Should I buy a house?
As I’ve shared in the past, my wife and I built our dream home about 3 and a half years ago…right at the height of the housing bubble here in Michigan (and across the US for that matter). Hind sight is always 20/20, but it sickens my some days to think of how many beautiful homes I could be buying TODAY, ON THE CHEAP, had I not went “house crazy” at the ripe old age of 26? We have a beautiful house that we will enjoy for years to come, Blah, Blah, Blah, is what we keep telling ourselves. This is fine, you live and learn! But the bottom line is that I dumped WAY too much of my dry powder into my home. If I had that cash now I can think of 5 places I would buy in a HEARTBEAT today for 75% off their rebuild price.
I tell you this story becuase I know there are some of you out there who are wondering if now is the time to buy your first home or to invest in foreclosures or whatever. I’m just saying that if I had a couple hundred grand liquid to invest for the long term, I’d be snatching up some of these deals in a minute. The demographics of the United States support my theory. Our populations is still growing at 1% or more per year. These fine folks are going to need a place to live. Supply and demand seems to suggest that values will be sightly higher in the future.
YOU ALWAYS MAKE YOUR MONEY ON THE BUY SIDE OF A TRANSACTION.
So knowing when to buy is very important. Now may be the time, I don’t know. But depending on where you live, it might make sense to talk to an expert and see if there are opportunities in your area!
Good luck, and do as I say, not as I do…because I probably moved into my house on the VERY DAY that the housing bubble burst! Crazy stuff. I thank the good Lord that we weren’t trying to FLIP anything. We would be up the creek baby!!!
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April 5th, 2009 at 3:07 pm
This is spot on TAM…. I recently wrote an article about the recession and about how the next one will be better - because I’ll be in a better place and more able to take advantage.
I’ve spent a lot of time lately thinking about owning rental properties. Because I’ve already cleaned up so many of my financial messes, it wouldn’t take many properties spinning off a couple hundred each to cover our living expenses. Buying those properties now, at the bottom, would only ensure my long term ability to generate that income - did someone say Financial Systems!
In this way, I very much share your angst. An ‘extra’ 100k cash would make this happen almost instantly.
In the meantime, I’ll take solice in knowing that I’m doing the right things and in knowing that I have a plan. I’ll enjoy and benefit from the up turn when it comes just like everyone else… but in the back recesses of my mind I’ll (perversely prehaps) be planning and preparing for the next recession… and I’ll strike with clarity and speed from a position of strength.
This recession is my training for the next… and the next one - in 10-12 years - will turn me into that millionarire!
Well, that’s the plan anyways!
Dave
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Almost Millionaire Reply:
April 5th, 2009 at 11:24 pm
Dave, You are fully focuses brother! You have to do the things today that set you up 10 or more years from now. We all are in whatever situation we are in, it doesn’t matter how we got here, what matters is where we are going!
Stick to the plan, it makes sense to me!
Almost Millionaires last blog post..Should I buy a house?
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April 5th, 2009 at 6:40 pm
I don’t think timing is the only thing to consider, its the amount of money, location and your length of holding. When I got my condos in Miami, I thought they were cheap enough and I had the ability to put down large down payments on foreclosures and immediately rent them out. Other properties in the area have gown lower in price, but I can kick myself for not waiting or enjoy what I have…I prefer the latter.
I have flipped a few units here and there and can say that not all areas are suffering from the shrinking economy. Right now I have two pre-construction condos in Toronto that just broke ground, both are up 15% or so from what I agreed to pay and if I opt to sell them in-trust.
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Almost Millionaire Reply:
April 5th, 2009 at 11:26 pm
Aman,
Great to hear that you are doing so well on the Toronto project! That is awesome. It’s good to know I have a contact who has the type of real estate experience that you do. I’m talking theory, you are actually making it happen! Very cool!
Almost Millionaires last blog post..Should I buy a house?
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April 5th, 2009 at 7:37 pm
Buying a house is a impulsive decision. Much more impulsive then buying a car. You buy a car, you know you will sell it for less. You buy a house, you will live there 24/7 and hence you get carried away. Good age there Brandon for getting your own house.
Make Money Onlines last blog post..Why Are Americans Obsessed With Apple?
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Almost Millionaire Reply:
April 6th, 2009 at 7:56 pm
Thanks friend!
Almost Millionaires last blog post..Pure Michigan
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April 6th, 2009 at 4:12 am
Yes, make your ROI on the buy-side of the transaction if you can…. unfortunately this doesn’t always work with “DRIPs”, but I get the point and agree with it. My best success there so far is buying some TD Bank when it was at its 52-low and since then it has sprung back well over 25%…. so nice!
If I had the cash for a downpayment, I might definitely buy a house right now and a vacant lot as well. I hope that whenever I am in the market for a house, prices will still be cheap… can it hold out another 5 years?:)
MoneyEnergys last blog post..US Dollar Collapse - More Looking For Answers and Updates
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Almost Millionaire Reply:
April 6th, 2009 at 3:00 pm
I sure hope it doesn’t hold out another 5 years. You could plan like Dave above…he is looking at being ready for the next recession in 10-12 years. He truly belives that history ALWAYS repeats itself.
Almost Millionaires last blog post..Should I buy a house?
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April 6th, 2009 at 11:31 am
I would be a millionaire more than once over if I knew what the future had in store for me. I had a Townhouse in a prominent area that didn’t do anything for over 10 years and then I sold it to do something else with the money and 6 mths later it’s value doubled. Same with my beach holiday home that I built. If I had only held onto those and other sets I could be retired and blogging just for the hell of it.
The thing is that if you worried about it you would get gray hairs. My attitude is, shit happens, and you get on with it.
Oh, if I had the money and I was in the state I would definitely buy. House prices over here haven’t gone down hardly at all.
Sires last blog post..Happy Easter To All My Blogging Mates And Getting Original Articles
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Almost Millionaire Reply:
April 6th, 2009 at 3:01 pm
Amazing,
You always know exactly what too do, when you are looking back at the past. What has kept house prices stronger in Aussie?
Almost Millionaires last blog post..Should I buy a house?
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Sire Reply:
April 6th, 2009 at 10:52 pm
Probably the fact that our banks weren’t as dumb as yours and so did not find themselves in such strife. It is amazing though how our share prices reflect your own even though the companies are in no way related, at least from what I can see.
Sires last blog post..Happy Easter To All My Blogging Mates And Getting Original Articles
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April 6th, 2009 at 1:18 pm
This is a question that lurks in the back of my mind. Being in the Midwest, it would be easy for my wife and I to find a lovely 80k house to purchase. The government would provide the 10% off sale, which we could use to make any repairs needed to be able to have equity once the market turned. I’d even make my own buyer’s commission as a real estate agent.
However, when I look at the big picture there are several downsides. First, I want to be out of debt, with an emergency fund, and a down payment, before I even think about it. Second, we will have to want to stay in place for at least 3-5 years (this currently isn’t the case).
So in the end I can fight off the urge, but I can’t completely eliminate it from the back of my mind!
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Almost Millionaire Reply:
April 6th, 2009 at 3:03 pm
Great insight Baker, you have to know that where you are buying is where you want to settle at least for 5 years, because that will give you time to hopefully have your investment cycle up a bit. I would probably hang tight too if I were in your shoes.
Almost Millionaires last blog post..Should I buy a house?
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April 6th, 2009 at 1:40 pm
Almost millionaire,
Sounds like you had some pretty damn unfortunate timing, and in fairness, you weren’t to know what was going to happen to the market.
Back in 2002/03, I gave serious consideration to the idea of buying a house in back in Australia (my home country). It was somewhat fortunate that I didn’t, because the following years saw my career go pear shaped and I had to endure considerable periods of unemployment. As a result, I would have been unable to meet committments with respect to mortgage payments and almost certainly would have wound up in insolvency.
Andrews last blog post..The shopkeeper who did not like ‘nigger money’
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Almost Millionaire Reply:
April 6th, 2009 at 3:05 pm
Ya, you can’t win them all! We are doing good though, praise be to God!
It is good to hear that you were able to avoid a tough situation in 02/03. Jobs come and go, but mortgage payments are due every month!
Almost Millionaires last blog post..Should I buy a house?
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April 6th, 2009 at 2:34 pm
It sucks but this type of thing happens. I feel this way with a lot of my stock purchases so I know how you’re feeling.
I’ve been debating a lot about buying a house as I’m graduating college this year with fifty grand in the bank and hate the idea of paying rent, which seems like flushing money down the toilet. Still, I just don’t know how long I want to stay in the area I’ll be working and so, am reluctant to purchase a house.
Thanks for the encouragement though!
Horace Browns last blog post..Chasing the Dream: The Case Story
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Almost Millionaire Reply:
April 6th, 2009 at 3:06 pm
I used to think of rent as flushing money down the tiolet too, but paying interest for the first couple of years on a mortgage is about the same, especially if you are not sure where you want to live after school.
Almost Millionaires last blog post..Should I buy a house?
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April 6th, 2009 at 4:02 pm
I’m not sure if you should go for it since you just recently built a new home, but I think people who are looking to be new homeowners should definitely go out and check out what they can get with the houses being much cheaper nowadays.
Funny Quotess last blog post..Out of Meet
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April 7th, 2009 at 1:27 am
There are some amazing deals here in Michigan. We are looking at $400,000 lake homes on the market for 250K
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April 7th, 2009 at 6:49 am
The recession is a great time to buy a house. Of course you need to have money (it’s hard to get a loan) but if you do, the choice is amazing and the prices are low because nobody buys houses nowadays.
Gry dla Dziecis last blog post..Kolorowanka Motyl
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Almost Millionaire Reply:
April 8th, 2009 at 12:35 am
Couldn’t agree with you more. I also wish that I was in a position to buy a lake property. They are even cheaper right now. That is the first thing to go when things get tight…that second home (that all of us crazy Americans think we must have:)
Almost Millionaires last blog post..Pure Michigan
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April 8th, 2009 at 2:00 am
Hi Brandon,
Bad luck for me, in my area houses have not suffer any downturn in price, they still pretty high. Even that some banks have some houses that cannot be paid by their owners and now they the bank is trying to sell but this guys in here are not lowering the price a bit. I guess this is totally different way of thinking from the US. Righ here they seem to be some sort of retards, lol. They cannot sold any single house and they keep the same price, non-sense, but thats the way banks behave in here.
Luis
Marketing Business Reviews last blog post..The First Day of My Freedom
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April 10th, 2009 at 1:09 pm
It is truly a beautiful home though. You’ll enjoy it for decades.
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April 20th, 2009 at 11:03 am
[...] Should I buy a house? The Almost Millionaire laments not waiting to buy a house.he encourages us to learn from his mistake, and buy low and sell high. [...]
May 2nd, 2009 at 4:32 am
Interesting article. Were did you got all the information from…
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May 15th, 2009 at 2:34 pm
Hello Guru! what enticed you to post this article? It was extremely interesting, especially since I’ve was searching for opinions on this subject since last week!
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October 3rd, 2009 at 11:52 am
Personally I’d hold off to see whether the economy suffers the ‘double bump’. There are key deals going through at the moment which will essentially test the levels of confidence in the business markets. The outcome of such deals will serve as a marker and the markets will act accordingly.
The point is despite much talk of ‘green shoots’ we may not be through the worst yet.
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November 20th, 2009 at 5:00 pm
A house is certainly a good investment, the mortgage repayments can be an absolute killer though.
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December 3rd, 2009 at 7:00 pm
If you have money and if you really like the house, why not. It’s recession, great time to do some investment
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December 24th, 2009 at 12:18 pm
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