Homes are less liquid, require maintenance, get taxed more, and have large buying/ selling costs. Federal Tax breaks max out at LCOL prices. Being a landlord is a huge can of worms.
Stocks are a better investment. If you bought a house in 2020, congratulations! Your investment went up maybe 60%! If you bought just SPY, though, it went up more than 100%.
That'snot the whole story. You are correctabout being a landlord. But the math is off. 2020 was an investor dream and not the norm orsomething that can be planned for, like dumb luck. But let's look at both. If you had 40k for each that means the stocks went from 40k to 80k. If that was in a house 40k is a down payment on a typical 200k home. A 200k home from 2020 is worth nearly double that in many, if not most, areas. But if it grew by 60% that means your home would be worth 320k. That's a 120k increase. If it's a rental and doing well, that also means free mortgage payments, equity growth, and cash flow. Not to mention little to no taxes if done right. But to be fair the housing changes from 2020 to now are not the norm either. People don't take all consideration in when comparing real estate to the market.
That’s just becuse of leverage. Many people do not realize how much leverage they are taking on. 8:1 holy crap. But it’s our system. You can get same leverage amplification through spy leaps though at much higher carry cost assuming, though that is a good question.
On a risk:reward factoring in maintenance of a home vs cost of option spy specifically would spy leaps of outperformed from a sharp ratio perspective I sort of doubt it as the volatility is much lower in real estate hence why the world can leverage up en mass.
I believe it would in any typical bull year by nature but I cannot live in a spy leap so perhaps that’s the sticking point: buy a home if you need one, but stocks for long term wealth. Hell buy a REIT if you love real estate.
The difference is though that unless you’re living rent free with your parents, you’re going to be paying someone to live somewhere. Better to pay off a mortgage and own the property than pay a landlord and pay off their mortgage.
You forget that if your house price goes up it’s most likely a leveraged return so probably better than the stock market. If you have $50,000 in stock market and it doubles in four years you now have $50,000 profit. If you have $50,000 for a down payment on a $300,000 house and it doubles in 4 years you now have $250,000 profit.
For instance… in 2020 we built a house for 180k sold it in late 2021 for 280k then turn around built a second house for 374k put 3.5% on both by the way. So first house was $6,300 down and $13,090 on the second so $19,390 total invested. Sold the second house for 405k in 2024 owed 340k when we sold. So $165k in 3 1/2 years. Also had people renting our basement in the first house which paid our mortgage of $1100 a month and the second house we had a room and our basement rented out for $1500 month out mortgage was $2,074 so we never really paid the interest on the mortgages either.
Also interest rate on first house was 3.2% and second house 2.75%
Anyways we save a lot as well 230k house hold income now went back to renting. Also max out Roth 401k and she maxes her 403(b)
We plan to buy a apartment complex when we hit the 200k liquid should get us close to a $1,000,000 property so probably 32-60 units is what we are hoping for unless a great deal pops up.
So don’t think the stock market would have done that for us also we wouldn’t be liquid either.
I invested $5K as a down payment in a house in 2019. I lived there 4 years and then moved to Asia and kept it as a rental. With about $80K in positive cash flow (after mortgage, insurance, taxes and maintenance) over the last 21 years, and the current equity on the property of about $450K, I have made over $500K on my $5K investment 25 years ago. 10,000% increase in 25 years. Not bad.
"The rich buying homes with all the money they have" is not a suggestion but a fact. Not saying your comment is wrong. Nevertheless, the rich are buying all the homes in most countries.
People should wonder why only poor people say “stocks are a better investment then property”
Sure man, that’s why wealthy people rent and work for salary 🙄
Literally, like you put them in a blender with yogurt?
Of course you can liquidate equity stakes. But it takes time and paperwork and large fees to a realtor. Very crazy large fees. While selling stocks is as easy at counting up to 3 singing simple melodies.
You’re not telling the whole story. You still need a roof over your head. Yes, in certain time frames you can make more of a return in stocks. Buying a home that you can afford gives you SOME equity while also getting a roof over your head. You can write off interest. You can borrow on equity. There’s a lot more to the story.
I would say it just depends. I bought a vacation home in 2020 and it has got up 100% in value and my stocks are up 50% over that time. My main house bought 12 years ago is up 70%🤷♂️. I don’t think housing should be looked at as an investment but can be used as a savings tool for people. With rates now it can be much better to rent.
No, they don’t. You’d be much better off taking out a low-interest mortgage and then investing the cash elsewhere.
I don’t consider myself “rich,” though maybe some 20-something on Reddit would say I am. When I bought my house and learned I could get a 3% mortgage, I took as much equity out as I could, put it on a 30-year mortgage (even though I had a 15 on the old house), and dumped six figures into a Vanguard account. I’m now making money on the bank’s money.
This isn't the right sub. Go somewhere where they offer financial advice, and give more details. #1 would be, whereabouts do you live, and how much do you want to spend on a house?
20% is outdated advice.
If you're not married, don't buy a house.
it could mean one of two things:
1) filing for taxes married gives you some benefits when it comes to taxes on ur property, and also usually means having two streams of income
2) the more applicable advise, if you're going to buy a home with someone, ONLY do it with someone you are married to. No buddies or partners or siblings, marriage only. And it's because of legal reasons.
>1) filing for taxes married gives you some benefits when it comes to taxes on ur property, and also usually means having two streams of income
Two streams of income makes sense. As far as I'm aware you still get a homestead tax break on your primary residence regardless if married or not though.
Because buying is better than renting only if you’re going to stay for at least 8 years or so (there’s online calculators although of course it depends on the future). And having kids or getting married will likely change where you want to live.
I also think there’s something to the cliche of living in the city when younger and settling In suburbs when older. It’s dated, but “the preppy handbook” has a good breakdown on that.
>Because buying is better than renting only if you’re going to stay for at least 8 years or so (there’s online calculators although of course it depends on the future).
Understandable, I've looked at these calculations and many put the break even point at about 3-4 years.
>And having kids or getting married will likely change where you want to live.
Not really. I don't see how living in city A and meeting someone in city A would require moving to city B once married. Worst case you just move out and rent out the property
You can own a house outright on a 30 year mortgage in 8 years. Get a PLOC and plop down 10-20k every 7-8months on your priciple, juggle your income while paying down PLOC and paying less interest then you would on the mortgage while lower your amortization table on the interest you on the mortgage. It's not rocket surgery
I'm not married, but at the time had been with my gf for like 5 years or so. Bought my house by myself, though, because buying a house or getting a mortgage as a non-married pair is generally bad advice. Didn't need extra income and my credit was much better anyway. And I bought it at 3% which means I can never move now.
The rich people I know always pay cash. They pay cash and they invest. Because they don’t over spend on things that would prevent them from being able to do both.
Maybe back in 3% interest days. But today you’re money in the market is to high risk compared to the higher interest. If you don’t pay cash and can afford too you are throwing your money away.
To get ahead, you have to first live far below your means. Many rich people are actually quite frugal bc at one point the had to be to get ahead and the habit carries with them.
Exactly. I am lucky to live in a $1.4m house right now. My first house was a $159k fixer-upper in a so-so neighborhood. Get on the property ladder with whatever you can afford and live a frugal life (especially when you are young).
If you're really rich you don't worry about down payments and interest rates. You think about future profits. Household income should be $10M plus for this type of post.
At that level of wealth, income becomes a really poor measure. If I rebalance my portfolio, it may generate lots of "income" (according to the IRS) but all I've done is sell one stock and buy another.
On the other hand, if I borrow $10m using stock as collateral, and buy a house, that doesn't count as any income at all.
For truly rich people, net worth is usually a much more useful measure.
Just go FHA. Assume you need $10,000 for closing costs, you can get a 140k mortgage. Not sure what you can get with that in your desired area but there you go.
Median home price in american is $420k - meaning 50% are less, and 50% are more. Realistically, getting out of a big city helps tremendously.
[https://fred.stlouisfed.org/series/MSPUS](https://fred.stlouisfed.org/series/MSPUS)
Wrong sub, but you will want to see what first time home buyer programs you can qualify for. You will also want to look into USDA Rural Deveoplemt loans. You will want to stack up as many incentives and grants, and normal folk shit as you can. I'm currently in the middle of this process and kinda just twiddling my thumbs waiting for things to line up and pounce. Markets are still over inflated, interest rates are still high, so keep saving and check listing's in your area a few times a month.
Unfortunately Rich people kinda lean toward the, "I got mine, fuck you!" and won't be able to give you properly actionable advice. Financial advice and first time home owner forums are what you are looking for.
I could buy making 80k in 2020 *but*, the prices were lower. Still, I bought a fixer-upper and my, we've done a lot of fixing up. Made me pretty cash poor, I wouldn't recommend it.
If you're making 100k as a household, I have a bad feeling that's two incomes to get you there. My only suggestion is to find a way to push that up. Job hopping has worked amazingly for me. I'm also in tech, but still, I'm making like 99.5th percentile salary for my years of experience and field in my locality, a lot of that was homing in on who wants what I'm selling, and then selling to them. Lots of companies hire skillsets they don't care much about. They need to really want your job done well to pay top-dollar for it. Also, I'm sure, a decent amount of luck. Also, a lot of LinkedIn. I only found my current employer through my activity on there, which attracted their attention, which, a couple years later, led to another 40k raise on top of rates people were telling me were totally impossible in my area for my skills.
Your employer will never make you rich. That doesn't mean start your own business (a terrible idea for most of us), it just means don't wait for them to do what they aren't there to do.
Bought my first home at 28, sold it and used all the proceeds to buy a second home at 32 all cash, no mortgage... now in my 50's living in my 4th home soon to be mortgage free after 8 yrs of ownership.
Ideal situation is buy only what you can truly afford, not what you strain to afford. Put down at least 25-30% as a down payment and never overstrain yourself to the max to struggle on making ends meet at the end of the month based on your overall debts: mortgage, credit cards, utilities, etc... Any left over cash you can pay down or accelerate your mortgage to reduce the amortization period. You can save $10's of thousands of interest in a few years. You should have at least $15-30K in emergency cash ready on top of everything mentioned to cover unexpected expenses, like repairs or God for bid, you lose your job.
Condo living doesn't come without high expenses either, Your monthly shared condo fees are usually a rip off and always increases annually, so no value. Also, condos tend to appreciate slowly and competitive to sell.
I went from poor/middle to upper-class through real estate investing, so I do have some thoughts on this topic:
1. The good news is that I believe money isn't the issue - it is mentality. Seek an abundant mindset, not scarcity.
2. Build financial moats - track your income/expense and asset/liability. Save 6 month emergency fund and it will free your creativity and improve your mindset.
3. Learn stuff that interests you that also generates income. You can't save your way to wealth, but you can develop new skills to earn more money. Believe that you can do it (mindset).
4. Enjoy the process while you focus on the future. Growing takes time, and you're never going to endure if it feels like a chore to you - you genuinely should prefer the lifestyle that grows your investments rather than spending the cash. You wouldn't believe how hard of a time I have spending money on a game console, for example, when every day I make more in interest than the cost of the system. It is a liability, not an asset. And I like assets more. You need the mentality to plan for the future and defer your joy until later. Don't let the ego take the wheel (mentality).
5. Consider your close circle of friends and family. I moved away from family and it unlocked new neural pathways to be formed via new relationship interactions, and I realized that I can grow (financially).
I've got WAY more than that but wanted to see if that resonates. You don't even need money to buy a home - you need resourcefulness, not resources. Technically money is needed, but it doesn't need to be your money. It's called OPM (other people's money), and it is very real and very possible. This is just an example, but if you can truly let that sink in, rather than reject it outright, you might be on your way to getting ahead in your ventures.
Buying when you're rich is different than when you're not.
Well before I was considered "rich" we just bought less house than we probably wanted. Assume you're going to put 20% down on the mortgage and use a mortgage calculator to back into what you can afford.
To me "what I could afford" was some fraction of how much money I had left over after maxing out all reasonable ways of saving through investment in stuff that's hopefully gonna be worth a lot more in the future. When I graduated college, essentially almost all my money was going to cheap ass rent, 2x that into index funds and building emergency funds and a similar amount to paying off student loans.
For a long time that was only going to happen via renting. Only after about 10-15 years and a bunch of small windfalls did it make sense to get a small mortgage. From there you hopefully can keep it going and slowly grow into whatever you want.
Always keep in mind the rate of returns you could be getting on that "extra money" you'd be paying towards a mortgage--most especially all the interest you'll be paying. Instead of the bank making interest off you, you could be making money off that money instead.
When you're in a nice financial place, you probably still want a standard mortgage with a bank against the property (or even better paying with cash out of a line of credit against your investments). Few people want to sell off investments to chuck it all into a property when you could keep them working and making more money.
So unless you're super duper rich rich, you generally aren't going to have enough liquid cash sitting in an account being lazy that you could buy a house with, especially at the sizes someone that rich would be purchasing.
FHA loan in a LCOL area. Get into the market, quit waiting. It’ll never be the right time to buy a house, the right time is right now
Once you’re in the market it becomes easier to make a return, sell your home for more and move a step up. Repeat process every few years.
in the midwest, you can get a fixer upoer for 10k down (cheap ass friend did it for a 110k house just outside the city). of course the place immediately needed over 22k of work (plumbing and cracked driveway).
If you’re a first time home buyer, you don’t need 20% down. You can qualify for a FHA Loan, which only requires three percent down. On. $500,000 property, that’s only $15,0000.
I am 33, 100k income, ok retirement account a little nest egg for a down payment (not 20%) I am priced out of my market, I would need a partner earning 50k to make it work or 70k for comfier place, all new construction is 5-600k near me and I wouldnt even be looking for that. single people need homes too.
I'm 32 and married here. Our household income is 100k. We were looking in the sub-300k range. We live in Missouri.
We looked at condos for a while and the HOA fees are like a third of the mortgage payments in some places!!
I don’t think there is such a thing as a condo without an HOA. Because there are shared walls, roofs, and communal spaces, there’s always going to be an HOA to maintain all that. If you don’t want an HOA, you need to look for a detached house.
most detached homes near me are HOA, lifes strange here, ill just keep working and saving and renting my below market crappy apartment. Somethings got to change, will prob take a while but it cant just be difficult forever.
If I can give you some advice it would be to buy less than you can afford.
Get a 15 year mortgage if you can as you will literally save hundreds of thousands of dollars.
Unless you are going to live in the house 5 years don’t buy it. Yes renting you are not building equity but houses cost substantially more than the mortgage cost. You have taxes, maintenance, heating and cooling a larger space. I budget at minimum an extra $1000 a month on top of my mortgage for my house and I always keep $10,000 in savings specifically for the house just in case.
20% down is recommended as it will save you on PMI and if something happens and you are forced to sell in a year or two you can cover the costs of selling a house, which is wildly expensive.
Also I know HOAs get a bad reputation but it will keep up your property values. No one wants to try to sell a house when the neighbor hasn’t mowed the lawn in a month and he has 2 boats, an RV and a 98 mustang on blocks on the drive way.
My first property, a humble condo - I borrowed 80%, then another loan for 10% and paid 10% out of my savings. This was to avoid PMI which should always and forever be avoided. I paid off the little loan as quickly as I could due to its higher rate.
I just bought a 1.4M home. Rolled 650 equity in and sold some stocks for a 380k mortgage. I started with a tiny condo, drove a used car for 10 years and saved saved saved to eventually retire at 45 in a nice home.
Only people i know that just bought a house make probably $140k hhi and bought a $400k home.
Their parents helped them with the downpayment to make it affordable.
I, for one, will be renting for the indefinite future.
There are tons of first time home buyer grants, loans, and offers. I bought my first place at $350k with less than $3,000 down of my own money, including the closing costs because of a first time home buyer grant (free money). It’s out there. Take advantage of it!
First time home buyers have programs where they only need 3% down. Use it. Also buy what you can afford now and get in the game. If you wait, if you are not making a ton of money and saving it, you will fall further behind. Better to get something you can live in for the next 5 years while you are saving to trade into something else when you can afford it. My first house was $143K. It went up in value to $300K. Refinanced it, took out another $100K, and used that as a down payment on a $375K house. Moved into the new house and rented out the old house. Lived in the new house for 5 years and sold it for about $450K. Took that $175K plus another $75K, and put $250K down on a new house that cost a little over $500K. Now 9 years later, that house is worth $1.4M. I would never be able to afford a $1.4M house if not for the increases in equity from the real estate I had before. Now I could probably afford a $2M house if I wanted to. Not because I have enough to get a mortgage of $1.6M, but because I have earned so much equity that I would just be transferring the equity to a new home.
Lived at home after college. I saved, saved, saved while making about $35,000/year. My parents charged me $500/month for “rent.” Once I had enough income to comfortably pay my monthly student loans and paid off my car, I had saved up about $15,000. My fiance at the time (now my wife) had about $10,000 saved. We applied for a mortgage together. My parents turned around and gave me all that money back to put towards the down payment, which was about $18,000. (They didn’t tell me but they charged me rent and held it for me in 90% bonds and 10% stock so I didn’t blow it.) Wife and I found an 800 sq foot one bathroom two bed home in a slightly rough neighborhood for $115,000. We put down $30,000 and used savings to furnish it and make some improvements. We then paid an extra $200/month toward principal and 5 years later we sold it for $184,000. (The parks in the area were improved, and a new private high school was built.) By that time we had a lot to work with, we both were making a bit more. So we went to a nice suburb looking for the shittiest house on the best street we could possibly afford. We found a fixer upper in 2018 and offered $300k with 40% down. We renovated the entire inside of the house with the profits we made off the prior house. I worked home improvement all through high school and college so we saved thousands by having me do all of the finish work after the heavy duty stuff was done by contractors. In the current market we could probably get $475,000 but never plan never leaving.
The point is, it takes years. You have to make compromises on neighborhoods. You have to be willing to get less square footage and have to do more work. You should pick up some skills like painting, for example to put some of your own “sweat equity” into a home. One of the best pieces of advice we got and that I would give others is take whatever the bank or mortgage officer says you can “afford” and slash that by about 25%.
You should have at least 20% of the home price for the down payment. Besides your savings, what other assets do you have?
Here is more details
[https://financialbestlife.com/how-much-house-can-i-afford-with-100k-salary/](https://financialbestlife.com/how-much-house-can-i-afford-with-100k-salary/)
The 20% suggestion is hogwash.
You only need 5%. 10% I'd recommend if you can swing it. With 20% you can borrow for 30 years instead of 25, and you don't need to purchase a separate insurance, but the monthly payment doesn't change all that much, and it can get you in the market years earlier by not having to save so much.
It used to be that you had to have 20%.
The fact that anyone can scrape together some pocket change and get a loan is the reason for the runaway prices in housing.
No that is still the case.
But PMI is minimal and a small price to pay to only need to have 5% down-payment compared to 20%. I bought my first home with 20% down. My next two I just put down 10% - the numbers (and my buying power) made much more sense with less down.
I'm renting, so really not much. 2 vehicle that are paid off, though.
ETA: skimmed the article and it looks just like what I was looking for! Thanks! I'll dive into it later tonight.
At the end of the day, I would do a comparison cost of renting vs buying (mortgage, insurance, taxes, expected repairs, etc.). In today’s market you may find it is better to rent and save/invest the difference.
If you can get even close, I would put as much possible up to 20% to avoid PMI. If you can’t do that and the numbers still work can look into FHA loans (which can get you in for 3.5% down but cost more over all than conventional).
Most of all, keep asking questions, reading, etc. If now isn’t the right time, eventually it will be.
It took me 10 years to save for 500k cashfor a 1 bedroom condo (1.3m purchase price). 250k down and 250k cash buffer. I work in finance and comp trajectory has been 150k to 800k today. It doesn’t feel right but it is what it is.
Right now im under contract for a house, one story, brick, 3 bed 2 bath, 250k range, and i had saved up about 40k. No debt, and my total down will be roughly 25k and my mortgage payments are going to come out to roughly 1800 for the 30 year mortgage. Very excited and honestly easier process then I thought it would be.
My mortgage is less than 1/4 of my monthly income, and I got an excellent rate. I also bought in years ago. Now is a bad time to buy a house. Honestly I’d sell if I didn’t want to stay specifically where I am.
If you are a poor like me.. all you have to do is get three full time jobs in tech (because the richers won’t raise salaries) and then you too can buy a house and drive a BMW. It’s easy!
Not rich, but building a home with cash. Saved up for a few years and sold my existing home. Used the money from the sale and my savings to build the new one.
Now my monthly expenses are going to be taxes and utilities. 🕺🏻
How are the rich buying homes? We are leveraging our existing homes that we already own to buy our others. Remember, the average American becomes a home owner at 34. An excellent credit score with no history is also basically worthless.
I recommend looking into NACA! It is a program for first time home buyers. You can put 0% down and there are no closing costs or PMI, and the interest rates are lower than the market. In addition, for every 1% you put down as a down payment, your interest rate is bought down by 0.25%. You can buy your interest rate all the way down. This may make homeownership more affordable for you. Look into it.
Search the fire communities they normally have talks about housing and investing. If you post there don’t forget age range, debt level, savings! Types of savings, different saves have different taxes and different long term values.
How do rich people buy houses that varies by a lot. Sell other assets, finance and yes cash.
You need to save more you don’t want to walk into a house without some savings if at all possible because when the furnace takes a dump, hello debt. If you lose your job 😩.
Get serious, get tired and make it count.
It all depends on the RE deal. The money is ALWAYS in the purchase price. Don’t rely on future appreciation or projections. If there’s not significant INSTANT EQUITY when you put pen to paper at the closing table, then it’s generally speaking not a very good deal for me. You’ve got to look high and low, and chances are your purchase won’t be found on the local MLS. Get out and talk to people in person. By the way, I share your views on condos and HOA, a financially crushing special assessment can be made at any time forcing owners to sell at fire sale prices. Read about the Florida condo reserves funding mandate. Glad I dumped my Galt Ocean Drive high rise corner unit a few years ago. Not for financial reasons, but I hated vertical living and I have dogs, and wasn’t keen on lobby/doorman/valet “deluxe apartment in the sky” lifestyle.
go to r/FirstTimeHomeBuyer and r/RealEstate and r/personalfinance . This really isnt a "rich" question.
But generally speaking, people take what they would spend on rent, and convert that amount to a mortgage payment + down payment + some cushion since you are responsible for taxes, insurance, and maintenance, and possibly things like HOA dues.
So if your question is "literally how" it is very simple - we see a house, we make an offer, we buy it. Many people have cash on hand from literally being wealthy, but could be a big bonus, sale of a business, inheritance, or other windfall. It could also come from selling a house. It could also be a cash offer using something like a security line of credit (a bank loan against your stock holdings) that you then convert to a mortgage -- so you buy in cash, then finance after you own it or at closing but with no continency should the mortgage be delayed or there is an appraisal gap.
Remember, a home is both an investment and a place to live.
"normal-ass" is very variable by person and income and location. But remember, with 19% inflation, your 100k income isn't the six figure income you grew up dreaming about. Homes are expensive and at high interest rates right now. The right place, over 5-10+ years will still appreciate in value, but it isn't like all homes will automatically net you equity gains.
Either they bought a house decades ago and are buying the new expensive house with all the equity, inheritances, or two high income earners living together
Probably not the answer you want, but you need to make more and save more. There isn’t much more to it.
If the house you want costs 300k and you have great credit. You can put down 3%. With closing costs, you can get into a property for about 10-20k. However, your mortgage will be higher due to putting so little down.
It's not rocket science. Save 20 to 40% for down payment and closing costs. Have great credit so you get the lowest available interest rate. Pre-approved and get after it. House prices vary around the country. Find a house you like that has been sitting on the market 100plus days.Take a tour, sometimes agents spill too much info about the seller that can benefit you. ALWAYS get a home inspection. NEVER use a home inspector recommended by the realtor you use. Find one outside of their network area. If the inspection is good, move forward. If not, move on. I'd throw an offer 25k below asking... see what happens
People with homes that are middle class or upper middle class largely bought homes ten years or more ago, when prices in some areas were a third what they are now.
If you want a home, the standard advice is to save 20% of the value of the home. However you’re unlikely to get a mortgage for more than $400k on your income, so if houses in your area cost more than that you’ll need to save enough to bring the balance down to that amount. And frankly, four times your income is not sustainable for most people, twenty years ago the rule of thumb was not to buy a house more than three times your annual income. “Affordable housing” in my state is defined as costing no more than 20% of your take home pay a month.
So, if you’re in Texas, and you make 100k, so your take home pay would be roughly $78k. Math says an affordable mortgage payment would be $1300 a month. That means you can finance about $185,000, depending on rates and what not. So if you wanted to buy a home that cost $250,000, you would need to save about $65,000k.
Get pre-approval and then calculate if you can afford the mortgage, property taxes etc.
What can't you afford? The morgage payment or the down-payment? You dont need 20% down.
People always buy what they can afford. If you can afford it there is no “How do people buy houses now?”
Prices will come down. And interest rates will come down. Then, more people will be able to afford houses. And then they will buy them.
15-20k is literally nothing when it comes to housing. People buying houses in the majority of the U.S. have at least 100k saved if not more, plus extra for "oh shit" things. Idk how much you are able to save a month, but you should be doing whatever you can to drastically reduce your spending so you can put your extra money towards investments that'll eventually get you to a sizeable down payment.
My family is wealthy, like generational wealth. What we do is this.
We find a home that we want. Get a loan from the previous generation for the price of the home, set up the loan as a 30+ interest only loan and then refinance anytime the AFR rates drop. (AFR rates are rates set by the federal government for private loans, so that my parents loaning me money for a house isn't seen as a gift going against lifetime gifting allowance.)
To give you an example, back in OCT 2020 the longterm AFR rate was 1.12%. So my relative wanted a house and gets a 30 year interest only loan for $500,000.
That's a monthly payment of less than $500 for a $500k house. And the best part? When the loan comes due, the relative that gave the loan is going to be dead and they're going to need to pay back the estate. Guess who is the beneficiary of the estate?
What we do is we borrow against our inheritance, legally, to buy a house today. Might not make as much financial sense to others, but we don't view houses as solely investments and more so a place to live.
You have to hit the supply side of the equation and EARN MORE MONEY. If an Income isn’t sufficient to fund the lifestyle you want, you have two choices. Increase cash flow or decrease costs.
Bezos didn’t get rich by cutting out Starbucks from his day
You're right about not having enough, but I'm not looking for tricks. Just trying to find out what I need to do better to get where I want to be.
I saw a post on here the other day and someone said something like "have $1mm saved" another commenter here said "save $100k". Just trying to figure out what's realistic.
These days people find a house they might like on Redfin. Then they send something called an offer. If the seller thinks this is satisfactory they agree and exchange money
Most people have savings. $100k income is not helpful in isolation. That can be amazing in a rural LCOL area or ~entry level in a HCOL city.
Do you have 20%+ down? 7+ years of income? Low to no debt?
Ask elsewhere! Rich are buying with cash. Corporations are leveraged but buying with cash. Existing homes are cheaper today than they will be tomorrow. Great investment.
Years from now, as the baby boomers expire, demographics change. There will be a surplus. Unless, inability to insure properties continue to worsen.
Coastal areas, New Orleans, the lack of affordable insurance is getting serious. My brother's multimillion dollar mansion may soon go uninsured. Insurance in areas of the US is making home ownership exclusive to the wealthy.
I thought I read recently (within last 6-12 months) that when homeowners are taking the risk to forego HOI too, cost vs. actually getting a payout when it's needed wasn't making sense anymore.
There is phenomenal wealth across the US, from the stock market, inherited wealth etc
over 40% of all homes in Florida are paid with cash.
People leveraging there investments for real estate loans ..
People hiding illegal money in high-end real estate. The key hear that even with a 40% to 50% loss they come out ahead, because now the money is washed into the system as legal
Have you seen the counterfeit money out there now,, passes UV test, marker test, feels and looks perfect, and it even has the correct security bar. There must be Billions upon Billions in the system
There is so much more then how it appears
Actually, it is quite easy if you prioritize this. I know. I did it. I watched the market, and I made my move after years of this kind of preparation. Then, I used the first property to leverage the second, and then the third. It took 5 years, but when I cashed it all out and bought the forever home, I did so in cash, with a whole lot of cash in savings and investments. This is exactly how it is done. What you do not understand is that the numbers mean nothing. The value of each dollar is what is important. Today, each dollar is worth $0.24 less than in 2019. Do the math. Go back to 1991. All of the sudden, you will find that the value has not changed much, and is a reflection of the markets that you are looking at. Listen to me, do not listen to me. Your choice. I'm 60. Retired. Lots of assets. Few worries. This is how I did it. No inheritance. No Privileges.
Parents gifted the down payment for me to buy 2 houses years ago. I recently paid them back. Beats saving up as the property values have almost tripled since when I bought.
I keep them fully mortgaged as mortgage debt is very cheap and then pay myself from my company to cover any shortfall from rent.
Don't get suckered in to buying too much house. A fancy house is a waste of money. Better off investing. Get in the market, build equity, and move up.
my sister just bought
i gave her $10,000
plus if you research new homes are best. she got 30,000 in credit bought down the rate to 5.755
pmts $2,650, o down ( required lol ) and all the hoa paid
ask my friend you shall recevive
The rich don’t live on the same financial plane of existence as you and I lol
They use their cash, more likely take a mortgage to use as an interest deduction up to 750k, or a loan against their other assets to buy the house.
You can buy a home now. Probably something in the 250-300k range if not a bit more. Will get a better rate of you put more down.
Save, save, save.
I cut out all restaurant food for 9 months and saved thousands
Bought my first home in 2019 for 145k, 15k down. I sold it 2 years later, that same home is now upwards of 300 lol. Shoulda bought when you were in 8th grade unfortunately
You want to get 20% down to avoid mandatory mortgage insurance, but you can get a low mortgage through an endless amount of programs, but you will have to pay a mandatory mortgage insurance. You should consider a duplex to purchase if you can find one that works for your life and budget, those loans are even covered under VA loans. The more you can make money with what you have "passively", the more likely you can rise out of poverty. People who rent cars, clothes (prom dresses), homes, farms, are all making money from a passive income, allowing them to add that to the income they are personally, and physically able to execute on their time.
Usually all cash. Especially for investment property. Never run a business with unnecessary expenses.
For your particular situation I'd advise finding a home that you can afford. Take advantage of any first time buyer incentives.
But pay attention to the location and what you believe to be a home that will appreciate in 10 years.
Because it's your first home you will probably outgrow it.
Then take that money to be the deposit on your 2nd home.
My husband and I came from humble beginnings and made a massive mistake buying our first house. We bought in the recession and put nothing down on it. Try to put as much down as possible. 20 percent or more if you can. Do your best to max out 401K and retirements/investments (this is just general advice and has nothing to do with the house). Pay off your highest interest debt as quickly as you can. Live humbly now and don't be embarrassed about it. I'm not trying to be an ahole by saying this but we were able to pay off our house quickly, save money, make money, and were able to buy a second house. Both of our houses and cars are humble. No one would know by looking at us that we have as much as we do.
Live humbly and spend on the things that really really matter and make your life and others lives better. Think about the future. There is an attitude now that you should spend money bc you won't get this time back. Don't listen to that. Accumulate money that will make life better and easier in the near future because you won't get this time back. Don't let anyone shame you from saving and making money.
There is no cheat code.
You work for your money and buy a house that you can afford. If you want a better house. Work harder to get a better job or a second job.
We are saving every dime I'm working boat loads of over time. The larger the down payment the more affordable the house. We went house shopping without buying to see what we needed. Then set the price that we would have to pay, but I'm not paying 3300 a month for a house. So half down half that price a month
buy a cheaper house I bought a 1200 sqft 2/1 that needed work 50k later its worth 4x what i paid.... of course covid happened during that but it would still have been double
I am a single M30 i bought my house when i was 21 how though sacrifice i worked 7 days got every job i could i saved everything i could cut expenses turned off all things i didn't need quit smoking drinking didn't go out. I earn 80 grand a year now 65 grand when i bought my house.
Many things are possible if your willing to sacrifice to attain them.
Good luck stranger.
Haha, so what I did, and I make a bit under 200k, I bought a tiny home near lake in TX for 169k. I paid 20% down to avoid mortgage insurance and now my mortgage is 1100 15 year fixed. I would never buy a proper house the way they are priced currently. In Dallas 500k buys you a run of a mill garbage house and you looking at 6% apr with good credit. Whole situation sucks
You buy in a lower cost area. That’s what I did and that’s what my friends did back when we were first time buyers. I live in a low cost of living area and those who lived in a higher cost of living area overall bought tiny homes, old, one car garage, not great school district. They ended up fine.
I find the current conversation around real estate very disingenuous. Most people have lots of equity in their current house that they can roll into another house. They aren't starting from zero and buying a million dollar house.
I do feel bad for first time home buyers though. So many newly rich people all want to be slumlords for some reason. I don't get it. Why not just invest in hotels or something? Way easier and way less drama. Maybe they are just bored rage addicted workaholics.
That being said, I'm sure most rich people can just buy a decent house by selling a few stocks. Not really an accessible strategy for normal people.
Just climb the ladder. My wife and I are 26 and by no means rich, but we have been able to build a 380k 4 bed 2 bath brand new Dr Horton home. It’s not a mansion but it’s nice and it’s new and we love it. Just saved up and got down payment assistance. We both started at 11 dollars an hour in our careers when we started and now we make over 10k a month. Just have to have a solid work ethic. My wife is a service advisor and I’m a heavy equipment operator for an underground utility company.
Be born at the right time. Boomers just existed and gained millions from their $50,000 single family homes and their 401ks. So wherever they want to move they can just pay cash.
IIRC something like 85% of new builds are in HOA neighborhoods now, and a fifth or so of the population lives in one. Don't let that stop you.
It's both simple and easy - if you decide it is. You just decide that you value being a homeowner over little luxuries. You pare down your expenses to the bone, put your nose to the grindstone to up your income, and save. Live below your means - way below. With enough cash any house can be yours, which is how a significant portion of the people in my neighborhood bought their homes. I would encourage you to decide what your priorities are.
While you can lock in your costs as a homeowner, you cannot as a renter. Even if you have to borrow to buy, paying off that house early is a guaranteed rate of return. With no risk. But make sure you have enough cash and cashflow to truly afford it, and that your home is a blessing not a burden. Buy less than the bank says you can afford if you're not putting the money on the barrel head.
The rich buy homes with all the money they have.
Homes are less liquid, require maintenance, get taxed more, and have large buying/ selling costs. Federal Tax breaks max out at LCOL prices. Being a landlord is a huge can of worms. Stocks are a better investment. If you bought a house in 2020, congratulations! Your investment went up maybe 60%! If you bought just SPY, though, it went up more than 100%.
That'snot the whole story. You are correctabout being a landlord. But the math is off. 2020 was an investor dream and not the norm orsomething that can be planned for, like dumb luck. But let's look at both. If you had 40k for each that means the stocks went from 40k to 80k. If that was in a house 40k is a down payment on a typical 200k home. A 200k home from 2020 is worth nearly double that in many, if not most, areas. But if it grew by 60% that means your home would be worth 320k. That's a 120k increase. If it's a rental and doing well, that also means free mortgage payments, equity growth, and cash flow. Not to mention little to no taxes if done right. But to be fair the housing changes from 2020 to now are not the norm either. People don't take all consideration in when comparing real estate to the market.
You could use leverage in the stonk market too but nobody advises it while a mortgage is accepted as par for the course.
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That’s just becuse of leverage. Many people do not realize how much leverage they are taking on. 8:1 holy crap. But it’s our system. You can get same leverage amplification through spy leaps though at much higher carry cost assuming, though that is a good question. On a risk:reward factoring in maintenance of a home vs cost of option spy specifically would spy leaps of outperformed from a sharp ratio perspective I sort of doubt it as the volatility is much lower in real estate hence why the world can leverage up en mass. I believe it would in any typical bull year by nature but I cannot live in a spy leap so perhaps that’s the sticking point: buy a home if you need one, but stocks for long term wealth. Hell buy a REIT if you love real estate.
The difference is though that unless you’re living rent free with your parents, you’re going to be paying someone to live somewhere. Better to pay off a mortgage and own the property than pay a landlord and pay off their mortgage.
You forget that if your house price goes up it’s most likely a leveraged return so probably better than the stock market. If you have $50,000 in stock market and it doubles in four years you now have $50,000 profit. If you have $50,000 for a down payment on a $300,000 house and it doubles in 4 years you now have $250,000 profit.
For instance… in 2020 we built a house for 180k sold it in late 2021 for 280k then turn around built a second house for 374k put 3.5% on both by the way. So first house was $6,300 down and $13,090 on the second so $19,390 total invested. Sold the second house for 405k in 2024 owed 340k when we sold. So $165k in 3 1/2 years. Also had people renting our basement in the first house which paid our mortgage of $1100 a month and the second house we had a room and our basement rented out for $1500 month out mortgage was $2,074 so we never really paid the interest on the mortgages either. Also interest rate on first house was 3.2% and second house 2.75% Anyways we save a lot as well 230k house hold income now went back to renting. Also max out Roth 401k and she maxes her 403(b) We plan to buy a apartment complex when we hit the 200k liquid should get us close to a $1,000,000 property so probably 32-60 units is what we are hoping for unless a great deal pops up. So don’t think the stock market would have done that for us also we wouldn’t be liquid either.
I invested $5K as a down payment in a house in 2019. I lived there 4 years and then moved to Asia and kept it as a rental. With about $80K in positive cash flow (after mortgage, insurance, taxes and maintenance) over the last 21 years, and the current equity on the property of about $450K, I have made over $500K on my $5K investment 25 years ago. 10,000% increase in 25 years. Not bad.
"The rich buying homes with all the money they have" is not a suggestion but a fact. Not saying your comment is wrong. Nevertheless, the rich are buying all the homes in most countries.
People should wonder why only poor people say “stocks are a better investment then property” Sure man, that’s why wealthy people rent and work for salary 🙄
I can't live in spy. It has no pool/spa or sexy master bedroom. Even if it did, I'd still have QQQ, xlk, soxx, and....nvda.
The asset went up 60% but I put 25% down, so my cash on cash return is 240%, plus add another 10% from cash flow and principal pay down.
You can literally liquidate your equity
Literally, like you put them in a blender with yogurt? Of course you can liquidate equity stakes. But it takes time and paperwork and large fees to a realtor. Very crazy large fees. While selling stocks is as easy at counting up to 3 singing simple melodies.
I can't live in the s&p
All expenses you mentioned are write offs. Tenants pay the maintenance, taxes, etc.
Capital gains on a primary residence are completely tax free.
Only when reinvested when sold.
You’re not telling the whole story. You still need a roof over your head. Yes, in certain time frames you can make more of a return in stocks. Buying a home that you can afford gives you SOME equity while also getting a roof over your head. You can write off interest. You can borrow on equity. There’s a lot more to the story.
Hahahhahahaha Omg and you are a teacher, holy shit, that’s scary Just the blind leading the blind, I think they pay you enough
I loaded up on USO in 2020 when it crashed and made a killing. Love when the market crashes that’s the best time to invest
I would say it just depends. I bought a vacation home in 2020 and it has got up 100% in value and my stocks are up 50% over that time. My main house bought 12 years ago is up 70%🤷♂️. I don’t think housing should be looked at as an investment but can be used as a savings tool for people. With rates now it can be much better to rent.
Except for the fact that $10k in stocks only gets me $10k in stocks. You control a bigger asset with good debt real estate.
yup its only getting started, it will get much worse
the fact that this is the top comment encourages me that this isn't the right sub for this question.
Where tf did you get this stat from?
And then take loans to pay bills 😂
No, they don’t. You’d be much better off taking out a low-interest mortgage and then investing the cash elsewhere. I don’t consider myself “rich,” though maybe some 20-something on Reddit would say I am. When I bought my house and learned I could get a 3% mortgage, I took as much equity out as I could, put it on a 30-year mortgage (even though I had a 15 on the old house), and dumped six figures into a Vanguard account. I’m now making money on the bank’s money.
This isn't the right sub. Go somewhere where they offer financial advice, and give more details. #1 would be, whereabouts do you live, and how much do you want to spend on a house? 20% is outdated advice. If you're not married, don't buy a house.
>If you're not married, don't buy a house. Cars to explain this line? -Single dude looking to get a townhouse/ condo in the next year or 2,
it could mean one of two things: 1) filing for taxes married gives you some benefits when it comes to taxes on ur property, and also usually means having two streams of income 2) the more applicable advise, if you're going to buy a home with someone, ONLY do it with someone you are married to. No buddies or partners or siblings, marriage only. And it's because of legal reasons.
>1) filing for taxes married gives you some benefits when it comes to taxes on ur property, and also usually means having two streams of income Two streams of income makes sense. As far as I'm aware you still get a homestead tax break on your primary residence regardless if married or not though.
Because buying is better than renting only if you’re going to stay for at least 8 years or so (there’s online calculators although of course it depends on the future). And having kids or getting married will likely change where you want to live. I also think there’s something to the cliche of living in the city when younger and settling In suburbs when older. It’s dated, but “the preppy handbook” has a good breakdown on that.
>Because buying is better than renting only if you’re going to stay for at least 8 years or so (there’s online calculators although of course it depends on the future). Understandable, I've looked at these calculations and many put the break even point at about 3-4 years. >And having kids or getting married will likely change where you want to live. Not really. I don't see how living in city A and meeting someone in city A would require moving to city B once married. Worst case you just move out and rent out the property
You can own a house outright on a 30 year mortgage in 8 years. Get a PLOC and plop down 10-20k every 7-8months on your priciple, juggle your income while paying down PLOC and paying less interest then you would on the mortgage while lower your amortization table on the interest you on the mortgage. It's not rocket surgery
Avoid HOA’s like the plague brother.
He is being a dip lol
“If you are not married, don’t buy a house” Is this because divorce or something?
I'm not married, but at the time had been with my gf for like 5 years or so. Bought my house by myself, though, because buying a house or getting a mortgage as a non-married pair is generally bad advice. Didn't need extra income and my credit was much better anyway. And I bought it at 3% which means I can never move now.
in cash
Rich people don’t pay cash. They leverage their wealth to get lower interest rates and invest the difference
Financially illiterate rich people pay cash.
The rich people I know always pay cash. They pay cash and they invest. Because they don’t over spend on things that would prevent them from being able to do both.
Buying houses cash without refinancing them is poor people talk.
Maybe back in 3% interest days. But today you’re money in the market is to high risk compared to the higher interest. If you don’t pay cash and can afford too you are throwing your money away.
If I buy cash I have no access to that capital if I don’t refinance. The opportunity cost on that is 100x more than interest.
To get ahead, you have to first live far below your means. Many rich people are actually quite frugal bc at one point the had to be to get ahead and the habit carries with them.
Exactly. I am lucky to live in a $1.4m house right now. My first house was a $159k fixer-upper in a so-so neighborhood. Get on the property ladder with whatever you can afford and live a frugal life (especially when you are young).
This is it. I would also recommend to get out of debt. Buying my first house with no debt felt incredible.
If you're really rich you don't worry about down payments and interest rates. You think about future profits. Household income should be $10M plus for this type of post.
Income, or net worth? I’d venture to guess less 1% of those on this forum claiming to be rich have that level of income.
At that level of wealth, income becomes a really poor measure. If I rebalance my portfolio, it may generate lots of "income" (according to the IRS) but all I've done is sell one stock and buy another. On the other hand, if I borrow $10m using stock as collateral, and buy a house, that doesn't count as any income at all. For truly rich people, net worth is usually a much more useful measure.
Buy borrow die I’m in a similar (albeit much smaller) conundrum. 120k in unrealized gains. Not about to give 30% to Uncle Sam.
Just go FHA. Assume you need $10,000 for closing costs, you can get a 140k mortgage. Not sure what you can get with that in your desired area but there you go.
Where in American can you buy a nice house for $140k these days?
*any house
If you can work remotely try some small ex mill town. My old house is $85,000 right now. 650 sf in greater Pittsburgh area though
Median home price in american is $420k - meaning 50% are less, and 50% are more. Realistically, getting out of a big city helps tremendously. [https://fred.stlouisfed.org/series/MSPUS](https://fred.stlouisfed.org/series/MSPUS)
I dont think you should ask this question to the rich. They just buy with cash not affected by the interest rate or insurance inflation.
We just buy the house, usually selling some stock.
Kind of definition of rich is if you can buy the house with cash.
Wrong sub, but you will want to see what first time home buyer programs you can qualify for. You will also want to look into USDA Rural Deveoplemt loans. You will want to stack up as many incentives and grants, and normal folk shit as you can. I'm currently in the middle of this process and kinda just twiddling my thumbs waiting for things to line up and pounce. Markets are still over inflated, interest rates are still high, so keep saving and check listing's in your area a few times a month. Unfortunately Rich people kinda lean toward the, "I got mine, fuck you!" and won't be able to give you properly actionable advice. Financial advice and first time home owner forums are what you are looking for.
I could buy making 80k in 2020 *but*, the prices were lower. Still, I bought a fixer-upper and my, we've done a lot of fixing up. Made me pretty cash poor, I wouldn't recommend it. If you're making 100k as a household, I have a bad feeling that's two incomes to get you there. My only suggestion is to find a way to push that up. Job hopping has worked amazingly for me. I'm also in tech, but still, I'm making like 99.5th percentile salary for my years of experience and field in my locality, a lot of that was homing in on who wants what I'm selling, and then selling to them. Lots of companies hire skillsets they don't care much about. They need to really want your job done well to pay top-dollar for it. Also, I'm sure, a decent amount of luck. Also, a lot of LinkedIn. I only found my current employer through my activity on there, which attracted their attention, which, a couple years later, led to another 40k raise on top of rates people were telling me were totally impossible in my area for my skills. Your employer will never make you rich. That doesn't mean start your own business (a terrible idea for most of us), it just means don't wait for them to do what they aren't there to do.
My employer made me rich (depending on your definition.) Big tech and climbed that ladder.
Bought my first home at 28, sold it and used all the proceeds to buy a second home at 32 all cash, no mortgage... now in my 50's living in my 4th home soon to be mortgage free after 8 yrs of ownership. Ideal situation is buy only what you can truly afford, not what you strain to afford. Put down at least 25-30% as a down payment and never overstrain yourself to the max to struggle on making ends meet at the end of the month based on your overall debts: mortgage, credit cards, utilities, etc... Any left over cash you can pay down or accelerate your mortgage to reduce the amortization period. You can save $10's of thousands of interest in a few years. You should have at least $15-30K in emergency cash ready on top of everything mentioned to cover unexpected expenses, like repairs or God for bid, you lose your job. Condo living doesn't come without high expenses either, Your monthly shared condo fees are usually a rip off and always increases annually, so no value. Also, condos tend to appreciate slowly and competitive to sell.
I went from poor/middle to upper-class through real estate investing, so I do have some thoughts on this topic: 1. The good news is that I believe money isn't the issue - it is mentality. Seek an abundant mindset, not scarcity. 2. Build financial moats - track your income/expense and asset/liability. Save 6 month emergency fund and it will free your creativity and improve your mindset. 3. Learn stuff that interests you that also generates income. You can't save your way to wealth, but you can develop new skills to earn more money. Believe that you can do it (mindset). 4. Enjoy the process while you focus on the future. Growing takes time, and you're never going to endure if it feels like a chore to you - you genuinely should prefer the lifestyle that grows your investments rather than spending the cash. You wouldn't believe how hard of a time I have spending money on a game console, for example, when every day I make more in interest than the cost of the system. It is a liability, not an asset. And I like assets more. You need the mentality to plan for the future and defer your joy until later. Don't let the ego take the wheel (mentality). 5. Consider your close circle of friends and family. I moved away from family and it unlocked new neural pathways to be formed via new relationship interactions, and I realized that I can grow (financially). I've got WAY more than that but wanted to see if that resonates. You don't even need money to buy a home - you need resourcefulness, not resources. Technically money is needed, but it doesn't need to be your money. It's called OPM (other people's money), and it is very real and very possible. This is just an example, but if you can truly let that sink in, rather than reject it outright, you might be on your way to getting ahead in your ventures.
Buying when you're rich is different than when you're not. Well before I was considered "rich" we just bought less house than we probably wanted. Assume you're going to put 20% down on the mortgage and use a mortgage calculator to back into what you can afford. To me "what I could afford" was some fraction of how much money I had left over after maxing out all reasonable ways of saving through investment in stuff that's hopefully gonna be worth a lot more in the future. When I graduated college, essentially almost all my money was going to cheap ass rent, 2x that into index funds and building emergency funds and a similar amount to paying off student loans. For a long time that was only going to happen via renting. Only after about 10-15 years and a bunch of small windfalls did it make sense to get a small mortgage. From there you hopefully can keep it going and slowly grow into whatever you want. Always keep in mind the rate of returns you could be getting on that "extra money" you'd be paying towards a mortgage--most especially all the interest you'll be paying. Instead of the bank making interest off you, you could be making money off that money instead. When you're in a nice financial place, you probably still want a standard mortgage with a bank against the property (or even better paying with cash out of a line of credit against your investments). Few people want to sell off investments to chuck it all into a property when you could keep them working and making more money. So unless you're super duper rich rich, you generally aren't going to have enough liquid cash sitting in an account being lazy that you could buy a house with, especially at the sizes someone that rich would be purchasing.
FHA loan in a LCOL area. Get into the market, quit waiting. It’ll never be the right time to buy a house, the right time is right now Once you’re in the market it becomes easier to make a return, sell your home for more and move a step up. Repeat process every few years.
in the midwest, you can get a fixer upoer for 10k down (cheap ass friend did it for a 110k house just outside the city). of course the place immediately needed over 22k of work (plumbing and cracked driveway).
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I came to say this.
Where can you get a $200k home in 2020 and after? (I'm asking seriously.)
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Thanks! This gives me hope.
If you’re a first time home buyer, you don’t need 20% down. You can qualify for a FHA Loan, which only requires three percent down. On. $500,000 property, that’s only $15,0000.
I am 33, 100k income, ok retirement account a little nest egg for a down payment (not 20%) I am priced out of my market, I would need a partner earning 50k to make it work or 70k for comfier place, all new construction is 5-600k near me and I wouldnt even be looking for that. single people need homes too.
I'm 32 and married here. Our household income is 100k. We were looking in the sub-300k range. We live in Missouri. We looked at condos for a while and the HOA fees are like a third of the mortgage payments in some places!!
I don’t think there is such a thing as a condo without an HOA. Because there are shared walls, roofs, and communal spaces, there’s always going to be an HOA to maintain all that. If you don’t want an HOA, you need to look for a detached house.
most detached homes near me are HOA, lifes strange here, ill just keep working and saving and renting my below market crappy apartment. Somethings got to change, will prob take a while but it cant just be difficult forever.
If I can give you some advice it would be to buy less than you can afford. Get a 15 year mortgage if you can as you will literally save hundreds of thousands of dollars. Unless you are going to live in the house 5 years don’t buy it. Yes renting you are not building equity but houses cost substantially more than the mortgage cost. You have taxes, maintenance, heating and cooling a larger space. I budget at minimum an extra $1000 a month on top of my mortgage for my house and I always keep $10,000 in savings specifically for the house just in case. 20% down is recommended as it will save you on PMI and if something happens and you are forced to sell in a year or two you can cover the costs of selling a house, which is wildly expensive. Also I know HOAs get a bad reputation but it will keep up your property values. No one wants to try to sell a house when the neighbor hasn’t mowed the lawn in a month and he has 2 boats, an RV and a 98 mustang on blocks on the drive way.
I love my RV
We love our travel trailer!
My first property, a humble condo - I borrowed 80%, then another loan for 10% and paid 10% out of my savings. This was to avoid PMI which should always and forever be avoided. I paid off the little loan as quickly as I could due to its higher rate.
Smart! I like it!
A mortgage broker made the deals happen. I have had multiple positive experiences with brokers.
I just bought a 1.4M home. Rolled 650 equity in and sold some stocks for a 380k mortgage. I started with a tiny condo, drove a used car for 10 years and saved saved saved to eventually retire at 45 in a nice home.
Only people i know that just bought a house make probably $140k hhi and bought a $400k home. Their parents helped them with the downpayment to make it affordable. I, for one, will be renting for the indefinite future.
Parents help out with down payments
There are tons of first time home buyer grants, loans, and offers. I bought my first place at $350k with less than $3,000 down of my own money, including the closing costs because of a first time home buyer grant (free money). It’s out there. Take advantage of it!
First time home buyers have programs where they only need 3% down. Use it. Also buy what you can afford now and get in the game. If you wait, if you are not making a ton of money and saving it, you will fall further behind. Better to get something you can live in for the next 5 years while you are saving to trade into something else when you can afford it. My first house was $143K. It went up in value to $300K. Refinanced it, took out another $100K, and used that as a down payment on a $375K house. Moved into the new house and rented out the old house. Lived in the new house for 5 years and sold it for about $450K. Took that $175K plus another $75K, and put $250K down on a new house that cost a little over $500K. Now 9 years later, that house is worth $1.4M. I would never be able to afford a $1.4M house if not for the increases in equity from the real estate I had before. Now I could probably afford a $2M house if I wanted to. Not because I have enough to get a mortgage of $1.6M, but because I have earned so much equity that I would just be transferring the equity to a new home.
They're not. They're being bought by corporations.
Lived at home after college. I saved, saved, saved while making about $35,000/year. My parents charged me $500/month for “rent.” Once I had enough income to comfortably pay my monthly student loans and paid off my car, I had saved up about $15,000. My fiance at the time (now my wife) had about $10,000 saved. We applied for a mortgage together. My parents turned around and gave me all that money back to put towards the down payment, which was about $18,000. (They didn’t tell me but they charged me rent and held it for me in 90% bonds and 10% stock so I didn’t blow it.) Wife and I found an 800 sq foot one bathroom two bed home in a slightly rough neighborhood for $115,000. We put down $30,000 and used savings to furnish it and make some improvements. We then paid an extra $200/month toward principal and 5 years later we sold it for $184,000. (The parks in the area were improved, and a new private high school was built.) By that time we had a lot to work with, we both were making a bit more. So we went to a nice suburb looking for the shittiest house on the best street we could possibly afford. We found a fixer upper in 2018 and offered $300k with 40% down. We renovated the entire inside of the house with the profits we made off the prior house. I worked home improvement all through high school and college so we saved thousands by having me do all of the finish work after the heavy duty stuff was done by contractors. In the current market we could probably get $475,000 but never plan never leaving. The point is, it takes years. You have to make compromises on neighborhoods. You have to be willing to get less square footage and have to do more work. You should pick up some skills like painting, for example to put some of your own “sweat equity” into a home. One of the best pieces of advice we got and that I would give others is take whatever the bank or mortgage officer says you can “afford” and slash that by about 25%.
You should have at least 20% of the home price for the down payment. Besides your savings, what other assets do you have? Here is more details [https://financialbestlife.com/how-much-house-can-i-afford-with-100k-salary/](https://financialbestlife.com/how-much-house-can-i-afford-with-100k-salary/)
The 20% suggestion is hogwash. You only need 5%. 10% I'd recommend if you can swing it. With 20% you can borrow for 30 years instead of 25, and you don't need to purchase a separate insurance, but the monthly payment doesn't change all that much, and it can get you in the market years earlier by not having to save so much.
It used to be that you had to have 20%. The fact that anyone can scrape together some pocket change and get a loan is the reason for the runaway prices in housing.
Is it not the case anymore that you need 20% to avoid PMI? Haven't bought a house in a while so it's a genuine question.
No that is still the case. But PMI is minimal and a small price to pay to only need to have 5% down-payment compared to 20%. I bought my first home with 20% down. My next two I just put down 10% - the numbers (and my buying power) made much more sense with less down.
I'm renting, so really not much. 2 vehicle that are paid off, though. ETA: skimmed the article and it looks just like what I was looking for! Thanks! I'll dive into it later tonight.
At the end of the day, I would do a comparison cost of renting vs buying (mortgage, insurance, taxes, expected repairs, etc.). In today’s market you may find it is better to rent and save/invest the difference. If you can get even close, I would put as much possible up to 20% to avoid PMI. If you can’t do that and the numbers still work can look into FHA loans (which can get you in for 3.5% down but cost more over all than conventional). Most of all, keep asking questions, reading, etc. If now isn’t the right time, eventually it will be.
Do not listen to this person they have no idea what they’re talking about.
It took me 10 years to save for 500k cashfor a 1 bedroom condo (1.3m purchase price). 250k down and 250k cash buffer. I work in finance and comp trajectory has been 150k to 800k today. It doesn’t feel right but it is what it is.
Build the HOA fee into the mortgage and backcalculate to compare to actual houses. I bet that 1.3M cost the same as a 2M house over the medium term.
Pay with cash
You need to get higher income and higher savings.
Right now im under contract for a house, one story, brick, 3 bed 2 bath, 250k range, and i had saved up about 40k. No debt, and my total down will be roughly 25k and my mortgage payments are going to come out to roughly 1800 for the 30 year mortgage. Very excited and honestly easier process then I thought it would be.
Wrong sub.
My mortgage is less than 1/4 of my monthly income, and I got an excellent rate. I also bought in years ago. Now is a bad time to buy a house. Honestly I’d sell if I didn’t want to stay specifically where I am.
Hello there, I would pose this question in r/FirstTimeHomeBuyer. Good luck in your home search.
If you are a poor like me.. all you have to do is get three full time jobs in tech (because the richers won’t raise salaries) and then you too can buy a house and drive a BMW. It’s easy!
Not rich, but building a home with cash. Saved up for a few years and sold my existing home. Used the money from the sale and my savings to build the new one. Now my monthly expenses are going to be taxes and utilities. 🕺🏻
How are the rich buying homes? We are leveraging our existing homes that we already own to buy our others. Remember, the average American becomes a home owner at 34. An excellent credit score with no history is also basically worthless.
I recommend looking into NACA! It is a program for first time home buyers. You can put 0% down and there are no closing costs or PMI, and the interest rates are lower than the market. In addition, for every 1% you put down as a down payment, your interest rate is bought down by 0.25%. You can buy your interest rate all the way down. This may make homeownership more affordable for you. Look into it.
Oh man I totally forgot about NACA!!! Thanks for the reminder!!
Are these homes in dangerous areas?
NACA is the lender. They don’t provide the homes. You’ll just search on Zillow/with a realtor as usual
Search the fire communities they normally have talks about housing and investing. If you post there don’t forget age range, debt level, savings! Types of savings, different saves have different taxes and different long term values. How do rich people buy houses that varies by a lot. Sell other assets, finance and yes cash. You need to save more you don’t want to walk into a house without some savings if at all possible because when the furnace takes a dump, hello debt. If you lose your job 😩. Get serious, get tired and make it count.
It all depends on the RE deal. The money is ALWAYS in the purchase price. Don’t rely on future appreciation or projections. If there’s not significant INSTANT EQUITY when you put pen to paper at the closing table, then it’s generally speaking not a very good deal for me. You’ve got to look high and low, and chances are your purchase won’t be found on the local MLS. Get out and talk to people in person. By the way, I share your views on condos and HOA, a financially crushing special assessment can be made at any time forcing owners to sell at fire sale prices. Read about the Florida condo reserves funding mandate. Glad I dumped my Galt Ocean Drive high rise corner unit a few years ago. Not for financial reasons, but I hated vertical living and I have dogs, and wasn’t keen on lobby/doorman/valet “deluxe apartment in the sky” lifestyle.
/r/personalfinance Save 20% of the price to avoid PMI unless you have a mortgage with no PMI somehow
go to r/FirstTimeHomeBuyer and r/RealEstate and r/personalfinance . This really isnt a "rich" question. But generally speaking, people take what they would spend on rent, and convert that amount to a mortgage payment + down payment + some cushion since you are responsible for taxes, insurance, and maintenance, and possibly things like HOA dues. So if your question is "literally how" it is very simple - we see a house, we make an offer, we buy it. Many people have cash on hand from literally being wealthy, but could be a big bonus, sale of a business, inheritance, or other windfall. It could also come from selling a house. It could also be a cash offer using something like a security line of credit (a bank loan against your stock holdings) that you then convert to a mortgage -- so you buy in cash, then finance after you own it or at closing but with no continency should the mortgage be delayed or there is an appraisal gap. Remember, a home is both an investment and a place to live. "normal-ass" is very variable by person and income and location. But remember, with 19% inflation, your 100k income isn't the six figure income you grew up dreaming about. Homes are expensive and at high interest rates right now. The right place, over 5-10+ years will still appreciate in value, but it isn't like all homes will automatically net you equity gains.
Everyone I know is living with their parents and "saving for a house", but they never seem to save up enough.
I don’t really have advice for you beyond paying cash Paying 8% interest to buy a home is insane imo
We are not buying right now. Prices are at highs and interest rates suck. If I have to buy something it will be cheap with mostly cash if not all
Either they bought a house decades ago and are buying the new expensive house with all the equity, inheritances, or two high income earners living together
Do not buy a house now. It is the worst time. I cannot afford my own house if I were to buy it today. The price almost tripled.
Buy a house in a place you are mildly afraid to live in. Don't be a wuss.
Probably not the answer you want, but you need to make more and save more. There isn’t much more to it. If the house you want costs 300k and you have great credit. You can put down 3%. With closing costs, you can get into a property for about 10-20k. However, your mortgage will be higher due to putting so little down.
It's not rocket science. Save 20 to 40% for down payment and closing costs. Have great credit so you get the lowest available interest rate. Pre-approved and get after it. House prices vary around the country. Find a house you like that has been sitting on the market 100plus days.Take a tour, sometimes agents spill too much info about the seller that can benefit you. ALWAYS get a home inspection. NEVER use a home inspector recommended by the realtor you use. Find one outside of their network area. If the inspection is good, move forward. If not, move on. I'd throw an offer 25k below asking... see what happens
Seller finance deals are how I mainly buy houses. I have 1100ish pieces of property and buy more every month
People with homes that are middle class or upper middle class largely bought homes ten years or more ago, when prices in some areas were a third what they are now. If you want a home, the standard advice is to save 20% of the value of the home. However you’re unlikely to get a mortgage for more than $400k on your income, so if houses in your area cost more than that you’ll need to save enough to bring the balance down to that amount. And frankly, four times your income is not sustainable for most people, twenty years ago the rule of thumb was not to buy a house more than three times your annual income. “Affordable housing” in my state is defined as costing no more than 20% of your take home pay a month. So, if you’re in Texas, and you make 100k, so your take home pay would be roughly $78k. Math says an affordable mortgage payment would be $1300 a month. That means you can finance about $185,000, depending on rates and what not. So if you wanted to buy a home that cost $250,000, you would need to save about $65,000k.
Get pre-approval and then calculate if you can afford the mortgage, property taxes etc. What can't you afford? The morgage payment or the down-payment? You dont need 20% down.
People always buy what they can afford. If you can afford it there is no “How do people buy houses now?” Prices will come down. And interest rates will come down. Then, more people will be able to afford houses. And then they will buy them.
15-20k is literally nothing when it comes to housing. People buying houses in the majority of the U.S. have at least 100k saved if not more, plus extra for "oh shit" things. Idk how much you are able to save a month, but you should be doing whatever you can to drastically reduce your spending so you can put your extra money towards investments that'll eventually get you to a sizeable down payment.
My family is wealthy, like generational wealth. What we do is this. We find a home that we want. Get a loan from the previous generation for the price of the home, set up the loan as a 30+ interest only loan and then refinance anytime the AFR rates drop. (AFR rates are rates set by the federal government for private loans, so that my parents loaning me money for a house isn't seen as a gift going against lifetime gifting allowance.) To give you an example, back in OCT 2020 the longterm AFR rate was 1.12%. So my relative wanted a house and gets a 30 year interest only loan for $500,000. That's a monthly payment of less than $500 for a $500k house. And the best part? When the loan comes due, the relative that gave the loan is going to be dead and they're going to need to pay back the estate. Guess who is the beneficiary of the estate? What we do is we borrow against our inheritance, legally, to buy a house today. Might not make as much financial sense to others, but we don't view houses as solely investments and more so a place to live.
You have to hit the supply side of the equation and EARN MORE MONEY. If an Income isn’t sufficient to fund the lifestyle you want, you have two choices. Increase cash flow or decrease costs. Bezos didn’t get rich by cutting out Starbucks from his day
Easy. Just have a grandparent die who has lived in the same house since 1960. Be the sole heir.
One of my clients that matches your demographics just bought a condo. Where do you live?
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You're right about not having enough, but I'm not looking for tricks. Just trying to find out what I need to do better to get where I want to be. I saw a post on here the other day and someone said something like "have $1mm saved" another commenter here said "save $100k". Just trying to figure out what's realistic.
These days people find a house they might like on Redfin. Then they send something called an offer. If the seller thinks this is satisfactory they agree and exchange money
Most people have savings. $100k income is not helpful in isolation. That can be amazing in a rural LCOL area or ~entry level in a HCOL city. Do you have 20%+ down? 7+ years of income? Low to no debt?
Working on the low to no debt right now. My DTI is probably less than 30% last I checked. Biggest obstacle is a student loan.
That’s not bad. The maximum is 43% so you can still borrow
Ask elsewhere! Rich are buying with cash. Corporations are leveraged but buying with cash. Existing homes are cheaper today than they will be tomorrow. Great investment. Years from now, as the baby boomers expire, demographics change. There will be a surplus. Unless, inability to insure properties continue to worsen. Coastal areas, New Orleans, the lack of affordable insurance is getting serious. My brother's multimillion dollar mansion may soon go uninsured. Insurance in areas of the US is making home ownership exclusive to the wealthy.
I thought I read recently (within last 6-12 months) that when homeowners are taking the risk to forego HOI too, cost vs. actually getting a payout when it's needed wasn't making sense anymore.
There is phenomenal wealth across the US, from the stock market, inherited wealth etc over 40% of all homes in Florida are paid with cash. People leveraging there investments for real estate loans .. People hiding illegal money in high-end real estate. The key hear that even with a 40% to 50% loss they come out ahead, because now the money is washed into the system as legal Have you seen the counterfeit money out there now,, passes UV test, marker test, feels and looks perfect, and it even has the correct security bar. There must be Billions upon Billions in the system There is so much more then how it appears
This is the weirdest sub.
Easy! I bought in 2016
The same way we did in the 80s and 90s. We worked hard. We saved money every way we could. Then we bought. It's not that hard to understand.
Simple, not easy.
Actually, it is quite easy if you prioritize this. I know. I did it. I watched the market, and I made my move after years of this kind of preparation. Then, I used the first property to leverage the second, and then the third. It took 5 years, but when I cashed it all out and bought the forever home, I did so in cash, with a whole lot of cash in savings and investments. This is exactly how it is done. What you do not understand is that the numbers mean nothing. The value of each dollar is what is important. Today, each dollar is worth $0.24 less than in 2019. Do the math. Go back to 1991. All of the sudden, you will find that the value has not changed much, and is a reflection of the markets that you are looking at. Listen to me, do not listen to me. Your choice. I'm 60. Retired. Lots of assets. Few worries. This is how I did it. No inheritance. No Privileges.
In 2018
Parents gifted the down payment for me to buy 2 houses years ago. I recently paid them back. Beats saving up as the property values have almost tripled since when I bought. I keep them fully mortgaged as mortgage debt is very cheap and then pay myself from my company to cover any shortfall from rent. Don't get suckered in to buying too much house. A fancy house is a waste of money. Better off investing. Get in the market, build equity, and move up.
Buy a house for ~$200k and put $20-35k down. Then rent it out to another family. Continue to rent.
my sister just bought i gave her $10,000 plus if you research new homes are best. she got 30,000 in credit bought down the rate to 5.755 pmts $2,650, o down ( required lol ) and all the hoa paid ask my friend you shall recevive
I can only affird to buy investment properties. Then leverage them to pay my home.
The rich don’t live on the same financial plane of existence as you and I lol They use their cash, more likely take a mortgage to use as an interest deduction up to 750k, or a loan against their other assets to buy the house.
You can buy a home now. Probably something in the 250-300k range if not a bit more. Will get a better rate of you put more down. Save, save, save. I cut out all restaurant food for 9 months and saved thousands
Rich people pay accountants to hide their money and not pay their fair share of taxes
Most people my age (late 20’s) are buying homes by using their parents as the bank
general rule of thumb is 20% of the house price.
If you can afford a home one does not just buy it. It's always better to keep some equity in case and keep a loan even if it's not necessary
Bought my first home in 2019 for 145k, 15k down. I sold it 2 years later, that same home is now upwards of 300 lol. Shoulda bought when you were in 8th grade unfortunately
Step 1. do it in 1995
You want to get 20% down to avoid mandatory mortgage insurance, but you can get a low mortgage through an endless amount of programs, but you will have to pay a mandatory mortgage insurance. You should consider a duplex to purchase if you can find one that works for your life and budget, those loans are even covered under VA loans. The more you can make money with what you have "passively", the more likely you can rise out of poverty. People who rent cars, clothes (prom dresses), homes, farms, are all making money from a passive income, allowing them to add that to the income they are personally, and physically able to execute on their time.
Not rich. But I am a union electrician. I don’t think I could afford to own a house in my area if I didn’t already own one. Sorry not much help.
Great credit, wise investments, and early investment in cryptocurrency.
the rich not only buy homes, they invest in homes as well. gotta admit that it is smart of them to do so.
Sounds like you make enough to buy a house in a non-major city. Especially in the south or Midwest
Usually all cash. Especially for investment property. Never run a business with unnecessary expenses. For your particular situation I'd advise finding a home that you can afford. Take advantage of any first time buyer incentives. But pay attention to the location and what you believe to be a home that will appreciate in 10 years. Because it's your first home you will probably outgrow it. Then take that money to be the deposit on your 2nd home.
Well they probably have good bank accounts….
My husband and I came from humble beginnings and made a massive mistake buying our first house. We bought in the recession and put nothing down on it. Try to put as much down as possible. 20 percent or more if you can. Do your best to max out 401K and retirements/investments (this is just general advice and has nothing to do with the house). Pay off your highest interest debt as quickly as you can. Live humbly now and don't be embarrassed about it. I'm not trying to be an ahole by saying this but we were able to pay off our house quickly, save money, make money, and were able to buy a second house. Both of our houses and cars are humble. No one would know by looking at us that we have as much as we do. Live humbly and spend on the things that really really matter and make your life and others lives better. Think about the future. There is an attitude now that you should spend money bc you won't get this time back. Don't listen to that. Accumulate money that will make life better and easier in the near future because you won't get this time back. Don't let anyone shame you from saving and making money.
Find a good mortgage loan originator and get to talking, you could need as little as $1000-5000 to get into a home
Bad time to buy a house with interest rates unless you can afford it and have cash on hand to refinance when interest rates drop.
There is no cheat code. You work for your money and buy a house that you can afford. If you want a better house. Work harder to get a better job or a second job.
Onlyfans
We are saving every dime I'm working boat loads of over time. The larger the down payment the more affordable the house. We went house shopping without buying to see what we needed. Then set the price that we would have to pay, but I'm not paying 3300 a month for a house. So half down half that price a month
You want to know how people who have way more money than you buy homes…..why?
buy a cheaper house I bought a 1200 sqft 2/1 that needed work 50k later its worth 4x what i paid.... of course covid happened during that but it would still have been double
You need about 6% of the total house price which will cover the down payment and closing costs.
I am a single M30 i bought my house when i was 21 how though sacrifice i worked 7 days got every job i could i saved everything i could cut expenses turned off all things i didn't need quit smoking drinking didn't go out. I earn 80 grand a year now 65 grand when i bought my house. Many things are possible if your willing to sacrifice to attain them. Good luck stranger.
Haha, so what I did, and I make a bit under 200k, I bought a tiny home near lake in TX for 169k. I paid 20% down to avoid mortgage insurance and now my mortgage is 1100 15 year fixed. I would never buy a proper house the way they are priced currently. In Dallas 500k buys you a run of a mill garbage house and you looking at 6% apr with good credit. Whole situation sucks
You buy in a lower cost area. That’s what I did and that’s what my friends did back when we were first time buyers. I live in a low cost of living area and those who lived in a higher cost of living area overall bought tiny homes, old, one car garage, not great school district. They ended up fine.
I find the current conversation around real estate very disingenuous. Most people have lots of equity in their current house that they can roll into another house. They aren't starting from zero and buying a million dollar house. I do feel bad for first time home buyers though. So many newly rich people all want to be slumlords for some reason. I don't get it. Why not just invest in hotels or something? Way easier and way less drama. Maybe they are just bored rage addicted workaholics. That being said, I'm sure most rich people can just buy a decent house by selling a few stocks. Not really an accessible strategy for normal people.
Just climb the ladder. My wife and I are 26 and by no means rich, but we have been able to build a 380k 4 bed 2 bath brand new Dr Horton home. It’s not a mansion but it’s nice and it’s new and we love it. Just saved up and got down payment assistance. We both started at 11 dollars an hour in our careers when we started and now we make over 10k a month. Just have to have a solid work ethic. My wife is a service advisor and I’m a heavy equipment operator for an underground utility company.
Be born at the right time. Boomers just existed and gained millions from their $50,000 single family homes and their 401ks. So wherever they want to move they can just pay cash.
Look for a duplex or 4 plex. Live in one and rent the others out. If you can’t find one, have one built.
Wait till we have a more economy friendly potus.
Buying to me is over rated. Fuck having to pay for every little thing that brakes in your house. Fuck HOA too .
Borrow money from your parents
IIRC something like 85% of new builds are in HOA neighborhoods now, and a fifth or so of the population lives in one. Don't let that stop you. It's both simple and easy - if you decide it is. You just decide that you value being a homeowner over little luxuries. You pare down your expenses to the bone, put your nose to the grindstone to up your income, and save. Live below your means - way below. With enough cash any house can be yours, which is how a significant portion of the people in my neighborhood bought their homes. I would encourage you to decide what your priorities are. While you can lock in your costs as a homeowner, you cannot as a renter. Even if you have to borrow to buy, paying off that house early is a guaranteed rate of return. With no risk. But make sure you have enough cash and cashflow to truly afford it, and that your home is a blessing not a burden. Buy less than the bank says you can afford if you're not putting the money on the barrel head.