House at 21?

Off Topic
21

[quote]bushidobadboy wrote:
I bought a house at 24.

I still have it, even though I now live elsewhere. I just rent it out.

Look, you “love the house” and it’s a freakin’ bargain. I don’t really see what the issues are.

Are you a commitment 'phobe? I ask because in other areas of your life (education, finance) you seem to have a mature head and sensible outlook.

Bushy[/quote]

I agree with this. My next move will be a house. School and the military (along with being flat broke during all of that time) kept me from even being able to consider it. If you have the means, there is little reason not to.

22

[quote]Professor X wrote:
I agree with this. My next move will be a house. School and the military (along with being flat broke during all of that time) kept me from even being able to consider it. If you have the means, there is little reason not to.[/quote]

I’ve often wondered how medical school affects one’s ability to get started in his or her finances due to them getting into the game at such an advanced age.

23

[quote]NeelyDan wrote:
Professor X wrote:
I agree with this. My next move will be a house. School and the military (along with being flat broke during all of that time) kept me from even being able to consider it. If you have the means, there is little reason not to.

I’ve often wondered how medical school affects one’s ability to get started in his or her finances due to them getting into the game at such an advanced age.[/quote]

I’m not sure I follow you. There are very few college grads with Bachelor’s degrees pulling in 6 figures a year like many doctors so why would you look at it as “starting their finances at an advanced age”? The average college grad is in debt by thousands of dollars and won’t even be making 60 grand a year. The average new teacher’s salary is still under 40k, isn’t it?

24

Some info on salaries:

http://accounting.smartpros.com/x56754.xml

Apparently, the average peak income for a Bachelor’s degree is about 70k.

With that in mind, going to professional school (whether it be nursing, dental, medical, pharm, law) could be looked at as investing rather than getting to the game late.

25

Isn’t medical school on top of your regular degree, making it 8 years of schooling vs 4 years?

It’s something like that up here - hence double the student debt, hence taking twice as long to get employment, etc.

26

[quote]NeelyDan wrote:
Isn’t medical school on top of your regular degree, making it 8 years of schooling vs 4 years?

It’s something like that up here - hence double the student debt, hence taking twice as long to get employment, etc.

[/quote]

Medical school usually involves:
a 4 year degree
4 years of medical school
about 6 years of residency depending on your specialty

Dental school usually involves:
a 4 year degree
4 years of dental school
optional residency which is often 1-2 years depending on the program

Both don’t necessarily require a Bachelor’s degree as long as the entrance exam score is high enough and the basic sciences are completed with good grades in college.

27

Congrats on your financial responsibility. I made 20,000 this summer and spent it all, now I’m waiting for my $7000 student loan to come in.

If I was in your position… I’d do it. Look at me, I graduate in 1.5 years and will make 48000/yr starting, topping out at 80000 by the time I’m 32. Houses here are 400000 and condos/townhouses start at 200000. Basically I will be living at my parents house until I’m 25. And despite being a rather handsome man, girls don’t go with guys who live at their parents.

You have a chance at purchasing a solid investment at a ridiculous price. If you want to relocate, get a tenant to pay the mortgage, it might be stressful, but at least you can travel where you want and know your investment is being taken care of.

The only things I can think of that might be annoying:

  • appliance/house wear and tear (i.e. roof starts leaking, need new shingles for roof, BAM $3000)
  • keeping the grounds tidy, you don’t want to be that house on the block with foot tall grass
  • stress of finding a tenant if you were to relocate for various reasons.
28

[quote]Squiggles wrote:
So, I’m a 21 year old female. [/quote]

So, I’m a 20 year old male, and I love construction. Hi.

29

[quote]rrjc5488 wrote:
Squiggles wrote:
So, I’m a 21 year old female.

So, I’m a 20 year old male, and I love construction. Hi.[/quote]

LOL, you bring the hammer.

Anyway, wow, lots of posts. I’m not a commitment 'phobe, I’ve just got all the ‘mature’ people in my life telling me that I’ll regret this decision because I shouldn’t buy a house till I’m 30, but I couldn’t see why by my logic, so I figured I’d garner some other opinions.

I thought this over, under, and backwards a million times, and I couldn’t justify not getting it. There’s no reason not to.

FWIW, I made an offer on the house earlier - 42k - and I’m waiting for the reply.

30

[quote]Professor X wrote:

Medical school usually involves:
a 4 year degree
4 years of medical school
about 6 years of residency depending on your specialty

Dental school usually involves:
a 4 year degree
4 years of dental school
optional residency which is often 1-2 years depending on the program

Both don’t necessarily require a Bachelor’s degree as long as the entrance exam score is high enough and the basic sciences are completed with good grades in college.[/quote]

Right…so for most people, while they are positioning themselves for greater earning potential down the road, they’re also starting out 4 years behind a lot of their peers. 4 years of earning is substantial when you’re trying to get on your feet - so things like real estate purchase are likely pushed back correspondingly.

My question was asked poorly, but I meant I wonder if that presents any extra challenge for those people, or if it’s simply a function of time.

31

Man am I jealous…

Came out of college at 21 with top marks in my degree (accounting). I start work next month, starting salary of $35k per annum, which is about the best that any accounting grad. will get here, rising to around $75-80k in 3 or 4 years.

For an 2 bedroom house/apartment in an ok area, with 800-900 sq ft of internal space, you’re talking list price of $390k

I would have HOPED to have my own place by the time I was 23, but the way things are going it’ll be a year or two after that now.

EDIT: All figures converted from Euro to Dollars

32

[quote]Squiggles wrote:
So, I’m a 21 year old female. I finished Uni a while ago, have very little student debt (had scholarships), own a good car (owned, as in, no payments), and I have been working at the same job for a year, I’m happy with it.

I am actively working towards the goal of living completely debt free. I hate debt. I live frugally, and I am happy. I have the material things I want.

I put money in a savings every month and an IRA every year. I am trying to work as hard as possible right now (12 hours or so a day), so that I can enjoy the rest of my life later.

That leaves housing. A mortgage has always been my bane. The thought of getting locked into a huge debt for 30 years kills me. At the same time, I’m simply paying someone elses mortgage right now, thus living in denial of sorts.

Houses are getting really cheap around here, and I’ve toyed with the thought getting one for awhile. People keep telling me I’m too young to get a house, and that I should enjoy the ‘renting’ years. I don’t know what that means. I do enjoy my life. I can’t enjoy my life while paying a mortgage instead of rent?

Two days ago I was driving home and I passed a house that is for sale. The bank just took it over after the owners failed to sell it and now it sits there.

I love this house.

It sits on an acre of land and the house is almost 2000 square feet. The entire yard in front of it is open and fluffy green, while the entire back is surrounded by huge, towering trees.

It is a ranch, and it is in good shape. It has a huge front porch, new roof and siding, the furnance is only 4 years old, and the wiring was just redone.

I pulled up records online, and houses in this area of the same size and caliber were going for $125,000+ easily a few years ago. The house is on the market for $48,000. The bank is trying to get rid of it before the copper gets stripped or something bad happens to it from sitting.

I do a lot of work for Habitat for Humanity, and I started envisioning all the stuff I could do to it. I’d build a deck on the back that wraps around to the front porch.

The kitchen floor’d get tiles put down; I’d rip out the cupboards, sand them down to their beautiful oak and stain them; build a shed outside the house; tear out the plaster in the dining room and put up some drywall; etc.

I imagine, should the housing market ever go back up, I could easily get three times what I’d pay for it, especially with the good land.

Then the ‘con’ side of me kicks in. What if after I buy it, the furnance blows up, or a tree falls on the house, or foundation cracks, or… You get the point.

I could put $12k on it as a down payment, meaning the monthly payment would be a little over $200 a month, or less than half of what I am paying in rent. If I paid what I am paying in rent, I could have it paid off in less than 8 years.

All this for an almost new house on an acre of beautiful land in a perfect neighborhood that is 15 minutes from the city.

I did out the math, and adding things like property tax, trash and water, home insurance, etc. I’d be about breaking even on the housing costs over renting.

I’m not seeing a negative side, which leads me to believe that I am missing something.

So, for those of you who have purchased a house, am I being young, naive, and stupid? Is there some glaring hole in my logic? If I go to the bank today and get the mortgage, would I be making a huge mistake?

Am I acting impulsively and not looking at getting a house the way I should? Is there really an upside to paying rent (aside from the manager doing work, etc)?

Thanks, and sorry about the long post. [/quote]

Don’t be afraid. Just do it. There are no holes in your logic and you’ll regret years later when you think back to the opportunity you passed up. Not many people get a chance to own their own home and land at 21! And you’ll feel so great after you’ve made all the improvements to it with your own hands.

You’re in a good position right now, judging from what you’ve said in your post. Why pay rent when you can own! Enjoy the renting years my ass! Renting sucks. I’m 30, in debt and I don’t even own my own place.

The rent around here is astronomical. An average house costs upwards of $300-400 a week to rent. You don’t want to end up in my position. So at your young age, you are making a wiser decision than most people your age.

If I were you I’d buy the place.

33

[quote]NeelyDan wrote:
Professor X wrote:

Medical school usually involves:
a 4 year degree
4 years of medical school
about 6 years of residency depending on your specialty

Dental school usually involves:
a 4 year degree
4 years of dental school
optional residency which is often 1-2 years depending on the program

Both don’t necessarily require a Bachelor’s degree as long as the entrance exam score is high enough and the basic sciences are completed with good grades in college.

Right…so for most people, while they are positioning themselves for greater earning potential down the road, they’re also starting out 4 years behind a lot of their peers. 4 years of earning is substantial when you’re trying to get on your feet - so things like real estate purchase are likely pushed back correspondingly.

My question was asked poorly, but I meant I wonder if that presents any extra challenge for those people, or if it’s simply a function of time.

[/quote]

I am still confused as to why you think the average college grad with only a Bachelors Degree is in a position to do much significant with real estate.

You keep responding as if you think the grad school student is starting BEHIND when this is not the case. The average person under 35 isn’t making over 100k a year UNLESS they went to grad school. The average starting salary for a recent college grad is BELOW 50k. So how is the guy graduating 4 or even 8 years later BEHIND if they are in a better financial position?

You add in student loans, kids and a wife and the situation is even less likely to produce someone who can buy a house without it being a HUGE financial burden.

If the average 22 year old recent college grad gets married and has kids, that starting salary is barely paying the bills.

That means the person who quit school to jump into the job market early would be the one “behind” in most cases.

34

BUY. THE. HOUSE.

After putting $12K down the monthly debt service is less than half the market rents? That’s a smart move, even after factoring in taxes, insurance, maintenance, etc.

You can easily rent the property if you want/need to relocate.

The whole advantage to renting is having a lower monthly payment versus owning. In your case it costs less to own and you’ll have your down payment back within five years (assuming a $2,500/year annual savings versus renting), and possible have tax advantages as well (not familiar with real estate in Argentina).

Either way, you’re still paying rent: landlord or interest to the bank. The latter is a much less expensive option at this point. Real estate markets are cyclical, they ALWAYS come back, it’s just a matter of time. Residential housing moves in alignment with wages/inflation/etc., so your money is “safe” for the long haul.

The only real decision is buy today or wait a little longer. If property values are at/near/below the long-term trendline, it wouldn’t be a bad time to pick something up for the long run.

35

Buy it, you can always rent it out if you need to take a sabbatical.

I bought my first house at 23 and am now (45) in my fourth house with greater than 50% equity from rolling them over.

And you sound much more mature at 21 than I was.

36

[quote]Professor X wrote:
I am still confused as to why you think the average college grad with only a Bachelors Degree is in a position to do much significant with real estate.

You keep responding as if you think the grad school student is starting BEHIND when this is not the case. The average person under 35 isn’t making over 100k a year UNLESS they went to grad school. The average starting salary for a recent college grad is BELOW 50k. So how is the guy graduating 4 or even 8 years later BEHIND if they are in a better financial position?

You add in student loans, kids and a wife and the situation is even less likely to produce someone who can buy a house without it being a HUGE financial burden.

If the average 22 year old recent college grad gets married and has kids, that starting salary is barely paying the bills.

That means the person who quit school to jump into the job market early would be the one “behind” in most cases.[/quote]

I don’t necessarily think that a college grad with a BA is going to do much with out of school with real estate - my point was only the 4 years of additional earnings they have (in theory) while those committed to 4 more years of school (and thus no income). Real estate is the example at hand, I was wondering out loud about how medical school students (law school, etc) recover from their not having an income for so much longer than most young people.

Now, if a grad school student is making 100k out of the gate, vs 50k for a BA, and obviously we are talking absolutes here, then it wouldn’t take long to recover those 4 years of earnings they missed out on, obviously.

Up here, that just isn’t the case. Hell, I have a grad student working in the office next to mine in a technology group at a large bank who makes less than I do.

Sorry for the hijack, OP - my opinion is that you should buy real estate whenever possible and not look back.

37

[quote]NeelyDan wrote:
Professor X wrote:
I am still confused as to why you think the average college grad with only a Bachelors Degree is in a position to do much significant with real estate.

You keep responding as if you think the grad school student is starting BEHIND when this is not the case. The average person under 35 isn’t making over 100k a year UNLESS they went to grad school. The average starting salary for a recent college grad is BELOW 50k. So how is the guy graduating 4 or even 8 years later BEHIND if they are in a better financial position?

You add in student loans, kids and a wife and the situation is even less likely to produce someone who can buy a house without it being a HUGE financial burden.

If the average 22 year old recent college grad gets married and has kids, that starting salary is barely paying the bills.

That means the person who quit school to jump into the job market early would be the one “behind” in most cases.

I don’t necessarily think that a college grad with a BA is going to do much with out of school with real estate - my point was only the 4 years of additional earnings they have (in theory) while those committed to 4 more years of school (and thus no income). Real estate is the example at hand, I was wondering out loud about how medical school students (law school, etc) recover from their not having an income for so much longer than most young people.

Now, if a grad school student is making 100k out of the gate, vs 50k for a BA, and obviously we are talking absolutes here, then it wouldn’t take long to recover those 4 years of earnings they missed out on, obviously.

Up here, that just isn’t the case. Hell, I have a grad student working in the office next to mine in a technology group at a large bank who makes less than I do.

Sorry for the hijack, OP - my opinion is that you should buy real estate whenever possible and not look back.

[/quote]

I understand the point you were trying to make, but again, those “four years of earnings” has NOTHING to do with actually being able to do anything “extracurricular” with the money earned.

Someone making 40K a year with a family for four years is not ahead of the guy who spent those four years in school and then graduated making over 100K. The reason they aren’t is because that 40K is barely making ends meet. They could have been out of school TWENTY YEARS before the grad student and they would still be less financially secure.

I understand you may know one guy who happened to be a grad student who makes less than you, but what does that have to do with doctors in medical school? They WON’T be graduating making less than average.

38

Regarding the whole education/income deal, it’s not how much you make, it’s how you spend/invest it.

I personally know physicians that are living month-to-month, delinquent on their cellphone bills, pulling HELOC money to keep their heads above water.

I also know immigrants with poor educations who are truly wealthy, built up large real estate / business empires, etc.

Formal education gives you a fair amount of prestige, is valuable in certain social circles, and might get your foot in the door, that’s about it…

39

[quote]pachell wrote:
Regarding the whole education/income deal, it’s not how much you make, it’s how you spend/invest it.

I personally know physicians that are living month-to-month, delinquent on their cellphone bills, pulling HELOC money to keep their heads above water.

I also know immigrants with poor educations who are truly wealthy, built up large real estate / business empires, etc.

Formal education gives you a fair amount of prestige, is valuable in certain social circles, and might get your foot in the door, that’s about it…[/quote]

I can’t stand it when people stop speaking in generalities as far as this topic and start bringing up RARE examples of some guy they knew who dropped out of high school and now makes millions.

MOST PEOPLE without an education beyond high school will not be making upwards of 50K a year.

MOST PEOPLE who are doctors are NOT living month to month unless they got divorced several times or have 5 or 6 kids from different women and he owes all of them.

40

[quote]Professor X wrote:
pachell wrote:
Regarding the whole education/income deal, it’s not how much you make, it’s how you spend/invest it.

I personally know physicians that are living month-to-month, delinquent on their cellphone bills, pulling HELOC money to keep their heads above water.

I also know immigrants with poor educations who are truly wealthy, built up large real estate / business empires, etc.

Formal education gives you a fair amount of prestige, is valuable in certain social circles, and might get your foot in the door, that’s about it…

I can’t stand it when people stop speaking in generalities as far as this topic and start bringing up RARE examples of some guy they knew who dropped out of high school and now makes millions.

MOST PEOPLE without an education beyond high school will not be making upwards of 50K a year.

MOST PEOPLE who are doctors are NOT living month to month unless they got divorced several times or have 5 or 6 kids from different women and he owes all of them.[/quote]

My point was there’s little difference between the $30k/year call center employee and the $300k/year physician – the latter may have nicer toys and can sustain a loss of income for a longer duration (or not), fundamentally both are working for living. Same illusion, different game.