Ah, the joys of home ownership!!!

amulford

Man, what a month. First the water treatment decides it's had enough. The old girls have been doing duty for a long time, so I can't complain too much. The only problem is that I have to replace 2 different units, an iron filter and a water softener. I have found a two in one, which is maintenance free and NO SALT. Oh the joy!!! But it comes at a price.....

Now the CA decides to quit. I guess the it was talking to the water treatment, but the compressor is shot. OK, let's replace the compressor, right??? OH NO! That is you could, but in order to do that you have to completely tear down the condenser unit to get to the compressor, which is conveinently located right in the middle of EVERYTHING. Prognosis??? New condensor unit, probably. At a cost.....

The grass is high, the mower's broke. The driveway and sidewalk's dirty, the blower don't wanna run.

I'd go fishin, but the bass are spawning, so they ain't hungry....

ICE COLD CORONA ANYBODY???

disneyjoe7

Yes, Home ownership can be fun. Sorry you had so much trouble in such a short time, I hope things get better for you soon.
BTW

ICE COLD CORONA ANYBODY???

Hell Ya.

HBombToo

HBombToo;)

amulford

Just tried to open the pool and found out the pump is not pumping.....

Gotta go, on my way to the store....liquor store that is....:)

Early B.

I think most of us got suckered into buying a house. Who the hell said it was a good investment?

My apartment was $350 per month before I got into a house 10 years ago and I had plenty of cash back then. Now I'm paying a $1,000 monthly mortgage and I'm always broke. If I need cash, I gotta borrow it and pay it back, which makes me perpetually broke.

Home ownership in many cases isn't a prescription for building wealth...

Jstas

Where teh hell do you live? I need to stay away from that area of NJ before the bad luck rubs off!

amulford

Originally posted by Jstas
Where teh hell do you live? I need to stay away from that area of NJ before the bad luck rubs off!

PolkWannabie

Originally posted by Early B.
I think most of us got suckered into buying a house. Who the hell said it was a good investment?

My apartment was $350 per month before I got into a house 10 years ago and I had plenty of cash back then. Now I'm paying a $1,000 monthly mortgage and I'm always broke. If I need cash, I gotta borrow it and pay it back, which makes me perpetually broke.

Home ownership in many cases isn't a prescription for building wealth...

$350/month ?! ... You couldn't have rented a dog house for $350/month any where near ten years ago.

Assuming that $1000/month is mostly interest and/or real estate taxes then it's at least tax deductible and assuming a marginal tax rate of 30% then you are out of pocket something closer to $700/month. The difference between the two is $350/month or $4200/year. Is your house increasing in value more or less than $4200/year ?

Early B.

Assuming that $1000/month is mostly interest and/or real estate taxes then it's at least tax deductible and assuming a marginal tax rate of 30% then you are out of pocket something closer to $700/month. The difference between the two is $350/month or $4200/year. Is your house increasing in value more or less than $4200/year ?

I live in the south, so housing is a lot cheaper than NJ. Unfortunately, my house is increasing in value a bit more than $4,200 annually (I wish it were closer to $20K annually). Even if it was, the value of my home isn't cash that I can spend. I can only borrow off of it, so equity pays off once I sell my home.

The issue isn't equity or tax deductions, it's all about the CASH spent to maintain the home, the useless furniture your wife makes you buy, and the other expenses (lawn care, home security monitoring, homeowner association fees, etc.). Over the past ten years, I must have spent about $40K at Home Depot alone. All of these things are paid out in cash, not in equity. That's why most homeowners are one paycheck away from poverty and have an average of $5,000 in credit card debt.

Home ownership is an expense, not an investment. That's a fundamental concept in wealth building. I learned this lesson too late in life. If I had to do it all over again, I would have gotten a condo to minimize my cash outlay and invested the difference. If I did this over a ten year period, my net worth would probably exceed $1 million bucks right now. If that were the case, I could easily afford the Lsi's I want. Instead, I gotta save my money to get the house painted. Damn.

Sami

Originally posted by PolkWannabie
Assuming that $1000/month is mostly interest and/or real estate taxes then it's at least tax deductible and assuming a marginal tax rate of 30% then you are out of pocket something closer to $700/month.

Don't forget home insurance and property taxes...

I'm in the process of buying a house and for a $150k house I'm looking to spend around $4-5k a year for taxes and insurance.

Still, I'm all for it. 1500-2000 ft^2, 3 bedrooms, pool & hottub (+ sauna later on), your own yard and the possibility to watch movies at reference levels is worth it all.

Sami

Originally posted by Early B.
I would have gotten a condo to minimize my cash outlay and invested the difference. If I did this over a ten year period, my net worth would probably exceed $1 million bucks right now.

Think positive. You would have had it all in Enron and co. anyways...

AsSiMiLaTeD

Originally posted by Sami
and the possibility to watch movies at reference levels is worth it all.

That's it for me. I like having the year and all and the pride of ownership, but the ability to watch movies and listen to music at decent levels is the reason I bought a house...

Something else to think about paying taxes and insurance and all that, you're still paying for that even when you rent, you just don't think about it...but it's all wrapped up into the rent you're paying...

VR3

I would be kicked out of an apartment/or arrested within 1 week...

PolkWannabie

Originally posted by Sami
Don't forget home insurance and property taxes...

I didn't ... reread what you quoted ... I left out homeowners insurance but that's usually relatively small compared to mortage and property taxes or at least it is here.

Sami

Originally posted by PolkWannabie
I didn't ... reread what you quoted ... I left out homeowners insurance but that's usually relatively small compared to mortage and property taxes or at least it is here.

I missed that part of it. So property tax is also tax deductable? Or is it only if you pay state tax?

In here the houses are cheap but you pay a lot in property taxes. $150k would get a very nice house in north Dallas. I was looking at houses in San Diego and it's about triple for a comparable house (house & neighborhood).

Early B.

I used to live in Dallas. Fantastic deals on homes. Most of them all brick, too. You can live large there. I also had an apartment there and lots of cash (but that was about 12 years ago -- before I got married). Guess where all my money goes now...

Damn.

PolkWannabie

Originally posted by Sami
So property tax is also tax deductable? Or is it only if you pay state tax?

In here the houses are cheap but you pay a lot in property taxes. $150k would get a very nice house in north Dallas.

Yes, property taxes are deductible.

Expensive ? How much are you calling expensive on that $150k home ?

Sami

Originally posted by PolkWannabie
Expensive ? How much are you calling expensive on that $150k home ?

Cool, now I can count the property taxes off from my federal taxes.

I honestly don't know how it compares to the rest of the country but $4k a year is equivalent to 35% of your loan payment ($150k for 30 years). $150k house, home insurance, property taxes would bring my monthly expenses to around $1350. After tax deduction (based on 30%), $975. That's 2 bedroom apartment kinda money around here.

Ability to crank up the volume, priceless. But I still need to be careful, I got my current neighbors to call in the cops in the middle of Saturday evening for playing the music too loud. I am currently renting a house.

amulford

Originally posted by Sami
Don't forget home insurance and property taxes...

Speaking of which, our scholl taxes went up last year 143%!!! Now were up to $10k in taxes alone, BEFORE the insurance!!!

If I didn't have so much invested in this place, I'd dump it!!!

But IT IS my retirement package, so by the time we're at retirement age, we'll be sitting pretty, as long as the current market trends hold...(he clasps his hands tightly and looks up to THE BIG GUY)

And HELL YES those taxes are deductible. But that only means you don't have to pay taxes for on the income you put out in taxes.:mad:

PolkWannabie

Originally posted by amulford
But IT IS my retirement package, so by the time we're at retirement age, we'll be sitting pretty, as long as the current market trends hold...

The only problem is you gotta live somewhere even in retirement. You sell it here and buy or rent another one somewhere else ... However, the benefit of living in a more costly state like this one is higher wages & higher real estate prices so at least there are places to retire to that cost less. Now if I could only find one or more where I'd like to be. Maybe, summers in Montana near Glacier National Park and winters in Arizona.

amulford

Yes, exactly. I still have a few years to go, but by the time I'm ready the property should appreciate to a sizable nest egg. Plus the fact that I plan to subdivide and build a few exclusively located very high end homes to pad the nest...;)

dorokusai

Unless the home was built FOR you...you always end up with the good fixes Have fun Anthony!

We have tried to remove every shred of previous loser owner since day one.....starting with an entire house FULL of bright blue carpet. I feel your pain hoss.

Early B.

We have tried to remove every shred of previous loser owner since day one.....starting with an entire house FULL of bright blue carpet. I feel your pain hoss.

Yep. Took us several years to get rid of the previous owner's signature on the house. Probably cost us $20K in carpet, paint, wallpaper, bathroom remodel, kitchen appliances, new countertop, new tile, etc. I don't even want to mention the number of hours we spent on it.

Ron-P

We spent 17k and 3 months before we could even move in. That was 12 years ago.

I think most of us got suckered into buying a house. Who the hell said it was a good investment?

Two houses in my tract recently sold for 630k+. When I bought in they were in the mid-200's. There is no better investment.

PolkWannabie

Which is of course one of the reasons why at least when nearing the point of selling ones home, the closer it is in terms of neutral colors the better, otherwise potential buyers will be doing mental calc's while walking through of how much it'll cost to get rid of the Kermit colored carpet and fire engine drapes and beyond that a lot buyers these days just don't want to be bothered regardless of the expense.

Early B.

Two houses in my tract recently sold for 630k+. When I bought in they were in the mid-200's. There is no better investment.

That's wonderful in your case. Once you sell it, you'll be fine, but you'll probably roll over a vast amount of that equity into another house. Otherwise, taxes will eat your investment alive. So the real value in equity typically translates into a bigger house. Bigger house means more cash expenditures, and most people are back into the cycle of being cash poor and debt rich.

Again, the real value of an investment is in its cash flow, not equity. What would you rather have -- $200K in cash or $200K in equity? Equity is great, but cash is king.

HBombToo

I put 1 of these in my house along with an RO system in the kitchen. All I do is add salt...

http://www.rainsoft.com/products/pr_amazon.html

HBomb

PolkWannabie

Originally posted by Early B.
Otherwise, taxes will eat your investment alive.

Actually, there won't be ANY taxes on a gain of less than $500k for a married joint return and those numbers are likely to continue to be increased ...

Originally posted by Early B.
What would you rather have -- $200K in cash or $200K in equity?

That all depends. If I have $200k in equity that's being controlled by $20K of cash and I have the opportunity to get a return of 10% per year on the $200K, that equates to more like 100% return on the $20k of cash that I'm controlling the investment with.

Early B.

Actually, there won't be ANY taxes on a gain of less than $500k for a married joint return and those numbers are likely to continue to be increased ...

That's only half true. You will be taxed unless you roll over your gain.

That all depends. If I have $200k in equity that's being controlled by $20K of cash and I have the opportunity to get a return of 10% per year on the $200K, that equates to more like 100% return on the $20k of cash that I'm controlling the investment with.

My point exactly. The 10% per year return is in CASH, not in equity. If invested properly, cash creates more cash, as your example clearly illustrates.

PolkWannabie

Originally posted by Early B.
That's only half true. You will be taxed unless you roll over your gain.

My point exactly. The 10% per year return is in CASH, not in equity. If invested properly, cash creates more cash, as your example clearly illustrates.

Hey ... If you'd rather have 10% of $20K in cash instead of 10% of $200K in equity then be my guest. Personally I love having leverage of 10 x 1 with almost no risk.

PolkWannabie

Regarding the tax consequences ... You need to catch up with the tax law changes that occured in 1997 ...

Primary Residence Sales:

If you are selling your primary personal residence, you don't need to use the services of a neutral third party, such as Tax Free Exchange Corporation. As of May 7, 1997, the rules for sales of primary residences were changed dramatically. However, many people, including some tax and real estate professionals, are unaware of the changes.

The long-lived rules requiring reinvestment of sales proceeds were completely repealed. Likewise, the once in a lifetime exclusion for sellers 55 & over was also eliminated.

In their place was instituted a new law allowing up to $250,000 of profit from the sale of a primary personal residence per person ($500,000 per couple) to be excluded from taxation. The full amount is available if the seller(s) used the home as their primary residence for at least two (2) years out of the five (5) years prior to the sale.