"100% of people who do not save money do not have any!"--Dave Ramsey

[redpoint5]

Originally Posted by JSH

Personally I would never take out a mortgage that was 50% of my net income. They are estimating a payment of $2185 a month which likely includes taxes, insurance, and PMI.

How does someone that is paying 50% of their income on a mortgage afford to do the maintenance on a house? Or eat for that matter. When the furnace goes out and a new one is $7,000 - then what?

You won't find a lender that would fund a 50% income to mortgage ratio. Maybe back in 2005, but lenders seem to be a lot more strict these days.

I don't know how that housing program can require people to have less income than would qualify for a loan to purchase it.

All that said, in general I'd be fine having half my income go towards a mortgage, taxes, and insurance because I'd rent out spare rooms, and I would make sure I lived in such a way that made rooms available to rent.

If the choices are a. walk away from a mortgage, losing all equity, and entering a financial death spiral, or b. cramming the whole family into a single bedroom and renting out the others, it seems option b. is better.

The 2 basic ways to become wealthy are either a. to have a high income, or b. build equity in a home, or both.

Perhaps there's a 3rd option where you rent an enormous house from someone that allows subletting. Then you rent out rooms in the house and bank whatever the difference between rents and monthly cost is.

[Isaac Zachary]

Originally Posted by JSH

Personally I would never take out a mortgage that was 50% of my net income. They are estimating a payment of $2185 a month which likely includes taxes, insurance, and PMI.

How does someone that is paying 50% of their income on a mortgage afford to do the maintenance on a house? Or eat for that matter. When the furnace goes out and a new one is $7,000 - then what?

Exactly. My rent is a lot less than that.

Originally Posted by redpoint5

I don't know how that housing program can require people to have less income than would qualify for a loan to purchase it.

Maybe they're looking for people that make $45,000 to $55,000 per year and also have $150,000 to $300,000 saved up for a down payment?

Originally Posted by redpoint5

All that said, in general I'd be fine having half my income go towards a mortgage, taxes, and insurance because I'd rent out spare rooms, and I would make sure I lived in such a way that made rooms available to rent.

I wonder if there's anything in the covenants that would prevent that somehow. If the maximum income of the household is X amount, what happens if you add more people? Say a lady makes $50,000 per year and after moving in invites her boyfriend who makes $100,000. Then what?

At any rate, I don't see me renting out the other room of a two bedroom when I still have children living at home.

[Isaac Zachary]

According to this calculator, if I have $30K saved to put down on the house and make the maximum $56K per year I should be able to afford or at least get a mortgage for a $2103 monthly payment.

https://better.com/how-much-home-can-i-afford?&utm_source=google&utm_medium=search&utm_ca mpaign=Search_G_NonBrand_DSA_App&utm_content=agn SA_App_All___m:_d:c_n:g_tid:dsa-1678107912877&utm_term=&gclid=Cj0KCQiAlKmeBhCkARIs AHy7WVswdUOYuWs9oUZao_0UjhD3hbqhvpoz5O7i56wq0hQdUM XIPMRCsMEaAgP4EALw_wcB&gclsrc=aw.ds

[redpoint5]

Originally Posted by Isaac Zachary

According to this calculator, if I have $30K saved to put down on the house and make the maximum $56K per year I should be able to afford or at least get a mortgage for a $2103 monthly payment.

Read the fine print and consider your options. The general advice is if you're not going to move in the next 5 years, you're better off buying than renting.

I don't know how you're paying less in rent than to purchase, because I've never seen a mortgage cost more than renting a comparable space. The whole point of owning a rental is to get renters that pay more than the monthly expenses.

I'm certainly more hesitant to rent rooms now that I have kids, but I'd just find a couple foreign girls going to college or something to rent to. I've had a few roommates who stayed in their rooms 100% of the time unless they were preparing food, mostly Asians. I even had 2 living rooms and made it clear they are as entitled to the shared spaces as me, but people seemed to like their rooms. One roommate I only saw when I invited him on bicycle Thursdays.

I've got a few who still keep in touch.

BTW- when you're occupying the same house you're renting, most of the dumb rental laws go out the window. You can discriminate for any reason, and the eviction process is way simpler. I've never felt the need to evict anyone. Pick the right people in the first place, and you don't have those problems.

[JSH]

Originally Posted by redpoint5

Read the fine print and consider your options. The general advice is if you're not going to move in the next 5 years, you're better off buying than renting.

Earlier in the thread:

Originally Posted by Isaac Zackary

I paid $500 for my trailer home 11 years ago and am quite happy with my purchase. I just hope the owners don't die or something because then the land would fall into someone else's hands and they would very, very likely raise the rent. I would probably tear down the trailer and take it to a landfill if that happened.

Originally Posted by redpoint5

I don't know how you're paying less in rent than to purchase, because I've never seen a mortgage cost more than renting a comparable space. The whole point of owning a rental is to get renters that pay more than the monthly expenses.

My wife and I did not buy a rental in the Portland area because we couldn't find a property that would cash flow positively with a mortgage with a reasonable amount held back for vacancies and repairs. Rents are high but not high enough to make money if you are buying a property with a loan. We would have needed to put money in every month with the idea that appreciation will continue and we would get that money back. I'm not willing to take that bet.

A coworker of mine is. He has a rental that is generating negative cash flow fully rented.

[redpoint5]

Originally Posted by JSH

Earlier in the thread:
My wife and I did not buy a rental in the Portland area because we couldn't find a property that would cash flow positively with a mortgage with a reasonable amount held back for vacancies and repairs. Rents are high but not high enough to make money if you are buying a property with a loan. We would have needed to put money in every month with the idea that appreciation will continue and we would get that money back. I'm not willing to take that bet.

A coworker of mine is. He has a rental that is generating negative cash flow fully rented.

Ah, I forgot Isaac's situation. Build up the down payment while rent is low.

I considered buying in Portland in 2012, but that was just 2 years after I had purchased my house in Vancouver. I might have been able to swing it, but that's when I met my wife. It would be cash flow positive for sure.

One way to get more rent is to rent individual rooms instead of the whole house. It has drawbacks, like nobody feels responsible to keep the place tidy. You'll never be completely unoccupied though. Leave your mediocre furniture n there and those renting a room will be happy to not have to furnish the place, or pack up everything when they leave.

[Isaac Zachary]

Originally Posted by redpoint5

Ah, I forgot Isaac's situation. Build up the down payment while rent is low.

I'll try to do that again. I was almost there before the pandemic.

[ME_Andy]

New landlords in Austin are getting screwed right now. In my neighborhood, a mortgage is about $3000/mo but houses are renting for $2100.

Anyway, I pretty much agree with everything redpoint has said. His inflation example of a $2000 payment being peanuts in 10 years is how it's worked for us, too.

Just be careful about timing. Paying 8% interest would not be wise in my opinion.

[JSH]

Originally Posted by Isaac Zachary

Maybe they're looking for people that make $45,000 to $55,000 per year and also have $150,000 to $300,000 saved up for a down payment?

They might also have a program to help with the down payment. I co-worker of mine bought his first house with a city run program that provided I believe $40K towards the down payment for a first home buyers with incomes under a certain percentage of the poverty line. The catch is he can't sell for a number of years without having to pay back the down-payment.

[Isaac Zachary]

Originally Posted by JSH

They might also have a program to help with the down payment. I co-worker of mine bought his first house with a city run program that provided I believe $40K towards the down payment for a first home buyers with incomes under a certain percentage of the poverty line. The catch is he can't sell for a number of years without having to pay back the down-payment.

That seems correct. The ad says 80% of the AMI (whatever that means). So I take it that someone is paying 20% of the house already. And yes, there seem to be a lot of rules when reading the stuff from the housing authority.

It's also part of a lottery: those that qualify are put into a lottery and the "winners" get the oportunity to buy one of the several apartments they are building on that block. But it seems they didn't get enough in the lottery to do the lottery, so they're apparently selling them, but still under the same requirements.

A part of me wants to go apply for one, but another says I'd be up to my neck in financial frustration.