28, single.

Have an extra 5k/mo after basic needs paid for. Been throwing most of that in market but I have 50k in HYSA right now. Should I keep throwing in market or putting it in a high yield?

rolo said:

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28, single.

Have an extra 5k after basic needs paid for. Been throwing most of that in market but I have 50k in HYSA right now. Should I keep throwing in market or putting it in a high yield?

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Is the down payment for a personal residence or investment property?

Personal

Toros23 said:

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rolo said:

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Personal

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Tough time to buy now, especially when you can get 5% in HYSA. I'd save/invest and leave my options open if I was you. I understand home ownership is a personal preference, so that will always be a factor to consider, but at your age and single I wouldn't rush into it. If you ever get married your wife/husband will want to buy a house you both can call your own anyway.

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Definitely agree with all that. I bought central metroplex so I could work wherever. You don't want to be forced to sell when the market is bad because of a job. I also avoided buying for some years leading up to 2008 because it smelled like a huge bubble. I knew I made the right choice when they wanted to sell me my apartment, relabelled as a condo but a lot of that is luck. But as long as you buy with the intent to say it should work out long term

rolo said:

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Your financial advisor does not sound prudent

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It's a pretty common theme among financial advisors. No doubt timing helps and there's upkeep costs amd taxes and insurance goes up but in the end game, I like the investment diversification. And on a personal note, i like owning a house

When you retire you still have bills. If you're renting what do you think rent will be when you retire? That will determine how much income you have left after paying bills. Own a home and your costs are utilities and tax, occasional maintenance. Plus once you go downhill, and you will, your kids can sell your house to take care of you. Owning a home free and clear opens up a lot of doors.

How much of your net worth is that $50K?

I've spent a lot of time and brainpower on the rent/buy decision. I think it comes down to personal preference. The finances are about even between the two.
That's assuming you're renting something reasonable, and saving and investing. If youre someone that blows any excess funds they have, then buying is a forced way to at least invest in something.

For buying a house, you need to consider a lot more than just the monthly P&I payment.

Toros23 said:

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rolo said:

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Personal

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Tough time to buy now, especially when you can get 5% in HYSA. I'd save/invest and leave my options open if I was you. I understand home ownership is a personal preference, so that will always be a factor to consider, but at your age and single I wouldn't rush into it. If you ever get married your wife/husband will want to buy a house you both can call your own anyway.

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I think this is a good answer. I didn't buy my first house until I was 33 because taking on the extra costs and responsibilities of home ownership while single just wasn't worth it. It would have made me house poor as well.

Marriage changed that equation and we bought our first house together.

I didn't buy my first house until I was 32. Prior to that I rented near city centers and night life.

Then I got married at 35 and wife wanted to a new home that was "ours".

I appreciate yalls advice, funny how all the realtors I know keep telling me now is the time to buy and harassing me on letting them find me a house

If you are willing to have a roommate or two, buying can be very lucrative and let them pay a decent chunk of your mortgage.

Otherwise, I wouldn't rush into home ownership. I think it is smart at some point, but if you think you'll have a significant other anytime soon, I guarantee they will want to have a say.

There are just too many things that are different from each situation to make broad claims. I don't know how this idea that 'always rent' has started to become a thing with financial advisors.

When I was single and right out of school, a small apartment made a lot of sense compared to buying a house. When I bought my current home with a large family and a 3% mortgage, renting made zero sense for so many reasons.

I'd say if you're looking to buy a house near term, or have other big life changes inbound (ie marriage, moving, having kids), there's more incentive to have more cash in less risky asset. If you're years away, it could be a great time to take some risks. Honestly, some mix of both is always a good thing. How much of a mix depends on the details.

rolo said:

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I appreciate yalls advice, funny how all the realtors I know keep telling me now is the time to buy and harassing me on letting them find me a house

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It's like asking a barber if you need a haircut…

One of the hidden costs that will knock you sideways - your A/C fails. You are looking at $10k to fix/replace. Do you have that cash on hand to do that?

YouBet said:

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One of the hidden costs that will knock you sideways - your A/C fails. You are looking at $10k to fix/replace. Do you have that cash on hand to do that?

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I would agree that when you buy a house you need a savings in case of a new AC, roof or whatever



Plus you'll be surprised how much money you'll need to spend on things yiu don't need as a renter like a lawn mower, weed eater, shovel and rake, basic tools for around the house...etc.

Buy. Keep it small and simple. But in a good location. Something with low upkeep, reasonable taxes, and insurance. Something that can easily be rented or sold. It still gives you flexibility. Nothing wrong with buying young. Just dont saddle yourself with more house than you need.

Young and single....if you can buy where you want to live, great. Have a friend who rent a bedroom...even better. Don't move out to the suburbs just to buy a house if that's away from where you normally work/hang out.

Tex117 said:

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jamey said:

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My financial advisor says rent forever. I disagree.

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Right, because...what do they know?

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Please enlighten us.

BenTheGoodAg said:

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Tex117 said:

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jamey said:

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My financial advisor says rent forever. I disagree.

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Right, because...what do they know?

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Please enlighten us.

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Chris had a good rundown of what he did.

It ALWAYS comes down to individual circumstances.

But, the basic math one has to work from is that that the market (like the S&P) has out-performed real estate. (Sure, you will hear about someone getting lucky on their place, like "my home value jumped 150K in 3 years, but that is never sustained. On average, the market does better. And, especially while young, if you can get more money into the market and get it to grow early, you will be in much better shape than if you used that to buy a house).

Tex117 said:

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BenTheGoodAg said:

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Tex117 said:

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jamey said:

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My financial advisor says rent forever. I disagree.

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Right, because...what do they know?

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Please enlighten us.

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Chris had a good rundown of what he did.

It ALWAYS comes down to individual circumstances.

But, the basic math one has to work from is that that the market (like the S&P) has out-performed real estate. (Sure, you will hear about someone getting lucky on their place, like "my home value jumped 150K in 3 years, but that is never sustained. On average, the market does better. And, especially while young, if you can get more money into the market and get it to grow early, you will be in much better shape than if you used that to buy a house).

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I agree with the bolded statement. I don't agree with the original claim of "rent forever".

I can agree with some of the details you added to your post, but I don't think it accounts for all factors. Risk, interest rate, inflation, etc.

I also am skeptical when a FA is encouraging me to invest more in their product vs encouraging me to invest in a house. As mentioned with a realtor, that is how they make money.

It all depends on your situation. We can't really give you a good answer unless we know more about your work situation, your personal life, your family, etc. And the people who say you should rent forever and the people who say you better act fast and by now are all pretty much the same goobers you are looking out for themselves and not for you.

As a firm rule from me, don't buy unless you know that you'll own it at least 5 years. If you think there's a possibility you would be owning it for less than that then you probably shouldn't be buying. Any chance your boss might be moving you across the country in the next few years? I turned down opportunities at my old job probably hurt my career, and my real estate investments were a big part of my thought process. Think your girlfriend might become your fianc and want to move back to where she's from someday? Happens often.

I'm a big fan of leveraging real estate to build wealth, but I've also seen a lot more people get into trouble buying when they shouldn't have than I have who have made millions.

OldArmyCT said:

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When you retire you still have bills. If you're renting what do you think rent will be when you retire? That will determine how much income you have left after paying bills. Own a home and your costs are utilities and tax, occasional maintenance. Plus once you go downhill, and you will, your kids can sell your house to take care of you. Owning a home free and clear opens up a lot of doors.

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you are leaving out the fact that in Florida and Cali there are a lot of other expenses you will always pay- insurance, fire insurance, flood insurance, earthquake, HOA fees every month, repairing your roof, repairing your HVAC...

BenTheGoodAg said:

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Tex117 said:

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BenTheGoodAg said:

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Tex117 said:

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jamey said:

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My financial advisor says rent forever. I disagree.

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Right, because...what do they know?

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Please enlighten us.

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Chris had a good rundown of what he did.

It ALWAYS comes down to individual circumstances.

But, the basic math one has to work from is that that the market (like the S&P) has out-performed real estate. (Sure, you will hear about someone getting lucky on their place, like "my home value jumped 150K in 3 years, but that is never sustained. On average, the market does better. And, especially while young, if you can get more money into the market and get it to grow early, you will be in much better shape than if you used that to buy a house).

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I agree with the bolded statement. I don't agree with the original claim of "rent forever".

I can agree with some of the details you added to your post, but I don't think it accounts for all factors. Risk, interest rate, inflation, etc.

I also am skeptical when a FA is encouraging me to invest more in their product vs encouraging me to invest in a house. As mentioned with a realtor, that is how they make money.

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That's fair on the "rent forever." But even then, circumstances could dictate that it makes sense.

My only point here is that "buying a house" is not the only way to amass wealth. Some would tell you that renting is a dumb financial decision, but, facts and numbers show that if renting is a part of an overall financial strategy, one can do better than the average.

Cool. We're on the same page. I remember people telling me to buy a house when I got out of A&M. I didn't then, and in hindsight it was a great financial decision.

Where I think the renting vs buying argument favors buying is if you start comparing like-for-like properties with similar monthly payments. At some point, the rents will increase more than the mortgage because the prinicple/interest portion is locked in as a buyer and you're building some equity in the property and it's going up in value. I don't know what's actually out there, but just spot checked a house in my neighborhood and the monthly payment to rent one home vs buying the home next door was about the same even if you include maintenance costs as the buyer. Renting an apartment down the street, however, was much cheaper.

If you can rent a property that cuts down on your costs it works for your lifestyle and family situation, it can absolutely set you ahead financially.

Tex117 said:

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BenTheGoodAg said:

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Tex117 said:

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jamey said:

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My financial advisor says rent forever. I disagree.

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Right, because...what do they know?

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Please enlighten us.

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Chris had a good rundown of what he did.

It ALWAYS comes down to individual circumstances.

But, the basic math one has to work from is that that the market (like the S&P) has out-performed real estate. (Sure, you will hear about someone getting lucky on their place, like "my home value jumped 150K in 3 years, but that is never sustained. On average, the market does better. And, especially while young, if you can get more money into the market and get it to grow early, you will be in much better shape than if you used that to buy a house).

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But isn't there a flipside to that equation, when the house is paid off and monthly living expenses drop significantly?

I have a low interest rate mortgage so this may not make as much sense right now woth higher rates. But if my house was paid off right now it would lower my annual living expenses by about 20K, in interest and principal.

If you a figure 4% draw rate on retirement funds it would take about 500K to give me that 20K a year.

And it's not like if I'm renting I could just put the whole would be mortgage payment into the S&P since I'd have to pay rent first

Good point. But I think at that point in time, the maintenance costs on a 15-30+ year old home will start eating into that savings.

In my calculations, renting involved an apartment, so you were saving money on utilities, insurance, and property taxes, and maintenance (and possibly the rent is less than the P&I mortgage pmt) and that savings would be invested in the market. So even though you're renting, you're still building equity in something, and most likely you're building that equity in an asset class that's going to grow much faster than real estate, and over a 30 year period that's going to build significantly.

BenTheGoodAg said:

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Cool. We're on the same page. I remember people telling me to buy a house when I got out of A&M. I didn't then, and in hindsight it was a great financial decision.

Where I think the renting vs buying argument favors buying is if you start comparing like-for-like properties with similar monthly payments. At some point, the rents will increase more than the mortgage because the prinicple/interest portion is locked in as a buyer and you're building some equity in the property and it's going up in value. I don't know what's actually out there, but just spot checked a house in my neighborhood and the monthly payment to rent one home vs buying the home next door was about the same even if you include maintenance costs as the buyer. Renting an apartment down the street, however, was much cheaper.

If you can rent a property that cuts down on your costs it works for your lifestyle and family situation, it can absolutely set you ahead financially.

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Yup for sure. If you have a family situation and are looking at the "same" house renting v buying, then this is a different calculous. And, with a family, sure...you can probably invest and save more by cramming 4 people in a one bedroom dinky apartment, but at some point, the financial benefit isn't worth the quality of life.