WWYD? Buy a house/invest/something else?

[jenstar]

Hypothetically speaking, if you had $500k to put somewhere, would you buy/build a house to live in, or put the money somewhere else and rent?

What would be the determining factors?

For arguments sake, let's assume that the $500k could buy a decent property with no mortgage necessary. And you have a steady income.

TIA, I am just a lurker, but I know there are some clever people hanging around here and I am trying to figure out pros & cons each way.

PDQ

[h]

I personally would buy over renting but 1) renting a house that would suit our family's needs would probably be more expensive than buying; 2) we plan to stay put for a while (and having to move would be a colossal pain); and 3) I like owning my home and being able to renovate, etc. If we were planning to move in the near future, renting were cheaper than buying a comparable property, and/or I had no interest in the benefits and burdens of home ownership, I would rent.

Regardless, I don't think I would buy a $500k house outright. Mortgage interest rates are low enough that I would prefer to put a good chunk down and invest the rest in the market. I would probably put down somewhere between 20-50% on a $500k house and then invest the rest.

[laurao]

I would put twenty percent down on a place if I knew I would be there awhile (10+ years). I also love to decorate/renovate, and I have a DH who can do a lot of the physical maintentenance/repairs that come with home ownership

[jenstar]

Thanks for the input so far guys. I have owned a home before, and still do now actually, so I am fairly comfortable with the ins and outs of home ownership, and I do think I would like that from a stability point with my DS to consider.

I don't think I could afford to pay the mortgage on a property where I am with only 20% down.. I just sold with 50% equity and would need to spend more than that to buy where I am now and I would prefer to not have a big monthly repayment. Also, rates where I live aren't as low as the US (though still low historically speaking). But, i can easily figure out what repayment I'd be comfortable with and what I would be comfortable spending up to and go from there.

I do want to invest somewhere other than property, so I will need to get some professional advice at some point as I have no idea where to start with that.

Thanks again

[jenstar]

Oct 23, 2014 8:59:07 GMT -5 RockNVoll said:

Are you not in the U.S., jenstar? I'm not sure many of us are qualified to give advice on real estate or investments outside the U.S. since we don't know their laws. If you were here, I'd say that if you can't afford the monthly payment with 20% down, you can't really afford the house at all. Unless mortgages work really differently where you are, it doesn't make sense to have to put more down in order to afford the place.

Thanks RockNVoll, I'm in Oz so some things are different but I'm more just looking for general ideas I guess about what else I could do with a large amount. Most people I know would just buy a house and be done with it so it's nice to get some other ideas.

The median house price here is $500k plus so even buying an average house with 20% down leaves a $400k mortgage which, even if I could afford on my own, I wouldn't want to owe that much. I guess I'm wondering what the point of having equity is if you only put 20% down and end up with a huge mortgage as a result? But I guess the idea is to have your money working harder for you somewhere else?

What I really want is simplicity I suppose so I wouldn't want to get bogged down with lots of other investments that take time to manage. A house, while requiring maintenance also gives you somewhere to live etc.

[jenstar]

Thank you RockNVoll, that's really helpful! I appreciate you taking the time to write all that out. I will definitely do some reading and get some professional advice before I do anything, this was just a starting point I guess to see what others with more experience in this area would do.

In my mind, I would like to have a mortgage of less than $200k just to keep the repayments low but realistically I know that is less than I can afford given the rent I am paying currently and I don't know where I would find a property for $250k these days interest rates are higher here, and taxation is different of course. But I will get reading and fetch my calculator! I might decide just to rent for the foreseeable future given we are happy here and it's very easy. I just don't want my money sitting around doing nothing in the meantime!

Thanks again.