4 ms·

I agree and disagree. On the one hand, yes, you're right that the repair expenses can be a big deal. If you don't want anything but the basics for the technolo

I agree and disagree. On the one hand, yes, you're right that the repair expenses can be a big deal. If you don't want anything but the basics for the technology in your home, sometimes a home warranty can be a good option too but experiences vary significantly. On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer. It also depends on the phase of your life. Personally, I can't imagine having kids and dogs without a yard. If I didn't have kids or hadn't found an area where I really wanted to settle down, renting would make perfect sense. At the point that you find somewhere to spend the rest of your life, become a part of the community, get involved, make local friends, raise a family...home ownership makes a lot more sense. I'm a firm believer in outsourcing repetitive work. I've had a yard company since the first 2 months in my first house because the time trade off for me was more than worth it. You also will eventually learn your way around finding good and reliable contractors for the important things (plumbing, electrical, general repairs). Word of mouth is hugely important there. A lot of this stuff is pretty easy to learn too. I was pretty proud of myself the first time I disassembled a toilet to fix it. The more you learn, the less you need to call for help for small stuff.

rifung 7y ago
> On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer. If you can assume historical returns, renting is a financially superior choice. Well, assuming my math was correct. Both are big assumptions admittedly. The reason is that when you buy, while you are effectively saving by having your money go towards your home, over the long term on average home prices don't increase. On the other hand if you invest that down payment, it will compound. Note that the result is not the same if you buy a place with cash and rent it out to others, because in this case you can reinvest your returns. However if you buy a place to live in, for most people they need a mortgage and their theoretical savings can not be reinvested. Or in other words, O(c^n) is a superset of O(n) for c > 1.
- simplify 7y ago
  How do you invest a would-be down payment such that it compounds effectively?
  - rifung 7y ago
    Put it in an index fund like VTI and don't touch it or use one of the robo investor platforms like Wealthfront and Betterment.
- jandrese 7y ago
  > over the long term on average home prices don't increase. I assume you mean adjusted for inflation here? Even then that hasn't been true. The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house. So the returns from that downpayment you instead invested need to make up for the monthly loss in rent, plus the lack of an asset at the end of the process. It's not a small difference either. My current mortgage is $1250/month for a single family home. 13 years ago when I was renting the rates started at $1600/month for a tiny studio apartment unless you were willing to commute an hour each way. Rents have gone up in the meantime. You need to be making some baller returns on your downpayment if you're going to beat that. This comparison isn't entirely fair because the rental unit also included maintenance and groundskeeping. In my house I have to do all that work myself or hire someone. However, in the rental unit I had to pay for the utilities. This is a problem because the landlord will never replace something like an AC unit or a refrigerator with anything but the absolute cheapest and most expensive to run model. In my house when I replace it I have the option of buying the high efficiency model and enjoying the cost savings over the life of the unit. Plus when something breaks in my home I just fix it or go out immediately and hire someone to fix it. In the apartment you have to contact the landlord who then sits on it for two weeks before contacting his maintenance guy who only comes by once every couple of weeks to look at it and then order the part so maybe he can fix it on his next visit. In the meantime I'm freezing my ass off with no heat for all of January. I don't miss renting at all.
  - 7y ago
akcreek 7y ago
>On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. You'll have property taxes as well, which could be meaningful depending where you live. I was talking to one of my neighbors the other day who has lived in his home here in Seattle for over 40 years and he told me he is taking out a equity line of credit against his fully owned home to pay the property taxes as they've increased beyond what his retirement income can cover. Once the home gets older you get into more than just maintenance as well; you get into replacement. Replacing the appliances, roof, windows, mechanicals, etc can be lead to some very serious expenses. The same neighbor needs to replace his roof, which he also can't afford until he gets the credit line.
- nightski 7y ago
  You are absolutely correct. However, there are better ways to handle a roof replacement than incurring the $10k+ cost in one year. It's a foregone conclusion that you will need a new roof, just a matter of when. Best to start saving right away every month and include that in your overall cost calculation. It's much easier to pay for a roof over 25 years instead of all at once. Plus then you can use interest to your advantage.
enraged_camel 7y ago
>>Personally, I can't imagine having kids and dogs without a yard. Wow, you can’t? edit: laughing at all the downvoters. I think y'all should become more familiar with how people in other countries manage to live. sorry, but "i can't imagine having kids and dogs without a yard" sounds incredibly, I mean incredibly privileged and entitled.
- dang 7y ago
  Would you please stop posting flamebait comments to HN? There's no information here. We've asked you countless times to stop posting low-quality comments to HN. If you keep it up we are eventually going to ban you. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
6gvONxR4sf7o 7y ago
>On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. Property taxes on 3 bedroom place in san francisco are going to be at least $1,000 a month. Even when you've paid it off, it stays expensive.

rifung 7y ago

> On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. On a 30 year, you'll still pay a fortune over the life of the loan which makes the renting argument a lot closer. If you can assume historical returns, renting is a financially superior choice. Well, assuming my math was correct. Both are big assumptions admittedly. The reason is that when you buy, while you are effectively saving by having your money go towards your home, over the long term on average home prices don't increase. On the other hand if you invest that down payment, it will compound. Note that the result is not the same if you buy a place with cash and rent it out to others, because in this case you can reinvest your returns. However if you buy a place to live in, for most people they need a mortgage and their theoretical savings can not be reinvested. Or in other words, O(c^n) is a superset of O(n) for c > 1.

simplify 7y ago
How do you invest a would-be down payment such that it compounds effectively?
- rifung 7y ago
  Put it in an index fund like VTI and don't touch it or use one of the robo investor platforms like Wealthfront and Betterment.
jandrese 7y ago
> over the long term on average home prices don't increase. I assume you mean adjusted for inflation here? Even then that hasn't been true. The problem with renting is that you're still paying the mortgage, only in the renting case you're also paying the middleman who then pays the mortgage. This is why rent per month is higher than mortgage per month for the same house. So the returns from that downpayment you instead invested need to make up for the monthly loss in rent, plus the lack of an asset at the end of the process. It's not a small difference either. My current mortgage is $1250/month for a single family home. 13 years ago when I was renting the rates started at $1600/month for a tiny studio apartment unless you were willing to commute an hour each way. Rents have gone up in the meantime. You need to be making some baller returns on your downpayment if you're going to beat that. This comparison isn't entirely fair because the rental unit also included maintenance and groundskeeping. In my house I have to do all that work myself or hire someone. However, in the rental unit I had to pay for the utilities. This is a problem because the landlord will never replace something like an AC unit or a refrigerator with anything but the absolute cheapest and most expensive to run model. In my house when I replace it I have the option of buying the high efficiency model and enjoying the cost savings over the life of the unit. Plus when something breaks in my home I just fix it or go out immediately and hire someone to fix it. In the apartment you have to contact the landlord who then sits on it for two weeks before contacting his maintenance guy who only comes by once every couple of weeks to look at it and then order the part so maybe he can fix it on his next visit. In the meantime I'm freezing my ass off with no heat for all of January. I don't miss renting at all.
- 7y ago

akcreek 7y ago

>On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. You'll have property taxes as well, which could be meaningful depending where you live. I was talking to one of my neighbors the other day who has lived in his home here in Seattle for over 40 years and he told me he is taking out a equity line of credit against his fully owned home to pay the property taxes as they've increased beyond what his retirement income can cover. Once the home gets older you get into more than just maintenance as well; you get into replacement. Replacing the appliances, roof, windows, mechanicals, etc can be lead to some very serious expenses. The same neighbor needs to replace his roof, which he also can't afford until he gets the credit line.

nightski 7y ago
You are absolutely correct. However, there are better ways to handle a roof replacement than incurring the $10k+ cost in one year. It's a foregone conclusion that you will need a new roof, just a matter of when. Best to start saving right away every month and include that in your overall cost calculation. It's much easier to pay for a roof over 25 years instead of all at once. Plus then you can use interest to your advantage.

enraged_camel 7y ago

>>Personally, I can't imagine having kids and dogs without a yard. Wow, you can’t? edit: laughing at all the downvoters. I think y'all should become more familiar with how people in other countries manage to live. sorry, but "i can't imagine having kids and dogs without a yard" sounds incredibly, I mean incredibly privileged and entitled.

dang 7y ago
Would you please stop posting flamebait comments to HN? There's no information here. We've asked you countless times to stop posting low-quality comments to HN. If you keep it up we are eventually going to ban you. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

6gvONxR4sf7o 7y ago

>On the flip side though, after my 15 year mortgage is up I'm not going to pay another dime outside of maintenance on this thing. Property taxes on 3 bedroom place in san francisco are going to be at least $1,000 a month. Even when you've paid it off, it stays expensive.