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Buying vs. renting your domicile

135

Posts

  • EncEnc A Fool with Compassion Pronouns: He, Him, HisRegistered User regular
    edited June 2010
    Djeet,

    This is actually an argument my family had at our last gathering. My mother (interior designer) agrees with your point and has seen increased home sales and increased business(as they are usually connected). My uncle in lending disagrees and says that the trend he sees follows this model:

    BIG GRAPH (Open at own risk!):
    case-shiller-chart-updated.png
    Now, the idea here is that he expects the drop listed on this chart to happen much slower due to localized spikes, but the overall trend to go down to about $110k by 2012 before everything starts going up again. Lending seems to be reflecting this trend, as people are being forced to drop more down to get a mortgage and that is lowering the possibilities for the high end stuff and dropping prices across the board. Some areas are already recovering, but a lot are nowhere near the bottom.

    I think there is likely some truth to both sides. Certainly housing sales are up from what they have been over the last year (my mom actually solder her house last month and closes on the 10th), but most of those sales are from owners dropping the 50 or 100k below the appraisal price to move the property, and even more are likely due to the homeowners credit and short sales by banks and other mass-buying institutions saddles with excess properties they no longer want.

    At least, thats the case here. I can't speak for elsewhere and our market is seriously fucked up.

    Enc on
  • SkyCaptainSkyCaptain Registered User regular
    edited June 2010
    Enc wrote: »
    NODe wrote: »
    SkyCaptain wrote: »
    Between closing costs and the earnest payment, I only paid about $2500 down on my house. I pay more in the long run, but I can always pay down the principal when I have the capability to do so to offset the longer term mortgage. Losing that would suck, but it's not like losing $20,000 or more.

    Not to derail this thread, but is your house made out of cardboard? You put $2500 down and pay ~400 a month on your mortgage?
    I guess I wasn't really aware how soft the US housing market still is.

    My guess is that he lives in the boonies somewhere.
    Not quite the boonies. I have an FHA backed mortgage which only requires a 3.5% down payment. The cost of the house was $49,900 and I live in Smalltown USA. It's a nice, little town outside of the suburbs of Indianapolis, which means I get much lower property taxes, a much, much lower crime rate and the amenities of small town living while still being within an hours drive of all the things Indianapolis has to offer. I have a 30 year fixed rate mortgage at 5.5% and my property taxes are $0 because of exemptions. The house was trashed from what my neighbors tell me. Horrible people living in it. Trashed the yard, the walls, the carpet was horrible.

    The company that bought it, paid less then $10,000 for it and put $20,000 into gutting it completely and renovating it. New carpet, new drywall, re-wired the entire house. All new appliances (dryer, washer, refrigerator) and the seller even gave me a check for $400 at closing to buy a stove since he didn't have time to have one put in and it was part of the purchase agreement.

    I've put quite a bit of money into it to fix some bare spots in the yard, paint the walls, and put up blinds, curtains, and a screen door (that was a chunk of change), but overall, I'm very happy with the deal I got. If the OP can find something like I did... he should buy. I have about ten to fifteen years before I would be worried about new neighbors. That's about when they'll all start dying off and the homes will be sold haha.

    SkyCaptain on
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  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    Djeet wrote: »
    Enc wrote: »
    -Your own place that, once paid off, you can use as an asset (only long term).

    For those of you considering your mortgage costs as something recoverable, I would say you are no longer living in the real world. This was the case, but housing prices (globally) are still falling and will continue to do so for the foreseeable future. Expectations from people in the industry are leveling out around midway through 2012, with slow gains for the next ten years. Local markets may (and likely will) rise and fall drastically over that time due to the lack of stability in the housing market, but counting on your area's values rising and being able to sell your home in the short-to-mid term is unrealistic in today's market.

    I bought a house 5 years ago for $200K, comparables in the area sold last month average between $280-300K (I know this cause I just contested my taxes and the appraisal district sends out an info pack that includes all sales in the area over the previous 8 months). Whether or not you can do well in the near or medium term is very dependent upon your local market.

    Also your house can be an asset even in the short or medium term. A friend of mine owns several duplexes and is about $800/month positive cash flow (net of mortgage, taxes, and insurance). Unless there are favorable school re-districting soon I expect to lease a place a few blocks away and rent my own house out. If rents stay flat I'll likely be several hundred monthly positive cash flow on my own house.

    uh, that still isn't an asset because you owe much more than you're bringing in from rent
    that's not how assets vs liabilities work
    being able to make some money off something you owe a couple hundred grand on doesn't make that couple hundred grand in debt magically an asset, it's still very much a liability

    not advising against buying, just clarifying that the money you owe on a house is NOT an asset except in magical reverse logic land where you frolic with unicorns and gumdrop fairies

    Druhim on
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  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    SkyCaptain wrote: »
    Enc wrote: »
    NODe wrote: »
    SkyCaptain wrote: »
    Between closing costs and the earnest payment, I only paid about $2500 down on my house. I pay more in the long run, but I can always pay down the principal when I have the capability to do so to offset the longer term mortgage. Losing that would suck, but it's not like losing $20,000 or more.

    Not to derail this thread, but is your house made out of cardboard? You put $2500 down and pay ~400 a month on your mortgage?
    I guess I wasn't really aware how soft the US housing market still is.

    My guess is that he lives in the boonies somewhere.
    Not quite the boonies. I have an FHA backed mortgage which only requires a 3.5% down payment. The cost of the house was $49,900 and I live in Smalltown USA. It's a nice, little town outside of the suburbs of Indianapolis, which means I get much lower property taxes, a much, much lower crime rate and the amenities of small town living while still being within an hours drive of all the things Indianapolis has to offer. I have a 30 year fixed rate mortgage at 5.5% and my property taxes are $0 because of exemptions. The house was trashed from what my neighbors tell me. Horrible people living in it. Trashed the yard, the walls, the carpet was horrible.

    The company that bought it, paid less then $10,000 for it and put $20,000 into gutting it completely and renovating it. New carpet, new drywall, re-wired the entire house. All new appliances (dryer, washer, refrigerator) and the seller even gave me a check for $400 at closing to buy a stove since he didn't have time to have one put in and it was part of the purchase agreement.

    I've put quite a bit of money into it to fix some bare spots in the yard, paint the walls, and put up blinds, curtains, and a screen door (that was a chunk of change), but overall, I'm very happy with the deal I got. If the OP can find something like I did... he should buy. I have about ten to fifteen years before I would be worried about new neighbors. That's about when they'll all start dying off and the homes will be sold haha.

    Here's hoping your house wasn't actually a meth lab.

    Druhim on
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  • DjeetDjeet Registered User regular
    edited June 2010
    Druhim wrote: »
    uh, that still isn't an asset because you owe much more than you're bringing in from rent
    that's not how assets vs liabilities work
    being able to make some money off something you owe a couple hundred grand on doesn't make that couple hundred grand in debt magically an asset, it's still very much a liability

    not advising against buying, just clarifying that the money you owe on a house is NOT an asset except in magical reverse logic land where you frolic with unicorns and gumdrop fairies

    It's both an asset and a liability. If I can sell it for more then I owe on it it's a net asset. If I owe on it more then I can get for it it's a net liability. If it's generating net positive cash flow for the owner it's most definitely an asset.

    Being a prat about it doesn't make you right and it's not nearly as cool as your probably think it is.

    Djeet on
  • EncEnc A Fool with Compassion Pronouns: He, Him, HisRegistered User regular
    edited June 2010
    SkyCaptain wrote: »
    Enc wrote: »
    NODe wrote: »
    SkyCaptain wrote: »
    Between closing costs and the earnest payment, I only paid about $2500 down on my house. I pay more in the long run, but I can always pay down the principal when I have the capability to do so to offset the longer term mortgage. Losing that would suck, but it's not like losing $20,000 or more.

    Not to derail this thread, but is your house made out of cardboard? You put $2500 down and pay ~400 a month on your mortgage?
    I guess I wasn't really aware how soft the US housing market still is.

    My guess is that he lives in the boonies somewhere.
    Not quite the boonies. I have an FHA backed mortgage which only requires a 3.5% down payment. The cost of the house was $49,900 and I live in Smalltown USA. It's a nice, little town outside of the suburbs of Indianapolis, which means I get much lower property taxes, a much, much lower crime rate and the amenities of small town living while still being within an hours drive of all the things Indianapolis has to offer. I have a 30 year fixed rate mortgage at 5.5% and my property taxes are $0 because of exemptions. The house was trashed from what my neighbors tell me. Horrible people living in it. Trashed the yard, the walls, the carpet was horrible.

    The company that bought it, paid less then $10,000 for it and put $20,000 into gutting it completely and renovating it. New carpet, new drywall, re-wired the entire house. All new appliances (dryer, washer, refrigerator) and the seller even gave me a check for $400 at closing to buy a stove since he didn't have time to have one put in and it was part of the purchase agreement.

    I've put quite a bit of money into it to fix some bare spots in the yard, paint the walls, and put up blinds, curtains, and a screen door (that was a chunk of change), but overall, I'm very happy with the deal I got. If the OP can find something like I did... he should buy. I have about ten to fifteen years before I would be worried about new neighbors. That's about when they'll all start dying off and the homes will be sold haha.

    Sounds like a good deal. In Central Florida, a former meth lab would start at $100,000, possibly twice that if it were in a decent location. Most modest homes and townhouses are now at $150-$175k starting. A few years ago, if you could get a property that wasn't in Christmas for under 200k you were getting a steal.

    Djeet, there are a lot of ifs in that equation. You're right, of course. But I would caution you that there are a lot of odds involved concerning actually making enough off of the rent to recoup your losses from the purchase and being able to sell it for a gross profit. Not that it would be impossible, just highly unlikely in the short term.

    Enc on
  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    Djeet wrote: »
    Druhim wrote: »
    uh, that still isn't an asset because you owe much more than you're bringing in from rent
    that's not how assets vs liabilities work
    being able to make some money off something you owe a couple hundred grand on doesn't make that couple hundred grand in debt magically an asset, it's still very much a liability

    not advising against buying, just clarifying that the money you owe on a house is NOT an asset except in magical reverse logic land where you frolic with unicorns and gumdrop fairies

    It's both an asset and a liability. If I can sell it for more then I owe on it it's a net asset. If I owe on it more then I can get for it it's a net liability. If it's generating net positive cash flow for the owner it's most definitely an asset.

    Being a prat about it doesn't make you right and it's not nearly as cool as your probably think it is.

    You don't realize the net gain until you actually sell it, so it's still a liability until you have it paid off or actually manage to sell it because value is not static and you may well end up selling at a loss (as many recent sellers can attest). If it's generating cash flow, that cash is an asset but you still have a much larger liability in the amount you owe on the house. And that cash flow from renting is by no means assured. You could end up with an empty rental or having to rent at a lower rate but still having to pay off the same mortgage. You can call me a prat all you want, but I'm just being clear that the amount you owe on your house is a liability, pure and simple. There's just no way around it and any claims to the contrary are attempts to confuse (or are coming from someone who's confused).

    Again, I absolutely am not and never have suggested that buying is wrong or stupid. But lots of people have silly notions about how a house is this big asset even when they've only paid down a quarter of the capital on it. No, it's not.

    Druhim on
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  • DiscoZombieDiscoZombie Registered User
    edited June 2010
    Man, if I could pay $50k for a house, I'd totally do that. Anything worth living in around the Philly area seems to go for $300k+. Well, I could probably get a house in a not-so-nice neighborhood for $50k, but I'd rather rent than do that. I haven't exactly done any serious shopping around yet, but I have it in my head that buying a house wouldn't be worth the trouble unless it was pretty darn nice, but I cannot afford $texas.

    DiscoZombie on
  • ImprovoloneImprovolone Registered User regular
    edited June 2010
    Enc wrote: »
    SkyCaptain wrote: »
    Enc wrote: »
    NODe wrote: »
    SkyCaptain wrote: »
    Between closing costs and the earnest payment, I only paid about $2500 down on my house. I pay more in the long run, but I can always pay down the principal when I have the capability to do so to offset the longer term mortgage. Losing that would suck, but it's not like losing $20,000 or more.

    Not to derail this thread, but is your house made out of cardboard? You put $2500 down and pay ~400 a month on your mortgage?
    I guess I wasn't really aware how soft the US housing market still is.

    My guess is that he lives in the boonies somewhere.
    Not quite the boonies. I have an FHA backed mortgage which only requires a 3.5% down payment. The cost of the house was $49,900 and I live in Smalltown USA. It's a nice, little town outside of the suburbs of Indianapolis, which means I get much lower property taxes, a much, much lower crime rate and the amenities of small town living while still being within an hours drive of all the things Indianapolis has to offer. I have a 30 year fixed rate mortgage at 5.5% and my property taxes are $0 because of exemptions. The house was trashed from what my neighbors tell me. Horrible people living in it. Trashed the yard, the walls, the carpet was horrible.

    The company that bought it, paid less then $10,000 for it and put $20,000 into gutting it completely and renovating it. New carpet, new drywall, re-wired the entire house. All new appliances (dryer, washer, refrigerator) and the seller even gave me a check for $400 at closing to buy a stove since he didn't have time to have one put in and it was part of the purchase agreement.

    I've put quite a bit of money into it to fix some bare spots in the yard, paint the walls, and put up blinds, curtains, and a screen door (that was a chunk of change), but overall, I'm very happy with the deal I got. If the OP can find something like I did... he should buy. I have about ten to fifteen years before I would be worried about new neighbors. That's about when they'll all start dying off and the homes will be sold haha.

    Sounds like a good deal. In Central Florida, a former meth lab would start at $100,000, possibly twice that if it were in a decent location. Most modest homes and townhouses are now at $150-$175k starting. A few years ago, if you could get a property that wasn't in Christmas for under 200k you were getting a steal.

    Djeet, there are a lot of ifs in that equation. You're right, of course. But I would caution you that there are a lot of odds involved concerning actually making enough off of the rent to recoup your losses from the purchase and being able to sell it for a gross profit. Not that it would be impossible, just highly unlikely in the short term.
    Florida property values are still out of control. In Miami there is an absolute glut of empty condos still trying to be sold for outrageous prices.

    Improvolone on
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  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    Yeah, here in Seattle there are still quite a few condos available that were built in the last couple of years. Some places have just suspended sales for now rather than sell them at a lower price.

    Druhim on
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  • DietarySupplementDietarySupplement Registered User regular
    edited June 2010
    Keys to home ownership as learned by me in two years of ownership:

    1. Tax deductions and credits are awesome, and
    2. Always clean your gutters. Always.

    DietarySupplement on
  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    Dhalphir wrote: »
    Being able to do what you like with your own house is all the reason anyone should need to buy rather than rent, assuming you can afford either.

    No asinine rules about owning pets, no inspections to verify such, no rules about what you can and can't modify about the house.

    This is wrong when considering HOA. HOA are the devil, I don't care about how nice the house is.

    mrt144 on
  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    Djeet wrote: »
    Enc wrote: »
    snip
    In theory your house would sell for $280-300. You would still need to find a buyer and close the deal before the market in your area shifts, and going on the global rates, markets are trending down rather than up. Again, local markets are going to spike up and down for a while, but the overall scheme is going to be a downward trend for a while, though exactly how long is anyone's guess.

    Renting out your own home is a good idea for making it into an asset, but then you aren't really living there anymore. Considering that the question in the OP was concerning living in home versus renting, buying then renting out the place and renting another apartment would be a rather oblique way of going about making money and one that in many places failed terribly*. Where I am, for example, rental values have dropped ridiculously. Four years ago you couldn't find a one bedroom apartment for less than $800 a month. Now that same price is baseline for most small houses. Most private renters in the area are speculators who are just trying to recoup some of their losses after being saddled with a handful of houses they wanted to flip.

    *Edit: To qualify, this is a sound plan in some markets and one that can be very successful. I haven't heard of any cases of it working since the crash, but my experience is limited to Central Florida and we were hit harder than most places.


    I suppose it depends upon your definition of trending. NAR says existing housing sales up 7.6% in April over March (and in March it was up 7%), and up 22.8% year over year. No doubt that was buoyed up by the tax credit, and we're not going to get good data til the end of 2010, but I wouldn't be surprised if year over year 2010 existing sales is up 10-15%. Personally I think (barring some major event) the worst is behind us, but you seem to think the worst is ahead.

    Not telling the OP to buy then rent out, just sharing that it was an option that monetizes a house being an asset. If you bought a house at a good price in an area that is likely to grow and need to move for whatever reason you could possibly retain ownership of the house, hire property management, and try to take advantage of long-term capital appreciation. I'm only considering it to get my kid into a more favorable school district; I quite like the house I live in.

    Again a lot of this has to do with location, If I bought a house in 2005 in Detroit I wouldn't be in this situation; I'd likely still be upsidedown. Some of it has to do with market segmentation: housing values here for $150-300K didn't ever see much softening, whereas houses over $2mil got whacked and are recovering slower. Some is just luck.

    The YoY numbers are pretty much junk considering the flux that we've been in.

    mrt144 on
  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    DVG wrote: »
    There's a financial advisor that comes on our local radio station every so often for a special segment that talks about some kind of mortgage acceleration program that revolves around getting a HELOC, and keeping the money in an account that pays a portion of your mortgage every day instead of once a month, so the house ends up paid for and done in 5-7 years instead of 15-30.

    I have no idea about that actual feasibility of such a thing, but it's something I'm keeping in the back of my head to investigate for when I look at buying a house in a few years.

    It sounds good on paper but in practice it can be harder than it seems;

    1. You need to good credit to get the best rate on the HELOC and in an amount that has an impact
    2. You need to put the HELOC money in something that generates a return higher than the HELOC interest which carries more risk to it (yield's going down or remaining static while HELOC rates go up would fuck you so hard in this)
    3. It may make use of margin which is yet another hurdle to overcome. There are some brokers with amazing margin rates and others that aren't amazing. 1 and 2 play into this because some brokers change margin rates based on amount of equity. This also can lead to other problems such as margin calls if the amount of equity on the investment drops below 30%
    4. Tax liability on investment made. This will also cut into the amount you're getting per month.
    5. There is no prepayment penalty on the mortgage itself.

    Now several of these things are tax deductable BUT you don't see those benefits each month.

    mrt144 on
  • SkyCaptainSkyCaptain Registered User regular
    edited June 2010
    mrt144 wrote: »
    Dhalphir wrote: »
    Being able to do what you like with your own house is all the reason anyone should need to buy rather than rent, assuming you can afford either.

    No asinine rules about owning pets, no inspections to verify such, no rules about what you can and can't modify about the house.

    This is wrong when considering HOA. HOA are the devil, I don't care about how nice the house is.

    Fuck HOA's, fuck them in the ass with a glass encrusted, mold covered corn cob on a shit covered stick. Never, ever buy a house that is part of a neighborhood Housing Association.

    SkyCaptain on
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  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    SkyCaptain wrote: »
    mrt144 wrote: »
    Dhalphir wrote: »
    Being able to do what you like with your own house is all the reason anyone should need to buy rather than rent, assuming you can afford either.

    No asinine rules about owning pets, no inspections to verify such, no rules about what you can and can't modify about the house.

    This is wrong when considering HOA. HOA are the devil, I don't care about how nice the house is.

    Fuck HOA's, fuck them in the ass with a glass encrusted, mold covered corn cob on a shit covered stick. Never, ever buy a house that is part of a neighborhood Housing Association.

    It's funny that I say that considering I own a condo in a co-op that has a laundry list of rules about renting out units, selling your unit, etc etc. But none of them are tyrannical and everyone votes and it works out pretty well.

    mrt144 on
  • GungHoGungHo Registered User regular
    edited June 2010
    mrt144 wrote: »
    Dhalphir wrote: »
    Being able to do what you like with your own house is all the reason anyone should need to buy rather than rent, assuming you can afford either.

    No asinine rules about owning pets, no inspections to verify such, no rules about what you can and can't modify about the house.

    This is wrong when considering HOA. HOA are the devil, I don't care about how nice the house is.

    Talk about a bunch of busy-bodied perverts without enough shit to do...

    GungHo on
  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    HOAs aren't busy bodies, it's in the damn contract
    if you don't want that, don't move into an HOA
    if you do, then go ahead and move into one

    and perverts? what?

    Druhim on
    belruelotterav-1.jpg
  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    Druhim wrote: »
    HOAs aren't busy bodies, it's in the damn contract
    if you don't want that, don't move into an HOA
    if you do, then go ahead and move into one

    and perverts? what?

    You're probably a board member of one.

    mrt144 on
  • strebaliciousstrebalicious Registered User regular
    edited June 2010
    When I moved to Washington in 2004, people said I was crazy for not buying a home. Forward to 2008 when I left and housing prices were shit and no one was buying. Glad I didn't deal with all that hassle.

    I don't mind renting. Being in the military and moving every 3 years just makes it easier on me. Maybe once I get closer to retirement. But renting also has the added advantage of being a lot easier to leave a place in 6-12 months (however long you sign a lease) if you hate the place.

    strebalicious on
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  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    mrt144 wrote: »
    Druhim wrote: »
    HOAs aren't busy bodies, it's in the damn contract
    if you don't want that, don't move into an HOA
    if you do, then go ahead and move into one

    and perverts? what?

    You're probably a board member of one.

    wow, seriously?

    Druhim on
    belruelotterav-1.jpg
  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    Druhim wrote: »
    mrt144 wrote: »
    Druhim wrote: »
    HOAs aren't busy bodies, it's in the damn contract
    if you don't want that, don't move into an HOA
    if you do, then go ahead and move into one

    and perverts? what?

    You're probably a board member of one.

    wow, seriously?

    Are you really that naive about how bad HOA can be and the general negative perception of them? Maybe you work for NAR?

    mrt144 on
  • JasconiusJasconius sword criminal mad onlineRegistered User regular
    edited June 2010
    HOA's can serve legitimate functions, and often do.

    Jasconius on
  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    Jasconius wrote: »
    HOA's can serve legitimate functions, and often do.

    Yeah, obviously but if you get on the wrong side of them or have some real asshats on the board or if you really think your house is yours to affect in any way you want...then it sucks.

    mrt144 on
  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    I just find it hilarious that you assume I'm an HOA board member because I say they're not vile and evil. Like any other contract, just be aware of what you're getting into.

    Druhim on
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  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    But go ahead and assert again how I must be in the system.

    Druhim on
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  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    Druhim wrote: »
    I just find it hilarious that you assume I'm an HOA board member because I say they're not vile and evil. Like any other contract, just be aware of what you're getting into.

    Contracts in themselves don't make things moral or immoral, evil or good. Just because theres a contract doesn't mean the actions of HOA and board members are morally ambiguous.

    mrt144 on
  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    mrt144 wrote: »
    Druhim wrote: »
    I just find it hilarious that you assume I'm an HOA board member because I say they're not vile and evil. Like any other contract, just be aware of what you're getting into.

    Contracts in themselves don't make things moral or immoral, evil or good.

    Congratulations, you agree with me. So why do you think I'm with an HOA?

    Druhim on
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  • mrt144mrt144 King of the Numbernames Registered User regular
    edited June 2010
    Druhim wrote: »
    mrt144 wrote: »
    Druhim wrote: »
    I just find it hilarious that you assume I'm an HOA board member because I say they're not vile and evil. Like any other contract, just be aware of what you're getting into.

    Contracts in themselves don't make things moral or immoral, evil or good.

    Congratulations, you agree with me. So why do you think I'm with an HOA?

    Cause you seem to think that they're fine and dandy, simply because there is a contract signed. Your reasoning seems to be that of one of those truly vile HOA members that says "But theres a contract!!! OMG STFU GTFO!"

    HOA are vile in spite of the contract.

    mrt144 on
  • SkyCaptainSkyCaptain Registered User regular
    edited June 2010
    A HOA was recently in the news for placing a lien on a house and foreclosing on it... while the owner was deployed overseas in the military. His wife had a mental breakdown and was unable to function day to day. COuldn't make the payments on the HOA fees. The house was owned by him and his wife free and clear. No mortgage. It was just a few hundred or thousand dollars in HOA fees that were owed.

    The HOA foreclosed and sold the house at rock bottom prices to get their fees and that was it. So again, fuck HOA'S with a glass-encrusted corn cob slathered in pig shit.

    SkyCaptain on
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  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    SkyCaptain wrote: »
    A HOA was recently in the news for placing a lien on a house and foreclosing on it... while the owner was deployed overseas in the military. His wife had a mental breakdown and was unable to function day to day. COuldn't make the payments on the HOA fees. The house was owned by him and his wife free and clear. No mortgage. It was just a few hundred or thousand dollars in HOA fees that were owed.

    The HOA foreclosed and sold the house at rock bottom prices to get their fees and that was it. So again, fuck HOA'S with a glass-encrusted corn cob slathered in pig shit.

    But those fees are just as much their responsibility as the property tax. Would you be crying about how unfair the state was because they didn't let their unpaid property tax slide? They agreed to pay those fees when they bought. And even if the HOA was out of line, I don't see what that has to do with HOAs in general. I would personally be very leery of moving into an HOA, but that's me. For some people it makes sense. Your anecdote is no more proof of HOAs being corrupt than a single Russian being involved in the mafia is proof of all Russians being criminals.

    Druhim on
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  • mcdermottmcdermott Registered User regular
    edited June 2010
    Druhim wrote: »
    SkyCaptain wrote: »
    A HOA was recently in the news for placing a lien on a house and foreclosing on it... while the owner was deployed overseas in the military. His wife had a mental breakdown and was unable to function day to day. COuldn't make the payments on the HOA fees. The house was owned by him and his wife free and clear. No mortgage. It was just a few hundred or thousand dollars in HOA fees that were owed.

    The HOA foreclosed and sold the house at rock bottom prices to get their fees and that was it. So again, fuck HOA'S with a glass-encrusted corn cob slathered in pig shit.

    But those fees are just as much their responsibility as the property tax. Would you be crying about how unfair the state was because they didn't let their unpaid property tax slide? They agreed to pay those fees when they bought. And even if the HOA was out of line, I don't see what that has to do with HOAs in general. I would personally be very leery of moving into an HOA, but that's me. For some people it makes sense. Your anecdote is no more proof of HOAs being corrupt than a single Russian being involved in the mafia is proof of all Russians being criminals.

    I actually didn't want to believe SC's story, so I googled it. Sure enough, their home was foreclosed on for eight hundred dollars of unpaid HOA dues. Apparently it was only a month or two. Then their $300,000 house was sold for $3,500 (it has since been flipped, of course).

    Apparently there was no court order needed in that state (Texas), and they didn't even need to personally notify the owner...just a first class letter (not even certified), and it was done.

    Supposedly they're looking into the SSCRA (protects soldiers while deployed)...theoretically that's supposed to put any civil actions against a servicemember on hold until they get back (including foreclosure). No idea if they'll be able to reverse the transactions and keep the house. But if it wasn't a servicemember? They'd just be straight up hosed (and they probably are anyway).

    So yeah, at least in a state where that's allowed (foreclosure without court order) I'd avoid HOAs like the fucking plague.


    Oh, and if I heard my state foreclosed on a house that was owned free and clear because the taxes were a month late, and then sold it for 1% of its value? I'd be writing the fucking governor.

    mcdermott on
  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    mcdermott wrote: »
    Druhim wrote: »
    SkyCaptain wrote: »
    A HOA was recently in the news for placing a lien on a house and foreclosing on it... while the owner was deployed overseas in the military. His wife had a mental breakdown and was unable to function day to day. COuldn't make the payments on the HOA fees. The house was owned by him and his wife free and clear. No mortgage. It was just a few hundred or thousand dollars in HOA fees that were owed.

    The HOA foreclosed and sold the house at rock bottom prices to get their fees and that was it. So again, fuck HOA'S with a glass-encrusted corn cob slathered in pig shit.

    But those fees are just as much their responsibility as the property tax. Would you be crying about how unfair the state was because they didn't let their unpaid property tax slide? They agreed to pay those fees when they bought. And even if the HOA was out of line, I don't see what that has to do with HOAs in general. I would personally be very leery of moving into an HOA, but that's me. For some people it makes sense. Your anecdote is no more proof of HOAs being corrupt than a single Russian being involved in the mafia is proof of all Russians being criminals.

    I actually didn't want to believe SC's story, so I googled it. Sure enough, their home was foreclosed on for eight hundred dollars of unpaid HOA dues. Apparently it was only a month or two. Then their $300,000 house was sold for $3,500 (it has since been flipped, of course).

    Apparently there was no court order needed in that state (Texas), and they didn't even need to personally notify the owner...just a first class letter (not even certified), and it was done.

    Supposedly they're looking into the SSCRA (protects soldiers while deployed)...theoretically that's supposed to put any civil actions against a servicemember on hold until they get back (including foreclosure). No idea if they'll be able to reverse the transactions and keep the house. But if it wasn't a servicemember? They'd just be straight up hosed (and they probably are anyway).

    So yeah, at least in a state where that's allowed (foreclosure without court order) I'd avoid HOAs like the fucking plague.


    Oh, and if I heard my state foreclosed on a house that was owned free and clear because the taxes were a month late, and then sold it for 1% of its value? I'd be writing the fucking governor.

    That certainly is raw. However that doesn't change the fact that it's one example that hardly establishes that HOAs are bad. They're bad only in the sense of not being what you want if you don't want to live in an HOA.

    Druhim on
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  • mcdermottmcdermott Registered User regular
    edited June 2010
    Druhim wrote: »
    That certainly is raw. However that doesn't change the fact that it's one example that hardly establishes that HOAs are bad. They're bad only in the sense of not being what you want if you don't want to live in an HOA.

    I don't know, I think an organization that has the ability to take away my free and clear house without a court order because I didn't mow the grass can legitimately be called "bad," regardless of whether they exercise that option. Like, the very idea of it is probably a "bad thing."

    Of course, that only applies in states that allow such fuckmuppetry. No idea if any others do.

    mcdermott on
  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    mcdermott wrote: »
    Druhim wrote: »
    That certainly is raw. However that doesn't change the fact that it's one example that hardly establishes that HOAs are bad. They're bad only in the sense of not being what you want if you don't want to live in an HOA.

    I don't know, I think an organization that has the ability to take away my free and clear house without a court order because I didn't mow the grass can legitimately be called "bad," regardless of whether they exercise that option. Like, the very idea of it is probably a "bad thing."

    Of course, that only applies in states that allow such fuckmuppetry. No idea if any others do.

    How is that a bad thing if you agreed to that when you bought? This is the key point. If you buy into an HOA where the lawn is required to be mowed twice a week, otherwise you're assessed a stiff fine, you can hardly complain when they do just that. It's exactly what you bought into. It's like complaining about getting a fish dinner when you don't like fish, even though you ordered a fish dinner. Don't like fish? Don't order it. Don't want to live in an HOA where you're required to mow the lawn twice a week? Then don't buy into such an HOA. If you DO want to live in such an HOA, then arguably that would be a good choice.

    Druhim on
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  • mcdermottmcdermott Registered User regular
    edited June 2010
    Druhim wrote: »
    mcdermott wrote: »
    Druhim wrote: »
    That certainly is raw. However that doesn't change the fact that it's one example that hardly establishes that HOAs are bad. They're bad only in the sense of not being what you want if you don't want to live in an HOA.

    I don't know, I think an organization that has the ability to take away my free and clear house without a court order because I didn't mow the grass can legitimately be called "bad," regardless of whether they exercise that option. Like, the very idea of it is probably a "bad thing."

    Of course, that only applies in states that allow such fuckmuppetry. No idea if any others do.

    How is that a bad thing if you agreed to that when you bought? This is the key point. If you buy into an HOA where the lawn is required to be mowed twice a week, otherwise you're assessed a stiff fine, you can hardly complain when they do just that. It's exactly what you bought into. It's like complaining about getting a fish dinner when you don't like fish, even though you ordered a fish dinner. Don't like fish? Don't order it. Don't want to live in an HOA where you're required to mow the lawn twice a week? Then don't buy into such an HOA. If you DO want to live in such an HOA, then arguably that would be a good choice.

    Just because a contract is entered into by choice doesn't mean the terms can't be unconscionable. Unless you're an Ayn Rand fan. In which case see you in D&D.

    mcdermott on
  • DruhimDruhim Registered User, ClubPA regular
    edited June 2010
    Tell me how it's unconscionable to fine you for not mowing your lawn when you willingly chose to move into an HOA where that's required and you know it can result in a fine? I mean, presumably you agreed to it because you wanted to live in a neighborhood where the lawns weren't all overgrown, but the rules that apply to your neighbors apply to you as well. Explain what exactly is "wrong" about that. And none of this vague "theoretically you could enter into a contract that's still unconscionable" bull.

    Druhim on
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  • mcdermottmcdermott Registered User regular
    edited June 2010
    Druhim wrote: »
    Tell me how it's unconscionable to fine you for not mowing your lawn when you willingly chose to move into an HOA where that's required and you know it can result in a fine? I mean, presumably you agreed to it because you wanted to live in a neighborhood where the lawns weren't all overgrown, but the rules that apply to your neighbors apply to you as well. Explain what exactly is "wrong" about that. And none of this vague "theoretically you could enter into a contract that's still unconscionable" bull.

    No, unconscionable is being able to take your house without a court order, and sell it for 1% of its value, for overdue dues/fines that are even less than 1% of its value.

    Here, let me quote myself:
    I don't know, I think an organization that has the ability to take away my free and clear house without a court order because I didn't mow the grass can legitimately be called "bad," regardless of whether they exercise that option. Like, the very idea of it is probably a "bad thing."

    Of course, that only applies in states that allow such fuckmuppetry. No idea if any others do.

    Bolded, for her pleasure. I wasn't talking about HOAs in general. HOAs in general are a fucking headache, and I'd recommend avoiding them, but they have their pros and cons.

    HOAs in Texas (and any state that allows similar actions) are bad. Just straight up bad. Whether or not they ever do the kind of thing that happened in this case, an organization having the ability to do so is a terrible, terrible idea. At which point I'd suggest that if you are buying a house in Texas, buying one under an HOA is a straight-up bad decision.

    mcdermott on
  • SkyCaptainSkyCaptain Registered User regular
    edited June 2010
    Druhim wrote: »
    SkyCaptain wrote: »
    A HOA was recently in the news for placing a lien on a house and foreclosing on it... while the owner was deployed overseas in the military. His wife had a mental breakdown and was unable to function day to day. COuldn't make the payments on the HOA fees. The house was owned by him and his wife free and clear. No mortgage. It was just a few hundred or thousand dollars in HOA fees that were owed.

    The HOA foreclosed and sold the house at rock bottom prices to get their fees and that was it. So again, fuck HOA'S with a glass-encrusted corn cob slathered in pig shit.

    But those fees are just as much their responsibility as the property tax. Would you be crying about how unfair the state was because they didn't let their unpaid property tax slide? They agreed to pay those fees when they bought. And even if the HOA was out of line, I don't see what that has to do with HOAs in general. I would personally be very leery of moving into an HOA, but that's me. For some people it makes sense. Your anecdote is no more proof of HOAs being corrupt than a single Russian being involved in the mafia is proof of all Russians being criminals.

    Just the fact that an HOA can do this shit is enough for me to never, ever buy into a development where there is a HOA. I don't care if they have a perfect reputation. I would never buy where there's a HOA. I wouldn't even rent where there's a HOA. There are ordinances you can use to take care of problems in a neighborhood.

    Giving random people the ability to foreclose on a house? Especially that of a serviceman in the national military and deployed? That's just wrong. I hope he gets his house back and the HOA is put so deep into debt it's dismantled and the guy never has to worry about it again. If I were him and I got the house back, I'd put up ten feet tall privacy fences and paint Looney Toon cartoon characters all around the outside, flipping the bird at the neighbors.

    SkyCaptain on
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  • KidDynamiteKidDynamite Registered User regular
    edited June 2010
    After reading some of the horror stories about HOAs, I am really glad we don't have one.

    What is process if they start talking about one in our hood? Is it a vote?

    If they ever do, I'm going to paint my house flourescent pink with green trim before the regulations to into effect.

    KidDynamite on
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