Just an idea, but you might want to ask your family real estate guru about like-kind exchange. There are some tax advantages if you can make it work for you.

I am finding something like this more appealing all the time.

https://reliabletent.com/tipis/

Just rent.

There's a 5-6% transaction cost each time you flip a house.

You aren't building any equity the first few years--90+ percent of your payments are going towards interest, not principal.

If you aren't going to hold the house long enough to weather the next downturn, then there's no point in buying now.

Just rent while you look for a really great deal or the next market downturn. You can probably break your lease for 1 or 2 months worth of rent in most cases.

quote:

Originally posted by Aeteocles:
Just rent.

There's a 5-6% transaction cost each time you flip a house.

You aren't building any equity the first few years--90+ percent of your payments are going towards interest, not principal.

If you aren't going to hold the house long enough to weather the next downturn, then there's no point in buying now.

Just rent while you look for a really great deal or the next market downturn. You can probably break your lease for 1 or 2 months worth of rent in most cases.

I'm not sure what you just read, but he said they are stationary for 15 years until retirement.

Also, 90% toward interest? Really? Only if you have a 8% 30 year mortgage. My (just closed mortgage) was 5% for 30 years, and a whopping 23% of each payment is principal.

So let's say he rents for 3 years until the next "downturn" which could be 15-20%. Those three years, the Charlotte real estate market is expected to grow by 3.5-4% compounded per annum, so call it 12%. So if the same house is available in 3 years, they could in theory buy it for $240,000 versus $250,000? So you would recommend they rent and throw away 100% of their money versus build equity? BTW, with a $250k mortgage, financing 100% at 5% for 30 years, they would have a balance of $238,358 after 3 years, so they would still be better off.

The other point that needs to be made is that rent is far more expensive in Charlotte. A recent search on Zillow yielded only 7 homes (within 20 miles of downtown Charlotte, a 1250 square mile area) with 1500 square feet for a monthly payment under $1340 (what a mortgage would be). Meanwhile there were 78 homes that we're for sale, less than $250,000 with the same parameters.

The Charlotte market is growing and doesn’t show any signs of stopping. It’s definitely a sellers market. When I bought my house in June I bid $30k over asking on a different house and still didn’t get it. I don’t think the market is really gonna take a hit anytime soon. Charlotte housing wasn’t really affected by the 08 crash. 60 people move to Charlotte every day....I don’t see that changing anytime soon. I would buy while you can. Around summer times houses sell in days and often sight unseen.

I would recommend FHA because you can lock your interest rate in for the next buyer if the plan is to move in a few years and you are at all worried about the mortgage rates.

My personal experience tells me Noslers advice is a better plan. I have not rented in better than 3 decades.

I say take your time. Know what you want AND what will make you both happy (except) be ready and do it when it feels right.


Location, location, location is always sound advice. A great home in a so so place will never be great.

A so so place in a great location can be made into a great place and/or investment.

quote:

Originally posted by Jeff Yarchin:
Thinking outside the box and long term....

Buy some property where you think you’d like to retire/use as a second home down the road.

Put in a well, septic and electric.

Buy an RV and park it.

We already have that...at the beach.


There's $80,000-$100,000 in equity in that house. Mostly the land value, actually. We've briefly mentioned a HELOC, but taking out more debt is something we want to avoid, unless the numbers make sense.

My worry right now is we have very little for a down payment. We've been paying triple and quadruple on debt payments during the last 4 years when possible. Dave Ramsey style. We could cover closing costs, but we can't save up $50,000 in 5 months...


I'm leaning more toward buying presently, after reading your responses. But that $250,000 number is without a downpayment. I can get a 0% down loan from my credit union with no PMI. You guys are talking about stretching it...250k keeps us at a neutral monthly number, so we could go 300 or 325 before we had to really alter anything. Still trying to evaluate everything, and not close to deciding our route quite yet.

Geographically, we will likely stay in the city, unless we go to Cabarrus County (east). That would be our preferred change, but my wife works in SW Charlotte, and the commute is a bear. I can't go to South Carolina, because I'd lose my work car and my kids live with their mom an hour north, so we don't want to go much farther south than we already are. And not going west...I'm not crossing the Catawba river every day. Not dealing with that traffic.

quote:

Originally posted by 280nosler:

quote:

Originally posted by Aeteocles:
Just rent.

There's a 5-6% transaction cost each time you flip a house.

You aren't building any equity the first few years--90+ percent of your payments are going towards interest, not principal.

If you aren't going to hold the house long enough to weather the next downturn, then there's no point in buying now.

Just rent while you look for a really great deal or the next market downturn. You can probably break your lease for 1 or 2 months worth of rent in most cases.

I'm not sure what you just read, but he said they are stationary for 15 years until retirement.

Also, 90% toward interest? Really? Only if you have a 8% 30 year mortgage. My (just closed mortgage) was 5% for 30 years, and a whopping 23% of each payment is principal.

So let's say he rents for 3 years until the next "downturn" which could be 15-20%. Those three years, the Charlotte real estate market is expected to grow by 3.5-4% compounded per annum, so call it 12%. So if the same house is available in 3 years, they could in theory buy it for $240,000 versus $250,000? So you would recommend they rent and throw away 100% of their money versus build equity? BTW, with a $250k mortgage, financing 100% at 5% for 30 years, they would have a balance of $238,358 after 3 years, so they would still be better off.

The other point that needs to be made is that rent is far more expensive in Charlotte. A recent search on Zillow yielded only 7 homes (within 20 miles of downtown Charlotte, a 1250 square mile area) with 1500 square feet for a monthly payment under $1340 (what a mortgage would be). Meanwhile there were 78 homes that we're for sale, less than $250,000 with the same parameters.

But that doesn't take into account a transaction cost of 5-6% to flip an interim house, or being in a poor negotiation position because of a sales contingency.

Also, don't forget property taxes.

Ultimately, he wants a $300k house but only has the down payment for a $250k house (namely, a zero down loan). Given that home prices are really high and stalling out, he would be in a better position to ride the drop and buy his $300k house on the upswing. Buying now exposes his interim house purchase to a potential maket drop for little benefit.

Using your numbers, if he buys the house now for $250k, in 3 years he will owe $238k on a house that may only be worth $240k. Then he'll try to sell it, and lose another $10-12k in fees. He walks away upside down $10k (owing the bank money) for the privilege of paying property taxes and maintaining his own property.

Or, he can rent...and wait for the $300k property to drop to $270k and buy it then and live in it for the next 12 years and sell it for more than $300k

Chongo, you do realize there really isn't a right or wrong answer to your question? When my wife and I got married many years ago, we wanted a house in a particular area of Orlando that was rather expensive. Ultimately, we found a house in that area that had good 'bones' at a good price, and bought it. We then spent a couple years renovating it. Eventually we sold the house and made good money on the sale when we moved to our current home.

There are lots of ways to look at this issue all dependent on what your goals and personal attributes are. Good luck with whatever direction you choose.

I think 2019 will be a slight down year over all and then it will get back on the rocket and fly again.

I'm focused on 2028. Somewhere around then my crystal ball says the bottom falls out in a big way...

I don't know what I'd do if I were in in your shoes, but I will offer this.

We just sold our home up in Troutman (for those of you not familiar, Troutman is about 30 minutes north of Charlotte -still in the Charlotte market).

Lots of homes for sale in our neighborhood, but they were all 2 story homes. Ours was a ranch. We learned that people will pay a premium right now for a ranch. And with baby boomers getting older I think ranch style homes will stay very popular or most likely become more popular.

We should sold our house in a day, with 3 offers. We got $12,000 over asking price and it appraised.

So, if you are moving to the coast in 15 years, I'd strongly consider a ranch home now.

Just my 2 cents ....

quote:

Originally posted by Aeteocles:
Just rent.

There's a 5-6% transaction cost each time you flip a house.

You aren't building any equity the first few years--90+ percent of your payments are going towards interest, not principal.

If you aren't going to hold the house long enough to weather the next downturn, then there's no point in buying now.

Just rent while you look for a really great deal or the next market downturn. You can probably break your lease for 1 or 2 months worth of rent in most cases.

In Charlotte just sitting on a property is building equity. I bought my house in June and my house is already valued at $13k over what I paid. At least that’s what Opendoor offered me for my house. Conservatively most of the Charlotte housing market will increase by 4.5% this year. Certain neighborhoods are hot and will go up closer to 10%.

quote:

Originally posted by Dusty78:

quote:

Originally posted by Aeteocles:
Just rent.

There's a 5-6% transaction cost each time you flip a house.

You aren't building any equity the first few years--90+ percent of your payments are going towards interest, not principal.

If you aren't going to hold the house long enough to weather the next downturn, then there's no point in buying now.

Just rent while you look for a really great deal or the next market downturn. You can probably break your lease for 1 or 2 months worth of rent in most cases.

In Charlotte just sitting on a property is building equity. I bought my house in June and my house is already valued at $13k over what I paid. At least that’s what Opendoor offered me for my house. Conservatively most of the Charlotte housing market will increase by 4.5% this year. Certain neighborhoods are hot and will go up closer to 10%.

Yes, historically. But everyone is anticipating the bubble to break soon. If Chongo was going to ride it out in this house over the next 5-10 years, then no problem, buy something now. Over the long term, a little dip in value isn't going to affect him. The problem is that if he buys something now, it'll be a an interim house for him and he risks buying at the top of the market and having to sell at the bottom.

It should be easy to see the average days on market and inventory levels for the specific neighborhood he's shopping. He should be able to compare year-over-year to get a better feel for the market he is looking at.

quote:

Originally posted by Aeteocles:

quote:

Originally posted by Dusty78:

quote:

Originally posted by Aeteocles:
Just rent.

There's a 5-6% transaction cost each time you flip a house.

You aren't building any equity the first few years--90+ percent of your payments are going towards interest, not principal.

If you aren't going to hold the house long enough to weather the next downturn, then there's no point in buying now.

Just rent while you look for a really great deal or the next market downturn. You can probably break your lease for 1 or 2 months worth of rent in most cases.

In Charlotte just sitting on a property is building equity. I bought my house in June and my house is already valued at $13k over what I paid. At least that’s what Opendoor offered me for my house. Conservatively most of the Charlotte housing market will increase by 4.5% this year. Certain neighborhoods are hot and will go up closer to 10%.

Yes, historically. But everyone is anticipating the bubble to break soon. If Chongo was going to ride it out in this house over the next 5-10 years, then no problem, buy something now. Over the long term, a little dip in value isn't going to affect him. The problem is that if he buys something now, it'll be a an interim house for him and he risks buying at the top of the market and having to sell at the bottom.

It should be easy to see the average days on market and inventory levels for the specific neighborhood he's shopping. He should be able to compare year-over-year to get a better feel for the market he is looking at.

We're weighing options. If we stretch it a little above my original desired top point, but not into a range that would put us in a crunch, I believe we could find a place that could be long term.

We will be going through our budget over the weekend. If we adjust our get-out-of-debt timeframe (it was at about 12-18 months) to free up more money for a mortgage, it may make more sense, especially as that money would be building equity, and we'd still be out of debt other than the house only about a year or two later than we had already planned.

A lot of people have made good points. The other point is there is no stability in renting. At the end of your year lease, the landlord could kick you out or raise the rent to where you're going to move anyways.

A fixed mortgage, the payment stays the same year after year...….and gets easier and easier to pay as time goes on......because wages increase.

quote:

Originally posted by Aeteocles:


But that doesn't take into account a transaction cost of 5-6% to flip an interim house, or being in a poor negotiation position because of a sales contingency.

Also, don't forget property taxes.

Ultimately, he wants a $300k house but only has the down payment for a $250k house (namely, a zero down loan). Given that home prices are really high and stalling out, he would be in a better position to ride the drop and buy his $300k house on the upswing. Buying now exposes his interim house purchase to a potential maket drop for little benefit.

Using your numbers, if he buys the house now for $250k, in 3 years he will owe $238k on a house that may only be worth $240k. Then he'll try to sell it, and lose another $10-12k in fees. He walks away upside down $10k (owing the bank money) for the privilege of paying property taxes and maintaining his own property.

Or, he can rent...and wait for the $300k property to drop to $270k and buy it then and live in it for the next 12 years and sell it for more than $300k

Property taxes are ultimately passed onto renters in the form of base rent.
If you are flipping a house every two yeas, you will never make any money.
He has property that he can sell, at a vacation spot, that will ultimately decrease in value before a downturn in Charlotte. Beach property decreases before and more than primary real estate.
I am also not sure where you are getting that he is planning on selling in 3 years.
Your assumption is that he can perfectly time the market, which does not always work.

quote:

Originally posted by 280nosler:
Property taxes are ultimately passed onto renters in the form of base rent.
If you are flipping a house every two yeas, you will never make any money.
He has property that he can sell, at a vacation spot, that will ultimately decrease in value before a downturn in Charlotte. Beach property decreases before and more than primary real estate.
I am also not sure where you are getting that he is planning on selling in 3 years.
Your assumption is that he can perfectly time the market, which does not always work.

Chongo's original post lays out the following options:

Buy a house, $250,000 budget (which doesn't get what we need long-term around here) with the intention to sell and upgrade in a few years, but worry that the market crashes.

Buy a lot in the country a little and build something on it, same budget but maybe more house.

Rent a house or apartment for a year or two at a nearly budget-neutral monthly cost, and see if the economy comes down, while saving the 20% for a down payment on a $300,000+ house.

quote:

Originally posted by Aeteocles:

quote:

Originally posted by 280nosler:
Property taxes are ultimately passed onto renters in the form of base rent.
If you are flipping a house every two yeas, you will never make any money.
He has property that he can sell, at a vacation spot, that will ultimately decrease in value before a downturn in Charlotte. Beach property decreases before and more than primary real estate.
I am also not sure where you are getting that he is planning on selling in 3 years.
Your assumption is that he can perfectly time the market, which does not always work.

Chongo's original post lays out the following options:

Buy a house, $250,000 budget (which doesn't get what we need long-term around here) with the intention to sell and upgrade in a few years, but worry that the market crashes.

Buy a lot in the country a little and build something on it, same budget but maybe more house.

Rent a house or apartment for a year or two at a nearly budget-neutral monthly cost, and see if the economy comes down, while saving the 20% for a down payment on a $300,000+ house.

Right, those were my initial thoughts.

After reading through recommendations I see the value in buying more house now with no down payment vs waiting two years saving, and spending $36,000+ in rent during those two years.

More discussion will take place, but right now I'm leaning toward finding something at the $300,000-$325,000 range that we would be happy with for the next 15 years.

quote:

Originally posted by chongosuerte:

More discussion will take place, but right now I'm leaning toward finding something at the $300,000-$325,000 range that we would be happy with for the next 15 years.

What would Dave Ramsey do?

Would stretching your budget to get the house you *want* now, rather than just a house you *need*, sidetrack your plan to be debt free?

What would your life look like if you just focused on paying down your debt and start house shopping when you have both a down payment and some money set aside for maintenance?

When you look at 36k in "thrown away" rent, did you also consider what another 2 or 3 years of having debt would cost you? Did you also consider what you would pay in interest over a 30 year mortgage if you came to the transaction with 0 down, as opposed to saving money and putting 10, 15 or even 20% down? Did you also consider whether you get the best interest rates with 0 versus 20% down?