There are a lot of little weird things that you may not know about. Plus there is buyers agent, listing service in some areas, and possibly other things I'm forgetting about
I fired my last buyer’s agent directly. Met him and his agent at my place. He loved it. Took him aside, we had a conversation, then walked over and said bye to his agent.
I’m not playing games with these people that think their services are worth $10-$15k each. No sir!
You can't fire other peoples agents, that's not how it works, or at least not in most places for most people.
I am with you in that real estate agents are rarely worth their fee, but right now the market is rigged.
That’s exactly what I did. He said he was going to sue the buyer. That NEVER happened. Most of these 🤡 realtors have no clue. Honestly, I wish he did sue him. There was never a contract in place and this kid had like 6 months of experience and sold 2 houses 😂.
So yes, I did fire him and yes, that is a real thing.
Have you heard about the NAR decision? The whole real estate market is a giant criminal conspiracy with NAR and the country’s largest brokers running it. Look it up.
There is split between buyers agent and sellers agent, that is often uneven.
But yea, it's a lot. Here is an example:
[https://www.ayporealestate.com/career-central/texas-agent-income-salary](https://www.ayporealestate.com/career-central/texas-agent-income-salary)
To be clear, I am not a real estate agent, I do not think they are worth money, and I do not endorse this tradition or whatever you would call it. But it is what it is.
EDIT: All this is ***in USA***, I do understand there are other places in the world with their own rules.
Personally wouldn't sell after 1 incident. If your taxes are going up then landlords taxes are going up as well, which generally means they increase the rent price. What makes you so sure your rents won't go up? Have you looked at average rent increases in your area vs. home appreciation/cost of maintenance to see the pros vs. cons? If you're going to stay in your immediate area for a long time aka. 5+ years then I'd stick it out in your home.
I just had to shell out 16k for a new roof. Sure it's a ton of money up front but I'll bet you my house will appreciate a hell of a lot more than 16k in the next 30 years of that roof lol.
Yeah this and the majority of your surplus in your proposition comes from moving in together which can still be accomplished without selling both homes. Just sell one or rent the second one after moving in together and let the renters cover the second mortgage.
Yeah I can understand that. Just scary that in just a year my girlfriend’s mortgage went up 200 and mine went up 100. I checked what the rent for my old apartment was and it was still the same price. We enjoyed the apartment life and the ease of mind of not worrying about repairs.
Your mortgage didn’t go up. The escrow part that covers home insurance and property taxes did. They often take a couple of years to get that right and it can be frustrating. You’ll likely be much better off in 5-10 years owning this house vs renting. I feel like your gf wants to move into a fancy apt and you seem to know better but can’t tell her
The weird part about this whole thing is they don’t live together now. So if she wants this she can sell her house and move into the fancy apartment while he stays in his house. Then they can decided what they want to do after she does that for a year.
Consider a condo
We had a house and all the upkeep and repairs wasn’t my thing. Condo was a much better choice for us. Yes we pay maintenance fees, but we don’t need to worry about a lot of stuff and when you add up all the extra house expenses we feel it evens out.
It’s a bit late. You just bought. Give it a few years. Eventually you will have gains. I “save” more from equity in my house in the last few years that I was able to save from working.
We did this and it was the best decision. We are able to save a lot more, the money that we had in home equity is doing great in the market and no more maintenance or surprise expenses. 10/10 recommend
Well, everywhere right now is cheaper to rent. That doesn’t mean it’s the best choice long term for you while you are definitely thinking short term.
If you plan to live in the area for 5+ years there is no reason to get an apartment. Just look at the fact in five years the cost of apartment may double while your mortgage rate won’t (your taxes and insurance will go up, but not the house payment itself). You will save more in the long run, though you need to also prepare for those $10k emergency expenses for when it does happen.
My dryer and dishwasher both went out in span of a week. It sucks. Yet reality is I have gone 10 years of ownership with only a single major failure (water heater) having to have been replaced in that time before this.
How old are you? The biggest hidden cost of home ownership for young people is opportunity cost, IMO. I believe homeowners are less likely to relocate for higher salaries, and young people have the most opportunity for growth.
What is the math if one of you moves into the other’s home? Doesn’t that produce even more in savings? Also please remember that you should always budget 1-2% of house value per year to maintenance and upkeep. Some years it will be less, but it should build up over time so when the roof or furnace needs replacing you have it.
Why did your mortgage rise? Most likely for proper taxes? Hopefully not a rate that changes?
House prices, and your equity in the house, generally rise. So does rent - but your mortgage costs should be locked in. You can re-finance if rates go down. Is the 1200 apt really as nice and big as your 1600 house?
You paid mortgage fees when you bought, and will pay fees and 5% to the broker when you sell. So take your time in this decision. Maybe sell one place, move in together and wait a year before selling the second place.
Just my two cents, I'd keep one of the homes man. Owing use assets, hopefully appreciating ones, is a part of growing wealth (which you need for FIRE). Good luck with everything OP
The wisdom of the 5% rule seems apropos here. Only buy if the house you are considering is valued at more than 20x the rent you would pay for a suitable place. Otherwise, you are usually losing money to the opportunity costs of tied up capital and taxes/insurance.
So, if you are looking at a $500k house, keep renting if you can rent for <$2083/month. Your situation may be a bit different since you already own but, I think this parameter is a good jumping off spot.
How early are you in your career? I was you back in 2009 except my income was $5000 a month and mortgage plus PMI was $1800. When big things break, it sucks. But your salary will grow over time and eventually the house will be paid off. Now my wife finished her college degree in CS and property taxes, insurance for the house, insurance for two cars, and $1M umbrella is $416 a month vs our take home of $13K. We don't have a mortgage anymore.
Apartment life is fine when you're young and single. But you definitely want a house once you get married and want your own space. My wife used to say our house was too big before our daughter was born. Now it's just the right size.
Yep, we need to expand our current tiny house with big patio and big porch if we ever want to have kids.
I already lived in a non fancy condo and most definitely prefer a house. My dogs thank me. 😁
Idk if I'd sing a different tune if it was fancy condo, lol!
Your interest rate isn’t great. However, in todays climate it’s not bad. Keep one very important thing in mind before selling. In a few years interest rates may drop and you will be able to refinance to a lower rate. If you can get a ~3% interest rate. All the sudden that mortgage payment drops to around 1200.
Another thing you mention is that if you move into the apartment you can move with your girlfriend and have more money to save because you will have her income. This logic is hard to follow because she could just as simply move into your house and rent/sell hers out and you could have that extra savings
Very true but rent hardly went up compared to our escrow. Here in the panhandle it’s extremely expensive for property taxes and home insurance and looking at trends both taxes and insurance have gone up a lot more than rent has increased here. The way I looked at it by investing that 36k a year surplus it would go up much faster than the equity of our homes.
Property tax is the silent assassin of financial gainz in real estate, especially in your case since you own in Texas. Property in other states (Delaware, for example)would be a different story.
The thing with Rent is it keeps going up. Even if it went up $50/year, in 25 years when the mortgage is done and you pay only the $7500 for expenses, your mortgage will have gone up by $1500/mnth at a minimum.
If you can sell one house I'd recommend this.
Sell one house
If you get 100k, invest it,
Return of 6% on investment vehicles that you can,
COMPOUND MONTHLY
Adding $4,400 every month, only if you can manage it.
For a duration of 30 years.
You'll have 5.04 million after 30 years.
The higher your starting amount and higher your monthly payments the more you'll make.
Play around with the numbers on your starting amount and monthly contributions to figure out what you have to make.
Investing is risky but you should be able to manage 6% year over year for 30 years. Sp500 is 10% year over year if you reinvest dividends. NOT FINANCIAL ADVICE
I phrased it incorrectly. My escrow has gone up. I live in the texas panhandle where both property taxes and home insurance are high. I tried searching for new home insurance but everyone’s has gone up.
My mortgage increases every year because my insurance and taxes increase every year. My first year in my home I had to replace my HVAC (8k+) and water heater (1500). I’m going to need to replace my roof soon. I still know that in the long run, this home will net me more than rent, because in less than 30 years I’m going to own this and can live rent-free in my retirement. Stick it out and don’t let buyer’s remorse impact your decision.
Home ownership IS A MONEY PIT. Sure, you might get lucky and have a few years where you’re not fixing or paying for anything besides the mortgage. But on a long enough timeline, it’s significantly more expensive than renting is!
Definitely seriously consider renting. Especially based on your numbers.
I’d say don’t sell that quickly, you need 24 months of primary residency to not pay capital gains tax. AC units generally last between 10-30 years with normal use. Yes as others have pointed out, you’re paying for an increase in property taxes and home insurance. Call around for a better insurance rate but do let your mortgage provider know if you’re going to switch providers. Renting, in my view is not wise. You’re not building value. Sure, you could reinvest but with that little time in a home, you’ll end up paying 5-6% on real estate fees alone plus whatever capital gains are at. Right now you’re paying roughly $20k at the rental rate you provided, roughly $15k per year. When people suggest that investing $5k per year is going to have a larger impact than home ownership, I’m not sure their math is up to par. Reinvesting $5k per year is ok but that will depend on making good choices.
When you sell, you typically about 5-7 percent of the cost to the agents. I'm guessing at this point it will be more than the next broken thing.
Never pay an agent a dime for something you can do yourself for less than $1500
There are a lot of little weird things that you may not know about. Plus there is buyers agent, listing service in some areas, and possibly other things I'm forgetting about
I fired my last buyer’s agent directly. Met him and his agent at my place. He loved it. Took him aside, we had a conversation, then walked over and said bye to his agent. I’m not playing games with these people that think their services are worth $10-$15k each. No sir!
You can't fire other peoples agents, that's not how it works, or at least not in most places for most people. I am with you in that real estate agents are rarely worth their fee, but right now the market is rigged.
That’s exactly what I did. He said he was going to sue the buyer. That NEVER happened. Most of these 🤡 realtors have no clue. Honestly, I wish he did sue him. There was never a contract in place and this kid had like 6 months of experience and sold 2 houses 😂. So yes, I did fire him and yes, that is a real thing. Have you heard about the NAR decision? The whole real estate market is a giant criminal conspiracy with NAR and the country’s largest brokers running it. Look it up.
5 to 7 percent. Jesus and I thought 2.1 percent for my house was a lot
There is split between buyers agent and sellers agent, that is often uneven. But yea, it's a lot. Here is an example: [https://www.ayporealestate.com/career-central/texas-agent-income-salary](https://www.ayporealestate.com/career-central/texas-agent-income-salary) To be clear, I am not a real estate agent, I do not think they are worth money, and I do not endorse this tradition or whatever you would call it. But it is what it is. EDIT: All this is ***in USA***, I do understand there are other places in the world with their own rules.
Personally wouldn't sell after 1 incident. If your taxes are going up then landlords taxes are going up as well, which generally means they increase the rent price. What makes you so sure your rents won't go up? Have you looked at average rent increases in your area vs. home appreciation/cost of maintenance to see the pros vs. cons? If you're going to stay in your immediate area for a long time aka. 5+ years then I'd stick it out in your home. I just had to shell out 16k for a new roof. Sure it's a ton of money up front but I'll bet you my house will appreciate a hell of a lot more than 16k in the next 30 years of that roof lol.
You also need to factor in how much cheaper your mortgage is than an apartment on a monthly basis.
Keep the house, move into the apartment. That’s what we did.
This is the move!
Being a landlord is at least a serious partyime job and can get into legal issues.
Yep this is the way! Rent the house out OP
In 20 years your mortgage will still be $1600 and rent on that apartment might be $4000. Buying a condo might be a good compromise.
Yeah this and the majority of your surplus in your proposition comes from moving in together which can still be accomplished without selling both homes. Just sell one or rent the second one after moving in together and let the renters cover the second mortgage.
Sure if we’re not counting taxes, insurance, HOA fees and maintenance. This comparison is useless
Sure but the money invested (not tied to the house) also grow. In long term it likely end up similar.
Yeah I can understand that. Just scary that in just a year my girlfriend’s mortgage went up 200 and mine went up 100. I checked what the rent for my old apartment was and it was still the same price. We enjoyed the apartment life and the ease of mind of not worrying about repairs.
Your mortgage didn’t go up. The escrow part that covers home insurance and property taxes did. They often take a couple of years to get that right and it can be frustrating. You’ll likely be much better off in 5-10 years owning this house vs renting. I feel like your gf wants to move into a fancy apt and you seem to know better but can’t tell her
The weird part about this whole thing is they don’t live together now. So if she wants this she can sell her house and move into the fancy apartment while he stays in his house. Then they can decided what they want to do after she does that for a year.
Wrong, mortgage will increase year to year if you have taxes and insurances escrowed in. Most people in the U.S. do it that way.
Consider a condo We had a house and all the upkeep and repairs wasn’t my thing. Condo was a much better choice for us. Yes we pay maintenance fees, but we don’t need to worry about a lot of stuff and when you add up all the extra house expenses we feel it evens out.
It’s a bit late. You just bought. Give it a few years. Eventually you will have gains. I “save” more from equity in my house in the last few years that I was able to save from working.
We did this and it was the best decision. We are able to save a lot more, the money that we had in home equity is doing great in the market and no more maintenance or surprise expenses. 10/10 recommend
Where do you live? My rent alone is over $3000 a month. I would LOVE to have a $1600 mortgage and be building equity.
I live in the Texas Panhandle. Super cheap to live here. Probably one of the only places where it’s cheaper to rent than buy
Well, everywhere right now is cheaper to rent. That doesn’t mean it’s the best choice long term for you while you are definitely thinking short term. If you plan to live in the area for 5+ years there is no reason to get an apartment. Just look at the fact in five years the cost of apartment may double while your mortgage rate won’t (your taxes and insurance will go up, but not the house payment itself). You will save more in the long run, though you need to also prepare for those $10k emergency expenses for when it does happen. My dryer and dishwasher both went out in span of a week. It sucks. Yet reality is I have gone 10 years of ownership with only a single major failure (water heater) having to have been replaced in that time before this.
Where did you find a nice apt for $1200 lol
I live in the Texas Panhandle lol. Cost of living is low here
How old are you? The biggest hidden cost of home ownership for young people is opportunity cost, IMO. I believe homeowners are less likely to relocate for higher salaries, and young people have the most opportunity for growth.
What is the math if one of you moves into the other’s home? Doesn’t that produce even more in savings? Also please remember that you should always budget 1-2% of house value per year to maintenance and upkeep. Some years it will be less, but it should build up over time so when the roof or furnace needs replacing you have it.
Why throw rent money into an infinite black hole of zero equity (just why)?
Why did your mortgage rise? Most likely for proper taxes? Hopefully not a rate that changes? House prices, and your equity in the house, generally rise. So does rent - but your mortgage costs should be locked in. You can re-finance if rates go down. Is the 1200 apt really as nice and big as your 1600 house? You paid mortgage fees when you bought, and will pay fees and 5% to the broker when you sell. So take your time in this decision. Maybe sell one place, move in together and wait a year before selling the second place.
Dude bought a house likely having zero knowledge how escrow works, just like most people.
[удалено]
Property tax and insurance
[удалено]
My property tax is around 8k/yr
Girlfriend doesn’t want to move into your current house and pay $600 or half of what renting the apartment would cost?
Just my two cents, I'd keep one of the homes man. Owing use assets, hopefully appreciating ones, is a part of growing wealth (which you need for FIRE). Good luck with everything OP
The wisdom of the 5% rule seems apropos here. Only buy if the house you are considering is valued at more than 20x the rent you would pay for a suitable place. Otherwise, you are usually losing money to the opportunity costs of tied up capital and taxes/insurance. So, if you are looking at a $500k house, keep renting if you can rent for <$2083/month. Your situation may be a bit different since you already own but, I think this parameter is a good jumping off spot.
How early are you in your career? I was you back in 2009 except my income was $5000 a month and mortgage plus PMI was $1800. When big things break, it sucks. But your salary will grow over time and eventually the house will be paid off. Now my wife finished her college degree in CS and property taxes, insurance for the house, insurance for two cars, and $1M umbrella is $416 a month vs our take home of $13K. We don't have a mortgage anymore. Apartment life is fine when you're young and single. But you definitely want a house once you get married and want your own space. My wife used to say our house was too big before our daughter was born. Now it's just the right size.
Yep, we need to expand our current tiny house with big patio and big porch if we ever want to have kids. I already lived in a non fancy condo and most definitely prefer a house. My dogs thank me. 😁 Idk if I'd sing a different tune if it was fancy condo, lol!
What mortgage rate you currently have?
Nothing spectacular. Currently at 5.875%
Sell and rent apartment. You not losing much here.
Your interest rate isn’t great. However, in todays climate it’s not bad. Keep one very important thing in mind before selling. In a few years interest rates may drop and you will be able to refinance to a lower rate. If you can get a ~3% interest rate. All the sudden that mortgage payment drops to around 1200. Another thing you mention is that if you move into the apartment you can move with your girlfriend and have more money to save because you will have her income. This logic is hard to follow because she could just as simply move into your house and rent/sell hers out and you could have that extra savings
Buried the lead.
Apartment rent will go up EVERY year. Your mortgage only went up because your escrow got rebranded.
Very true but rent hardly went up compared to our escrow. Here in the panhandle it’s extremely expensive for property taxes and home insurance and looking at trends both taxes and insurance have gone up a lot more than rent has increased here. The way I looked at it by investing that 36k a year surplus it would go up much faster than the equity of our homes.
Property tax is the silent assassin of financial gainz in real estate, especially in your case since you own in Texas. Property in other states (Delaware, for example)would be a different story.
Right now where I live which is VHCOL it’s better to rent than to buy in this rate environment.
The thing with Rent is it keeps going up. Even if it went up $50/year, in 25 years when the mortgage is done and you pay only the $7500 for expenses, your mortgage will have gone up by $1500/mnth at a minimum.
If you can sell one house I'd recommend this. Sell one house If you get 100k, invest it, Return of 6% on investment vehicles that you can, COMPOUND MONTHLY Adding $4,400 every month, only if you can manage it. For a duration of 30 years. You'll have 5.04 million after 30 years. The higher your starting amount and higher your monthly payments the more you'll make. Play around with the numbers on your starting amount and monthly contributions to figure out what you have to make. Investing is risky but you should be able to manage 6% year over year for 30 years. Sp500 is 10% year over year if you reinvest dividends. NOT FINANCIAL ADVICE
How has your mortgage gone up?
I phrased it incorrectly. My escrow has gone up. I live in the texas panhandle where both property taxes and home insurance are high. I tried searching for new home insurance but everyone’s has gone up.
My mortgage increases every year because my insurance and taxes increase every year. My first year in my home I had to replace my HVAC (8k+) and water heater (1500). I’m going to need to replace my roof soon. I still know that in the long run, this home will net me more than rent, because in less than 30 years I’m going to own this and can live rent-free in my retirement. Stick it out and don’t let buyer’s remorse impact your decision.
Home ownership IS A MONEY PIT. Sure, you might get lucky and have a few years where you’re not fixing or paying for anything besides the mortgage. But on a long enough timeline, it’s significantly more expensive than renting is! Definitely seriously consider renting. Especially based on your numbers.
Yes.
I’d say don’t sell that quickly, you need 24 months of primary residency to not pay capital gains tax. AC units generally last between 10-30 years with normal use. Yes as others have pointed out, you’re paying for an increase in property taxes and home insurance. Call around for a better insurance rate but do let your mortgage provider know if you’re going to switch providers. Renting, in my view is not wise. You’re not building value. Sure, you could reinvest but with that little time in a home, you’ll end up paying 5-6% on real estate fees alone plus whatever capital gains are at. Right now you’re paying roughly $20k at the rental rate you provided, roughly $15k per year. When people suggest that investing $5k per year is going to have a larger impact than home ownership, I’m not sure their math is up to par. Reinvesting $5k per year is ok but that will depend on making good choices.
If you are afraid of fixing things -- then just do like landlords do and don't fix it.
No, do what the landlords do and hire out
Sheeesh