Buying a house with 9 friends

[Rotating Rabbit]

Everyone without financial understanding seems to think renting is bad because someone else is getting the money.

Its not.

Regardless of utility bills etc, whatever capital you use to front the buying of the house has its cost, whether its equity that you could have put elsewhere earning returns, or debt that needs financing (ie interest).

So, for example, if you own a $1m house, and its all yours, no mortgage, its actually costing you around $50-100k a year even though you dont see the cash out (because ur not using that $1m to earn returns of that amount/year). This is pretty basic finance.

[Wired Jokers]

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Is this a good plan? Thoughts and ways to make it better?

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When considering purchasing anything over $1,000, I use two rules of thumb if I am going to involve a second person:

1) I must be able to consentually insert my penis into that individual, and

2) There must be a legal document filed with the state stating I can do so without criminal repercussions.

These rules have served me well over many years.

Yes, it is a very stupid plan. Sorry for the bluntness.

[DrewDevil]

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Everyone without financial understanding seems to think renting is bad because someone else is getting the money.

Its not.

Regardless of utility bills etc, whatever capital you use to front the buying of the house has its cost, whether its equity that you could have put elsewhere earning returns, or debt that needs financing (ie interest).

So, for example, if you own a $1m house, and its all yours, no mortgage, its actually costing you around $50-100k a year even though you dont see the cash out (because ur not using that $1m to earn returns of that amount/year). This is pretty basic finance.

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Why would you want to own a house free and clear unless you are renting it?

[mo42nyy]

So, for example, if you own a $1m house, and its all yours, no mortgage, its actually costing you around $50-100k a year even though you dont see the cash out (because ur not using that $1m to earn returns of that amount/year). This is pretty basic finance.


Thats not true in many cases. When you factor in that you still have to live somewhere if you sell the house (so youd be using some of that 50-100k to pay rent), that you have use of a 1 million dollar house and the fact that the house may appreciate at more than 5-10% a year this is a rediculous statement (oh and if you sell the house you receive a lot of tax breaks you dont get when you make 50k profit on stocks.)

[chesspain]

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Most likely the worst idea ever.


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I was going to say the dumbest idea ever, but we're pretty close.

[ThaSaltCracka]

I thought about doing this with my brother, but even with just the two of us, its too big of a pain in the ass. CAn't imagine trying this with 9 other people.

[scotchnrocks]

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So, for example, if you own a $1m house, and its all yours, no mortgage, its actually costing you around $50-100k a year even though you dont see the cash out (because ur not using that $1m to earn returns of that amount/year). This is pretty basic finance.

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Home prices aren't static. In an average market you can expect a million dollar home to appreciate about 4% each year. If you're investing the difference it's just as easy to lose 5-10% as it is to make it, plus you have to pay taxes on your earnings. In real estate, you have big upside potential if you buy at a good time and sell during a huge runnup.

Basically, do you want to sweat the stock market all year, or relax in the house you own that's fully paid for? Of course every situation is different but basically that is the question.

[El Diablo]

OP,

F all the haters. When I was 21 I went in with 99 friends and we got a $5M mansion, it was pretty sweet.

[moayer]

LLC

[punkass]

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OP,

F all the haters. When I was 21 I went in with 99 friends and we got a $5M mansion, it was pretty sweet.

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And then we broke the key to the mansion into 100 pieces. Last man alive gets the mansion.