Home Owner Thread

[Lee]

Yeah. Only thing is I doubt this is our forever house. I can see us outgrowing it if/when we have another kid. So I’m kind of watching how much money we put into it and trying to be strategic about it, but reality is it’s my first house and I don’t know shit.

Still better than renting. Makes me sick thinking of the money I wasted renting over the years.

Rent isnt always throwing away money. If you dont think you will own a house 5 years or more, most times in most areas, rent is fine or maybe better.

There are no hard rules, but if not your forever house, for the sake of G-d, stop doing up grades that you wont get the money out of. Maintenance is fine, but no more upgrades, tell your wife you rather wipe your ass with the money, lol.

I know it seems harsh, but only been doing mortgages 20 years, so i might know a thing or two. And force yourself to stay in the house a bit longer and make do with less space. Its amazing what happens when you hit the 5 year mark or so. Buy house at 200k, put 5% down, pay down mortgage to 175k in the 5 years or so, house now worth 240k. Sell house, walk with 228k after realtors (negotiate, no need to pay full 6%) and other closing costs, minus the 175k owed, that is a nice 53K on the next house. Now you put down 10%, get better MI, your credit is better because you had an on time mortgage on your credit, new house is 350k, so you are left with about 15k to put in bank. Start building savings on top of the 401k's you should have. Now do your upgrades, this is the house you will live in for 15-20 years or more.

But what do I know, only done about 4,000 mortgages including about 500 purchases, lol

 

[WellYouNeednt]

Wait 10 years or so, I know it seems like a long payoff, but when your mortgage is $1500 a month Still (or lower when rates drop), rent will be like $2300 for a similar house.

Home ownership is the long game, not the short game. If you are living in your forever home, the equity doesnt really matter, the fact you will have lower housing payments and the ability to payoff your mortgage and live for insurance and taxes only is a beautiful thing.

Most proper financial plans begin with a paid off house. Some more advanced ones plan on keeping a mortgage and investing the savings, but either way home ownership is one of the main keys to financial independence.

A big factor here is if homeowner upgrades are being made with cash or credit.

 

[Chris]

Rent isnt always throwing away money. If you dont think you will own a house 5 years or more, most times in most areas, rent is fine or maybe better.

There are no hard rules, but if not your forever house, for the sake of G-d, stop doing up grades that you wont get the money out of. Maintenance is fine, but no more upgrades, tell your wife you rather wipe your ass with the money, lol.

I know it seems harsh, but only been doing mortgages 20 years, so i might know a thing or two. And force yourself to stay in the house a bit longer and make do with less space. Its amazing what happens when you hit the 5 year mark or so. Buy house at 200k, put 5% down, pay down mortgage to 175k in the 5 years or so, house now worth 240k. Sell house, walk with 228k after realtors (negotiate, no need to pay full 6%) and other closing costs, minus the 175k owed, that is a nice 53K on the next house. Now you put down 10%, get better MI, your credit is better because you had an on time mortgage on your credit, new house is 350k, so you are left with about 15k to put in bank. Start building savings on top of the 401k's you should have. Now do your upgrades, this is the house you will live in for 15-20 years or more.

But what do I know, only done about 4,000 mortgages including about 500 purchases, lol

I think we’re done with big projects honestly. I think we’ll be here longer than 5 years but less than 10. The appliances were 30 years old and the hvac was on its last leg. Windows were original and ridiculously old. None of what we did was done willy nilly imo but I have had to talk my wife out of doing some things I don’t think we should be doing. I’d like to think what we’ve upgraded will add value when the time comes.

 

[AllforOne]

All I know is this shit is expensive. In one year of home ownership I’ve replaced the fridge, oven/stove, installed new torsion system on the garage doors, redone the entire front yard landscaping (did this myself so was cheap), just got new windows and now a new HVAC system.

I’m sure I’m missing some stuff. Who knows what I’ll do in year 2.

There’s always something with home ownership, sure - that said, you have had a real run of expensive repairs here, and that won’t last forever. You won’t need new windows for decades, or a new HVAC system for many years, et cetera. Year 2 may well be a year of no major expenses. It should even out over time.

And as @Lee suggested - you’re playing a game that is tilted in your favor. It just takes time. But you will build equity, and it will pay off in the long run.

 

[Lee]

A big factor here is if homeowner upgrades are being made with cash or credit.

Even if cash, its money you dont get back when you sell, very few upgrades actually add much money to value.

 

[bob2the2nd]

Even if cash, its money you dont get back when you sell, very few upgrades actually add much money to value.

I would add to that if one is doing their own work it's much easier to get the value back. But overall this is pretty spot on.

futhermore New HVAC, roof, windows add almost zero actual value to a house.

 

[Randolphkeys]

Even if cash, its money you dont get back when you sell, very few upgrades actually add much money to value.

Okay, which upgrades do add value?

I have to say, I put in vinyl flooring and updated the plumbing because I expect it to raise the value of my property.

 

[Lee]

Okay, which upgrades do add value?

I have to say, I put in vinyl flooring and updated the plumbing because I expect it to raise the value of my property.

Plumbing is maintenance, so is electric, really no value there, the biggest bang for the buck is painting, vinyl flooring is cheap and looks nice, so that works too. New kitchen or bathroom usually gets you m aye 50 cents on the dollar.

The issue is home flippers buy houses that you cant finance and use crews who do the work for much cheaper than we can get done. If you do the work yourself, sometimes you can add value, what I mean is add more than what you put in, but usually we make the upgrades to specific to our tastse spend to much money, and hosue value is based off size of the house and area more than anything else. Condition is broken down into 1-6 on an appraisal. 1 you will never see, 5,000 seen appraisal and I dont remember an appraiser giving 1. 5 and 6 are conditions that cant be financed, so dumps. So its 2-4 only and 2 is rare, high end home brand new or recently flipped, so 3 or 4. You can add value by turning your house at a 4 condition into a 3, but it really doesnt matter like people think,.

Basically realtors are idiots and have no clue how an appraisal actually works and its the appraisersthat value the home for us lenders, so their set of rules, and they are pretty narrow what they follow.

I hear it all the time, people think that a new roof adds value, but not really, if the roof isnt leaking then all you did was maintenance.

 

[bob2the2nd]

Plumbing is maintenance, so is electric, really no value there, the biggest bang for the buck is painting, vinyl flooring is cheap and looks nice, so that works too. New kitchen or bathroom usually gets you m aye 50 cents on the dollar.

The issue is home flippers buy houses that you cant finance and use crews who do the work for much cheaper than we can get done. If you do the work yourself, sometimes you can add value, what I mean is add more than what you put in, but usually we make the upgrades to specific to our tastse spend to much money, and hosue value is based off size of the house and area more than anything else. Condition is broken down into 1-6 on an appraisal. 1 you will never see, 5,000 seen appraisal and I dont remember an appraiser giving 1. 5 and 6 are conditions that cant be financed, so dumps. So its 2-4 only and 2 is rare, high end home brand new or recently flipped, so 3 or 4. You can add value by turning your house at a 4 condition into a 3, but it really doesnt matter like people think,.

Basically realtors are idiots and have no clue how an appraisal actually works and its the appraisersthat value the home for us lenders, so their set of rules, and they are pretty narrow what they follow.

I hear it all the time, people think that a new roof adds value, but not really, if the roof isnt leaking then all you did was maintenance.

You forgot the obvious way to add value to a house is to increase square footage. But that's not really practical for most places. I'll finish my basement when I go to leave this house for the added value, but I'll do the work.

 

[Lee]

You forgot the obvious way to add value to a house is to increase square footage. But that's not really practical for most places. I'll finish my basement when I go to leave this house for the added value, but I'll do the work.

A finished basement is not added square footage, once again, only square footage in the house has to be above grade. So you have to make an addition which is stupid expensive. even walk out basements with sliding doors and all is considered below grade.

Now when you look at an appraisal, there is a section whete the basmeent square footage is broken down into below grade finished and unfinished. so a finished basement adds value, as it becomes finished below grade square footage, but nowhere near the value of above grade square footage.

Basically take anything that a realtor sells you on and throw it out the window, they are fucking idiots, trust me. If a basement was properly sealed that you bought, sure you can add turn it into a finished basment pretty cheap, but if you spend more than 20k on a 200k house, you lost money. Another faux pas, turning a garage into living space. Sure you added living space, but you now lost a garage. You spent more than you gained becauise you now have to comp against houses with car ports or worse yet, just parking.

Think when you went to buy your house. Did the fact they had a brand new roof make you want to pay 15-20k more for the house? Of course not, you expect the roof of the house you are buying to be in good condition. How about a 4 bedroom now but no garage or car port? Probably looking at a different place. Sure some will like that, but most people these days wont buy a house without a garage and thus you just shrunk your market, less demand, so less value and thus the money you spent, wont come back.

Finished basement? Yes people like that, but its a finished basement, when the hosue comps to other houses, that basement wont be in the square footage. House appraises low, stupid realtor is shocked, because they sure used that extra square footage in the listing. Now you have to renegotiate, especially since most people arent puting like 30-40% down, so the lower of the purchase price or appraisal is used for LTV purposes (Loan to Value) and if you buying a house for 300k, puting 20% down and wanted to be at 80LTV but house appraised at 285k because finished basement not extra square footage, you are now at 85LTV and have PMI.

But if you were puting 5% down, now you are fucked, becasue you are at 100 LTV and to get the hosue without renegotiating, you need to put 30k down instead of 15k....but you ahve already fell in love with the house, kids have picked there rooms, wife was already nesting, so now you are figuring a way to reno and come up with extra money.

I avoid this thread for this reason, i get frustrated with what people think and what I actually know and I become the grumpy bear in here dashing peoples hopes and dreams.


Long story short, any upgrade you do to the house, make sure its for you, chances are you are a flipper with a flippers taste....and i mean one that makes money, not these weekend warrior flippers that lose money. Owning a house is awesome and makes great money, but thinking you are going to make a ton extra because you put a pool in, or speng 40k on a brand new kitchen just wont happen.

 

[Randolphkeys]

I avoid this thread for this reason, i get frustrated with what people think and what I actually know and I become the grumpy bear in here dashing peoples hopes and dreams.

I really appreciate your view as a professional in the field, Lee. It looks to me like the thread is popular with people about to be first-time home owners or people who just bought. We want to be excited or vent... or both. We also appreciate expert opinions and sage advice.

So about the 25 foot fountain of a nude age 50+ Jewish man I put in the front tree lawn... should I take your name off the pacard? I'm mostly worried about property value. Maybe keeping the name more vague would add value?

 

[Lee]

I really appreciate your view as a professional in the field, Lee. It looks to me like the thread is popular with people about to be first-time home owners or people who just bought. We want to be excited or vent... or both. We also appreciate expert opinions and sage advice.

So about the 25 foot fountain of a nude age 50+ Jewish man I put in the front tree lawn... should I take your name off the pacard? I'm mostly worried about property value. Maybe keeping the name more vague would add value?

If he is 75lbs over weight and hung like a tic tac, it will be the greatest tribute to me Have a sign posted as King Lee the Magnificant, and it will add atleast 100k in value.

 

[inliner311]

Plumbing is maintenance, so is electric, really no value there, the biggest bang for the buck is painting, vinyl flooring is cheap and looks nice, so that works too. New kitchen or bathroom usually gets you m aye 50 cents on the dollar.

The issue is home flippers buy houses that you cant finance and use crews who do the work for much cheaper than we can get done. If you do the work yourself, sometimes you can add value, what I mean is add more than what you put in, but usually we make the upgrades to specific to our tastse spend to much money, and hosue value is based off size of the house and area more than anything else. Condition is broken down into 1-6 on an appraisal. 1 you will never see, 5,000 seen appraisal and I dont remember an appraiser giving 1. 5 and 6 are conditions that cant be financed, so dumps. So its 2-4 only and 2 is rare, high end home brand new or recently flipped, so 3 or 4. You can add value by turning your house at a 4 condition into a 3, but it really doesnt matter like people think,.

Basically realtors are idiots and have no clue how an appraisal actually works and its the appraisersthat value the home for us lenders, so their set of rules, and they are pretty narrow what they follow.

I hear it all the time, people think that a new roof adds value, but not really, if the roof isnt leaking then all you did was maintenance.

The house next door was bought by a flipper. After seeing what they did and didn't address, I felt bad for the new buyer especially the price they paid for it.

The previous owner sold the house knowing it probably needed some big maintenance items done like the roof because of age and the garage roof/structure because of deterioration. The boiler was old and they were having some on going electrical issues they never could solve. It was priced accordingly.

None of these things were addressed by the flipper, just some cosmetic stuff which the flipper thought made the house look nicer. I see the new owner randomly just staring at different parts of the house, which I assume is just him finding issues on the exterior. He got up on a ladder to the garage roof one day, I was worried he would fall though.

I would never buy a house from a flipper. Not only from what I saw from the house next door but experiences from my friends that have bought from flippers.

 

[Lee]

The house next door was bought by a flipper. After seeing what they did and didn't address, I felt bad for the new buyer especially the price they paid for it.

The previous owner sold the house knowing it probably needed some big maintenance items done like the roof because of age and the garage roof/structure because of deterioration. The boiler was old and they were having some on going electrical issues they never could solve. It was priced accordingly.

None of these things were addressed by the flipper, just some cosmetic stuff which the flipper thought made the house look nicer. I see the new owner randomly just staring at different parts of the house, which I assume is just him finding issues on the exterior. He got up on a ladder to the garage roof one day, I was worried he would fall though.

I would never buy a house from a flipper. Not only from what I saw from the house next door but experiences from my friends that have bought from flippers.

It depends on the flipper, but generally I agree with you.

You made my point, they are not looking to deal with the things you cant see, they play to emotions, make the house look pretty. But the roof, boiler, and crap like that just dont add value, they are neccessary, but not value.

 

[bronko]

Put money into a house to make it into the home you want to live in. The financial aspect is important, but making it right for your lifestyle and something you are proud of is as important. And when you get to your longterm house, that financial stuff becomes less valuable. Your house is maybe your biggest investment but it's alot more than that. Your house can lose value proportionally if it's not kept up to date. If you plan on flipping, Lee's advice is good but it shouldn't stifle improvements that make the family happy.