Comments on Dog Ate My Finances: Oops, I'm in Love

R May: "takign the property out of the equations s...

2009-11-25T14:07:59.047-08:00

R May: "takign the property out of the equations she is going to pay 100k (plus taxes plusinterest) to tear down a house....and that sounds ok to you? Cause to me that sounds like taking a pile of money and setting fire to it."

Yes it does. Because she doesn't have to do it right now, and in a few years time she can build a house worth $1M+ for much less than that. And then sell it for a good profit.

But if it doesn't sound ok to you that's fine. Property development isn't for everyone. But I can see that it might be for Dog.

I don't like using other people's blogs for debates so I won't be responding any more after this.

The question, Dog, is whether you will satisfied l...

2009-11-25T13:16:00.028-08:00

The question, Dog, is whether you will satisfied living in the house as it is, or will you start itching to tear it down and rebuild? Based on many of your previous posts, I have a feeling it might be the latter. You don't seem like the sort of person who will comfortably dwell in a house that doesn't fit the neighborhood's standards. How much will it cost to rebuild? Has the house been well maintained, or were the owners just assuming it would be a teardown immediately and ignoring maintenance? Buying the worst house in the best neighborhood is often considered a savvy move, but from a personal finance standpoint, it generally begets a slippery slope of increased spending to keep up with the Joneses.

People thinking houses are investments is what is ...

2009-11-25T13:10:12.551-08:00

People thinking houses are investments is what is causing an awful lot of problems currently. I guess I'm odd because I don't view houses as investments.

I do see it as keeping up with the Jones'. Tearing down a house that you love to match the neighborhood. I'm not saying it's wrong, and if it can be afforded and what you want fine. But it is what it is.

I would take into consideration exactly how much a demo and rebuild would cost, including other living quarters, and what you would have to get in return to make it worth it. It may not be as great as it seems.

Not my mother - takign the property out of the equ...

2009-11-25T05:48:40.298-08:00

Not my mother - takign the property out of the equations she is going to pay 100k (plus taxes plusinterest) to tear down a house....and that sounds ok to you? Cause to me that sounds like taking a pile of money and setting fire to it.

Oh and R May, when you say: "The only reason to te...

2009-11-24T22:03:47.682-08:00

Oh and R May, when you say: "The only reason to teardown is to keep up with the jones' (the neighbors)" you're wrong. Or at least not completely right.

What Dog is getting at is the current house is not up to the level of the rest of the neighbourhood so it would make a SOUND INVESTMENT DECISION to upgrade. This is a "worst house in the best street scenario" - EXACTLY the kind of house you want to buy. You wouldn't bother rebuilding the house in anoher suburb if the house matched its neighbours but if this one clearly is subpar to the rest of the neighbourhood because the others have been renovated when it's been left behind then this is a good choice. You NEVER buy the best house in the street, you buy the worst. It's cheaper, you get to live where you want to, and you get a much better return on your investment.

The house itself is only costing Dog $100k, the rest is land value. She can live in it happily for years because she loves the house how it is, and watch its value increase. Then when she has the means, she can renovate and see its value skyrocket. Or not - when the economy picks up there'll be dozens of people wanting to take it off her hands.

This is exactly the sort of house you should look for, Dog, the only issue is if the price range is higher than you can afford.

Please buy it so that we can read about your inevi...

2009-11-24T18:10:53.603-08:00

Please buy it so that we can read about your inevitable struggle and misery.

Do you really want to put ALL of your liquid cash ...

2009-11-24T17:06:14.121-08:00

Do you really want to put ALL of your liquid cash into a house? You'll want to buy furniture, paint etc.

Will you be able to save as aggressively if you buy that much house? Or is a down payment the only reason you're saving up money?

Do you have the needed copays for health insurance and car insurance if you spend that money? What about if you have to replace the roof or furnace or something like that in the near future?

I'm frugal but I guess not as much as your other c...

2009-11-24T17:02:06.122-08:00

I'm frugal but I guess not as much as your other commenters, or maybe I'm just not as burned by the financial crisis, because I'm not jumping immediately to say no. For feck's sake everyone who's complaining that it's a teardown - Dog said it's a teardown EVENTUALLY. ie, it's old, it doesn't match the suburb anymore, you could get a much better house by rebuilding rather than renovating. Dog loves the current layout so she could live in it for years happily. Also, if $400k is the land value in the area then the house it costing $100k.

I don't know. IF you've done your sums and know what the repayments would be and IF you can make your budgets work comfortably with a buffer, and IF you can convince the banks to give you the cash, then I'd say go for it.

Then again, I just paid $530k for a house and I'm about to go part time for maternity leave. We don't have the recession problems the US has though, and my husband is a bit of a star at work so his job is secure, so I'm crossing my fingers that it'll all work out great. If all else fails, we could sell another property.

I don't know...maybe you're loving the $3M and $1M...

2009-11-24T16:30:52.259-08:00

I don't know...maybe you're loving the $3M and $1M houses next door. That's a whole lot of mortgage for something that is a teardown.

I agree with other commenters who are saying to go for something you can afford on one income. You're not loving your job - what if six months down the road you hate it so much, but you're stuck there because you have to pay the mortgage?

Run. Run fast. Get a different realtor. You are ...

2009-11-24T16:30:43.611-08:00

Run. Run fast. Get a different realtor. You are clearly buying into the same housing stupidity that helped bring the economy to its knees. Slap yourself across the face and wake up. You want it all now...so what are you going to do in your 30s? Good grief...

how do the numbers work out? What part of your in...

2009-11-24T15:09:07.855-08:00

how do the numbers work out? What part of your income does it represent?

Stupid 20-something

2009-11-24T14:15:54.898-08:00

Stupid 20-something

I'm confused. You say you love the layout, but it...

2009-11-24T09:23:19.093-08:00

I'm confused.

You say you love the layout, but it's a teardown? How is the layout relevant if you're planning on tearing it down?

If you're planning on tearing it down, have you factored in the time and expense of building a new home on the lot?

500K is a lot of house. Or rather, a lot of mortga...

2009-11-24T09:00:57.178-08:00

500K is a lot of house. Or rather, a lot of mortgage. I bought 530K, and owe 450K and we don't even have the taxes you have in Texas. Taxes for my place at time of purchase were around 5500. You are looking at minimum $3500/month, with taxes and insurance. In the event you end up down to one income b/c of layoff or whatever, it won't be the easiest thing to deal with (I know because I am there). It eats up a huge portion of my income and I'm making 6 figures, give or take a few thousand. It made sense when both of us were working, but it totally doesn't anymore.

I would advise you try to stick to a house where given one income (the higher of the two of you), you can make the payment without feeling totally strapped for cash.

Yawn. Some people never learn. A half mill for a ...

2009-11-24T08:49:57.774-08:00

Yawn.
Some people never learn.

A half mill for a teardown? What does that mean? You have to rebuild and repair? Obviously, there is something wrong with you. And me. For keep coming back to read your highs and lows.

That IS a steal though. And a 70s build!?!? Heaven...

2009-11-24T06:48:12.834-08:00

That IS a steal though. And a 70s build!?!? Heavenly.

How are you going to make the decision? Pros and Cons?

Are you two stable for income?

It's an eventual teardown....that to me would scre...

2009-11-24T06:17:27.407-08:00

It's an eventual teardown....that to me would scream HELL NO!

There is no way on god's green earth I am putting any kind of into a house that I will just tear down eventually...especially for the reason. You didn't come out and say it but 'in any other neighborhood' made it quite clear. The only reason to teardown is to keep up with the jones' (the neighbors).

Maybe its me but a 500k house in Texas is a mansio...

2009-11-24T05:54:19.847-08:00

Maybe its me but a 500k house in Texas is a mansion. Are you sure you want to lock yourself into that much. Less than a month ago you would looking more modestly at 300k. Now you are almost double your original budget. Sounds like your head isn't screwed on tight to me. Think of all the extra renovation costs to make it 'perfect'. I had a few friends over the last year who bought in nice areas outside Houston and they bought huge near brand new houses both for <350k.

That's more than a thousand bucks a month just in ...

2009-11-24T04:49:00.149-08:00

That's more than a thousand bucks a month just in taxes. Can you really work that much into your budget? Especially a "just in case" budget?

Yikes.