Mandy Woodruff-Santos
Appearances
Today, Explained
Is a house still a good investment?
Hey, I'm Mandy Woodruff-Santos, and my podcast is called Brown Ambition.
Today, Explained
Is a house still a good investment?
Yeah, it sure is, isn't it? I mean, at least that's what society wants us to think. Got to get a Birkin, got to get a home. Big Birkin, big hole, five, six figures. Are you a homeowner? I am. Yeah, I am. I bought my house in 2018, which feels like a thousand years ago. This is pre-motherhood, pre-pandemic.
Today, Explained
Is a house still a good investment?
And at the time, our total mortgage, which included property tax and the actual loan monthly principal that we were paying was about $2,700. That's increased a thousand bucks since then. So now I'm spending $3,600, so nearly $4,000.
Today, Explained
Is a house still a good investment?
And I'm like, oh, I'm reminded. Oh yeah. That's why I always feel broke.
Today, Explained
Is a house still a good investment?
There's all sorts of like different trains of thought about is it a good investment to buy a house? And I think you have to understand why you're buying a house. Are you buying a house for your family to live in for the next 10 plus years? That's a very different equation to me than are you buying a home that you're hoping to fix up? Flip on the market in a year or two.
Today, Explained
Is a house still a good investment?
Now, if you really want to buy a house and it is your dream and you love everything that you understand, what goes into it, you understand. Listen, I didn't understand how much property taxes could be. I thought my mortgage was just going to be my mortgage. But you add in property taxes, it just about doubled it. Which was crazy to me.
Today, Explained
Is a house still a good investment?
If you understand maintenance, if you understand how property values can, yes, typically they do go up, but how they can be impacted by things like development and by weather patterns, like global warming is real. If you understand all these things and you still really want to buy a house, then yeah, go get your house. Especially, I mean, like the ultimate thing is can you afford it?
Today, Explained
Is a house still a good investment?
Of course, mortgage rates. I know they're not cute, right?
Today, Explained
Is a house still a good investment?
But they're not as ugly as they could be. Like in the 80s, you know, people were just walking out the door with like double digit interest rates like it was nothing. That was like the norm, right? So they're not great, but they're not the worst they've ever been. What's more difficult these days is inventory.
Today, Explained
Is a house still a good investment?
What I wouldn't do today is because there's such like a dearth of good properties on the market, I wouldn't just buy whatever's there just because you want to buy something. Like I got to get it, you know. I would, if you can, wait. Wait until you find a home that you really like that fits all your needs. It's worth it.
Today, Explained
Is a house still a good investment?
Look at your credit score because your credit score is going to determine how expensive that mortgage is going to be. And like we're assuming, right, that people are going to be taking out a mortgage. If you got cash to buy a house, that's a whole other conversation.
Today, Explained
Is a house still a good investment?
You want to avoid making any big taking out additional loans six months before you're going to apply for a mortgage because mortgage lenders don't like to see new debt right before they're going to potentially approve you for a loan. Ideally, you're not going to have a fluctuation in income, like household income. So you want to save up for that down payment, of course.
Today, Explained
Is a house still a good investment?
But also think about also saving up for a few months of your household income just to have it on the side. Another thing to consider is how much do you want to put down for your down payment? There are, if you're a first-time homebuyer, I would absolutely spend time researching first-time homebuyer programs. There are some through the federal government.
Today, Explained
Is a house still a good investment?
Look at your monthly income. Look at it, guys. Post-tax. And look at maybe 25% to 35% of it. If you live in a more high-cost area, it just may be more realistic to look at that 30% to 40% range, and even up to 50%. And that's what I would cap your monthly housing expenses at.
Today, Explained
Is a house still a good investment?
I mean, the worst thing you can do is buy a property and then end up getting into it and all your bills start hitting and you're like, wait, what? Right. Like, how am I supposed to afford all of this? And then you're you're stopping investing or stopping, you know, contributing to your savings account and debt starts getting not paid back. And then you're just in a real difficult position.
Today, Explained
Is a house still a good investment?
Duh. No, listen, homeownership, yes, a home can be a vessel for, you know, increasing equity and building wealth. And that's true, but it is not the only game in town. Like, ever heard of index funds, mutual funds? You should be investing through your 401k. And in fact, like, no one can predict the market, right? No one can predict.
Today, Explained
Is a house still a good investment?
I could not have predicted that I would have bought one of the last homes in this country It feels like that because there's such low inventory where I am. And so, yes, my home value has gone up something nuts. I think my house was valued at $400,000. We bought it for $445,000. Now it's worth like $700,000 or something. Wow. It's not, though. I don't know.
Today, Explained
Is a house still a good investment?
People be buying houses out here for way too much money. I just can't. You will not catch me dropping $700,000. You should see what a million-dollar home is these days. It is depressing. Yeah, yeah. So you can absolutely invest in the stock market, invest in your 401k, max out your Roth IRA, invest in yourself. Can we make that normal again? And I don't mean go get a brand new degree.
Today, Explained
Is a house still a good investment?
I mean, what do you value in life? Do those things. One of the myths that I kind of fell into when I became a homeowner was that you would have these tax benefits of being a homeowner. That really changed with the 2017 Jobs Tax and Jobs Cut Act, whatever Trump put in effect back then.
Today, Explained
Is a house still a good investment?
And the amount that you can actually get, how much you can reduce your taxable income as a homeowner has gotten a lot less attractive. The most tax breaks I've gotten is when I opened my LLC. And I'm not trying to sugarcoat the entrepreneur lifestyle. It ain't for everybody. But when I say invest in yourself, maybe it's investing in a business idea that you have. Who's to say that your business...
Today, Explained
Is a house still a good investment?
you know, if it does well, that it couldn't do better on the return on investment than a home. Who knows?