Do people realize that when they get a mortgage they're paying 2x the price?
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Date: May 11th, 2018 9:17 PM Author: excitant set
For example, if you buy a $500k house and get a $400k mortgage, you'll end up paying something like $750k in principal and interest over 30 years.
Do people not realize this?
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36033688) |
Date: May 11th, 2018 9:25 PM Author: lavender toilet seat
As opposed to paying even more in rent over 30 years....
You can always live in a shack in Montana Unabomber style.
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36033729) |
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Date: May 11th, 2018 11:29 PM Author: bistre motley whorehouse partner
You don't get that when comparing financing to cash you're also comparing the opportunity cost of that money, right? So you have two options:
Option 1: pay cash, have no money to invest
Option 2: finance at 4.25% (which is 30% less because tax benefit), invest and get 7-8% growth
Option 2 is better.
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36034431) |
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Date: May 11th, 2018 11:38 PM Author: bistre motley whorehouse partner
Oh, not much to figure out.
1) Live in a shitty, undesirable place (for example, you can get a $150k house close to NYC in a place called Newark); and/or
2) Buy a house that no normal human would ever want to live in.
There's no mystery here. Enjoy!
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36034490) |
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Date: May 11th, 2018 11:42 PM Author: bistre motley whorehouse partner
1) No interest in living in Charlotte
2) No interest in working biglaw anywhere
3) We would need 2 good jobs in our area of law in Charlotte, which wouldn't happen, certainly nowhere near the salaries we make now
4) Those houses are way shittier than the one we're buying
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36034520) |
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Date: May 11th, 2018 11:04 PM Author: aphrodisiac associate garrison
because the dollars 30 years from now won't be worth the same as dollars today, they will be cheaper dollars.
Plus, even though you're only paying for a tiny portion of the house for the first few years, YOU GET TO LIVE IN THE WHOLE THING the entire time.
The house satisfies one of your three basic needs. The house is only collateral for the loan the bank extended to you.
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36034330)
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Date: May 12th, 2018 4:17 PM Author: big-titted diverse stain
People are willing to overpay that much? Seems like there is a market here. You should found a startup where they only have to pay half as much money over the course of the loan.
Then everyone will use your financing and you will be rich. Pretty clear you've identified some serious arbitrage here. Let me know if I can be on the startup board as an adviser (though I think you have all the advice you need!)
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36037566) |
Date: May 15th, 2018 8:09 PM Author: Sapphire glittery yarmulke theatre
To make it easier for you, let's say that you don't live in the house you bought and you rent it out at the same cost of market rent.
Cost to rent: $2,000 a month (Dallas) with 3% annual increase.
Cost of house: $250,000 (Dallas) with 3% annual increase in value. You put $50k down or 20%.
Total cost over 30 years on $200k mortgage is $333k. Principal: $200,000.00 Interest: $133,443.23 Total: $333,443.23
You also pay property taxes and HOA, combined let's be aggressive and say it's 5% of your total house value a year, so you pay $12,500 a year.
Total cost of ownership over 30 years: $758,443 which includes the down payment, total mortgage costs, total property costs, and total HOA costs.
Your total rent received during these 30 years would be $1,141,810.
Oh don't forget that the value of your $250k house in 30 years would be worth $606,816, making the total value of your house + collected rent to be................
$1,748,626 vs, total costs of $758,443.
I used conservative numbers but you can play with the assumptions and see your break-even point which implies a very very low rent $ which means you should almost always buy.
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36058085)
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Date: May 15th, 2018 8:21 PM Author: Sapphire glittery yarmulke theatre
In Northern VA the average house is $1mm in a nice suburb and they rent out for about $6k a month.
However, property taxes and HOA are much lower in VA, they come in about 2-3% total of the house value.
Total cost of 30 year mortgage on $800,000 is $1,333,773. Combined with your down payment of $200k it's $1,533,773. Plus the HOA and property taxes for 30 years and you get $2,433,773 for total cost.
In return, rent at $6,000 * 3% annual increase gets you $3,425,430 over 30 years. Your house of $1mm will be worth $2,427,262 after 30 years.
Total Value: $5,852,692
Total Cost: $2,433,773
If you want to be draconian and assume only $4,000 a month rent, your total value drops to $4,710,882 which is still almost double your cost.
(http://www.autoadmit.com/thread.php?thread_id=3974807&forum_id=2#36058153) |
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