OT: House Buying

[jickey moseph]

Happy Friday, tpb. I will preface that my wife and I are in no rush to buy a house, but we are thinking about beginning that process. We would be first-time home buyers. We got married last month, and with that being said, we paid for it all ourselves and do not quite have the capital and funds we would have if we hadn't.

Our (my) biggest question for all of you elderly and more wise folks of the board... does anyone know what the fuck is going to happen in this economy? I've heard many different things and I'm unsure if the economy potentially tanking would benefit first-time home buyers like us... or if it would impact it at all. I have noticed that 30-year mortgage interest rates have dropped (lol) a bit since the beginning of the year (sitting at 6.8%~ish at the moment). In that same breath, I read an article that said nearly 90% of borrowers have rates below 3%.

Extremely frustrating that the market is still in the absolute shitter and people whom bought a house two years ago, not only got low interest rates, but have seen the market value of their property raise and raise.

So I guess our questions...

1. Do we need to have a realtor for any other purpose than placing a bid for us?
2. Do we wait and renew our lease for another year?
3. General market thoughts?
4. What does the build process look like if we were to go down this path?

Thanks, tpb.

 

[Baron Winnebago]

I wouldn't try to forecast this economy, but I'd hit up @MtnHusker on the best way to approach things in an uncertain environment so you aren't getting f'd in the a in the long run so to speak

 

[jickey moseph]

I wouldn't try to forecast this economy, but I'd hit up @MtnHusker on the best way to approach things in an uncertain environment so you aren't getting f'd in the a in the long run so to speak

I'm in the finance-adjacent field (like your bestie, @Jim14510, CPA) so I'm not as well-versed in the economy as I could/should be.

 

[Husker_in_OK]

If the political climate stays the same post November 2024, I wouldn't expect the housing market to get any better. Either with inflated home values or interest rates. I'd absolutely hate to be in a position to buy a house right now ..

 

[iruletheskool]

I'm no expert at all but if you are planning to be in the home for awhile I am not sure how much timing will matter as the environment is so uncertain

 

[jickey moseph]

If the political climate stays the same post November 2024, I wouldn't expect the housing market to get any better. Either with inflated home values or interest rates. I'd absolutely hate to be in a position to buy a house right now ..

Yeah... it's disgusting, honestly. Wife dragged me to an open house yesterday for a house at 350k that was purchased in 2021 for 230-240k. Stupid.

 

[MtnHusker]

Buy, Buy, Buy........... I'm telling every friend, client, relative to BUY NOW and not wait. Without getting too in depth we all know an election is coming up next year. Typically interest rates, unemployment & gas prices drop towards the end of the year before an election. Those dirty politicians want to get re-elected. There is a saying in Real Estate: Marry the House, Date the Rate. Interest Rates will go up and down. They are currently high but when they go down we are expecting a huge increase in demand, hence higher prices. Buy Now and refinance in 6 months and then probably again in 2 years as rates drop. Supply & Demand, right now there are way more buyers than sellers out there, and that number is increasing. If I won $2 million in the Lottery today I'd go out and buy $2 million in real estate and retire off of the Rental Income. During inflationary times real estate and gold are typically 2 of the best investments.

We follow numerous Real Estate Economists/Specialists and all of them are expecting a bull market towards the end of this year or early next year. Get in before the demand and prices rise. Watch this YouTube. Brian Buffini is one of the most spot on when it comes to track records on predictions over the last 15 years.

 

[jaihawk]

Trying to time the market is an exercise in futility.

The best answer that I can give you is to make sure that you don't become house poor. When my wife and I were getting ready to build the house we're in now, we went through a lot of the Parade of Homes homes in Lincoln to get an idea of the builders, their quality, the different neighborhoods, etc... We were more established in our life (early 40's), had a house that was fully paid off, so the entire proceeds of selling the home that we owned would go towards the new home.

We were amazed at how many 20 somethings were looking at $400-$500k houses as their "first home". Barring inheritance or someone that was even more frugal with their money than me, there's no way that they'd have enough money or equity to keep from having a crazy mortgage payment. That's just from a P&I standpoint, let alone the insane amount of property tax that Lancaster County makes you pay.

Figure out what you can manage for a mortgage payment, comfortably, and use that as your metric going into anything, whether that's building or buying. Life changes pretty quickly. You can always put more towards your mortgage if you end up being blessed financially, but it's pretty damn hard if finances change the other way and you have to stretch things to make the payment.

 

[2010sarenevercomingback]

Realtor is free for you as a buyer, the seller pays the commission, so no reason to avoid them.

Rates are not bad historically, even though we're coming off an extended period of crazy low rates.

Friends in real estate say commercial is the sector that's the most vulnerable, housing will probably stay strong for a while, partially because it costs 1.5x to build anything.

 

[Mavsker]

A few things that probably aren't that helpful.
- 6-7% rates suck but my parents' first mortgage was at almost 15%. Don't think it can't get worse.
- I think realtors are basically a scam and I would guess that in 10 years it won't look like it does today. With that said i think it's more of a seller's concern.
- Asking people's thoughts on the general market is worse than useless unfortunately. If you look back on most market crashes, most people didn't see the crash coming. And vice versa, most people will think a crash is coming and it doesn't. You'd be better off flipping a coin because at least then you'd be right half the time.
- I like owning a house because it's a real asset that I can see that's mine. I'd be willing to pay a premium against renting for that alone. Just don't be a dumbass when you buy.

 

[jickey moseph]

Buy, Buy, Buy........... I'm telling every friend, client, relative to BUY NOW and not wait. Without getting too in depth we all know an election is coming up next year. Typically interest rates, unemployment & gas prices drop towards the end of the year before an election. Those dirty politicians want to get re-elected. There is a saying in Real Estate: Marry the House, Date the Rate. Interest Rates will go up and down. They are currently high but when they go down we are expecting a huge increase in demand, hence higher prices. Buy Now and refinance in 6 months and then probably again in 2 years as rates drop. Supply & Demand, right now there are way more buyers than sellers out there, and that number is increasing. If I won $2 million in the Lottery today I'd go out and buy $2 million in real estate and retire off of the Rental Income. During inflationary times real estate and gold are typically 2 of the best investments.

We follow numerous Real Estate Economists/Specialists and all of them are expecting a bull market towards the end of this year or early next year. Get in before the demand and prices rise. Watch this YouTube. Brian Buffini is one of the most spot on when it comes to track records on predictions over the last 15 years.

Thank you - great supply of information. I know that we could probably refi if that opportunity arises again, it's just disheartening to know what kind of deal we could have gotten two years ago lol.

Is the 20% down payment a month? We could muster at least 10% from anything in the 280-400k range (which is what we could afford).

 

[jickey moseph]

A few things that probably aren't that helpful.
- 6-7% rates suck but my parents' first mortgage was at almost 15%. Don't think it can't get worse.
- I think realtors are basically a scam and I would guess that in 10 years it won't look like it does today. With that said i think it's more of a seller's concern.
- Asking people's thoughts on the general market is worse than useless unfortunately. If you look back on most market crashes, most people didn't see the crash coming. And vice versa, most people will think a crash is coming and it doesn't. You'd be better off flipping a coin because at least then you'd be right half the time.
- I like owning a house because it's a real asset that I can see that's mine. I'd be willing to pay a premium against renting for that alone. Just don't be a dumbass when you buy.

What does not being a dumbass look like? lol

 

[jickey moseph]

Trying to time the market is an exercise in futility.

The best answer that I can give you is to make sure that you don't become house poor. When my wife and I were getting ready to build the house we're in now, we went through a lot of the Parade of Homes homes in Lincoln to get an idea of the builders, their quality, the different neighborhoods, etc... We were more established in our life (early 40's), had a house that was fully paid off, so the entire proceeds of selling the home that we owned would go towards the new home.

We were amazed at how many 20 somethings were looking at $400-$500k houses as their "first home". Barring inheritance or someone that was even more frugal with their money than me, there's no way that they'd have enough money or equity to keep from having a crazy mortgage payment. That's just from a P&I standpoint, let alone the insane amount of property tax that Lancaster County makes you pay.

Figure out what you can manage for a mortgage payment, comfortably, and use that as your metric going into anything, whether that's building or buying. Life changes pretty quickly. You can always put more towards your mortgage if you end up being blessed financially, but it's pretty damn hard if finances change the other way and you have to stretch things to make the payment.

I'd like to think of myself as frugal and know what our sweetspot is; 300-400k with the higher-end being probably a worst-case scenario.

Are there any no-no's when purchasing? I.e. what things in a house that's forsale that should set off alarms? Like I said above, the house we just dropped by yesterday I could tell was a flip, as they really redid the kitchen and the area you walk in to but neglected the rest of the house.

 

[Bootleg11]

If you're buying, I see no downside for using a realtor.

Selling is a little different.

 

[Goskers07]

Buy, Buy, Buy........... I'm telling every friend, client, relative to BUY NOW and not wait. Without getting too in depth we all know an election is coming up next year. Typically interest rates, unemployment & gas prices drop towards the end of the year before an election. Those dirty politicians want to get re-elected. There is a saying in Real Estate: Marry the House, Date the Rate. Interest Rates will go up and down. They are currently high but when they go down we are expecting a huge increase in demand, hence higher prices. Buy Now and refinance in 6 months and then probably again in 2 years as rates drop. Supply & Demand, right now there are way more buyers than sellers out there, and that number is increasing. If I won $2 million in the Lottery today I'd go out and buy $2 million in real estate and retire off of the Rental Income. During inflationary times real estate and gold are typically 2 of the best investments.

We follow numerous Real Estate Economists/Specialists and all of them are expecting a bull market towards the end of this year or early next year. Get in before the demand and prices rise. Watch this YouTube. Brian Buffini is one of the most spot on when it comes to track records on predictions over the last 15 years.

Well you just made me feel better. Like the OP, we are looking at buying a few properties in the coming months/years (one for us, the rest as rentals) and have kind of been operating on the same line of thought as you described, albeit with much less knowledge of the best practices. Gracias amigo.

 

[Juro]

Buy, Buy, Buy........... I'm telling every friend, client, relative to BUY NOW and not wait. Without getting too in depth we all know an election is coming up next year. Typically interest rates, unemployment & gas prices drop towards the end of the year before an election. Those dirty politicians want to get re-elected. There is a saying in Real Estate: Marry the House, Date the Rate. Interest Rates will go up and down. They are currently high but when they go down we are expecting a huge increase in demand, hence higher prices. Buy Now and refinance in 6 months and then probably again in 2 years as rates drop. Supply & Demand, right now there are way more buyers than sellers out there, and that number is increasing. If I won $2 million in the Lottery today I'd go out and buy $2 million in real estate and retire off of the Rental Income. During inflationary times real estate and gold are typically 2 of the best investments.

We follow numerous Real Estate Economists/Specialists and all of them are expecting a bull market towards the end of this year or early next year. Get in before the demand and prices rise. Watch this YouTube. Brian Buffini is one of the most spot on when it comes to track records on predictions over the last 15 years.

So here’s my issue. Bought a house back in 2019 at 179k. I paid off nearly 20k in principal with extra payments and with today’s home prices in my neighborhood, I could probably get 230k.

Now, my house is small. 1260 sq ft. Wife and I want to move up and start having kids. With my income alone, could probably do a 420k house with figuring out what our mortgage should be.

I think I know the answer, but should I buy a new one and sell the one I’m in?

 

[Mavsker]

What does not being a dumbass look like? lol

As a dumbass I'm not the best person to advise on that. But a couple things:
- Look at the last sale price and when it occurred. A ton of house flippers in the area that buy for $100k, put in literally $15k on LVP flooring, paint, and fixtures, and sell for $220k. Don't take the bait.
- With that said don't buy a fixer upper if you're lazy. You don't have to be super handy, you can learn literally anything on YouTube. But if you're lazy or just don't like home renovation, buy something you won't need to fix up. If you do it yourself you can get close to breaking even and in some cases even make a few bucks. But if you're paying a contractor you'll be hard pressed to not be in the red.
- Similar to the above but don't fall for cosmetics. Those are relatively inexpensive in comparison to whether the windows/deck/roof/HVAC will need to be replaced soon. Most people will overemphasize the small things and underemphasize the big things. When we were looking years ago there was a house that half of buyers counted out because there were a few broken tiles in the entryway and some scuffs on the paint. Basically don't be that kind of buyer lol
- Also, put the interest rates from 2 years ago completely out of your mind. Yes it sucks, but it should have absolutely zero bearing on any decision made today. It's a sunk cost.

 

[HuskerGarrett]

@Drue629

 

[MtnHusker]

Thank you - great supply of information. I know that we could probably refi if that opportunity arises again, it's just disheartening to know what kind of deal we could have gotten two years ago lol.

Is the 20% down payment a month? We could muster at least 10% from anything in the 280-400k range (which is what we could afford).

I work for REMAX Lake of the Ozarks. I've been in real estate for over 20 years (Realtor, Mortgage Broker, Property Management) and our REMAX is hands down the most impressive real estate company I have ever worked for, and it is not even close. Our owners are all over this and do a great job keeping us educated on trends, predictions, issues, rates...... Our REMAX office has not only been the #1 Small Market REMAX Franchise for Transactions & Volume in the USA but also for the world, and we have won that honor for the last 4 years with odds on we win it next year too. No Small Market REMAX sells more than us anywhere in the world. Even though we represent only 11% of the agents on our MLS we sell over 40% of the Lake of the Ozarks and did over $750,000,000 in business last year. Our owners are buying themselves right now. Smart honest guys that I trust 100%.


If you have concerns about buying now watch that video. There is so much that goes into interest rates and home prices. Don't focus on the Here & Now, as it will change. We think rates will be around 6% or lower at the end of the year and maybe getting down into the 4's in 12-24 months. You are renting the rate right now.

As for applying for a Loan there are so many options out there. There are USDA & VA Programs where you can put Zero Money Down. FHA Loan Programs that you can put down only 3.5%. But you do pay Mortgage Insurance on most of these programs until your home reaches 20% equity owned by you. Conventional Loans you typically put down 20% which if you can swing that gives you some of the best rates and lowest monthly payments. Also currently Average Rental Rates are increasing at a much higher rate than home prices. It's a great time to be a home owner or landlord due to our nationwide housing shortage so don't let the current interest rates scare you.

 

[MtnHusker]

So here’s my issue. Bought a house back in 2019 at 179k. I paid off nearly 20k in principal with extra payments and with today’s home prices in my neighborhood, I could probably get 230k.

Now, my house is small. 1260 sq ft. Wife and I want to move up and start having kids. With my income alone, could probably do a 420k house with figuring out what our mortgage should be.

I think I know the answer, but should I buy a new one and sell the one I’m in?

Can you afford to keep your current house, rent it out and buy the other one? Building a second stream of income, or passive income will pay off huge in the future. You might be able to include the rental income or part of it for your new income when trying to buy a new house. A good mortgage broker can do wonders. With prices going up you should be able to rent it out for far more than your mortgage. When we are looking at investment properties with a 30 yr mortgage we use what we call a 1% Multiplier. So if we are buying the house and it will cost us $200,000 will it generate 1% or $2,000/month in rental income. If it brings in that or more then we know if we buy it that we can put the profits or the extra rental income towards paying off the principal sooner that we can typically have that property paid off in 8-10 years. I have a bunch of friends, relatives & clients that are doing this as their Retirement Plan. I mentioned above that if I won $2,000,000 in the lottery today I would put that all into buying rental properties, and basically retire. Down here with that I could generate a yearly income of over $180,000/yr after paying a rental management company to run the properties. I'm not fancy like Applebees so could easily live off of $180.000/yr.

If you bought in 2019 your property may have gone up more than that. You bought at a great time, right before the spike in demand and prices. Our market has gone up over 100% since Jan 2020. I'd see if you can carry both mortgages. Invest for you & your families future. You might have that paid off in 10 years and think about how nice it would be to get an extra $2-$3,000/month in passive rental income