Wife TC: 98k
Savings together: 300k
+ 1 year old kid
With that given: We want to buy property for 400k-500k in a modest suburb. (currently in a suburb townhouse apartment)
But in between of: if we should get a 10yr fixed mortgage (3.2% APR) and get a house now or wait about 7-8 years so we can buy the property with full cash (save money?? don't know how much).
10yr fixed = start school in an excelent sd in K
7-8 year wait = start in an okay sd and move before 3rd grade
Don't know how much we'll save or type of upper hand if we have the cash, any real estate pros out there?
- Zillow Group / Product Big SurmoreStudied real estate finance and work in mortgage. From a purely financial perspective, take the 30 year fixed rate we have today. There’s a ton of math behind it, but basically it’s free money. There’s no reason to buy a house cash unless you can’t put it in an investment account.
- @rubaduba. Investing is all about compounding. More time in market == significantly higher returns. Rushing to pay off your mortgage with an interest rate below 4% isn’t the optimal strategy.
This chart is a pretty good example of how compounding can be extremely powerful.Nov 5 5
- Palo Alto Networks FupatroopaStart hiding money for the divorce in about 10 years. You will remember this post if you dont. Good luck
- RichRelevance ZodianWhat I'd do is route the funds through cryptos into a business account opened in a trustees name. Then once I had enough money in the business account I would buy a large plot of land somewhere remote. Every month following I'd draw from the account and head over to Home Depot to purchase $1,000 worth of seeds to plant trees on the plot. Now when my wife divorces me I'll only need to wait a few years before harvesting the lumber and totally recover my losses, build a log cabin on the land, and live out the rest of my life as a mountain man fighting bears and doing other manly shit.Nov 5 8
- It is STUPID to get a loan other than a 30-year loan. Why? Simple, tax law. Put 25% down and take out a 30-year fixed.
Invest your 500k into 4-houses. Retire from day job in 15-years with rental income that relaxes your current 300k/year household.
- I love how everyone in this thread is worried about real estate correction yet they believe 10% mutual fund growth is guaranteed.
- Real estate corrections are short term. Long term they are still stable investments. Same goes with stock.
Real estate corrections just hurt more because it can destroy mobility (unable to move to a new home of underwater), while a temporary dip in your 401k doesn’t change shit in the short term.
- Twitter crackerjaThis the comprehensive list of reasons that you should buy a house in cash
1 - you are laundering illegal money
2 - you are in a highly competitive market and want to close the deal at any cost
3 - you are stupid rich for no reason
4 - somehow your credit sucks so much you won’t get a mortgage
End of list.
- Why are you impacting your future opportunities by sticking to one place? You need to be mobile. Remember a house for self use is an expense it’s not an investment!
- Not 21 years old anymore, also + kid + wife is an asoc prof. going for that tenure. Graduating with MBA that my company paid for, pretty much a guarantee that I'll work for corporate officers (that I know well) this december. W my experience I can move to HydroQuebec or Texas (no family nearby, no thanks)
- You’d be foolish to invest that much in a single property. You’d be house rich, cash poor, and giving up opportunities elsewhere. Instead put 25% down on your primary residence, and then 20% down on a rental property that’s much cheaper than your home. Maybe get a second rental. Put the rest in an index fund. The next step is Profit!
I own my residence and five rental properties. It works. Tenants are a hassle though.
- You should get a 30 years fixed. Home loans are cheap so you should but invest more than the minimum down payment. Put rest of the money which gets you more than 4% returns. Investment 101.
- Amazon yzjjayPast performance is not an indication of future performance. Those ETFs could easily lose half their value in the upcoming recession.
10% per year growth every year is a wildly unreasonable expectation. Even the most experienced investment experts wouldn’t expect that.
3% is a realistic expectation if you have a well balanced portfolio that isn’t going to run the risk of completely wiping you out in bad times. It’s been so long since the last recession that people forget what it is like to lose half their savings overnight.
You don’t want to be that guy but you will be if you invest in risky stocks that give short term high gains.
- DoorDash uNoS26Buy cash don’t listen to all this
1- You don’t know the future.
2- The stock market is over inflated a 50+% correction is near so your money will lose its half if in market.
3- Your house if rented will give you guaranteed income equal to 10% of your cash + the house appreciation which around 4% so total gain is 14% + peace of mind, compared to 10% in stock + sleeplessness nights.
- This 1931 market prediction brought to you by doordash.
Also you're not going to earn 10% rental income if you fully own the house with cash. That's why you lever it with a mortgage and increase your gains, calculating the earnings over the principal.
But a 50% loss has never happened, the highest was 47% in 1931. Even then if you have a 70/30 portfolio it only has like a 1% fail rate during market downturn.
Do some research.
- New meme9Buy with a 10 or 30 year fixed loan, live in the house for at least 10 years. Paying cash is such a bad idea unless you're optimizing for a potential short term decline that you can't ride out because you'll move in under 10 years. And if you're doing that, you should reconsider your financial strategy.
- Reltio / Eng gologiHow long did it take you guys to save $300k? Just trying to figure out what the fuck I am doing wrong that I can't even get close to that number - 1) probably living in Bay area
- Save your cash and invest it in the stock market. Go for something tried and true like the SPY ETF. I've been investing since since 2007 and my overall annualized return is ~9% and that's through the 2008 recession and the 2014 oil recession.
If you buy the house outright you will be losing 6-7% in upside opportunity. (10% annualized minus 3% mortgage rate)
1/3 of my networth today is through capital gains because of this.
Also using the rule of 72.. 10% annualized will double your money in just over 7 years. You will not achieve this with a house.
- Basic point is the market has its swings but tends to recover faster than a real estate market. Yes, you can get leveraged gains, but if you get a real estate market that crashes or holds stagnant it may stay that way a lot longer than an equity market. A city's or state's landscape can change drastically over 30 years (look at Michigan, for example).
- @ fugacity excellent! Apologies, I run into people in the real-world all the time who don’t understand real-estate investing.
Yes, you’ve been around long enough to see the boom and bust cycles. Most of us are actively de-leveraging and realizing real estate profits to be in a better position for the next storm.
Invest on the numbers, not speculation.
For the average joe, real-estate has larger returns and easier to understand profit & loss. Even an all-cash purchase often has more predictable returns than a specific stock purchase. That being said, the simplest investment is simply an index fund held long-term.Nov 8 0
- AdsWizz / Eng floweringSeems like we are near a housing crash no? But even if we weren't... A historically 1.1% yoy value increase with a 3-4% cost of the loan... Plus the additional taxes, fees, and maintenance.... It seems pretty expensive compared to renting - which provides more flexibility should your life need to change while also allowing you to invest or save your cash. Just my 2 cents. Best of luck!
- This. As the “owner” all you’re paying is the interest, insurance and taxes. The principal is forced savings.
Plus as the owner, your costs go up slower than rents go up. Oh yeah, also, if more people want to live in your area, then you can sell your house later for MORE money than you originally paid.
Owning is by far the generally better option for anyone who isn’t a professional investor.