So all the headaches of renting:
Roommates
Lack of Privacy
With all the headaches of buying:
Beholden to Lender
Have to deal with upkeep and capital expenditures
With the added benefit of landlord duties:
Collecting rent
Dealing with complaints
Sounds great.
In tech a lot. With salaries in 200K+but they are in SF or NYC where down payment of 400k would not go far. With this down payment you can only buy one bedroom condo and have 3k monthly payment which is in line with what they pay in rent.
Our son bought a lovely four-bedroom house at 23 just before things went crazy which I posted here and above. But, he’s in the Army, so VA loan. He will be selling this house and moving to MD (not PA as posted above, Semper Gumby) in August. His VA loan eligibility and BAH (Basic Allowance for Housing) will reset, he will clear a nice profit from the GA house, he will be earning a captain’s salary by then, and he will have the addition of a wife and her income. They have no debt other than their cars. They will do a short-term rental near base while they look for either another house or a place in the city. His BAH will not cover the entire gap in this new market, but his salary will be able to handle the difference. I don’t recommend the military as a way to enter the housing market, but if you go that route as an officer, it appears they take care of you.
I already carry out landlord duties for our other rental properties (parents live far away from where we invest while I’m nearby).
I’m not too bothered about the difficulties involved. I honestly can’t complain - most of our tenants are upscale professionals and that’s the demographic I’d be targetting for a central city location.
No one is buying “houses between $500k to $750k” in NY or SF.
Who has mentioned a downpayment of 400k?
How many parents could even gift that large a downpayment to their kid(s)?
Not house but condos. And with that level of salaries those who lived with their parents for a year or so during Covid have that much of their own money for down payment
My parents didn’t pay for my house, and I intend to keep that tradition alive. If they’re grown adults, they can save up and buy one from their own earnings. If the cost of living is too high, there are 49 other states to choose from.
You would also probably have to file a gift tax return. Not a big deal but it’ may be technically required.
Assuming you are a young person, have you been pre-approved yet? Not prequalified.
I sold a piece of property to a 25 year old high earner last year, before the interest rate hikes started. He had a very difficult time getting through underwriting even with his parents putting up over 25% of the purchase price of the house as a downpayment. It took a committee waiver to get his loan approved hours before closing, and the only reason they approved it was because they could see the writing on the wall with the interest rate hikes and they wanted to close one last deal before they started to hit the mortgage market.
After 2008, regulations were enacted to prevent people with little to no credit history from buying homes. This might delay your dream but it is in your best interest. Many people like you with subprime loans were foreclosed upon in the Great Recession.
To add to the above, the $400k downplayment gift needs to be well documented as a true gift, not a disguised loan.
Interesting juxtaposition of experiences, conclusions and responses that you describe, specifically your decision to pay it forward by not helping pay now that “you have it”
Personally I would rather use my hard earned savings to support my kids in the hope they would be able to thrive and live near me. Different strokes.
For clarity…it’s not a “gift tax return” it’s a form you complete that details that your gifts exceeded the amount allowed annually…if the amount exceeds the annual amount. It is NOT filed with your tax return. It is sent separately. I think it’s form 708 or 709…
I believe it’s 709.
I can tell you…the form is not hard to do if it’s a one time gift from one person in the year.BUT if you gave the kid multiple gifts throughout the year, each one has to be listed separately…and if you want to split these with your spouse so that the amount is double what a single person gives…it’s a PITA to do.
We finally turned it over to our financial planner who offered to do it.
But we are so glad we were able to make this gift to one of our kids!
Am mulling what happens after S2 gets married. Odds are good that he and fiancee will split their time between here and Ukraine. In that case, it may make sense to add a suite on the main floor (with a full bath) to make this house more amenable to aging-in-place, but to also give them privacy and space for kiddos in the rest of the house. Not happening right now, but am thinking about future options.
H wants to leave more to S2 because S1 is set financially (I have real issues with this, but S1 agrees with H), but making some sort of arrangement in our will re: the house may be a win-win, if we are financially ok without selling the house.
Prices in Lviv are ridiculously low. They pay $360/mo (at current rates) for a 2 BR apt in the heart of Old Town Lviv. SFH would be $100-125k in a Lviv suburb.
“United States Gift (and Generation-Skipping Transfer) Tax Return”
IRS Form 709
The annual exclusion amount for 2023 is $17,000 ($34,000 per married couple) for gifts given to any one person from any one person (or couple). Any amount above the annual exclusion requires the filing of Form 709 by the gift giver.
Well, ShawD made an offer on a two-family home, which was accepted. Supposedly there were stronger offers but her letter to the seller was somehow persuasive (seems unlikely to me, but OK). Downpayment will come from her, her grandmother and us.
She will either rent the 2 BR apartment and then have a roommate or possibly two (both of her current roommates are interested) in the 3 BR one or rent the 3 BR one and have a roommate in the 2 BR unit. Her net out of pocket cost will be equal to her current rent.
When interest rates decrease and or if rents rise, she will move to breakeven (hence net saving relative to rent).
DD made an offer on a SFH in an adjoining zip code, which was accepted. In our area, she can’t afford to do this solo, so I am a co-signer on the mortgage.
Plan is to live there with current BF who will pay rent (1/2 the mortgage). When interest rates come down, and after they marry, they will use his VA loan to refinance and I will be released from mortgage.
Our agreement - I am a qualifying income only, if she cannot manage financially, the house gets sold.
This only works for us because I do not see myself needing to borrow for anything.
It will likely work out very well for you, but please have a plan (money saved) in case a roomie moves out, loses their job, it takes a while to replace a roomie. etc.
Translation: This buyer is more likely to close than the other guy.