Comments on: Financial Peace University Part 5 – Tips on buying and selling real estate

By: iarenoob

iarenoob — Wed, 19 Sep 2007 15:33:39 +0000

I think if you are going to purchase a property investment you should also get insurance such as fire or flood. I don’t see it being a “forced savings” since if you do get a mortgage, you are putting a lot of money towards interest on the first half of the loan period. If you are able to find out how much to prepay on the principal then the interest can get waived. I agree with getting an inspection because sometimes there are some problems that you cannot find such as mold.. though you may be able to smell it. If you are looking to make some quick profit, you can flip the property.. buy it low fix it up and depending on your market you can either sell it low or sell high.

By: Investment purpose

Investment purpose — Tue, 18 Sep 2007 11:49:19 +0000

Good Post.This information is really beneficial for buying, selling and maintaining the property for investment purposes. Thanks for giving such valuable information.

By: Kathy

Kathy — Mon, 03 Sep 2007 21:51:49 +0000

I’ve always thought you shouldn’t live in your home when it’s for sale but many will tell you they sell quicker. It’s good to see my thought confirmed. I do not like going into lived in homes and do not want strangers lurking through mine while I’m here.

Good tips.

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By: Jill at housewifery.wordpress.com

Jill at housewifery.wordpress.com — Thu, 30 Aug 2007 00:49:55 +0000

This post and comments were perfect timing; they resonate with a recent decision my husband and I made e.g. to delay home ownership (…you’re welcome to view a quick video clip per above; it was fun to cut). Although I concur with the purchasing tips, it became clear that our overall fiscal health would be unstable if we bought our first home now. We live in downtown DC and walk to work (…sold car years ago to rid the budget of said payments). We’d have to liquidate our emergency reserves for the down/closing costs. So we’re holding tight for now.

By: MONEY BLUE BOOK

MONEY BLUE BOOK — Mon, 27 Aug 2007 05:25:47 +0000

I think #4 is my favorite real estate advice. It’s all about location location location they say…but the location is also relative. Better to be a small fish in a big pond than the other way around when it comes to real estate. The small fish has more room to appreciate!

– Raymond

By: sjpeer

sjpeer — Fri, 24 Aug 2007 15:50:52 +0000

JMHO,
You bring up some very good points. I definately agree that buy a house should in no way be considered a replacement for saving money for retirement or other purposes. In fact, the spirit of what Dave is saying was not that you should buy a house specifically as a forced savings plan. Rather, he framed it as being one of the side benefits.

While your suggestions about setting up a savings plan are sound, I’ve been surprised at how many people have a hard time doing so. It’s hard to save when you’re living beyond your means. For such people, having a house at least forces them to make payments and build equity. The downside is, many of them then go and take out home equity loans and spend the equity!!!

I agree if you’re only going to be in one place for 2-3 years you’re better off renting and saving the difference. In fact, I think Dave’s 5 year rule of investing (that you should invest in mutual funds if you’re savings horizon is greater than 5 years) could apply quite nicely to real estate – If you know you’ll be around for 5 years or more, buy, otherwise, rent.

Lastly, I agree that the costs of owning can be much higher. Most people don’t consider all the costs which is exactly why they get in over their heads.
Sam

By: sabrina

sabrina — Thu, 23 Aug 2007 16:51:04 +0000

You know, I am really not sure I buy the “forced savings plan” argument. First of all, you throw away a LOT of cash at inception on closing costs. If I closed on a condo for myself today, that’s eight to ten grand I’ve spent on closing costs, for no direct benefit. That’s huge! Then there’s moving and the associated costs, and you know, I really need a new sofa for the new place, the old one is just so ratty… Plus, all the interest money is mostly thrown away — sure, you can deduct it, but a deduction against your taxable income isn’t the same as having cash in hand; you save less money than you spend — and there’s a /lot/ of interest paid off in those first five years. If I rented for half the cost of a mortgage payment, I could put the rest in even a low earning savings account and it’d be more directly beneficial (especially if it was intended to buy a property later, with a fatter down payment, thus causing lower payments and a shorter loan term — which I see are also a couple of recommendations, but I thing most people tend to focus on the good (”Equity! Savings!”) and not the bad (”Saving now to buy later? But that’s hard…”).

I think the “forced savings plan” argument is only a good one to make if the person intends to stay there for 5-10 years, at least, and they’re really bad at actual saving. I mean, *really* bad at it, at least enough to justify throwing away the closing costs. Otherwise, just get a savings account, set up direct deposit, and enjoy having your landlord fix things for you.

JMHO!