Home ownership

We have a gas fireplace at a new house. No propane tank though. We don't really want to use it unless we need to (power outage and cold outside) Can it be hooked up to 5/10 gallon BBQ tanks?
I know it's a smaller tank so it might not last long, but I'm ok with that.

Natural gas and propane are two different things. Using one in an appliance made for the other is not safe.

Do you have gas powering other appliances? (e.g. furnace, possibly a dryer or gas stove?). If yes, I'm surprised the house would need a tank for the gas fireplace (instead of feeding from same gas line as other appliances).

Hi all,

Venturing into buying my first home and looking for advice from folks who have done it and had investments.

I have a good amount in savings and more in investment accounts. Looking to spend around 1/2 of it all on the house. Question is should I keep the investments and borrow (from lender or parents) / pay a mortgage at 7% or sell some of my investments and just pay cash for the place?

One option I make the maximum from the market but have a loan and the other I don’t have a debt but make less from the market (and have a smaller life/poker roll).

Thanks,
DT

No other appliances, just the fireplace. It's also confirmed propane not natural gas.

Think of it this way. Would you rather get 7% guarantee on your investments, or the high variance but probably higher return that the market actually provides? If the former, put the money into not paying a mortgage. If the latter, leave it in the market. As a Big-O player, I'm guessing you are fine with variance. Me, I split the difference, and put down more than 20% if I have that much liquid (which I usually do, due to the sale of my previous house), but I don't sell investments to reduce the amount of my mortgage.

All that said, IIRC, you are a full-time poker pro, which can make lenders nervous. You may need to put down a very large amount just to get a loan that doesn't require PMI (Private Mortgage Insurance) and isn't at ridic interest.

DT,

Don't forget, if you sell investments, you're on the hook for taxes on any capital gains. So, selling $x of investments will not net you $x for a down payment.

I'd pretty strongly recommend having 20% to avoid PMI. If that's not reasonable, though, make sure to track that, and drop the PMI as quickly as possible. (If in that situation, I'd also keep paying the same amount toward my mortgage afterward. Already used to paying that amount, and accelerate your equity stake.)

Pay Cash...

I was probably going to put more than 20% down anyway, to reduce my monthlies, and get a joint loan with my folks so the poker isn’t as much of an issue. I agree not taking my investments out of the market is probably best due to taxes and lower returns. Other thoughts? Someone said pay cash…but that means I’m giving up potential returns of other investments.

If I pay cash I’m depleting my poker bankroll and my investments though. I don’t have that much liquid and even if I did I would probably want to keep it in the market.

Probably not a good idea to deplete to a level approaching 60% of your networth, depending on your level of tolerance... but if you could, cash is the way to go.

I've long had this fantasy of buying a second place, some small condoish deal in a warm environment to go during the winter.

Nobody can decide except you what whether you should pay cash. In no particular order, here's some things to consider :

As mentioned earlier, there's the question of capital gains when cashing investments. (I'm assuming these investments are not of the IRA/401k variety, where early withdrawal penalties may also apply).

Also don't forget the ongoing taxation of future dividend income, which happens in real time (as opposed to cap gains). So you don't make $X, you make $.88X (or whatever your bracket is).

OTOH, there's the stability of owning. Lowers your monthly bills a ton, just insurance/property taxes/HOA.

Consider the short, medium, and long terms. How long could you see yourself living in some first house? The shorter the period, maybe it's not worth it to put more down/pay cash.

Risk tolerance. Paying cash is likely the lowest risk, unless you're in a place where home values aren't doing well. But then there's the risk of not having (or having less) emergency money, and a lower investment balance to generate dividend/interest income. Which risk(s) do you want to mitigate, and in which priority?

Maintenance. In either case, there's the regular upkeep, plus the "well, ****, the dryer broke" kinda stuff, plus painting/whatever work before getting your stuff in. I used to counsel first-timers I knew to have at least $5K set aside for these purposes; with time passing, I guess I'd up that, but not sure to what.

Don't forget to price out washer/dryer/fridge/etc, and have that set aside in addition to the above. (Assuming since you're first-time, you don't have that stuff.)

You can always take a medium route too. Put down a good amount, but hold some in reserve, with the idea that "if nothing goes too wrong, in six months I'll use that money to pay down the mortgage." IOW, designate that money as a down payment, just delayed--don't treat it as fun money.

Don't know your current situation. If you don't have external pressure (i.e., lease ending or something) to buy, don't buy just to buy. If a place isn't right for you, it's ok. Search might take months til the right place/price comes up. Of course, nothing's ever going to be perfect; look carefully, and find a place you dig, and are ok with personalizing as time/money permit.

Good luck, hope it works out.

several nuggets of solid advice can be mined from that golddog post

Thanks everyone! Very helpful. Super excited to have a home of my own!

I was debating between lower floor and brighter finishes which I really liked and higher floor and darker finishes but more privacy (lower floor was close to sidewalk), and ultimately went with higher floor which was also a little more expensive.

Absolutely.

The "Maintenance" paragraph should be bolded. I haven't moved as often as some of you guys, but IME that is truth!

dt, everyone i know who bought a house ended up putting at least another 20k into within a year, even if it's perfect at first, after 6 months of living there you decide, you know what, i really think i should have a ceiling fan, you know what, this bathroom should be nice, wouldn't the place be a lot better if this wall wasn't here, i hate looking at the popcorn ceiling and want to scrape it all off

for the first time in your life you're going to be in a situation where you have 100% control over your living environment and this eventually gets the best of people (for the better usually) so like others have said about maintenance and furniture/fridge/stove etc - it's very likely you'll find projects soon enough

also, most people knowing they will be selling in the near future will not fix things that aren't visible at first glance and are unlikely to be spotted at a typical inspection so don't be surprised if winter comes around and you discover your furnace has issues when it has to carry a heavy load or you buy in winter and when summer rolls around and you turn on the ac you smell urine which lets you know that your air conditioning units are infested with black mold and need to be cleaned/replaced

another thing people don't think about, is a lot of sellers leave behind all their junk, my brother bought his place assuming it'd be empty when he moved in and he found the place loaded with junk and the old owners were now long gone in florida he it was so much stuff he had to hire a junk removal company to come and get it all

Wow, Never heard of rick's last paragraph happening. The houses I've bought (lol sample size) had a "must be broom clean" clause in the closure.

Naturally, they weren't, but that's a whole different story. It wasn't too bad.

rick's third paragraph is good advice and should be emphasized. Test the stuff that's out-of-season.

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Since it's kind of related (well, at least I mention a mortgage), I thought I'd give an idea that worked for me. YMMV, adjust for your specific needs, not a financial professional, all that ****. But, I think it's a solid basis for younger people.

Cliffs: a secret to growing wealth is diligence.

Details: I used to keep a spreadsheet to help with budgeting (an actual spreadsheet, it was that long ago). I'd have on it my minimum checking account balance (i.e., the amount I wanted to be super-liquid), the amounts of next-pay-cycle bills, and running totals for investment money and extra mortgage money.

Each deposit to my checking account, I'd get out my spreadsheet, and if checking balance was greater than my spreadsheet total, I'd split that extra between the last two sub-accounts. When I had enough to bother investing, or it was mortgage time, I'd zero out that sub-account and invest/pay extra mortgage.

One thing I didn't do until later in life (a slight regret) was add a third sub-account: fun money. I finally realized at some point that, hey, instead of investing/mortgaging every extra penny, I should stick some aside that's specifically geared toward having fun with.

Now the percentages of the extra money being distributed to these three sub-accounts varied over time, and that's ok. For example, leading up to some of my bigger trips, I'd swing the "fun" percentage to be higher; sometimes I felt like crushing the mortgage and would swing the percentages that way.

But you get the basic idea. If I haven't explained it in too confusing a way. Be diligent about saving, but don't keep yourself from having fun.

Keep in mind, interest rates fluctuate. You’re looking at 7-8% right now but in all likelihood you’ll have the opportunity to refinance in the first few years (I’m not making a specific prediction on rates, I’m just referring to normal rate fluctuations).

IMO it would take some pretty particular and compelling circumstances to justify liquidating investments (incurring a taxable event, presumably) to put down greater than 20%. Of course, a bank being uneasy about lending to a poker pro could very well be one of those circumstances.

I'll admit to being a perp. Kinda sorta. When I sold my parents' house after my mom died I left a bunch of stuff there. IIRC it was all in the storage area of a large detached carport and not the house itself. Yeah, I had things of my own going on and didn't have time to get it all out. I worked my butt off getting rid of stuff, but I finally hit the wall. The house was sold to friends of my parents and they said not to worry about getting it all out. I tried, but failed.

Looking back, I didn't regret not getting that stuff out as much as I regretted not taking it with me. There were several pieces of marble topped old furniture, all my old baseball cards, and a bunch of other stuff that probably would have brought a bundle only 10-20 years later. I hope someone had the foresight to keep some of it from going to the landfill.

Side note: The last couple of times I was in my hometown the house was abandoned with all the windows boarded up. Sickening feeling. I got a text from a childhood friend a few days ago who just drove by it and saw it boarded up. Life goes on ...

Pre-closing walk-through. You need to be ready to kill the deal if they don't empty it or agree to have money held back to pay for the crew to come in and clean it out.

That's not the way it actually works. Yes, 7% on the loan amount is an expense that if you eliminate it is just as good as income on an investment. But, the return on the increase in value of the house shouldn't be calculated on the purchase price. It should be on the actual amount invested. $100,000 purchase price increases to $120,000 is a 20% increase if you pay cash. It is a 100% increase if you only put $20,000 down. It is of course more complicated as there are other factors.

Also, how long are you going to stay? Five years - I'd never pay cash (and seriously consider renting). 40 years - Maybe cash is the way to go.

Definitely accurate. I mean 0% sales tax, low property tax rate & being smack in between Philly and Baltimore are all very big plusses. Plus wife and I do a ton of work very close by. But yeah not a very exciting place and the food is pretty bland too.

I've kept a spreadsheet for ages and could literally tell you what I spent to the dollar in a given month from 10 years ago. Not necessarily every exact item but say if I pulled out $60 for carry around cash that I used for coffee or whatever I would just show the $60 as miscellaneous.

My main bills are all in chronological sequence as they occur through the month, with a couple annual ones (Amazon Prime membership for example) and every Sunday I update, takes less than 10 minutes. Besides keeping organized and making sure nothing ever gets missed it's a regular perspective on the larger picture.

do you make neat graphs and visuals with it?