Reply to How much can we afford to spend on home?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Put down $100k and get a $900k house at historically low interest rates.  The $100k will give you a far greater return than any other investment as the house appreciates, even if a low amount.

No brainer.  [/quote]

In the long term, housing prices stay in tune with wage inflation.  That was not the case in the 2000's, but it is factually, true.  Do NOT consider your home as an "investment."  Your money is not working for you.  You are living in your money/debt.

Perhaps read a few books from the library before making the biggest financial commitment of your life.  I mean that very  seriously.  It's SOOO easy to get swept away by beautiful finishings and fixtures.  Please read up on "The Smartest Money Book You'll Ever Read" and "Your Money Ratios."  It's a weekend's worth of your time and it will save you thousands of dollars by giving you info to make good choices.  [/quote]

You make this comment a lot, but I disagree with your statement. You may think it's a more conservative investment, but it's still an investment. And some people will do much better than others.[/quote]

You can "disagree" with what I "think" -- but your disagreement is based on nothing more than your opinion.  The data hold otherwise.  You don't have to agree with me.  That's the beauty of knowing I'm right -- I have data and the support of people with PhD's in finance and ecomonics on my side.  So I don't really care whether you agree or disagree.  Not only am I right, but I'll also be richer for it!  Living well is the best revenge.  Enjoy![/quote]

Once again ignoring leverage. This PP would be right if home buying was 100% cash, like mutual funds normally are. But obviously most borrow. I.just bought an investment property. Lets say it cost $200k and the fmv is $200k (actually was a foreclosure so hopefully 30% under fmv). (And lets pretend the rent covers all expenses with no cash flow). I plan to keep it for 3 years. If it appreciates approx 3% a year, it will be worth around $220k in 3 years.  That is a lame investment compared to the stock market. But if you borrowed 80% at 3.5%, the $20k gain is on $40k cash.  Now the 3% annual return is more like 17%.

In my real situation, the house appraised for $180k, I bought for$130k, put $6k into it, had closing costs, rented it out in 3 days for $1400/ month. If I keep it 3 years, I guarantee it will destroy the dow Jones.[/quote]

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