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Korean Job Discussion Forums
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Sir John Hawkins
Joined: 07 Nov 2008
Location: Ulsan, SK
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 Posted: Sun Dec 28, 2008 11:08 am Post subject: |
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| brento1138 wrote: |
Let's see. If I rent a house/apartment for.. let's say $800 for the rest of my life assuming I live to age 81 (Canadian average)...
80-27= 53 years of life left.
53* (12*800) = $508,800
Guess I'll have nothing to give to my offspring if I rent. So might as well buy a $500,000 house. Also, who knows. In the future maybe 800 dollars will buy us a coca-cola. |
If you buy a 500k house, youll pay 3 times that in Tax, maintenance, upgrades, insurance.....you get the picture? |
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blaseblasphemener
Joined: 01 Jun 2006
Location: There's a voice, keeps on calling me, down the road, that's where I'll always be
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| Posted: Sun Dec 28, 2008 12:13 pm Post subject: |
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Buying a house is forced savings. If you rent, the likelihood that you will put the surplus difference in cash into an investment is less.
It is interesting living in Korea to see how buying a house is viewed differently. Here they consider a 25 year mortgage not buying, but renting for 25 years until the house is actually yours, not the banks. That's why the bank can take "your" house after a couple of missed payments.
I'm converted to the Korean mindset now. I don't want to buy a house until I can actually "buy" it, free and clear, with no mortgage. Also means I will buy a more affordable place when I do buy. No $300,000 30-year mortgage, thanks. |
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Cheonmunka
Joined: 04 Jun 2004
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| Posted: Sun Dec 28, 2008 12:30 pm Post subject: |
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| No $300,000 30-year mortgage, thanks |
What if I tell you you don't have to pay much of your own money to it, and yet you own it after 30 years?
When you buy stock it's all coming from your income. If you buy a house with the purpose to rent, your tenant pays for the purchase.
In a depression, you will still get rental income (unless you bought relying on a single labor force nearby.) In a depression, your shares might become like my wife's Chinese ones, poo-paper.
PS: The story above is a bit of a worry, about missing payments. People must have insecure income ... there's no way out of that, except the road to homelessness, or, the road to renting.
Last edited by Cheonmunka on Sun Dec 28, 2008 12:38 pm; edited 1 time in total |
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blaseblasphemener
Joined: 01 Jun 2006
Location: There's a voice, keeps on calling me, down the road, that's where I'll always be
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| Posted: Sun Dec 28, 2008 12:37 pm Post subject: |
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| Cheonmunka wrote: |
| Quote: |
| No $300,000 30-year mortgage, thanks |
What if I tell you you don't have to pay much of your own money to it, and yet you own it after 30 years?
When you buy stock you pay it yourself. If you buy a house to rent, your tenant pays for the purchase.
In a depression, you will still get rental income (unless you bought relying on a single labor force nearby.) In a depression, your shares might become like my wife's Chinese ones, poo-paper. Well, nice smelling poo paper.
Shh, don't tell everyone the formula - it's kind of a secret. |
Yes, but we weren't talking about rental properties, we were talking about the home you live in. And that $300,000 mortgage ends up costing you much much more in interest payments over the course of those 30 years, plus taxes, upkeep, etc.
It's your line of thinking that had a lot of people believing the housing bubble was not to be feared. |
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Cheonmunka
Joined: 04 Jun 2004
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| Posted: Sun Dec 28, 2008 1:05 pm Post subject: |
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| Quote: |
| And that $300,000 mortgage ends up costing you much much more in interest payments over the course of those 30 years, plus taxes, upkeep, etc. |
Yes, you are right - a live-in home would be very costly. US tax is high. Interest is low now but maybe not in six years. I was talking about rental places though, as someone above was talking about not settling anyway but living abroad but wanting something back home ...
I can see it for people wanting to travel for ten years or so, they could put in a bit of finance for a home and have a good chunk of it paid for when they return ...
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| It's your line of thinking that had a lot of people believing the housing bubble was not to be feared. |
Not really. My line of thinking is to add security. I wouldn't suggest to someone on 25k salary to take a 110% mortgage. That's what the mess is about. I'm much more conservative than that.
Last edited by Cheonmunka on Sun Dec 28, 2008 1:07 pm; edited 1 time in total |
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madoka
Joined: 27 Mar 2008
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| Posted: Sun Dec 28, 2008 1:05 pm Post subject: Re: Anyone Not Want To Own A House? |
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| Bryan wrote: |
| I'm saying I think many people buy a home because its basically expected, and they never really thought of any other option. Agree? |
Maybe it's true for some people - we'll never know what goes through everyone's minds when they purchase.
I know that homeownership wasn't just something I thought I should do though when I purchased. Even though there are more taxes, headaches, etc., the benefits far outweigh the negatives. I've saved a ton of taxes and even after the housing downturn, my house has still appreciated some $140,000. That's way more than I could have gotten if I played the stock market. |
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Cheonmunka
Joined: 04 Jun 2004
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| Posted: Sun Dec 28, 2008 1:08 pm Post subject: |
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| Quote: |
| my house has still appreciated some $140,000. |
Where is it Madoka?
PS: It did sound a bit sales-ey up there didn't it, "Shh that's the secret ..' hehehe. Not really meant that way at all. If you buy a house, you've gotta put at least 15-30% of the purchase price in yourself. No way low doc loans. I didn't even know they existed until recently. |
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MA_TESOL
Joined: 11 Nov 2007
Location: Seoul
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| Posted: Sun Dec 28, 2008 8:26 pm Post subject: |
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| I don't want to buy a home because my lifestyle is not compatible with the thought of "being owned by something." I mean, if you buy a home you may own it, but it also owns you. I know there are many advantages to owning a home, and if I were a 9-5 type person with 2.3 kids it would make sense. I am not that person. I may regret that in my later years? |
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Bryan
Joined: 29 Oct 2007
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| Posted: Mon Dec 29, 2008 6:41 am Post subject: |
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| The stories where people say "I gained 200,000 in real estate" should be taken the same as the stories where people say they gained it in the stock market, except also consider that the S&P 500 has a historical return rate that is ABOVE that of real estate in the US. |
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Bryan
Joined: 29 Oct 2007
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| Posted: Mon Dec 29, 2008 6:42 am Post subject: |
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| blaseblasphemener wrote: |
| Buying a house is forced savings. If you rent, the likelihood that you will put the surplus difference in cash into an investment is less. |
How do you figure? Tonnes of banks can set up automatic withdrawals into your investment or retirement account for you. |
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Bryan
Joined: 29 Oct 2007
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| Posted: Mon Dec 29, 2008 6:46 am Post subject: |
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| RedRob wrote: |
| There is also a bit of coin to be made by buying a scruffy house in a good area and doing it up. I'm doing this right now, and it is both more fun, and more work than I had anticipated. Depends if you like getting yr hands dirty or not I guess. |
There is also a bit of coin to be made by taking on some extra hours at your job (which should be something you like) and investing that money in an index fund. If your job is making you less per hour than home renovations, then you should be a full time home renovator. If your job makes you more per hour than renovating your home, then you should be spending the time at your job instead. |
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Bryan
Joined: 29 Oct 2007
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| Posted: Mon Dec 29, 2008 6:53 am Post subject: |
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| Cheonmunka wrote: |
| When you buy stock it's all coming from your income. |
Many people can and do purchase stock on leverage.
| Quote: |
| If you buy a house with the purpose to rent, your tenant pays for the purchase. |
| Quote: |
| In a depression, you will still get rental income (unless you bought relying on a single labor force nearby.) In a depression, your shares might become like my wife's Chinese ones, poo-paper. |
In a real estate depression, the value of the house could drop below the debt you owe on it, just like with any other leveraged investment. Real estate is an investment vehicle just like securities and the same laws of economics apply... except that you have to put work into being a landowner, which becomes a second part time job. Why not just put more hours into one's career where they have greater productive power per hour? |
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blaseblasphemener
Joined: 01 Jun 2006
Location: There's a voice, keeps on calling me, down the road, that's where I'll always be
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| Posted: Mon Dec 29, 2008 7:01 am Post subject: |
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| Bryan wrote: |
| blaseblasphemener wrote: |
| Buying a house is forced savings. If you rent, the likelihood that you will put the surplus difference in cash into an investment is less. |
How do you figure? Tonnes of banks can set up automatic withdrawals into your investment or retirement account for you. |
The difference is your home is not optional. If you stop making payments, you will be out on the street. It means that a house is the best way to guarantee a large amount of your income will go to an investment. |
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Bryan
Joined: 29 Oct 2007
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| Posted: Mon Dec 29, 2008 7:03 am Post subject: |
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| blaseblasphemener wrote: |
The difference is your home is not optional. If you stop making payments, you will be out on the street. It means that a house is the best way to guarantee a large amount of your income will go to an investment. |
What do you mean best way to guarantee? It sounds like you're talking about training a dog, not about human beings. |
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Tiger Beer
Joined: 07 Feb 2003
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| Posted: Mon Dec 29, 2008 7:51 am Post subject: |
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I keep seeing people quote houses as 500K....if you are paying half a million dollars for a house...then I certainly wouldn't agree to that either, and rent would be the better option.
But not everyone is looking to buy in San Francisco, Los Angeles or New York City. There are another 100 cities to choose from where prices are very reasonable - like 150K, etc. |
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