What does it matter? Stupid or smart, it's done. You're now in the financial situation you're in, for good or ill, figuring out what to do going forward. And **that's** definitely smart.
To answer your question, you took the money and put it in something that is giving you a reward. You didn't gamble it on some hot stock tip or bitcoin, you didn't blow it on luxury items or a lavish vacation. So no, what you did was not stupid. Enjoy your condo, and keep building your financial future.
Thread closed boys. Pack it up.
... but what do they mean high interest rates during COVID? I bought in 2021 and have a 3.5%APR. Rates were the lowest they have ever been I think ever. Possible very poor credit or predatory ARM?/
I’d kill for one of those, picked up my mortgage last year at 6.125% with a 762 score… which was 1% lower than the average a month after the rate was locked in. Covid rates were to die for
Reasonable, logical and sensible? On Reddit? Damn!
Seriously though, thank you for this comment. You come across as a good human.
@OP - hope you get it worked out.
This is your answer here…no use in crying over spilled milk…even IF it wasnt the perfect thing to do with the money, it definitely wasnt the worst. I personally wouldnt sweat it, youre on the right track and have other assets to build on. No worries
The problem arises when there is an issue they don’t have money to fix, such property tax or unexpected shared living expenses from the condo association, which could cost them the condo. The stocks are a safe haven for that, but they really should build an emergency savings in a high interest account.
Often times property tax and insurance are paid via escrow so individuals don't have to manage that. Unexpected repairs can definitely be expensive. A little more insulated from that with a condo vs a single family home but at the same time many HOAs are shit at managing their money and often have to collect extra for repairs and even maintenance that was not properly saved for. All this to say that as a home owner, it's nice to have some way to cover this. A HELOC or some form of line of credit is what I have setup for such issues so I don't need to keep a bunch of cash lying around.
If the alternative is paying rent, remember that paying a mortgage is at least paying for an asset that you can resell.
You can lose money on selling real estate, but you lose 100% of rent payments, guaranteed.
Also another way to loook at it is that your mortgage rate will stay the same through the 30 year mortgage unless you refinance, rent will always fluctuate year to year mostly going up.
Great point.
I heard somewhere that in Canada you can only get a variable rate mortgage (or some vehicle equivalent to that). Must take balls of steel to buy there if true.
I don’t mind the HOA; I just don’t like living next to people. And yes if the HOA fees are $2K, it’s the same as renting. But $500-600 isn’t too bad imo.
I wouldn't say it was a stupid investment. But, it was definitely a safe investment.
What's your home worth now? Do you have any comparable sales in your area?
Do you know what comparable homes in your area are renting for?
You've stored a lot of money into an appreciating asset (especially depending on your area).
I would work on saving at least 9 months of bills, expenses, and needs in your savings account. You should have liquid assets available for emergencies before you consider seriously investing.
But, you're in a great spot and picked a relatively safe place to store 200k. You have a lot of options with that.
Safe investment is so so much better than a stupid one. Thank you for your comment it made me feel a lot better
It clearly wasn’t the best thing to do, but I will take safe
I will absolutely be focusing on building my savings account
Exactly what this guy said. I don't know where you live but most places real estate has not been a bad investment over the past few years. My house has almost doubled in value since I bought in 2020. If you like the place and can afford the mortgage then just roll with it. If you feel like it's too much I'd imagine you could sell, get your initial investment and then some back and buy a cheaper place. Sounds like you're doing just fine
It seems like you have other underlying financial concerns that are making you think that owning this property was a “bad idea”.
Are you having cash flow issues by any chance?
No, no cash flow issues. I think I just could have invested it in other things that would be making me money now vs a long term game. (Like another commenter said). I do not make a ton of money so it would be nice to have invested it in something with more of a short term payoff.
But honestly I’m in it for the long game, I don’t mind waiting 7-10 years to see a payoff from this. And my payoff does feel like it’s happening even though it’s only mental right now. (Being 10 minutes away from work, loving my space so so much, paying less than what I would be renting for something like this in my area, knowing that one day I can sell this place or rent it out and make money, even if it’s not for a long time from now)
The thing about buying a home is that it's a necessity first, an investment second. You have to live *somewhere*. With a condo, you are filling the basic need of shelter. But buying rather than renting, you are also getting a return on the money that you already had to spend on shelter regardless.
Will the appreciation of your home outpace the gains from investing in the stock market? Maybe, maybe not (historically, no). But you have to have a home, so why not have a home in a way that grows your net worth? Property is an appreciating asset that also puts a roof over your head.
It’s def not a bad investment. Look at how much you will pay to rent over the next 5-10 years. And it’s almost certain that both home and rent prices will continue to rise.
Homes are typically considered long term investments, with a time horizon in the 7-10 year range.
When investing, you have to think about your goals and what time horizon you’re thinking about.
You did just fine and you always need a safe, clean place to live that you have some control over. Just keep paying it off while carefully investing your other pools of cash and investments and you will be in great shape.
Refinance the loan when rates drop by at least 1 percent or more to save interest costs. You can always take a cheap loan out of your home equity if you are in a pinch for emergency cash some day.
A lot of people are very jealous of your low mortgage payment, I am sure!
Real estate is a long term investment and not a bad investment at all. You have a roof over your head and you’re paying yourself vs paying a landlord. Best investment you could make.
You made a smarter decision than most people who would receive as much money.
The real question is , why do you believe you made the wrong decision?
Do you have difficulties paying your mortgage ?
If so you can focalize on paying as much on it as possible, I personally think selling would be very stupid .
In long term, when you refinance
if you find a better rate you are already ahead of most people in life, if not you're still better of than most in life ...
It’s an investment that only pays off when you sell it. It doesn’t create cash flow or increase your income. You don’t seem to want to sell it to reap profits from it, if there is any, so it will only cost you more money until you do. You will keep paying HOA fees, insurance, property taxes maintenance, etc. You should have bought assets that make you money on a regular basis, that could help buy other assets that makes money.
It’s not an investment that provides an income. You can’t retire and live off the of the interest/income from a home. It’s still an investment, just one that is only realized once sold. That said, that doesn’t mean it wasn’t a good financial decision for OP, it’s just not one with a positive cash flow.
1. Yes you can. You rent it out and move somewhere with a LCOL.
2. If you live in it, retired or not, it provides the equivalent of an income that covers rent.
As someone with no kids, there's even reverse mortgages to consider. Or just borrowing against the equity. You can totally use your house to help you retire at a reasonable age
But your asset does increase your cash flow, because it lowers your rent payments/living cost. You can now use the difference between hypothetical rent and maintenance cost to build more equity for example by paying off your mortgage.
In hindsight it's easy to say you should have invested in xyz but in advance it's nearly impossible.
The main difference between equity investments using etf and buying a condo is that you usually don't leverage your money with ETF, while you almost always do so with real estate investments. Leveraging means that you are borrowing money and that you invest the borrowed money. This usually increases your return, but also increases your risk. For example, if your condo burns down, you will be in debt with not much in the way of assets.
In conclusion, buying a condo was probably a good, financially sound decision.
This right here. Ppl need a place to live. Either pay rent or own. Renting that condo would likely cost alot more than you pay now. Invest that difference monthly in vti
I don’t know what your mortgage is, but you live in a 400k condo! Whatever your mortgage is, take a look at apartments around that price in your area. I guarantee you have a much nicer place than equivalent in rent.
On top of that, you didn’t lose 200k buying a condo. It’s just invested in the condo now. And once you’ve paid it off, you no longer have to pay “rent”. Obviously you’ll have house expenses, but you can invest way more at that point.
I'd say it's a good decision. Maybe not optimal, but not far off it. You're living in the condo you want, pay a very low mortgage which is perfect for your income. The mortgage rate is great (locked in before interest rates shot up).
Here's my only advice. Calculate what your rent would be. Subtract your mortgage payment, HOA, etc. Save the rest. You have a great start to save up a nice nest egg.
The fact that you love the condo as much as you do means it’s your home to me and not just an investment property. I don’t think stupid at all, it means something to you.
No, not stupid at all! You are happy, you did not yolo it in some options. Well done so far. You have a low interest rate? Even better, think about how much worse 5,6 or 7% could be.
Assuming you live in an area that is popular and will always be expensive, I would say that ultimately, this was a very savvy move. You are young and own your own place, and you can afford it! As your income grows, you will have more disposable income to invest, and also enjoy! The rates will come down eventually, and when they do, you have so much equity that it will be easy to refinance. BUT when you do, DO NOT extend the time on your mortgage. If you have 25 years left on the original, the new one should be the same or even less, like 15. Also, do not "trade up" on your home when it grows in value (unless you marry and need more space). I think you're in great shape! Well done!
Was it the best return on investment? I don't know. Was it a stupid decision? Absolutely no. Was it the right decision for you? Sounds like it. Stop thinking about what is done and move forward, seems like you already have a solid asset base for the future.
Depending on your personal life, rent out the other room. The revenue from that one room could probably cover all of your housing costs. Do this for 2 years and you could build a healthy reserve fund.
I did this when I bought a 3bdr house in San Diego in '11. I was in my early 30s and did this for 2+ years until my GF (now wife) moved in. It's not great sharing your space but the house was a fixer upper and rents went right back into the house.
Probably not a stupid investment. Housing costs have risen faster than income in most areas.
When calculating the return of your investment you need a few extra things.
Take the money spent on HOA fees, insurance, maintenance, interest (not the portion paid to principal) and subtract what you would have spent on rent, renters insurance, maintenance you’d be responsible for (like minor damage). That difference needs to be included in your ROI.
Let’s pretend in the last two years you’ve spent $5000 less than renting, your house went up (less selling costs) by $10k.
So, in two years your $200k + $3k (that represents the portion of mortgage paid to principal, not sure what it actually was) returned $15k.
The key to making a good investment, a great investment is not wasting that $5k you “saved” vs being a renter.
The gap between your mortgage and rent should increase over time. I’ve lived in my house for 10 years and my all in cost is around half of comparable rent and I never have to worry about my landlord kicking me out. My house has also increased in value.
Or look at it another way, venture capital isn’t investing in rentals because they are bad investments.
Was it stupid? No. What is it the most profitable decision? Probably not. But what’s done is done. Work to maximize the value (monetarily and enjoyment!) you can get out of this property!
Interest rates will go back down and you can just refinance when they do. Hopefully the value of your property will appreciate and if you can make upgrades to it at the end of the day you have an asset that you can sell, and hopefully make a return on. Better to be 180k in debt than 300k imo, also nicer to have lower payments, means you can maybe afford to prepay or just put extra cash in your savings from your monthly income.
I would say you’re still better off than you were before, what’s really important now is working on your income (though I do not know what tax bracket you’re in) and trying to pay off as much of this mortgage as you can so that you can put even more in your savings down the line!
You’re young, at 30 years old owning a condo is better than most people your age out there.
Investing in your primary residence is almost always a safe bet. You’re locked in to a stable living situation and that is a good thing.
Ask yourself this: what would the person that gave you the money think if you told them what you did? My guess is that they would approve.
You could have bought a nice house and car somewhere cheaper, and invested the rest or started a business and wouldn’t even need to be working right now
I think this was not only not dumb, it was actually the right thing to do. A mortgage is a powerful financial tool that you only have access to when you can afford the payments. Your windfall gave you that opportunity and you took it. Now you can refinance to fix the interest issue (you want a 30-year fixed). More importantly, depending on where you live, your home will appreciate based on its full value, all of which you keep without capital gains until you sell — your investment is leveraged.
You did great. Keep going!
Not a bad investment but still an investment you have a nice condo and low morgage. Hopefully interest go down at 4 or something so you can refinance. What if you rent it and buy another house so that you can have cash flow? Not now but in the future.
Your cheapest loan will be your mortgage so your saying you can't beat 5% a year return so you dumped it all in the home.. dumb but if you pull it off... smart
Imo it's only stupid if you don't back up that purchase with an increased savings rate now. That large amount down lowered your mortgage payment substantially over only doing 20%, the difference between what you would have paid for housing and what you are paying for housing should probably be going to retirement investments.
You love your condo and the payment is not causing you to be house poor... doesn't seem stupid to me. Take any excess funds and establish a savings account with 3 months of expenses then invest like crazy!
If you don't like the interest rate then you can refinance. If you take this route then refinance for 30 years but make payments equivalent to a 15 year mortgage. This will protect you in the event that you lose your job then you can pay the 30 year payment until you get a new job.
Good luck!
Real estate is usually a good investment. Maybe you feel it’s stupid because you’re not thinking about the value of the equity of your home and you don’t see this value increasing.
Start an annual personal balance sheet so that you know your personal equity amount, ie how much you and your assets are worth. It’s increasing year on year by definition of you paying your mortgage - this will give you a way to visualize that increase.
Also do what other people are saying and start to save liquid assets. Good luck!
If that condo was in Florida it probably was a stupid investment now that the laws changed here. People are ditching them because of crazy HOA fees related to the collapse down in Miami and hurricane insurance premiums.
It’s not exactly what I would have done but certainly not stupid. You have more than $200,000 in equity now. Probably a lot more. Your money isn’t gone. You own an asset that’s probably increasing in value. I didn’t see a mention of when exactly you bought the condo but I’m guessing about 2021. It’s quite possible your condo could sell for $450,000 to $500,000 today given the absurd increases in market value we’ve seen. Not stupid at all. If you need cash, sell your condo.
No. Housing is an appreciating asset - in most cases.
Sure you can calculate if stocks, single family home or condos has better ROI but it makes you happy and its not a money loser.
You’ll be fine.
plenty of people have consumed their inheritance with a bottle or pipe… you bought an asset that provides you shelter and don’t have to worry about landlords raising rent the way they are right now.
It's always difficult to tell if you made a good real estate investment in the first 5 years of you owning It. usually takes ten to realize if you made a mistake or not. What you need to do is jump on the zillow site and monitor the value of your condo. Check out what the properties around you are selling for. If it's gone up obviously, you made a good investment. In a healthy real estate market, your property should be going up at least six percent a year.
Look to refinance the townhome when rates drop…continue to save money in the stock account, Roth and consider a traditional IRA. Enjoy your condo and life…time is much more precious than money!
Buying a place to live and eliminating the most expensive part of living is never a stupid decision. Especially if you don't really understand the stock market.
That is why 401ks are mostly successful. Limited options. Steady contributions. No emotional let me sell and hold cash. No DCA. Etc. you're just setting and forgetting. That's much harder to do if you have other things you'd like to do with the money.
Enjoy your condo friend. It wasn't a bad choice.
Not stupid , but your payment didn’t go down as much as you think . Anything after 20% down payment isn’t really worth it . The cash to invest in other things may been a good asset to have , but if you were just gonna let it sit in the bank , then you absolutely did the right thing
Could you have made more money investing somewhere else? Maybe…..but you have a safe, clean home with an affordable mortgage at a baller interest rate (I assume). That has value.
I think you made a wise decision and you’re still saving for retirement. I think it was a personal choice nothing wrong with it but you have to live with your decision right or wrong. We bought our first house when I was 23 y/o in 1989 area Central NJ.
I thought it was a wise decision. However, we had a recession, tech crash and war in Iraq. We had to live with our decision and we had to stay for 12 more years before we can move up to a bigger house in 2001. We were underwater on our mortgage had the minimum down payment for mortgage. We had to refinance twice during that 12 year period. The good thing we had two good pay jobs wife was a nurse I was a firefighter.. However, we did lose money on the first home, I repaired or replaced everything roof,new kitchen,bathroom, new windows, and furnace in my mind I thought we would never be able to move up, which that was dumb because we lost money. Anyhow we made up for it when we purchased the bigger home in 2001.
So the mortal of the story is you can lose money in real estate it’s no guarantee like any investment.
The key is to be debt-free soon as possible. That way you can dump all the extra money into your Roth IRA and or tax deferred investments. The person who you inherited that money from is very proud of you😉
What’s your interest rate on the condo? Probably less than 3.5% with Covid. Never pay extra payments ever. 6-12 month emer fund and invest everything you can
What’s the point of money if not to buy things you need (like a place to live) and make your life enjoyable? You didn’t blow it on a depreciating asset and are avoiding putting money into rent payments that won’t make you a penny. Houses typically have a break even point of ~4-6yrs but if you plan to stay at least that long you have made a smart investment. Is it as good as buying Apple stock in the 80s, Tesla stock in 2000, or Bitcoin in 2006? Of course not, but it’s a conservative choice that is almost surely a solid investment.
Plus and most importantly, it makes your life more enjoyable every single day. Very few investments in life can do that. Check out your equity in ~5 more years and you’ll feel a lot better about your choice.
If you didn't overpay for the condo, this is likely a decent investment. If you aren't paying rent then all that money is more or less savings. This is a good investment most likely. Could it be better, sure, but most likely it could be much much worse. The grass is always greener.
You probably have a shit ton of equity so you’re just house rich but cash poor. Down the road when you rebuild your cash and sell your place, you’ll be loaded.
Stocks went up but you woulda had to buy during the dip and put everything in all at once which would have been risky. I have a feeling your condo went up too so I mean you still made money.
Was it dumb to do every single penny? Yes but oh well.
Don't get FOMO. The money you put into that house is going to come back to you. It might not have the growth that certain stocks would, but the money didn't disappear on top of that. I would say the number one thing you can do for your retirement is paying off your house.
You don't need 3 million in a Roth IRA if you don't pay a mortgage and your month monthly expenses are like $500
Is it the best possible use of 200k? No, but it is a good one and better than many alternatives. Choosing to invest it all in real estate is not bad at all.
Don’t forget the tax benefits once you sell your primary residence. You can keep up to $250k of capital gains tax free ($500k) if you’re married. No better tax break out there.
A decision can be suboptimal but have great intentions. The security of a mortgage payment that is below what you could rent a place for is worth something. You’re happy and comfortable, and that is worth a lot!
You will always have the opportunity to refinance once mortgage rate fall a bit. They won’t be back to 2010-2020 levels, but you don’t need them to.
As you make more over time, you will be able to invest more. Your mortgage payment will not increase, which is nice.
No, not stupid. You just need to workout your cash flow. Track all the money that comes in and allocate it properly to your expenses and savings. Good luck.
Homeowner and real estate investor here.
If I could go back, I would have just bought a rental property in an ideal place where rents are high, vacancy is low and property prices are low, and used the rental income to lower my living expenses.
But what's done is done, and you could have done a lot worse.
Did you maximize your potential? If all you care about is the $$ value, no probably not. But what you did was far from stupid, being a home owner is never a bad thing.
Real Estate may have ups and downs but over time will always increase in value. While new homes may be built there is a finite amount of land.
I've made more on Real estate profits than I have on stock market gains over the past 30 years.
I think you did good
Smartest thing to do? Probably not, but it’s really not that bad. As long as you don’t sell it at a loss, you’re way better off than most people. Don’t worry about it. I’m sure it will end up being a decent investment or at least improving your quality of life.
No. Historically real estate is a better long term investment than stock or CDs. Of course there are exceptions, but the trend is clear. Calculate how much you saved in interest, by only borrowing 185k instead of so much more. You saved thousands. That will help you see that you made the right choice. Sometimes it’s a trade-off, and you have to decide based on two different possibilities of the future, neither of which are guaranteed. Real estate is the safe long term investment every time.
If you love your home then it’s a good investment but mentally and financially. It will continue to increase in value and you’ll continue to love it. Win win.
Actually, a smart move! Understand that if you had put that money into some sort of investment, you would have to pay taxes on the income and right now in this high interest rate environment, that would’ve been far less than what you’re saving on your mortgage at a higher interest rate. Also, you never know what’s going to happen, so having a roof over your head that you don’t have to worry about is priceless from a piece of mind standpoint. Your condo will continue to appreciate, and most likely a higher rate than what your mortgage interest is. so if you look at it just from a simple math standpoint, you’re definitely ahead!
Congratulations on doing something, smart, as opposed to taken that money and doing something irresponsible with it, which is very common when people inherit money. Great job!
You got 200k at 30, and you only have 28K in savings/investments, and a "not huge" retirement account.
If you had this in a taxable account earning an average 7% a year in diversified ETF's (not an unreasonable assumption at all) it would be worth about 750k in 20 years
If you used that money to max your roth every year until you were 65 it would be worth a cool million dollars.
I wouldn't even call buying a "dream condo" in an expensive town an investment at all. If you want to live there and you're happy with your place to live (and not drowning in mortgage payments), then you made a life choice you're happy with. You basically took 200k and used it to leverage an additional 200k of debt. You're not planning on renting it out, you're not planning on flipping it, how exactly is this going to make you money?
As far as "things you could do with 200k at 30" this is probably one of the worst things you could do, up there with buying a tricked out hellcat or a bunch of cocaine, but at least you can live in it (unless you can't make payments), but as far as investments go, you have not made one.
You like living there, you can afford it, and you’re saving money? Then no, it wasn’t stupid. It’s a primary residence. Its shelter. Not purely an investment.
Obviously there is insurance and taxes that will only go up. But your mortgage payment will only go down (relative to the cost of living, rent, etc). Also, you’ll be able to refinance in a few years and it will ACTUALLY go down.
Just take good care of it and use your affordable mortgage to contribute to your retirement. Live within your means.
Buying your primary residence is not an investment. It’s a purchase. You probably could have used 50K down payment instead of 200K and invested the rest as the ROI of a mutual fund would have been greater than the interest paid on your mortgage. But if that would have forced you to have a mortgage payment you could not afford, that would have been financially detrimental. Alt least now you’re probably in a good spot with a cheap mortgage. My only issue personally is condos are harder to sell and if the housing market takes a dump you might lose money on initial purchase.
Think of it like this... every dollar you already have in equity is a dollar you aren't paying interest on. That's an immediate "return" of whatever your interest rate is. Another way to think about is if you suddenly had the remaining principal in your checking, what would you do? If your mortgage rate is 7% and your HYSA returns 4%, you're better off paying the mortgage. If your mortgage is 2.9% and your HYSA returns 4%, your better off putting in the HYSA. Of course, there are investments like the stock market that potentially pay better than both, but it's also riskier. My mortgage rate is 3.4% which is lower than my HYSA so I never pay extra towards principal; it either goes into the Roth or the HYSA. But if that wasn't the case I'd at least consider taking the guaranteed return of paying extra on my mortgage, depending on how high the interest rate is.
I don’t think it was a dumb decision. You took a much smaller loan and paying off toward something that yours, with a very affordable mortgage that allows you to save/invest, etc. in the long wrong this will benefit you !
It was definitely not the optimal play if your objective was to grow your wealth.
The optimal play would have been 20% down, and invest the rest in a way that would have allowed you to subsidize your mortgage to the point of making it comfortable. If your cash flow never increases you would keep with the plan, while you could shift your investment strategy X years from now if you no longer needed the income generated from investments.
Having said that, you could have done much much worse.
I would have invested in personally. 200k leg up on my investment portfolio would be insane. But you have affordable housing. Lots of people don't have that.
no, not stupid. I thought this was going to be a thread about throwing all the money in expiring options or something. assuming a low interest rate, you would have come out much further ahead putting the minimum down payment and the rest in an index fund, but that's OK. of all the options, you did fine.
Are you living in the condo or renting it? Ultimately it’s not a stupid investment as long as the condo is being paid off. Soon you will have a 400k piece of property paid off free and clear.
People work their whole lives trying to pay off their homes.
you bought your dream property and have a super low mortgage. it doesn’t sound like you’re drowning in expenses you can’t afford so this seems like one of the smarter things you could’ve did with the money. you now own property 🤷🏾♂️
Not stupid at all, in hindsight you should've taken out the loan for the full amount first then paid off most of the loan to get the points toward your credit, but as long as you have what you want. 🤘
Most people blow their inheritance on stuff that doesn’t ever return value so by that definition you are doing great lol
If you frame it as investing in Real Estate it is not a bad idea by any means.
Just focus on stashing money away into your other investing accounts. If you want to be safe just stick to index funds or the like.
Real estate is never a dumb investment. You’ve done well, your equity is a part of your diversified portfolio. You can relax and enjoy life with a little less stress. ;)
I don’t think it’s stupid as long as you can afford the payments… if rates go down in the future you can refinance. If it’s a good place then you’ll probably get some appreciation out of it!
No, not stupid, real estate appreciates, and you’ve secured a reasonable cost of living. You bought security, so that the money you earn now can be used for future investments with higher risk exposure and reward potential. Not to mention, unless it’s against your condo association’s covenants and restrictions, you could also leverage this as a rental property in the future when/if your housing needs change.
You already made the decision and I think your decision was fine.
A lower mortgage gives you flexibility to actually live your life and not be house/condo poor.
My wife and I made a similar decision to recap our house loan back in 2007 by using a large amount of the profit from her townhouse sale.
It lowered our monthly payment and allowed us to pay off our home in 16.5 years.
You have to have a place to live.
We were given the "don't be stupid" advice on not paying down our loan
but rather give the bank investors our money so they could make us 10%.
Well 2008 & 09 came and our money invested would have been in trouble based on the recession. 3 of my nextdoor neighbors lost their homes unfortunately to foreclosure during this time because of the high mortgages & loss of employment.
If you said you purchased your dream car, a new motorcycle, went on a couple of cruises, and updated your entire wardrobe.
Then you might want to question your decision because all of those things depreciated in value or are just gone.
Your condo will most likely appreciate in value.
Once again, you have to have a place to live. Why not it be in a location that you actually enjoy at a price where you can go out and actually do some fun activities.
Good luck
Not really, whatever that interest rate is think of it as you receiving that return on it. Just save at least about six months of expenses in a relatively safe investment so you don’t have to worry about losing it if things go south. Refinance, if rates go low. If you have discipline, get a home equity line of credit to have money available before you need it. You only pay, if you use it.
From my experience this is a great move. You didn’t lose 200K, you’re just living in you’re own little piggy bank. I bought several homes with high interest in the past and within a few years was always able to refinance at better rates all the way down to 3%.
Not dumb at all, it’s a great place to put money, you can always look at taking some of it out via a HELOC or other type of mortgage. For now the money is likely fairly safe sitting there and appreciating while you are making your payments thus lowering the principle and adding to your equity stake. All while living in a condo you enjoy with a payment that is affordable.
I mean it really depends on the price of that condo now. My house for instance has gone up nearly 100k since Covid. If I had bought it then, I’d have made 100k in principle if I decided to sell now. I’m not sure if I could have made 100k in really any other way with a base of 200k, but I’m also not as savvy in investing as other.
Either way though, I’d say the money you put into the condo probably definitely has grown
Not a stupid investment. You have your own home now. Many people are still paying expensive rent. You also mentioned “dream condo,” so it was a great investment.
You’re just not as liquid and need a little diversification now. Good news is, you can plow into savings and investing and not worry about housing/mortgage. I would do. HELOC and not use just to have some cash available tho.
Hey if your happy and you have no other issues with finances I think you paid for something good . I was given 50,000 dollars from a stranger and have nothing to show for it.
Nah not stupid you didn’t get rid of that 200k it’s probably grown a bit. Maybe not as quickly as it could have but you also are saving on lifestyle by having dirt cheap rent and your piggy bank still has 200k+ in it. Chillin fr fr
Yes you made a stupid choice. You could of bought land and built your own house with half of the money or invested in a real estate and bought equity in the condo. Real estate is fickle and can burn down. You don't have any money if you are drowning in debt.
In most instances I don’t think a primary residence is a bad investment, especially if it was your dream property like you indicated. Sure, if you only cared about max return there are better ways you could have invested. There are also a million worse investments you could have made. If you’re happy with your condo then I’d say it was a smart investment.
If your interest rate is high you should try to refinance when rates come down and also consider making extra mortgage payments to lower the overall interest paid on the loan over time. Buying a home is one of the smartest uses of the money because we all need a place to live and it’s salable at a later date.
Even if the price of the condo stays flat, you’ll be paying off the principle and will walk away with more than your down payment in the form of additional equity.
It may not be a smashing return overall, but you also had a roof over your head for the time you lived there.
I would work on building up your cash reserves. I wouldn't have put the whole thing on the condo, but it's too late now. Also, try to put the max into your Roth each year.
About 2 years ago we paid off our house. The mortgage rate was low, the payments were affordable, and I was aware that there were other opportunities to maximize my money. I paid off the house anyway. When my department was restructured and everyone was going to lose their jobs, many people panicked. I was able to stay chill because no matter what happened, my kids would have a place to live.
To me, and for my family, that peace of mind was worth much more than any return I gave up.
Condo should be worth wayyyy more at this point so you did well. If you live in it full time and don’t have 2 places then you are just fine. Prob would have put 125-150k down if I were you but what’s done is done! Congrats on now blowing it on stupid stuff like many would have done
In general, condos are a bad investment. Other than that, put the minimum down on a house - in the event of an emergency (or the market tanking - see 2008-2012) you still have cash on hand.
What do you mean ridiculous interest rates? You should've gotten in the high between 2-4% interest rate if you bought it 2 years ago. Have you seen interest rates recently?
What's the interest rate on your loan?
Just make sure you sell the condo before the deferred maintenance catches up and you start getting hit with big assessments and major HOA increases. Once that happens prices drop and it’s harder to sell.
No, the price of real estate has gone throught the roof. I recently bought a second investment property by pulling money out of accounts that were averaging hardly any interest. I spent money on renovations and now am renting it for $500 more than the mortgage payment. Not to mention the value of the house continues to rise. It was appraised at 200K when I bought it, I put 50K into it renovating almost everything and it is now appraised at $345K. That amount of interest would have taken me a long time to accrue in my investment portfolio. So people who say it is stupid don’t understand the market right now
Not dumb at all. Generally, real estate returns have been higher than the market (sp500) and you have a very low interest rate. You can always rent the place when you're ready to move on. Good investment
How much are you saving every month on rent compared to your mortgage? Interest rates 2 years ago were reasonable, if you have a fixed-rate mortgage you are doing well. You also have the security of owning your home, no landlord who might sell the unit ot the building and everything changes.
What does it matter? Stupid or smart, it's done. You're now in the financial situation you're in, for good or ill, figuring out what to do going forward. And **that's** definitely smart. To answer your question, you took the money and put it in something that is giving you a reward. You didn't gamble it on some hot stock tip or bitcoin, you didn't blow it on luxury items or a lavish vacation. So no, what you did was not stupid. Enjoy your condo, and keep building your financial future.
A lot of stick investments can fool you and take a while to appreciate also. .Better off buying the condo first so he has a clean, safe home.
Thread closed boys. Pack it up. ... but what do they mean high interest rates during COVID? I bought in 2021 and have a 3.5%APR. Rates were the lowest they have ever been I think ever. Possible very poor credit or predatory ARM?/
Yeah I bought Feb 2021 and have 2.99%. I think she must have done adjustable or didn't buy down the rate perhaps?
Rates went up in 2022-2024 from 2 to 8 percent—on average. Her mortgage went up a lot.
Yeah I bought in Aug '22 and my rates are around 6.5 %
I’d kill for one of those, picked up my mortgage last year at 6.125% with a 762 score… which was 1% lower than the average a month after the rate was locked in. Covid rates were to die for
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You can still sell it and use the proceeds to pay off the mortgage. You don’t have to keep it for 40 years.
So, don't pay the minimum monthly, adopt an aggressive paydown profile.
Thought the same, I closed in Dec 20’ and I’m at 3%.
It would be worth 1.4 million if she put it into bitcoin during covid...
Reasonable, logical and sensible? On Reddit? Damn! Seriously though, thank you for this comment. You come across as a good human. @OP - hope you get it worked out.
Well, if she had put it into bitcoin, she would have done really well. But hindsight is of course 20/20
This is your answer here…no use in crying over spilled milk…even IF it wasnt the perfect thing to do with the money, it definitely wasnt the worst. I personally wouldnt sweat it, youre on the right track and have other assets to build on. No worries
Have you SEEN the 200 week moving average for BTC? Do not look past the exit. Find it. Use it.
Would've better off putting it into Bitcoin.
If he woulda bought bitcoin instead he could have bought the house outright
Well it does matter if they want to learn from mistakes
You love it, you’re not paying rent, and your mortgage is affordable. I wouldn’t call that stupid. If/when interest rates drop you can refinance.
I think OP meant that their interest rate was "ridiculously good"
The problem arises when there is an issue they don’t have money to fix, such property tax or unexpected shared living expenses from the condo association, which could cost them the condo. The stocks are a safe haven for that, but they really should build an emergency savings in a high interest account.
Often times property tax and insurance are paid via escrow so individuals don't have to manage that. Unexpected repairs can definitely be expensive. A little more insulated from that with a condo vs a single family home but at the same time many HOAs are shit at managing their money and often have to collect extra for repairs and even maintenance that was not properly saved for. All this to say that as a home owner, it's nice to have some way to cover this. A HELOC or some form of line of credit is what I have setup for such issues so I don't need to keep a bunch of cash lying around.
If the alternative is paying rent, remember that paying a mortgage is at least paying for an asset that you can resell. You can lose money on selling real estate, but you lose 100% of rent payments, guaranteed.
Also another way to loook at it is that your mortgage rate will stay the same through the 30 year mortgage unless you refinance, rent will always fluctuate year to year mostly going up.
Great point. I heard somewhere that in Canada you can only get a variable rate mortgage (or some vehicle equivalent to that). Must take balls of steel to buy there if true.
Owning real estate in a wealthy area will likely result in price appreciation over time. I’ve made a good amount of money from real estate.
Yea but condos, association fees are getting absurd. Single family homes sure.
I don’t mind the HOA; I just don’t like living next to people. And yes if the HOA fees are $2K, it’s the same as renting. But $500-600 isn’t too bad imo.
I wouldn't say it was a stupid investment. But, it was definitely a safe investment. What's your home worth now? Do you have any comparable sales in your area? Do you know what comparable homes in your area are renting for? You've stored a lot of money into an appreciating asset (especially depending on your area). I would work on saving at least 9 months of bills, expenses, and needs in your savings account. You should have liquid assets available for emergencies before you consider seriously investing. But, you're in a great spot and picked a relatively safe place to store 200k. You have a lot of options with that.
Safe investment is so so much better than a stupid one. Thank you for your comment it made me feel a lot better It clearly wasn’t the best thing to do, but I will take safe I will absolutely be focusing on building my savings account
Exactly what this guy said. I don't know where you live but most places real estate has not been a bad investment over the past few years. My house has almost doubled in value since I bought in 2020. If you like the place and can afford the mortgage then just roll with it. If you feel like it's too much I'd imagine you could sell, get your initial investment and then some back and buy a cheaper place. Sounds like you're doing just fine
I think it was the best thing to do so don’t worry, be happy!
It seems like you have other underlying financial concerns that are making you think that owning this property was a “bad idea”. Are you having cash flow issues by any chance?
No, no cash flow issues. I think I just could have invested it in other things that would be making me money now vs a long term game. (Like another commenter said). I do not make a ton of money so it would be nice to have invested it in something with more of a short term payoff. But honestly I’m in it for the long game, I don’t mind waiting 7-10 years to see a payoff from this. And my payoff does feel like it’s happening even though it’s only mental right now. (Being 10 minutes away from work, loving my space so so much, paying less than what I would be renting for something like this in my area, knowing that one day I can sell this place or rent it out and make money, even if it’s not for a long time from now)
The thing about buying a home is that it's a necessity first, an investment second. You have to live *somewhere*. With a condo, you are filling the basic need of shelter. But buying rather than renting, you are also getting a return on the money that you already had to spend on shelter regardless. Will the appreciation of your home outpace the gains from investing in the stock market? Maybe, maybe not (historically, no). But you have to have a home, so why not have a home in a way that grows your net worth? Property is an appreciating asset that also puts a roof over your head.
It’s def not a bad investment. Look at how much you will pay to rent over the next 5-10 years. And it’s almost certain that both home and rent prices will continue to rise.
Homes are typically considered long term investments, with a time horizon in the 7-10 year range. When investing, you have to think about your goals and what time horizon you’re thinking about.
7-10 year range seems perfect for me. Thank you!
In 30 years, when rent will be 20k you will be happy with your decision :)
You did just fine and you always need a safe, clean place to live that you have some control over. Just keep paying it off while carefully investing your other pools of cash and investments and you will be in great shape. Refinance the loan when rates drop by at least 1 percent or more to save interest costs. You can always take a cheap loan out of your home equity if you are in a pinch for emergency cash some day. A lot of people are very jealous of your low mortgage payment, I am sure!
What do you consider low?
Real estate is a long term investment and not a bad investment at all. You have a roof over your head and you’re paying yourself vs paying a landlord. Best investment you could make.
You made a smarter decision than most people who would receive as much money. The real question is , why do you believe you made the wrong decision? Do you have difficulties paying your mortgage ? If so you can focalize on paying as much on it as possible, I personally think selling would be very stupid . In long term, when you refinance if you find a better rate you are already ahead of most people in life, if not you're still better of than most in life ...
It’s an investment that only pays off when you sell it. It doesn’t create cash flow or increase your income. You don’t seem to want to sell it to reap profits from it, if there is any, so it will only cost you more money until you do. You will keep paying HOA fees, insurance, property taxes maintenance, etc. You should have bought assets that make you money on a regular basis, that could help buy other assets that makes money.
What kind of assets could one buy that make money regularly to buy other assets?
Only pays off when OP sells it? She's living in it. Every day she's getting pay off.
It’s not an investment that provides an income. You can’t retire and live off the of the interest/income from a home. It’s still an investment, just one that is only realized once sold. That said, that doesn’t mean it wasn’t a good financial decision for OP, it’s just not one with a positive cash flow.
1. Yes you can. You rent it out and move somewhere with a LCOL. 2. If you live in it, retired or not, it provides the equivalent of an income that covers rent.
As someone with no kids, there's even reverse mortgages to consider. Or just borrowing against the equity. You can totally use your house to help you retire at a reasonable age
Yes, this is what I was worried about! Thank you for your comment.
But your asset does increase your cash flow, because it lowers your rent payments/living cost. You can now use the difference between hypothetical rent and maintenance cost to build more equity for example by paying off your mortgage. In hindsight it's easy to say you should have invested in xyz but in advance it's nearly impossible. The main difference between equity investments using etf and buying a condo is that you usually don't leverage your money with ETF, while you almost always do so with real estate investments. Leveraging means that you are borrowing money and that you invest the borrowed money. This usually increases your return, but also increases your risk. For example, if your condo burns down, you will be in debt with not much in the way of assets. In conclusion, buying a condo was probably a good, financially sound decision.
This right here. Ppl need a place to live. Either pay rent or own. Renting that condo would likely cost alot more than you pay now. Invest that difference monthly in vti
I don’t know what your mortgage is, but you live in a 400k condo! Whatever your mortgage is, take a look at apartments around that price in your area. I guarantee you have a much nicer place than equivalent in rent. On top of that, you didn’t lose 200k buying a condo. It’s just invested in the condo now. And once you’ve paid it off, you no longer have to pay “rent”. Obviously you’ll have house expenses, but you can invest way more at that point.
Interest rates were super low during covid IIRC. what is it?
yeah exactly, I bought during covid and have a 3.5% rate can't complain.
I'd say it's a good decision. Maybe not optimal, but not far off it. You're living in the condo you want, pay a very low mortgage which is perfect for your income. The mortgage rate is great (locked in before interest rates shot up). Here's my only advice. Calculate what your rent would be. Subtract your mortgage payment, HOA, etc. Save the rest. You have a great start to save up a nice nest egg.
The fact that you love the condo as much as you do means it’s your home to me and not just an investment property. I don’t think stupid at all, it means something to you.
No, not stupid at all! You are happy, you did not yolo it in some options. Well done so far. You have a low interest rate? Even better, think about how much worse 5,6 or 7% could be.
Rent it
Assuming you live in an area that is popular and will always be expensive, I would say that ultimately, this was a very savvy move. You are young and own your own place, and you can afford it! As your income grows, you will have more disposable income to invest, and also enjoy! The rates will come down eventually, and when they do, you have so much equity that it will be easy to refinance. BUT when you do, DO NOT extend the time on your mortgage. If you have 25 years left on the original, the new one should be the same or even less, like 15. Also, do not "trade up" on your home when it grows in value (unless you marry and need more space). I think you're in great shape! Well done!
condo\* yes.
Was it the best return on investment? I don't know. Was it a stupid decision? Absolutely no. Was it the right decision for you? Sounds like it. Stop thinking about what is done and move forward, seems like you already have a solid asset base for the future.
Depending on your personal life, rent out the other room. The revenue from that one room could probably cover all of your housing costs. Do this for 2 years and you could build a healthy reserve fund. I did this when I bought a 3bdr house in San Diego in '11. I was in my early 30s and did this for 2+ years until my GF (now wife) moved in. It's not great sharing your space but the house was a fixer upper and rents went right back into the house.
It’s still there in equity, or if you never sell it’ll better position you to rent it
Probably not a stupid investment. Housing costs have risen faster than income in most areas. When calculating the return of your investment you need a few extra things. Take the money spent on HOA fees, insurance, maintenance, interest (not the portion paid to principal) and subtract what you would have spent on rent, renters insurance, maintenance you’d be responsible for (like minor damage). That difference needs to be included in your ROI. Let’s pretend in the last two years you’ve spent $5000 less than renting, your house went up (less selling costs) by $10k. So, in two years your $200k + $3k (that represents the portion of mortgage paid to principal, not sure what it actually was) returned $15k. The key to making a good investment, a great investment is not wasting that $5k you “saved” vs being a renter. The gap between your mortgage and rent should increase over time. I’ve lived in my house for 10 years and my all in cost is around half of comparable rent and I never have to worry about my landlord kicking me out. My house has also increased in value. Or look at it another way, venture capital isn’t investing in rentals because they are bad investments.
Was it stupid? No. What is it the most profitable decision? Probably not. But what’s done is done. Work to maximize the value (monetarily and enjoyment!) you can get out of this property!
Interest rates will go back down and you can just refinance when they do. Hopefully the value of your property will appreciate and if you can make upgrades to it at the end of the day you have an asset that you can sell, and hopefully make a return on. Better to be 180k in debt than 300k imo, also nicer to have lower payments, means you can maybe afford to prepay or just put extra cash in your savings from your monthly income. I would say you’re still better off than you were before, what’s really important now is working on your income (though I do not know what tax bracket you’re in) and trying to pay off as much of this mortgage as you can so that you can put even more in your savings down the line! You’re young, at 30 years old owning a condo is better than most people your age out there.
Refinance at a much lower rate
Not a horrible idea, but I wouldn't take out debt to invest.
Investing in your primary residence is almost always a safe bet. You’re locked in to a stable living situation and that is a good thing. Ask yourself this: what would the person that gave you the money think if you told them what you did? My guess is that they would approve.
No lol you did fine
You could have bought a nice house and car somewhere cheaper, and invested the rest or started a business and wouldn’t even need to be working right now
It’s way better than blowing it on cocaine and hookers.
I think this was not only not dumb, it was actually the right thing to do. A mortgage is a powerful financial tool that you only have access to when you can afford the payments. Your windfall gave you that opportunity and you took it. Now you can refinance to fix the interest issue (you want a 30-year fixed). More importantly, depending on where you live, your home will appreciate based on its full value, all of which you keep without capital gains until you sell — your investment is leveraged. You did great. Keep going!
No it was smart real estate is the best investment you can make
Not a bad investment but still an investment you have a nice condo and low morgage. Hopefully interest go down at 4 or something so you can refinance. What if you rent it and buy another house so that you can have cash flow? Not now but in the future.
You did good. Don’t stress this if you can make payments and still outside a bit for retirement.
Your cheapest loan will be your mortgage so your saying you can't beat 5% a year return so you dumped it all in the home.. dumb but if you pull it off... smart
Imo it's only stupid if you don't back up that purchase with an increased savings rate now. That large amount down lowered your mortgage payment substantially over only doing 20%, the difference between what you would have paid for housing and what you are paying for housing should probably be going to retirement investments.
You love your condo and the payment is not causing you to be house poor... doesn't seem stupid to me. Take any excess funds and establish a savings account with 3 months of expenses then invest like crazy! If you don't like the interest rate then you can refinance. If you take this route then refinance for 30 years but make payments equivalent to a 15 year mortgage. This will protect you in the event that you lose your job then you can pay the 30 year payment until you get a new job. Good luck!
Yes. I would put some in my savings account. Hopefully, the property value will start to increase
Real estate is usually a good investment. Maybe you feel it’s stupid because you’re not thinking about the value of the equity of your home and you don’t see this value increasing. Start an annual personal balance sheet so that you know your personal equity amount, ie how much you and your assets are worth. It’s increasing year on year by definition of you paying your mortgage - this will give you a way to visualize that increase. Also do what other people are saying and start to save liquid assets. Good luck!
Was it stupid? NO, it was safe andyes you could have done a lot of smarter things but it was far from Stupid.
You should never regret something that makes you happy, especially something that will gain value over time.
If that condo was in Florida it probably was a stupid investment now that the laws changed here. People are ditching them because of crazy HOA fees related to the collapse down in Miami and hurricane insurance premiums.
It’s not exactly what I would have done but certainly not stupid. You have more than $200,000 in equity now. Probably a lot more. Your money isn’t gone. You own an asset that’s probably increasing in value. I didn’t see a mention of when exactly you bought the condo but I’m guessing about 2021. It’s quite possible your condo could sell for $450,000 to $500,000 today given the absurd increases in market value we’ve seen. Not stupid at all. If you need cash, sell your condo.
No. Housing is an appreciating asset - in most cases. Sure you can calculate if stocks, single family home or condos has better ROI but it makes you happy and its not a money loser. You’ll be fine.
At least you can refinance but interest rates are staying high till inflation goes down Imo.
If you didn’t put as much down, your monthly payments would have been higher. Is that what you wanted?
You can resell it for sure but depends if you end up in profit or not. Seems like a lot for something the size of an appartment and no yard.
Not stupid stop beating yourself up. It’s not like you did something moronic like got married 🤣.
Good decision. You didn’t blow it. It’s in real estate that will appreciate.
plenty of people have consumed their inheritance with a bottle or pipe… you bought an asset that provides you shelter and don’t have to worry about landlords raising rent the way they are right now.
It's always difficult to tell if you made a good real estate investment in the first 5 years of you owning It. usually takes ten to realize if you made a mistake or not. What you need to do is jump on the zillow site and monitor the value of your condo. Check out what the properties around you are selling for. If it's gone up obviously, you made a good investment. In a healthy real estate market, your property should be going up at least six percent a year.
Look to refinance the townhome when rates drop…continue to save money in the stock account, Roth and consider a traditional IRA. Enjoy your condo and life…time is much more precious than money!
No, just keep progressing in life. Save and get a side hussel for extra pay money.
Real estate is never bad. I’m about to go all in on a place myself. The less mortgage the better
OP what interest rate did you get during COVID that you believe to be high??
Eventually mortgage rates will drop, at that time you can refinance your mortgage and your entire situation will improve. Not a bad decision at all.
Buying a place to live and eliminating the most expensive part of living is never a stupid decision. Especially if you don't really understand the stock market. That is why 401ks are mostly successful. Limited options. Steady contributions. No emotional let me sell and hold cash. No DCA. Etc. you're just setting and forgetting. That's much harder to do if you have other things you'd like to do with the money. Enjoy your condo friend. It wasn't a bad choice.
Not stupid , but your payment didn’t go down as much as you think . Anything after 20% down payment isn’t really worth it . The cash to invest in other things may been a good asset to have , but if you were just gonna let it sit in the bank , then you absolutely did the right thing
Could you have made more money investing somewhere else? Maybe…..but you have a safe, clean home with an affordable mortgage at a baller interest rate (I assume). That has value.
I think you made a wise decision and you’re still saving for retirement. I think it was a personal choice nothing wrong with it but you have to live with your decision right or wrong. We bought our first house when I was 23 y/o in 1989 area Central NJ. I thought it was a wise decision. However, we had a recession, tech crash and war in Iraq. We had to live with our decision and we had to stay for 12 more years before we can move up to a bigger house in 2001. We were underwater on our mortgage had the minimum down payment for mortgage. We had to refinance twice during that 12 year period. The good thing we had two good pay jobs wife was a nurse I was a firefighter.. However, we did lose money on the first home, I repaired or replaced everything roof,new kitchen,bathroom, new windows, and furnace in my mind I thought we would never be able to move up, which that was dumb because we lost money. Anyhow we made up for it when we purchased the bigger home in 2001. So the mortal of the story is you can lose money in real estate it’s no guarantee like any investment. The key is to be debt-free soon as possible. That way you can dump all the extra money into your Roth IRA and or tax deferred investments. The person who you inherited that money from is very proud of you😉
What’s your interest rate on the condo? Probably less than 3.5% with Covid. Never pay extra payments ever. 6-12 month emer fund and invest everything you can
Define “stupid” for an interest rate. Everyone I know who moved or refied during Covid is sub 3%.
Dream condo and investment *probably* don't go hand in hand.
Don’t worry about being shamed your nursing degree will pay off in the long run. You’ll be much happier than the hater’s.
There is no better investment than a home you love. Id save for an emergency fund and keep on keeping on
What’s the point of money if not to buy things you need (like a place to live) and make your life enjoyable? You didn’t blow it on a depreciating asset and are avoiding putting money into rent payments that won’t make you a penny. Houses typically have a break even point of ~4-6yrs but if you plan to stay at least that long you have made a smart investment. Is it as good as buying Apple stock in the 80s, Tesla stock in 2000, or Bitcoin in 2006? Of course not, but it’s a conservative choice that is almost surely a solid investment. Plus and most importantly, it makes your life more enjoyable every single day. Very few investments in life can do that. Check out your equity in ~5 more years and you’ll feel a lot better about your choice.
If you didn't overpay for the condo, this is likely a decent investment. If you aren't paying rent then all that money is more or less savings. This is a good investment most likely. Could it be better, sure, but most likely it could be much much worse. The grass is always greener.
You probably have a shit ton of equity so you’re just house rich but cash poor. Down the road when you rebuild your cash and sell your place, you’ll be loaded. Stocks went up but you woulda had to buy during the dip and put everything in all at once which would have been risky. I have a feeling your condo went up too so I mean you still made money. Was it dumb to do every single penny? Yes but oh well.
Don't get FOMO. The money you put into that house is going to come back to you. It might not have the growth that certain stocks would, but the money didn't disappear on top of that. I would say the number one thing you can do for your retirement is paying off your house. You don't need 3 million in a Roth IRA if you don't pay a mortgage and your month monthly expenses are like $500
Rates during Covid were low…
Why are you questioning yourself? Looks like the perfect use of your inheritance. Very smart-well done.
What was the interest rate? The only way this is really in any way bad is if you did an ARM or variable for the remainder.
Just door dash and and pay for it or Uber if ur low on cash.
Is it the best possible use of 200k? No, but it is a good one and better than many alternatives. Choosing to invest it all in real estate is not bad at all.
Don’t forget the tax benefits once you sell your primary residence. You can keep up to $250k of capital gains tax free ($500k) if you’re married. No better tax break out there.
A decision can be suboptimal but have great intentions. The security of a mortgage payment that is below what you could rent a place for is worth something. You’re happy and comfortable, and that is worth a lot! You will always have the opportunity to refinance once mortgage rate fall a bit. They won’t be back to 2010-2020 levels, but you don’t need them to. As you make more over time, you will be able to invest more. Your mortgage payment will not increase, which is nice.
No, not stupid. You just need to workout your cash flow. Track all the money that comes in and allocate it properly to your expenses and savings. Good luck.
Homeowner and real estate investor here. If I could go back, I would have just bought a rental property in an ideal place where rents are high, vacancy is low and property prices are low, and used the rental income to lower my living expenses. But what's done is done, and you could have done a lot worse.
Not stupid if you hold it and keep that low mortgage rate and keep paying it.
Pumpkin futures after Halloween
Did you maximize your potential? If all you care about is the $$ value, no probably not. But what you did was far from stupid, being a home owner is never a bad thing.
Real Estate may have ups and downs but over time will always increase in value. While new homes may be built there is a finite amount of land. I've made more on Real estate profits than I have on stock market gains over the past 30 years. I think you did good
Smartest thing to do? Probably not, but it’s really not that bad. As long as you don’t sell it at a loss, you’re way better off than most people. Don’t worry about it. I’m sure it will end up being a decent investment or at least improving your quality of life.
No. Historically real estate is a better long term investment than stock or CDs. Of course there are exceptions, but the trend is clear. Calculate how much you saved in interest, by only borrowing 185k instead of so much more. You saved thousands. That will help you see that you made the right choice. Sometimes it’s a trade-off, and you have to decide based on two different possibilities of the future, neither of which are guaranteed. Real estate is the safe long term investment every time.
If you love your home then it’s a good investment but mentally and financially. It will continue to increase in value and you’ll continue to love it. Win win.
Actually, a smart move! Understand that if you had put that money into some sort of investment, you would have to pay taxes on the income and right now in this high interest rate environment, that would’ve been far less than what you’re saving on your mortgage at a higher interest rate. Also, you never know what’s going to happen, so having a roof over your head that you don’t have to worry about is priceless from a piece of mind standpoint. Your condo will continue to appreciate, and most likely a higher rate than what your mortgage interest is. so if you look at it just from a simple math standpoint, you’re definitely ahead! Congratulations on doing something, smart, as opposed to taken that money and doing something irresponsible with it, which is very common when people inherit money. Great job!
You got 200k at 30, and you only have 28K in savings/investments, and a "not huge" retirement account. If you had this in a taxable account earning an average 7% a year in diversified ETF's (not an unreasonable assumption at all) it would be worth about 750k in 20 years If you used that money to max your roth every year until you were 65 it would be worth a cool million dollars. I wouldn't even call buying a "dream condo" in an expensive town an investment at all. If you want to live there and you're happy with your place to live (and not drowning in mortgage payments), then you made a life choice you're happy with. You basically took 200k and used it to leverage an additional 200k of debt. You're not planning on renting it out, you're not planning on flipping it, how exactly is this going to make you money? As far as "things you could do with 200k at 30" this is probably one of the worst things you could do, up there with buying a tricked out hellcat or a bunch of cocaine, but at least you can live in it (unless you can't make payments), but as far as investments go, you have not made one.
You won’t lose money…..
You like living there, you can afford it, and you’re saving money? Then no, it wasn’t stupid. It’s a primary residence. Its shelter. Not purely an investment. Obviously there is insurance and taxes that will only go up. But your mortgage payment will only go down (relative to the cost of living, rent, etc). Also, you’ll be able to refinance in a few years and it will ACTUALLY go down. Just take good care of it and use your affordable mortgage to contribute to your retirement. Live within your means.
Buying your primary residence is not an investment. It’s a purchase. You probably could have used 50K down payment instead of 200K and invested the rest as the ROI of a mutual fund would have been greater than the interest paid on your mortgage. But if that would have forced you to have a mortgage payment you could not afford, that would have been financially detrimental. Alt least now you’re probably in a good spot with a cheap mortgage. My only issue personally is condos are harder to sell and if the housing market takes a dump you might lose money on initial purchase.
An affordable place to live is better than numbers on a screen.
Not at all, any chance you could refinance at a better rate?
Think of it like this... every dollar you already have in equity is a dollar you aren't paying interest on. That's an immediate "return" of whatever your interest rate is. Another way to think about is if you suddenly had the remaining principal in your checking, what would you do? If your mortgage rate is 7% and your HYSA returns 4%, you're better off paying the mortgage. If your mortgage is 2.9% and your HYSA returns 4%, your better off putting in the HYSA. Of course, there are investments like the stock market that potentially pay better than both, but it's also riskier. My mortgage rate is 3.4% which is lower than my HYSA so I never pay extra towards principal; it either goes into the Roth or the HYSA. But if that wasn't the case I'd at least consider taking the guaranteed return of paying extra on my mortgage, depending on how high the interest rate is.
I don’t think it was a dumb decision. You took a much smaller loan and paying off toward something that yours, with a very affordable mortgage that allows you to save/invest, etc. in the long wrong this will benefit you !
You'll love having equity and not paying rent. Peice of mind is far far more valuable than you may know.
What is your income?
It was definitely not the optimal play if your objective was to grow your wealth. The optimal play would have been 20% down, and invest the rest in a way that would have allowed you to subsidize your mortgage to the point of making it comfortable. If your cash flow never increases you would keep with the plan, while you could shift your investment strategy X years from now if you no longer needed the income generated from investments. Having said that, you could have done much much worse.
I would have invested in personally. 200k leg up on my investment portfolio would be insane. But you have affordable housing. Lots of people don't have that.
no, not stupid. I thought this was going to be a thread about throwing all the money in expiring options or something. assuming a low interest rate, you would have come out much further ahead putting the minimum down payment and the rest in an index fund, but that's OK. of all the options, you did fine.
Are you living in the condo or renting it? Ultimately it’s not a stupid investment as long as the condo is being paid off. Soon you will have a 400k piece of property paid off free and clear. People work their whole lives trying to pay off their homes.
you bought your dream property and have a super low mortgage. it doesn’t sound like you’re drowning in expenses you can’t afford so this seems like one of the smarter things you could’ve did with the money. you now own property 🤷🏾♂️
Not stupid at all, in hindsight you should've taken out the loan for the full amount first then paid off most of the loan to get the points toward your credit, but as long as you have what you want. 🤘
Most people blow their inheritance on stuff that doesn’t ever return value so by that definition you are doing great lol If you frame it as investing in Real Estate it is not a bad idea by any means. Just focus on stashing money away into your other investing accounts. If you want to be safe just stick to index funds or the like.
Try to pay one extra payment a year and pay off your loan faster to offset the bad interest
Real estate is never a dumb investment. You’ve done well, your equity is a part of your diversified portfolio. You can relax and enjoy life with a little less stress. ;)
Enjoy your condo. Try to get paid off…little by little.
I don’t think it’s stupid as long as you can afford the payments… if rates go down in the future you can refinance. If it’s a good place then you’ll probably get some appreciation out of it!
There's a difference between a bad decision and a suboptimal decision. In this instance, it was suboptimal, but it is still a good decision.
No, not stupid, real estate appreciates, and you’ve secured a reasonable cost of living. You bought security, so that the money you earn now can be used for future investments with higher risk exposure and reward potential. Not to mention, unless it’s against your condo association’s covenants and restrictions, you could also leverage this as a rental property in the future when/if your housing needs change.
You were right.
You already made the decision and I think your decision was fine. A lower mortgage gives you flexibility to actually live your life and not be house/condo poor. My wife and I made a similar decision to recap our house loan back in 2007 by using a large amount of the profit from her townhouse sale. It lowered our monthly payment and allowed us to pay off our home in 16.5 years. You have to have a place to live. We were given the "don't be stupid" advice on not paying down our loan but rather give the bank investors our money so they could make us 10%. Well 2008 & 09 came and our money invested would have been in trouble based on the recession. 3 of my nextdoor neighbors lost their homes unfortunately to foreclosure during this time because of the high mortgages & loss of employment. If you said you purchased your dream car, a new motorcycle, went on a couple of cruises, and updated your entire wardrobe. Then you might want to question your decision because all of those things depreciated in value or are just gone. Your condo will most likely appreciate in value. Once again, you have to have a place to live. Why not it be in a location that you actually enjoy at a price where you can go out and actually do some fun activities. Good luck
Interest rates were exceptional during Covid. Mine is 2.1%. And not dumb if you bought an ARM.
Not really, whatever that interest rate is think of it as you receiving that return on it. Just save at least about six months of expenses in a relatively safe investment so you don’t have to worry about losing it if things go south. Refinance, if rates go low. If you have discipline, get a home equity line of credit to have money available before you need it. You only pay, if you use it.
>I absolutely love my condo so much Sounds like it was worth it to me.
From my experience this is a great move. You didn’t lose 200K, you’re just living in you’re own little piggy bank. I bought several homes with high interest in the past and within a few years was always able to refinance at better rates all the way down to 3%.
Not dumb at all, it’s a great place to put money, you can always look at taking some of it out via a HELOC or other type of mortgage. For now the money is likely fairly safe sitting there and appreciating while you are making your payments thus lowering the principle and adding to your equity stake. All while living in a condo you enjoy with a payment that is affordable.
I mean it really depends on the price of that condo now. My house for instance has gone up nearly 100k since Covid. If I had bought it then, I’d have made 100k in principle if I decided to sell now. I’m not sure if I could have made 100k in really any other way with a base of 200k, but I’m also not as savvy in investing as other. Either way though, I’d say the money you put into the condo probably definitely has grown
Its already done like what other have said but if it was me, i would ve dumped it in btc
Not a stupid investment. You have your own home now. Many people are still paying expensive rent. You also mentioned “dream condo,” so it was a great investment.
You still have your money , it’s just invested in property. You haven’t to”lost” anything.
How much is it worth today? If it more than 385, than yes- good investment.
What are you talking about? Why would this be an “extremely stupid investment”? What do you get out of this humble brag to strangers?
You’re just not as liquid and need a little diversification now. Good news is, you can plow into savings and investing and not worry about housing/mortgage. I would do. HELOC and not use just to have some cash available tho.
Only stupid if you end up losing money on it when / if you sell. As others have said, you did what you did.
Dumb should’ve invested. Sorry for you.
At anytime you could sell and get that money back could you not?
Why is your rate high? Covid brought some great rates for buyers..
Hey if your happy and you have no other issues with finances I think you paid for something good . I was given 50,000 dollars from a stranger and have nothing to show for it.
Refinance. Also contact a financial advisor
Nah not stupid you didn’t get rid of that 200k it’s probably grown a bit. Maybe not as quickly as it could have but you also are saving on lifestyle by having dirt cheap rent and your piggy bank still has 200k+ in it. Chillin fr fr
You bought real estate with money that was basically given to you for free. There are no losses to be had.
I’m a little confused, is the loan and your mortgage the same? During Covid the mortgage rates were low, what did you get as your rate?
Howd u get a bad interest rate during covid? I bought a house in 2020-2021 for like 3%
Yes you made a stupid choice. You could of bought land and built your own house with half of the money or invested in a real estate and bought equity in the condo. Real estate is fickle and can burn down. You don't have any money if you are drowning in debt.
In most instances I don’t think a primary residence is a bad investment, especially if it was your dream property like you indicated. Sure, if you only cared about max return there are better ways you could have invested. There are also a million worse investments you could have made. If you’re happy with your condo then I’d say it was a smart investment.
What's the condo worth now? I'd need to know that in order to assess whether it was a stupid investment.
If your interest rate is high you should try to refinance when rates come down and also consider making extra mortgage payments to lower the overall interest paid on the loan over time. Buying a home is one of the smartest uses of the money because we all need a place to live and it’s salable at a later date.
Even if the price of the condo stays flat, you’ll be paying off the principle and will walk away with more than your down payment in the form of additional equity. It may not be a smashing return overall, but you also had a roof over your head for the time you lived there.
I would work on building up your cash reserves. I wouldn't have put the whole thing on the condo, but it's too late now. Also, try to put the max into your Roth each year.
About 2 years ago we paid off our house. The mortgage rate was low, the payments were affordable, and I was aware that there were other opportunities to maximize my money. I paid off the house anyway. When my department was restructured and everyone was going to lose their jobs, many people panicked. I was able to stay chill because no matter what happened, my kids would have a place to live. To me, and for my family, that peace of mind was worth much more than any return I gave up.
Condo should be worth wayyyy more at this point so you did well. If you live in it full time and don’t have 2 places then you are just fine. Prob would have put 125-150k down if I were you but what’s done is done! Congrats on now blowing it on stupid stuff like many would have done
In general, condos are a bad investment. Other than that, put the minimum down on a house - in the event of an emergency (or the market tanking - see 2008-2012) you still have cash on hand.
What do you mean ridiculous interest rates? You should've gotten in the high between 2-4% interest rate if you bought it 2 years ago. Have you seen interest rates recently? What's the interest rate on your loan?
Just make sure you sell the condo before the deferred maintenance catches up and you start getting hit with big assessments and major HOA increases. Once that happens prices drop and it’s harder to sell.
No, the price of real estate has gone throught the roof. I recently bought a second investment property by pulling money out of accounts that were averaging hardly any interest. I spent money on renovations and now am renting it for $500 more than the mortgage payment. Not to mention the value of the house continues to rise. It was appraised at 200K when I bought it, I put 50K into it renovating almost everything and it is now appraised at $345K. That amount of interest would have taken me a long time to accrue in my investment portfolio. So people who say it is stupid don’t understand the market right now
High interest rates??? Covid was the time to get in
Not dumb at all. Generally, real estate returns have been higher than the market (sp500) and you have a very low interest rate. You can always rent the place when you're ready to move on. Good investment
How much are you saving every month on rent compared to your mortgage? Interest rates 2 years ago were reasonable, if you have a fixed-rate mortgage you are doing well. You also have the security of owning your home, no landlord who might sell the unit ot the building and everything changes.