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Buy a house. No just buy one. Go on buy a house. Just do it. Buy one.


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https://www.theguardian.com/money/2020/dec/14/buy-a-home-now-house-prices-fall-stamp-duty-holiday

 

...it seems to make sense to take the minimal risk of using some of your inheritance so that you can buy sooner rather than later

It is also worth pointing out that if you bought somewhere and house prices then crashed, you wouldn’t have wasted your inheritance because it would have been spent on a home of your own. What your house is worth while you are living in it doesn’t really matter.

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The same journalist in another response to a reader said just borrow more money until you retire and don't worry about leaving anything to your kids etc.

Contrasting with the above one which says you got a nice inheritance so just f#ck it and buy a house irrespective of whether those means blowing the inheritance.

https://uk.finance.yahoo.com/news/63-options-paying-back-interest-070050604.html

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The same journalist in another response to a reader said just borrow more money until you retire and don't worry about leaving anything to your kids etc.

Contrasting with the above one which says you got a nice inheritance so just f#ck it and buy a house irrespective of whether those means blowing the inheritance.

https://uk.finance.yahoo.com/news/63-options-paying-back-interest-070050604.html

Is there any metric accounting for house sales based on inheritance? Either house being sold or house being bought with inheritance money?

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If you already own with no/low leverage or have a secure tenancy, then a much better option for a inheritance north of £500k is to divide it between cash and a balanced portfolio and put yourself here (1:36 for the speech):

Now, he refers to $2.5M, but that's to live the lifestyle he's used to and be able to face off powerful people and organisations.  Also, healthcare in the USA is expensive, a consideration at his age.  The advice on drinking is also golden.

In the UK With a bit of work I think £750k-£1M would be enough, or £500k if you have 75%+ equity in home you like with sensible running costs.

Hell, even £100k or so puts you in the "Oh, I think we can end the conversation here, you are under the misapprehension that I need this job" category.  No need to be so direct though, just make sure your boss knows you are well in the black, (and/or have a chunky pension if over 50), and the conversation won't arise in the first place.  You do need to be in a job that's a pain to re-fill, and adds genuine value.

 

 

Edited by hotblack42
grama
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The same journalist in another response to a reader said just borrow more money until you retire and don't worry about leaving anything to your kids etc.

Contrasting with the above one which says you got a nice inheritance so just f#ck it and buy a house irrespective of whether those means blowing the inheritance.

https://uk.finance.yahoo.com/news/63-options-paying-back-interest-070050604.html

To be honest, if someone has easy money lying about (inheritance) and if they borrow a bit on a repayment basis then there is little disadvantage to buying in comparison to renting. Renting would eat into an inheritance too. In general renting does work out more expensive on almost every basis except when there is a crash - so things like STR or holding out from buying are all about timing.

I did and 18 month STR back in 2008/9, not completely deliberate, but it worked out beautifully. At that point a lot of property firms were desperate for cash, and we managed to pickup a house acquired on a part exchange by a developer selling new builds. Our original offer, £160k below the asking price was rejected, but 12 months later they accepted £155k below their asking price.

Interestingly, the current situation seems very different from 2008/9. I think the banking crisis had a lot of very rich people nervous, this time round it seems to be hitting the poor even harder. The token bailouts are just to stop looting.

 

 

Edited by Mikhail Liebenstein
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I have to agree with the article. If you are buying a home to live in, its the right choice to buy. You won't save money by choosing renting over buying long term.

She's also said living and working in a small rented flat isn't doing her mental health any good and I can definitely understand this point.

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I have to agree with the article. If you are buying a home to live in, its the right choice to buy. You won't save money by choosing renting over buying long term.

That's demonstrably untrue. Look up the mortgage prisoner threads.

 

She's also said living and working in a small rented flat isn't doing her mental health any good and I can definitely understand this point.

Well don't rent a tiny flat. They're some of the worst value rentals I've seen.

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That's demonstrably untrue. Look up the mortgage prisoner threads.

Well don't rent a tiny flat. They're some of the worst value rentals I've seen.

For the vast majority of people renting, it would be better to buy financially. I can accept for some people the opposite is true, but rent is like throwing money away to make someone else wealthy instead of yourself.

Some people don't have a great choice in renting a tiny flat. Do you think that would have been their first choice? Most likely it was renting a flat or living in HMO. You do make it sound like there are lots of choices for renters out there but there clearly is not.

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For the vast majority of people renting, it would be better to buy financially. I can accept for some people the opposite is true, but rent is like throwing money away to make someone else wealthy instead of yourself.

Bullsh#t

It's just about yield. 

 

Some people don't have a great choice in renting a tiny flat. Do you think that would have been their first choice? Most likely it was renting a flat or living in HMO. You do make it sound like there are lots of choices for renters out there but there clearly is not.

Well I live in the same city so I suspect I'm pretty familiar with the same rental market.

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Bullsh#t

It's just about yield. 

Well I live in the same city so I suspect I'm pretty familiar with the same rental market.

About yield? Can you clarify what you mean.

For a renter it would be better to pay a mortgage and ultimately increase the equity in your own home rather than renting. In the article it says she is 29, so assuming she started work after graduating, you are talking of 8 years of renting against 8 years of increasing the equity in your home (and from a no financial aspect, having freedom and independence to do what you like within your home).

Understand you're from Leeds too but it still doesn't mean the rental market is great and there's lots of choice and value for money. My first point is still applicable, owning and paying down your mortgage is better than renting (even if there's a crash and you lose some equity its still better than renting).

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For the vast majority of people renting, it would be better to buy financially. I can accept for some people the opposite is true, but rent is like throwing money away to make someone else wealthy instead of yourself.

Some people don't have a great choice in renting a tiny flat. Do you think that would have been their first choice? Most likely it was renting a flat or living in HMO. You do make it sound like there are lots of choices for renters out there but there clearly is not.

The vast majority of people renting are normally too poor to buy.

Renting serves a purpose esp when you are young. I was not in a position to buy as I was moving for the first ~10 years after graduating.

But needs much better rules.

Having a bunched of over leverage loons in control of peoples lives is insane.

 

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About yield? Can you clarify what you mean.

For a renter it would be better to pay a mortgage and ultimately increase the equity in your own home rather than renting. In the article it says she is 29, so assuming she started work after graduating, you are talking of 8 years of renting against 8 years of increasing the equity in your home (and from a no financial aspect, having freedom and independence to do what you like within your home).

Understand you're from Leeds too but it still doesn't mean the rental market is great and there's lots of choice and value for money. My first point is still applicable, owning and paying down your mortgage is better than renting (even if there's a crash and you lose some equity its still better than renting).

If there was only a property crash then Id agree with that.

Property crashes tend to occur in times of financial stress.

What youll find is that property falls, putting people in negative equity. And they lose their incomes too.

If you can buy at sub 3x LTE on 1 income then yes, go for it.

If you are buying at 4 LTE + in joint income when you've not had kids yet than I can guarantee youll hit the a hard patch.

 

 

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About yield? Can you clarify what you mean.

No. It's in a dictionary.

 

For a renter it would be better to pay a mortgage and ultimately increase the equity in your own home rather than renting. In the article it says she is 29, so assuming she started work after graduating, you are talking of 8 years of renting against 8 years of increasing the equity in your home (and from a no financial aspect, having freedom and independence to do what you like within your home).

No. It's about yield. Again.

 

Understand you're from Leeds too but it still doesn't mean the rental market is great and there's lots of choice and value for money. 

Err

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No. It's in a dictionary.

No. It's about yield. Again.

Err

I understand what yield is but I don't understand the point you're trying to make that renting is better than buying in regards to yield. 

I think we need to also take into account the non financial reasons to buy a home like mental health which is mentioned in the article.

 

The vast majority of people renting are normally too poor to buy.

Renting serves a purpose esp when you are young. I was not in a position to buy as I was moving for the first ~10 years after graduating.

But needs much better rules.

Having a bunched of over leverage loons in control of peoples lives is insane.

 

I understand that prices are out of reach for a lot of people, but the couple in question in the article seem to be able to be in a position to buy with the deposit and inheritance money. 

 

If there was only a property crash then Id agree with that.

Property crashes tend to occur in times of financial stress.

What youll find is that property falls, putting people in negative equity. And they lose their incomes too.

If you can buy at sub 3x LTE on 1 income then yes, go for it.

If you are buying at 4 LTE + in joint income when you've not had kids yet than I can guarantee youll hit the a hard patch.

In regards to your point about negative equity I would say this is unlikely since the deposit is quite significant and even if a correction  would occur, it is unlikely they would go into negative equity.

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I understand what yield is but I don't understand the point you're trying to make that renting is better than buying in regards to yield. 

 

Well you don't understand yield then. It is a comparative measure. If you do not understand this then you do not understand yield.

 

I think we need to also take into account the non financial reasons to buy a home like mental health which is mentioned in the article.

Already countered this so no.

 

 

 

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Well you don't understand yield then. It is a comparative measure. If you do not understand this then you do not understand yield.

Already countered this so no.

 

I do understand yield, what I don't understand is how you think yield means that it is better to rent than to buy. You still haven't explained this point.

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That's demonstrably untrue. Look up the mortgage prisoner threads.

Well don't rent a tiny flat. They're some of the worst value rentals I've seen.

I don't think the problem of small flats is specifically a buy or rent issue. It is more to do with greedy developers. May be there should be minimum legal standards on size/quality. 

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I don't think the problem of small flats is specifically a buy or rent issue. It is more to do with greedy developers. May be there should be minimum legal standards on size/quality. 

Well yeah.

I know, from people I know, they rent a pokey flat for way too much money without shopping around or asking any questions. There's a lot of it about. It's a boon for the landlords. Except of course when their flat gets trashed by a dodgy tenant. Which I've also seen first hand.

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I do understand yield, what I don't understand is how you think yield means that it is better to rent than to buy. You still haven't explained this point.

Perhaps I could explain. If the money that you have tied up in a house would yield more, elsewhere, than the amount you would need to pay to rent a similar house, then it may be better to rent than buy.

Opportunity cost.

Edited by Bruce Banner
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