I am looking at buying a house in Seattle, where prices tend to rise faster than most of the country and I expect there to be strong demand for quite a while. I work in tech and could comfortably afford something in the $650,000 range, I am single and don't need a lot of space. I'm thinking of intentionally buying something a bit larger or in a nicer neighborhood though as an investment.
The general advice is not to buy more than you need, but I watched a youtube video recently that talked about how when you buy a house you essentially get access to a huge amount of investing margin, because you now have an investment worth the entire price of the house and all you had to pay upfront was the down payment. So if the property goes up 15% I make $97,000 even though I only put down $35,000 or so. If my income ever changed I could rent out the place to cover most of the mortgage and still benefit from appreciation.
In theory, if the whole city appreciates at roughly the same rate, I will make more money the more expensive the home is to begin with. There are obviously a few risks with paying more for a house:
1. I lose my job and can't make the payments. I can probably rent it out, but there are expenses and risks associated with renting.
2. The market slows or reverses and my home doesn't appreciate or loses value.
I know those are both real risks to be considered, but are there other reasons I'm not thinking of that buying a more expensive home is a bad idea?
[link] [comments]
source https://www.reddit.com/r/RealEstate/comments/xnmxkr/buying_a_more_expensive_house_than_i_need_as_an/
Comments
Post a Comment