexpected repair expense.

amother

Tealblue ↓

Tue, Nov 21 2023, 7:10 am

OP, just to explain equity/free money/dip into value that's being referred to here on this thread:

Let's say you bought your house at 400k. Five years pass, and your house's market value is now 500k. You can take out what's called a home equity loan from the bank for 100k, which you can use to renovate/make a simcha/invest. Yes you have to pay back the loan, but it's money that is available for you to borrow, because you're a homeowner. I'm not very familiar with mortgages/home equity loans, but I believe these loans come with much lower interest rates than standard bank loans.
Another option is to refinance your house, if the value increases a lot. This means that if you bought your house for 400k, and a few years later the value of the house goes up/interest rates go down, or a combination of the above, you can basically redo your mortgage and come out with either a lower monthly payment, or with a similar monthly payment but cash in your pocket, whoch again you can use to renovate/make a Simcha/invest/use as you please.

These are advantages that you only get through homeownership.

Refine

Tue, Nov 21 2023, 7:14 am

The rent will go up but your mortgage wont (assuming you live in the USA). Eventually your house will be cheaper (and eventually free once the mortgage is done).
Three bedrooms is not always comfortable forever. Think as family grows, teenagers, young marrieds come home. A house usually has more place to stick in a bedroom.
Mortgage interest is tax deductible. So cheaper taxes.
While it's true that the equity is not a free gift while you live in the house (any loan on the house will need to be repaid), it is yours and available should you sell. In that case you can rent again and have that equity as cash so you'd be better off.

amother

↑ Waterlily

Tue, Nov 21 2023, 7:15 am

amother Seagreen wrote:

See my post- these are the benefits not including any increase in value. The value increases & possible additional loans are more an investment perspective, but the benefits not including that are still significant.

amother

↑ Anemone ↓

Tue, Nov 21 2023, 7:37 am

amother OP wrote:

Can you explain what this means - got free money?

It means that I bought my house for $500k.
At this point between the down payment and monthly payments, the bank owns about $300k of the house.
But the house also rose in value.
It’s now worth a million dollars
So if I need, I have about $700k in assets

anonymous mom

Tue, Nov 21 2023, 7:43 am

It seems like you bought a house you cannot afford.

A house is not an asset, an asset is something that makes you money, if you are constantly putting money in the house it is liability, not an asset.

Can you can sell the house for more in 15 years from now? Probably, but that doesn't make it a good investment (especially with taxes). You can be smarter and invest your money elsewhere for a way bigger percent return on your money.

The reason people buy houses are to live more comfortably and not have to share the property with other people. Also for security, so that they aren't kicked out at an inconvenient time.

But you are right that this is not a wise investment.

coloredleaves ↓

Tue, Nov 21 2023, 8:03 am

There is a financial movement that says if u don't want to own then rent. But invest the same money of the down payment and yearly amounts into index 500 funds for 7-11% a year. If u just use the savings for vacations and life and not for investments then you loose out on the investment you would have had by owning a house.

Also as noted 10-15 years down the line rent may be double, while a mortgage is the same so down the line u are not paying more for owning a house.

amother

Tomato

Tue, Nov 21 2023, 8:37 am

I know of several people who are currently being kicked out by their landlords.
One is a family with 7 little kids. One is an elderly couple nearing 80-they lived in this apartment for 40 years but the landlord died & the kids sold it. Another middle aged couple in the midst of marrying of a child. Can't imagine the agmas nefesh.

amother

Snowflake

Tue, Nov 21 2023, 8:39 am

OP, totally agree with you. I wish we could go back to living in an apartment. The house wrecked us financially.
I'm trying to figure out why people think they're making so much off their houses. Did you pay in cash? Most people have mortgages and are paying plenty of interest. You need to take that into account. Of course HKB"H runs the world but if we would have stayed in the apartment we would be in a much much much better place.

amother

↑ OP ↓

Tue, Nov 21 2023, 8:46 am

amother Anemone wrote:

What does $700k in assets help for if you don't sell your home?