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Arksansas - Where it's a crime to not pay rent.
#21
did a search

https://www.google.com/search?q=mortgage...ve&ssui=on

first link
http://www.interest.com/mortgage/news/ho...ou-afford/

28%
It says your total: Monthly housing costs, which include mortgage payments, insurance, property taxes and condo or association fees, shouldn't exceed 28% of your monthly gross income. Monthly debt payments, including credit card bills and student loans, shouldn't exceed 36% of your gross income.
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#22
Just to clear things up.  The lender is looking for an income of 35-45% above the monthly commitment to the loan.  So yes, $16k should be just fine for a $500 a month commitment.  

As for income tax.  A person who earns $16,000 a year pays zero federal income tax.  0-9,700 at 0% then factor in the standard deduction of $12,200 and you'd still pay zero until you earn over $21,900.  State income tax would be roughly $450 a year.  

If you still feel its a little tight, add a roommate in the beginning, people do it all the time there is an extra $300 a month covering 60% of your mortgage.

There more upward mobility in AR than in CA.  Even if the income is lower, the cost of living to income is much more preferable in AR, without the tax liability federal and state that comes with CA.  The great thing about getting into real estate early is you are hedging for inflation, you are really putting money back into your pocket instead of wasting it on rent.  Opportunity costs should really be considered at an early age.  

If repairs are a concern, a home warranty is $38 a month, I use them on properties that have old AC units and old hot water heaters.  Last year my 20-year-old hot water heater went out on a property, the cost was $125 for the deductible.

Your down payment for this property in Arkansas is $18,000, which you can achieve by saving $75 a week for four and a half years.  How many decades will the down payment savings take in CA?  Despite being classified as poor and in poverty by the federal government, you can do just fine at $16,000 a year in Arkansas and will be much better off than someone who lives in CA making $60,000 a year.  

There are also cheaper smaller homes in AR.

The Foreclosure Fear/Myth
What happens if I go into foreclosure.  The bank takes back the house, places it at an auction, sells it at the market cost most of the time, then takes what is owed plus legal costs associated with foreclosure, and the difference must be sent back to the borrower.  So you are most likely even going to get cash back after foreclosure.  Finally, you are no longer the cool kid with a great credit score for a few years, boohoo.

If you make $16,000 a year living in AR, can be disciplined enough to save $75 a week for 4.5 years, buy, buy, buy, buy.
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#23
(01-15-2019, 02:47 PM)videogamesrock Wrote: The Foreclosure Fear/Myth
What happens if I go into foreclosure.  The bank takes back the house, places it at an auction, sells it at the market cost most of the time, then takes what is owed plus legal costs associated with foreclosure, and the difference must be sent back to the borrower.  So you are most likely even going to get cash back after foreclosure.  Finally, you are no longer the cool kid with a great credit score for a few years, boohoo.

If you make $16,000 a year living in AR, can be disciplined enough to save $75 a week for 4.5 years, buy, buy, buy, buy.

Getting cash back almost never happens because the bank isn't motivated to maximize the selling price of the house, they just want it to sell quickly.
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#24
It goes to auction and usually sells for market price. I’ve been to many of these-rarely do you get what they show on these flipping shows on tv.
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#25
(01-15-2019, 03:14 PM)videogamesrock Wrote: It goes to auction and usually sells for market price. I’ve been to many of these-rarely do you get what they show on these flipping shows on tv.

The people here who I've seen go into foreclosure rarely only have 1 loan on the house.  They got a 2nd when they took out a boatload when the house was worth more, and then the prices dropped.  So there are some people here who are STILL underwater even though the market has been back up for ages - because it's still not what it was at the top.  Nobody is getting cash back at foreclosure.  And foreclosures aren't going at market here, normally, because they are usually train wrecks.  The people have been living in them but not paying a dime for 2-3 years, and they haven't maintained the house for years (first because they couldn't afford it, then because they knew they were going to lose it).  The banks (usually 2 different ones for the 1st and the 2nd mortgages) have been fighting it out for years, or waiting for the prices to go back up.  It's all a hot mess.

Do you live in CA?  You can't compare CA with the rest of the US when it comes to housing.
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#26
(01-15-2019, 02:47 PM)videogamesrock Wrote: Just to clear things up.  The lender is looking for an income of 35-45% above the monthly commitment to the loan.  So yes, $16k should be just fine for a $500 a month commitment.  

As for income tax.  A person who earns $16,000 a year pays zero federal income tax.  0-9,700 at 0% then factor in the standard deduction of $12,200 and you'd still pay zero until you earn over $21,900.  State income tax would be roughly $450 a year.  

If you still feel its a little tight, add a roommate in the beginning, people do it all the time there is an extra $300 a month covering 60% of your mortgage.

There more upward mobility in AR than in CA.  Even if the income is lower, the cost of living to income is much more preferable in AR, without the tax liability federal and state that comes with CA.  The great thing about getting into real estate early is you are hedging for inflation, you are really putting money back into your pocket instead of wasting it on rent.  Opportunity costs should really be considered at an early age.  

If repairs are a concern, a home warranty is $38 a month, I use them on properties that have old AC units and old hot water heaters.  Last year my 20-year-old hot water heater went out on a property, the cost was $125 for the deductible.

Your down payment for this property in Arkansas is $18,000, which you can achieve by saving $75 a week for four and a half years.  How many decades will the down payment savings take in CA?  Despite being classified as poor and in poverty by the federal government, you can do just fine at $16,000 a year in Arkansas and will be much better off than someone who lives in CA making $60,000 a year.  



There are also cheaper smaller homes in AR.

The Foreclosure Fear/Myth
What happens if I go into foreclosure.  The bank takes back the house, places it at an auction, sells it at the market cost most of the time, then takes what is owed plus legal costs associated with foreclosure, and the difference must be sent back to the borrower.  So you are most likely even going to get cash back after foreclosure.  Finally, you are no longer the cool kid with a great credit score for a few years, boohoo.

If you make $16,000 a year living in AR, can be disciplined enough to save $75 a week for 4.5 years, buy, buy, buy, buy.

You still pay social security and Medicare tax. Arkansas is one of the worst states for social mobility. 

https://www.google.com/amp/s/amp.busines...-us-2018-2

The South, in general, has low social mobility, and it's been like that for hundreds of years.

https://www.pewtrusts.org/en/research-an...the-states


This is common sense, but a person making $60k in California would be better off than someone making $16k in Arkansas. I did a comparison on a website that breaks down cost of living. Someone making $3500 per month in Bentonville would need to make over $4800 in Sacramento to maintain the same standard of living. That's a big difference, but not as extreme as you make it seem.

$75 per week takes away $300 per month for someone with a gross income of $1333.
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#27
(01-15-2019, 04:03 PM)sanantone Wrote: ...
This is common sense, but a person making $60k in California would be better off than someone making $16k in Arkansas. I did a comparison on a website that breaks down cost of living. Someone making $3500 per month in Bentonville would need to make over $4800 in Sacramento to maintain the same standard of living. That's a big difference, but not as extreme as you make it seem.

$75 per week takes away $300 per month for someone with a gross income of $1333.

People make that mistake because they always compare to Silicon Valley, which is on an entire other planet housing cost-wise even compared to the rest of California. I live in San Diego, and I could get a job in Silicon Valley making 30% more, and still come out behind.
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#28
(01-15-2019, 04:07 PM)davewill Wrote:
(01-15-2019, 04:03 PM)sanantone Wrote: ...
This is common sense, but a person making $60k in California would be better off than someone making $16k in Arkansas. I did a comparison on a website that breaks down cost of living. Someone making $3500 per month in Bentonville would need to make over $4800 in Sacramento to maintain the same standard of living. That's a big difference, but not as extreme as you make it seem.

$75 per week takes away $300 per month for someone with a gross income of $1333.

People make that mistake because they always compare to Silicon Valley, which is on an entire other planet housing cost-wise even compared to the rest of California. I live in San Diego, and I could get a job in Silicon Valley making 30% more, and still come out behind.

Right there with you davewill.  We're in SD as well, and while it can be expensive, our housing costs don't compare in any way to the Silicon Valley.  If you live in Sacramento/the central valley or San Diego or Inland Empire, that's completely different than LA/SF.  And if you live outside of those areas - say Redding - your housing is going to be WAY less.  There are tons of places in CA where it's not expensive - but lots more people live where it's more expensive so that's what's heard about more.
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#29
It's supply and demand. It doesn't matter if a state or city is red or blue. If no one wants to live there, then housing costs are usually going to be low. The housing costs in Austin are significantly higher than El Paso because so many people want to move to Austin. These are both blue cities in a red state.

The median home cost in Redding, CA is similar to many cities in Texas.
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#30
Yes, $75 a week is very doable for someone who makes $1333 a month.

$1333
-133 FICA
-37 State tax
-300 savings
--------------------
$863 disposable income --- this is very doable

It boils down eliminating instant gratification for a short period of time for long-term benefits.

Now suppose this person gets married and both make $16,000 a year, one person's salary can go toward the house payment and it is free and clear in 4.5 years. Can we do the same in California? No.

Now the $16,000 a year is an example that your dollar can go much further in AR than in coastal cities. The average salary in Little Rock is much higher than 16k, but you can see how low your salary can go and you can still own a home (the example of a home was one from Little Rock). You will never be able to afford a home in coastal cities at that salary, therefore your upward mobility is much better in AR than in coastal cities despite what your articles say. Teenagers can afford to buy a home in AR.
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