Lottery it is!

[STR8UP]

Re: Re: Re: Re: Re: Re: Lottery it is!

Originally posted by al77
1. It is. But we are no talking about banks, it is their problem what it cost them. We are talking about ordinary people, you and me. For us paying $250k instead of paying $100k is to much.
We have to figure out somehting in order to not to get in the slavery of the banks.

You have to get over this negativity towards banks and interest if you want to be a serious investor.

Borrowing money is nothing more than a tool to make more money. If you use it incorrectly you will lose money. If you use a hammer incorrectly you will miss the nail and break your thumb. So is a hammer bad? No, it's the person swinging it who either knows how to use it or doesn't.

And your whole argument that someone should save a huge downpayment before buying a house is simply "poor talk". Look at the statistics- rich people tend to OWN real estate and poor people tend to RENT real estate. In the time that it takes you to save this down payment you miss out on the benfits of ownership such as tax breaks and appreciation. Over a period of time it is almost always better to get in the game early rather than trying to save 6-7% in interest.

 

[Create Reality]

Re: Re: Re: Re: Re: Re: Re: Lottery it is!

Originally posted by STR8UP
You have to get over this negativity towards banks and interest if you want to be a serious investor.

Borrowing money is nothing more than a tool to make more money. If you use it incorrectly you will lose money. If you use a hammer incorrectly you will miss the nail and break your thumb. So is a hammer bad? No, it's the person swinging it who either knows how to use it or doesn't.

And your whole argument that someone should save a huge downpayment before buying a house is simply "poor talk". Look at the statistics- rich people tend to OWN real estate and poor people tend to RENT real estate. In the time that it takes you to save this down payment you miss out on the benfits of ownership such as tax breaks and appreciation. Over a period of time it is almost always better to get in the game early rather than trying to save 6-7% in interest.

I can see your point there st8, the appreciation will surely overcome the expense of the mortgage.

 

[al77]

Re: Re: Re: Re: Re: Re: Re: Lottery it is!

Originally posted by STR8UP
You have to get over this negativity towards banks and interest if you want to be a serious investor.

And your whole argument that someone should save a huge downpayment before buying a house is simply "poor talk". Look at the statistics- rich people tend to OWN real estate and poor people tend to RENT real estate. In the time that it takes you to save this down payment you miss out on the benfits of ownership such as tax breaks and appreciation. Over a period of time it is almost always better to get in the game early rather than trying to save 6-7% in interest.

You are correct on many things, but you missed my main point: I was saying that my concept was for people who are not investors: people who just want to buy a house. Those are majority of people. Ok? Why did you overlook this I have no idea


Ok, you came up with a good counterscenario.
Lets look at it:

A family is going to buy a place to live. They are not investors and will never be. They want their own place.
We offer them two scenarios:
1. Buy a house with little downpayments and pay the mortgage.
This will lead to:
a) Property taxes (2-5k per year).
b) Paying mortageg of about $1000+ each month for 30 years.
c) Occasional repairs of the house
d) mowing the lawn, taking care of the backyard
e) Being scared to death to lose their job, cuz with the job they will lose their house as well. I say it again: it triggers the slavery to the bank.
f) They will overpay 2.5 after 20 years.

What will they have after 30 years? They will have.. the same house they bought in the beginning but they spend tons of money on taxes, repairs and in interest to the bank.
I can even agree with you that after 30 years their house will cost 2.5 more, so if they sell it they can get even.

2. Save 60k. Buy a condo and quickly pay it off.
They will avoid almost every negative point from the scenario 1.
If they really want they can save $60k in two years. and pay it off in another couple of year. In 4 years they will have their own place, free of mortgages and of the fear of the bank and fear of losing the job.

Again, they are not investors. They cannot buy this house... live there for 3 years sell it a got money for buying two houses. All the other house will increse in price two. They cannot empoy this naive strategy, they will have to become investors, i.e. employ more spohisticated strategies.But wait, they are just people, ordinary people who are not investors.

 

[STR8UP]

Re: Re: Re: Re: Re: Re: Re: Re: Lottery it is!

Originally posted by Create Reality
I can see your point there st8, the appreciation will surely overcome the expense of the mortgage.

Exactly.

It might not exceed it, but you should at least come close to breaking even. That's more than can be said for paing rent while you try to save $70k. How many people could save that kind of money in a few years? Not many.

Point is- if you think it is better to rent until you can afford to pay cash you are missing the boat, plain and simple.

 

[al77]

Re: Re: Re: Re: Re: Re: Re: Re: Re: Lottery it is!

Originally posted by STR8UP
How many people could save that kind of money in a few years? Not many.

Point is- if you think it is better to rent until you can afford to pay cash you are missing the boat, plain and simple.

$70 is a lot to save in a coupel of years? ok, I you know better, I didn't do it yet.

Ok, Lets assume what you are saying is 100% correct: teh appreciation goes up faster than inflation and their interest payments. So... what? What is the next step for a family?
To sell? and do what? and buy another smaller house? after a couple of such moves they will end up living in a box 10 by 10 feet. They need a place to live, they cannot extract money all the time. Every time they sell, they need to buy. if they buy a similar house.. it is already appreciated as the one they just sold.

I guess I am missing a point. What is your idea for them: become investors? But this was the very first assumptiong: they are not investors.

 

[STR8UP]

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Lottery it is!

Originally posted by al77
Ok, Lets assume what you are saying is 100% correct: teh appreciation goes up faster than inflation and their interest payments. So... what? What is the next step for a family?
To sell? and do what? and buy another smaller house? after a couple of such moves they will end up living in a box 10 by 10 feet. They need a place to live, they cannot extract money all the time. Every time they sell, they need to buy. if they buy a similar house.. it is already appreciated as the one they just sold.

What would be the next step if they had rented? They certainly would not have as much equity by saving and waiting. 9.99999 times out of ten you come out ahead by buying early instead of renting while you save a huge downpayment. It isn't practical and it isn't smart.