[JSH]

Originally Posted by Xist

People say that if you cannot afford 20% down then you cannot afford a house, but how will you ever afford a house if you can hardly save anything? Yes, there are many ways that things could go horribly wrong, but if you get a good inspection, and can get a mortgage comparable to what you were paying in rent, why wouldn't you?

There are a lot more expenses to owning a house than just the rent. There is insurance (Homeowners, Earthquake, Flood, etc). The tax man sends a bill in the thousands every year. When something breaks, it is up to the owner to fix it. No calling the landlord when the stove stops working, the water heater leaks, the furnace stops working or the roof starts leaking. The little things add up and the big things are expensive. Our house in Alabama was built in 1998 and we had to replace the heat pump in 2010 and the roof in 2013. The materials used by contractors on spec houses are junk. The heat pump and roof each cost about $7000. Do you think someone that cannot save a 20% down payment is going to have $7,000 to replace a heat pump or roof?

Originally Posted by Xist

I was wondering what the math would need to be to be safe with rental properties. I had thought that if you needed the rent from 8 to pay the mortgage for all 10 you should be safe, but since I cannot get a rule-of-thumb from anyone, I can only guess that a 10% profit margin would be reasonable, which isn't much of a safety net.

My research has that closer to 5% in the right locations once your factor in long-term capital costs to replace things like roofs, heat pumps, appliances, etc. Here in Portland the cash flow is negative if you are looking to buy a turnkey house not a fixer-upper. Prices are too high and rents too low to make money on a month-to-month basis. Any profit comes from the equity in the house not monthly cash flow which doesn’t work for my needs.

Originally Posted by Xist

I have driven $2,000 beaters for years!

So have I but at the time I was routinely out of the country for work for 2-3 weeks at a time so having my wife drive an old beater 100 miles a day didn’t seem like a good idea.

While my wife was driving that VW I had:

The free 1987 / 1991 Frankenstein Ranger. My brother’s abandoned project made up of 2 different trucks that he never got running right. I drove it for about 2 years and it left me stranded many times. Once I got everything sorted out I sold it to a coworker - which turned out to be a mistake. He drove it back and forth to West Virginia every weekend for a couple years before he lost it in a divorce.

$1000 1961 Buick Skylark. Drove it for a bit until the rear main seal went so it was leaking a quart of oil per day. Parted it for more than I paid

$300 1986 VW Jetta plus a parts car.

Mostly I just rode my motorcycle year-around because it was reliable and cheaper.

Near the end of 2006 my wife got tired of me wrenching on old wrecks all the time and told me we were getting a reliable used car. At that point she was about to defend her thesis so the end was in sight. We ended up with a 2 year old 2005 Prius that we kept for 10 years. Only thing that ever went wrong was a faulty valve for the coolant thermos bottle that didn’t effect anything. (Broke on my 2009 Prius too at the same mileage) That was the last car we took out a loan to purchase

Originally Posted by Xist

I am not a fan of new cards

I’m a big fan credit card companies giving me free money. Just the miles from the two Alaska card have paid for: A trip for my wife and I to fly home to visit the family for the 4th of July, flying my father and I to LA for a motorcycle trip in September, and we have 50,000 miles left.

Originally Posted by Ecky

I know it's not my place, but what is your plan for the future?

One's health typically doesn't have an upward trend after 40. At some point you won't be able to continue doing what you're doing.

I've wondered the same. Health and health insurance is one thing but I think about retirement too.

Xist is basically the same age as me and our generation is on our own for retirement. 40 means 2 decades of compounding interest gone. It is way harder to save for retirement starting at 40 then 20. On the bright side there are still 27 years to save before full retirement age.

Social Security is similar. Yes, it doesn't pay a lot but even what it pays is based on the average of the highest 30 years of earnings. The option to retire abroad starts slipping away too at a certain age.