Buying a House Worth It?

Speaker 1 0:00

Buying a house was like your biggest investment that you were going to make . Buying a house is no longer seen as an investment . Welcome to the Money Chisme Podcast , a fun and safe space for personal finance , investing and entrepreneurship tips , where we get the chisme on all things money with sass and humor . I am your host , violeta , a first-generation Mexican immigrant , a real estate investor , entrepreneur , and I am here to help you kick ass in the financial game . Each week , I not only bring you expert tips , but also share the financial freedom and entrepreneurship journeys from our own community , because you know , representation is important . So grab un cafecito or , si quieres , an adult beverage and let's get into this week's Money Chisme . Hola , hola . Welcome to another episode of the Money Chisme Podcast . This week I want to kind of not necessarily go into a little rant , but just kind of talk about the current state of like , whether or not buying a house is even doable , is it even worth it anymore . I've seen it on like TikTok , I see it on threads and everywhere of people just being so discouraged and I think , um , I recently saw that interest rates went back up to I think it was like 7.1% or something like that , and it doesn't seem like it's going to go back down anytime soon . Uh , at the beginning of this year and end of last year there was kind of some talk and rumors that , um , this year it would drop down , drop down below like 6% or something or close to 6% , and that we would start seeing a drop in these mortgage interest rates . But it's looking like that may not happen . Mortgage interest rates , I think , are at 7.1 or 7.2 somewhere around there . Last time I checked Um and it's kind of very discouraging , especially with housing prices . Um , they're still going up . Um , even me myself , with the house that I'm currently in . Uh , I plan to list it this summer and it's just going up Um , so I'm going to be able to sell it for higher than um what I purchased it in a few years ago , and on top of that the interest rates are at 7% . So it has like people wondering and I see , uh , it see it on the streets I guess owning a house or buying a house is no longer doable . It's like , why should you buy a house and all that ? And it really depends on what your goals are and what you're trying to do , and so I want to talk about that , because I was looking at the conversation of how buying a house is no longer seen as an investment . A few years back a while back , even know , even growing up uh , myself , like , buying a house was like your biggest investment that you were going to make and that it was going to be worth it Cause it would increase , you'd build equity , it would appreciate all that stuff . And , um , it has been true in the past few decades , right , I mean , we were looking at these boomers that , um bought these houses for like a few thousands , like 20 , 30 , $40,000 , whatever and now they're selling them for like $500,000 and stuff . And so it definitely was a good investment for them . And so it definitely was a good investment for them .

Speaker 1 4:24

And so the question is now is like , is it a good investment now ? Um , because , yes , currently house prices are still going up , but , um , at some point we're probably going to hit a ceiling and it's going to have to come back down , and you know that worries a lot of people . That you know . Is my house's going to have to come back down ? And you know that worries a lot of people , that you know . Is my house still going to be worth what I paid for ? Or even go up or come back down in five , 10 years from now , and then I'm going to be stuck paying , um , a house , um that you know I'm paying a high interest on , and it's not appreciating anymore , or as much , or it depreciated , and so like , what ? Like ? Why should I still buy a house right now ?

Speaker 1 5:16

So , number one , it really depends on what your goals are and what your lifestyle is . Uh , cause , at the end of the day , life goes on , unfortunately , and that's why you know these prices are staying where they're at , interest rates are where they're at . Is that ? The fact is that there's just no housing available for the people that need housing , and there's such a housing shortage , and a shortage of affordable housing , that the people that need to buy regardless are still going to buy , because , at the end of the day , people need somewhere to live , somewhere where to raise their families and stuff like that , and so you're still going to have people buying .

Speaker 1 6:04

Now , is it a good investment ? Because I'm going to be upfront is that when you own a house , it's not just like the mortgage and stuff like that . You also have to think about the upkeep and the maintenance of the house , and then you want to have money set aside to make the house your home , so like painting and updates and you know , building the garden in the backyard or , um , making a your patio nice and pretty and all that stuff , and so , um , I think it's true that at this point , uh , seeing your house as an investment is not realistic . It's more of like , hey , I just want to have something that's mine , where I could raise my kids or live or whatever , or spend my time or not have to deal with somebody else telling me what to do . Um , at this point , unless you're very strategic with your uh purchase , then , uh , for the majority of people , is not an investment uh per se anymore , because everything's going up with my house .

Speaker 1 7:19

Um , the taxes went up , obviously , when I paid for it . Um , the insurance went up , obviously , when I paid for it , the insurance went up . If you've been seeing that on the news , I mean California and Florida . The insurance rates have been gone up for obvious reasons California , the fires and Florida , the hurricanes , and so insurance companies are just like using that to uh increase their insurance premiums . So , meaning I pay more now and making it more expensive . On top of that , everything that I need to maintain the home has increased .

Speaker 1 7:59

Um , just , you know , buying paint , like I remember when , like these big old giant gallon , like I think they're like five gallon buckets or whatever , um , and they were like I don't know like 80 bucks or something like that . I don't remember Um , but now I went and they're like almost $200 and I'm like , oh my God , you know , um , and that's like the , the cheap ones . And so , just like paint and all these things , wood to fix stuff , anything that you want to buy to , you know , upgrade your house or whatever . Um , it's very pricey and then if you hire somebody , a contractor or something like that , the labor costs are so expensive as well . Now , if you plan to live in this home for 10 plus years , then that should not hinder you from buying your first home or a home or whatever , because it's going to be worth it in the long run . Like you have all these extra costs , but like you're having a home , you're raising your kids , you're , or just yourself , you're raising your dogs , um , you like , uh , are enjoying that home and with that mindset , like you know , it can be worth it . Um , because renting it really depends on your lifestyle , how much flexibility you want to have , because owning a home , you know you really can't just get up and leave until you sell that house . And so , with all these extra costs , you know the discussion right now is that obviously , buying a house now again is not seen as an investment anymore and it's definitely not a way to build wealth because it's actually , you know , taking money from you . Even if you're building equity , that's still um in the future , like 10 years down the line or whatever years down the line or whatever .

Speaker 1 10:10

And , um , some people prefer to just rent and use whatever extra that they don't have to use , uh , for all this upkeep and stuff . Um , they want to use that to invest in something else and , um , that works as well . Again , I am for both , because I've done both . I'm in the mindset of like buying your first house and blah , blah , blah , and that's beneficial . But I also see the benefits of renting . I mean , I'm going to do that in the summer I'm selling this house and I'm going to rent the last year that I'm in California because , for several reasons , I don't want to have this house , I don't want to rent it or nothing . I'm not interested , it's just it's the risk is too high for me to have it to worry about , like vacancies or any , or upkeep or anything like that . And number two I need to get a loan to build my house in Texas and having this high mortgage is going to hinder me from getting the loan amount that I need or that I want , and so I want to get down my costs so that way I could put that money towards building the house and towards saving up for another rental property to invest in another property , and so I can see both sides on the benefits of either or Um .

Speaker 1 11:47

But I get that a lot of people are now seen as buying a house as pointless , as actually something that's negative , because now it's seen as a liability , as something that is taking money from you . But it really just uh , requires a little bit more creativity with the interest rates and the prices and all that . We just have to get a little bit more creative if we want to make our house at a reasonable price , be an investment for the future or whatever , and to um not worry about , like , if prices go down or whatever . Um , that uh is not going to put you in a financial ruin . The problem is that it really depends on , again , your lifestyle , what you're willing to give up and deal with , and just learning about different strategies and different ways that you can make your home an investment property , because it can be done .

Speaker 1 12:51

I talk a lot about house hacking , where you find a way to generate income from your home , whether you rent a room out which is one of the things I'm doing currently and have been doing in every single house that I've ever bought and lived in and , um two , maybe you have a space somewhere where somebody could park their RV or an extra car or whatever . Or maybe you have extra space where you can build an additional unit like an accessory dwelling unit , an ADU , and have that as a rental . Or convert your garage to like an in-law suite or a mother-in-lawplex or a triplex or whatever , and living in it , um , uh , in one of the units and renting out the rest to bring down your costs and stuff . And um , this one's a little bit iffy because I know a lot of people don't want to uh live that way , um , but uh , cause the point is that they want their own house and all that stuff . Um , but in these times you have to get a little bit creative and be willing to give up a little bit .

Speaker 1 14:31

If you want to um , make your house an investment property or offset the cost of owning a home , um and multifamily or finding a way to house hack or something like that is something that is beneficial and in most cases , like , for example , with multifamilies , you only have to do it for a year . You only have to live in that property for a year before you can move out and make that a rental and then do it again until you feel like you have built enough income or reduced your risk enough for you to finally buy your first home and make it worth it that you bought it , so that way you don't feel like , um , it's such a burden to own a house and there's different ways that you can house hack your your home . It doesn't necessarily have to be like a roommate or something like that . Like you know , a lot of uh people are starting businesses or um , like content creators or stuff like that , and you know some of that can help to offset the cost of the house . Now , I am not a tax expert , but definitely talk to one , because there's many benefits if you could find a way to kind of merge your office that you need for , like your business or whatever . There's lots of benefits that you can do , a lot of ways that you can reduce your taxable income , which in turn saves you money , which in turn reduces the housing costs and all that stuff .

Speaker 1 16:18

And so I want to talk about a little bit and share kind of my mindset of what I plan on doing with the 10 acres that I bought in Texas , and same with my parents . They bought 10 acres and I'm doing some similar stuff with there . I'm creating , I'm coming up with a strategies not setting stone in yet because I still have some research to do to make sure that , uh , I am um planning it out correctly and I need to talk to my um tax person and stuff . So make sure that I am going to do this correctly so that way I can get these benefits . And so I have bought 10 acres in Texas in which I will be building my final home I'm not going to move out of it finally settle down . I'm so tired of moving place to place from the military , so I'm excited to finally uh set up a home base .

Speaker 1 17:22

Um , I do plan to homestead , so , um , I plan to get that exemption tax . So that's one benefit , um , that you can homestead and that reduces your taxes a little bit . So let's talk about what I'm planning to do with these 10 acres to ensure that I reduce my tax liability and to ensure that you know my , my house is still an investment and not going to be costly for me , especially since , um , this is going to be my final home . So number one is that I'm going to apply for the homestead tax exemption . So number one is that I'm going to apply for the homestead tax exemption . This is just going to be . It's not going to be much tax savings , but every little thing counts and I haven't looked into how much it's going to waive or deduct for me or kind of exempt me from in taxes . Deduct for me or kind of exempt me from in taxes , um , but that is an option that , if you this is your primary home , this is where you're going to stay , um , looking for that homestead exemption tax , um , you , you can save yourself some money in taxes every year , um , that helps reduce the tax liability and help reduce your costs .

Tax Savings and Rental Income Strategy

Speaker 1 18:55

The second thing is that the 10 acres that I bought have a agriculture exemption , which can further save taxes with me on my property and I do have to , you know , grow a crop or do something agriculture to keep that tax exemption . But that can be done with , like , even beekeeping or something like that . Like , I need to do a little bit more research and I'm currently in the works of that too , in my planning phase , of what exactly I want to grow or produce or whatever , so that way I can continue to have that exemption and then also , like , generate a little bit of income growing like food off the land , maybe selling eggs or whatever it may be Right , and so that will be another tax reduction for my property taxes and my taxes every year . Number three is that I am going to build well , also for my husband , uh , because he has a business doing like woodworking , uh , 3d printing and engraving , 3d printing and engraving and so we're going to build him a uh like a little small workshop , uh on the land , which then we will rent out to his business , which is rental income for us , and then it becomes rental income that's coming into our household . And you know , as I've said before in previous episodes , there's a lot of tax benefits that come with rental property and I plan to do that as well in the future with an office space and kind of like a podcasting space type deal studio or whatever you want to call it on the property as well , to where I record my podcast and videos and stuff like that , and that's also going to be rented out to Money Chisme once I make it an LLC and there's a lot of rules and stuff to be able to do that . So make sure that , if this is something you're interested in doing , that you look up all the legalities and how to ensure that you're following the rules to be able to do that .

Speaker 1 21:19

Um , and I'm in the process of doing that . Um , I'm reading this book and um figuring it out . And um , again , my business is going to be renting out a space , an office space , from me and so now that rental income , they're going to be paying me the rental income and then I get to deduct a lot of stuff like the maintenance and all these things and reduce my tax liability with that rental income and pay less taxes on that money and pay less taxes on that money , and so these are kind of like little ways that you still receive the money but pay less taxes on it , right , and so those are two ways . Is that you know our businesses are gonna rent spaces from me and my husband , and so , like I said , this is all perfectly legal . It's all things you're able to do , is the problem is that the average person does not know these things . I just learned these things , um , in a book , and when I attended this workshop , um , it actually was a real estate investing workshop , and that's when I found out these things . And so now I'm using that knowledge that I learned years ago and I'm going to apply them now , uh , for my businesses , once they become an LLC and stuff like that . And so , um , these are the ways that you can utilize the current tax code and stuff to benefit you and lower your taxes and be able to keep more money in your pocket . And , lastly , I do plan to I haven't decided yet if I either A want to build like a tiny home or something there and rent that out , or currently we are debating if we want to buy like an RV or a pool trailer kind of , and place it on the land at the moment , so that way , my husband has somewhere to go when he has to fly back and forth , or when we have to fly back and forth to , you know , supervise and make sure that things are being built correctly with our house and then just use that as a rental .

Speaker 1 23:36

And so we're deciding on that , if what we want to do . But we're leaning towards the RV thing because we could do it two ways . If we don't find someone to rent it , then maybe we could Airbnb it or something like that , or just sell it Like , um , we'll get the use that we need out of it . In the meantime , if things get uh , like sidetracked , like it starts to rain Cause I know it's been raining there for a long time and so I know that's going to push back like uh , when they could build and stuff like that , so that might push the timeline to the right .

Speaker 1 24:16

And so you know what the house may not be done by the time I move back to Texas , once I get out of the military , but we'll have somewhere to stay and I think they're like $300 to $400 a month that's the budget that we're going to go for and then after that we're going to establish RV hookups and stuff , so that way they have water , electric and sewer as well . I'm going to figure out how to do that and someone can rent the RV out for affordable housing and the RV gets paid off , and then after that it's just profit , and then I could later on build or whatever . But I don't plan on having more than one person renting near my home , so probably gonna do the same thing with my parents , just so they can have extra income as well , and so those , I will have rental income as well that way . So those are the ways that I am currently researching on how I am going to get the biggest bang , I guess , for my buck , for the land in that house that I'm going to build on and make sure that I'm lowering down my costs , I'm lowering down my taxable income , my tax liability , and ensuring that I'm giving myself a buffer . I mean , um , uh , I am making sure I'm planning out . So it's still in the planning phase , so we'll see what the final uh plan is and what I actually do .

Speaker 1 26:03

So , uh , you have to just follow my journey on that and , of course , you know I always share and I'm very transparent about it , and so , um , the thing is that I kind of wanted to really drive home is that , um , buying a house , uh , is a little iffy right now . Um , it's not , uh , pretty ideal . Don't use it as like an investment . Don't think of it as an investment at the moment , because at the moment it kind of takes money um more , even though , like you're going to build equity , even if it doesn't , uh like appreciate as much or building equity . But I don't want people to get like discouraged from , you know , fulfilling that dream if they can swing it right , because for many people it's still a dream to own their own home and have their own space and do whatever they want with their house or whatever their space , and not have to worry about a landlord or whatever . And as long as those expectations , you have realistic expectations , that you buy under your budget , that you account for everything , that you have an emergency fund and all that like that you plan out correctly when you buy your house , then you know , go for it .

Speaker 1 27:30

Even with these high interest rates and even with real estate investing at 7.1 , 7.2 , even I think I've calculated up to 8% and 9% already , just in case , I will still be able to find deals . The only thing , again , we have to just get a little bit more creative and figure out , uh , what our expectations are with this house . Again , probably not going to be an investment , but it's still going to be worth it . This is your space . I mean um to me making having my own space and something that I you know , although you have a loan , it's still yours , right , and you could do stuff with it . I don't have to worry about asking the landlord or anything like that . It was just kind of freeing and that's one of the things that I have to give up now and not looking forward to like having to deal with a landlord and blah , blah , blah so . And then I have a dog , so then that's another pain in the butt that I have to ask to bring my dog and stuff . So , uh , and pay like rent and for the dog and a deposit and all these things . So , um , those are some of the reasons that I went and continued to go to buy a house , except for this last year that I want to rent . But that's because I have an end goal in mind , and so it really depends again , whatever your lifestyle is , whatever your goals are , whatever you're willing to give up um , go ahead .

Speaker 1 29:08

I see people still buying houses and some of them are getting into um paying off the mortgages faster . That could be a strategy as well . I don't knock that it really . I know some people are against paying your mortgage off early , but , um , honestly , if it gives them that ease of mind for their future , go for it . It'll all work out and later on they can invest as well , or have that extra money , or if they don't want to invest , or whatever .

Speaker 1 29:43

But other than that , I want to hear your thoughts . What are your thoughts on still buying a house ? If you've bought one currently or recently , what , what drove you to still decide that you still wanted to buy a house ? So , yeah , that's pretty much what I wanted to choose me out of this week . I wanted to just to talk about it , have a conversation and share my thoughts , because I've been seeing it again on social media . But again , let me know , hit me up . Other than that , I will see you in the next episode . Bye , thank you so much for listening . Don't forget to like and share this episode so others can also find this podcast . Don't forget to follow me on all my social medias listed in the show notes below , where you can also find resources to help you in your financial journey . If you're interested in becoming a guest on the podcast , you can find that information in the show notes . Other than that , thank you so much for your support and I will see you in the next episode . Bye .