OCBen

Sometimes it's the only way to get into a house. Right now my best choice is an interest only option loan for the first 3 yrs that varies monthly. I could get into a negative amortization loan to get my payment down but the way the market is situated there is no guarantee the market will continue to appreciate much, certainly not at the rate it has been. I'm more comfortable with the interest only. As it is, my monthly housing cost will be approx. $7k.

///Mous3

Ben,
One question; when are you planning to retire? I asked myself that question and I have decided that I can't see myself buying a half-a-million dollar 2-bedroom "condo" (I read; "apartment").

My rule-of-thumb;
I shell not live my life very differently than how I would be able to afford to live when I retire.

No Porsche for me so far...

Soulteacher

I think I just had a heart attack.

Soulteacher

See, okay, this is exactly what I don't agree with. My father worked his tail off all his life as a port worker in Hamburg, always saying that when he retires he will do this and do that. Never a vacation, never anything. And then he died three months before retirement. My approach (now that I have reached a good standard of living) is to enjoy as much as I can afford (while taking acceptable care of retirement planning), and to reduce the costs of living gradually with age while improving "quality of old life" along nonmonetary dimensions.

///Mous3

Had he not passed he would be passing you in a 997GT3.

Do you have a plan on how you can do that? Let's do this; add up ALL your monthly payments [$/Month]. Divide your Net Worth with that number. The result should be in Months. Add 20% more month. Then add those months to your current age.

You MUST die by then...

2nd Edit: Hey, we may have the Right to Die in California! That's it; I am going to get a $100K car and move into a half-a-mil apartment.

Soulteacher

... or move back to Germany and take advantage of its welfare system.

fast1

That's an excellent point. The statistics could also be skewed because I imagine that they include only those buyers who financed their cars. Since I never finance, the Dealer doesn't know what my household income is. My guess would be that families that don't have to finance $90K car purchases have higher incomes than those that do. It would be interesting to know how many Porsche buyers didn't finance their purchase.

fast1

Another interesting piece, but a bit older (and you may have seen it already): Ten years ago, a study classified U.S. Porsche buyers in accordance with their psychographical characteristics. Here are the quick results again:

Top Guns (27 percent of owners): driven and ambitious; strong desire to be noticed; consider power and control to be important.
Elitists (24 percent): old money; a car is just a car, no matter how expensive, and not a representation of one's personality.
Proud Patrons (23 percent): ownership is what counts and an end in itself; car is a trophy and a reward for hard work; being noticed is unimportant.
Bon Vivants (17 percent of owners): thrill-seekers; global mind; car increases excitement in life.
Fantasists (9 percent): car is a form of escape; some guilty feelings about owning the car; try deliberately to avoid impressing with the car.

It would be interesting to find out what questions were asked to categorize Porsche owners. I rarely meet a Porsche owner who admits that one of the strong buying motives for his car purchase was "status". In my case there are lots of reasons that I love Porsches: performance, styling, reliablity(notwithstanding Bob's experience), and I'll admit status. Hypothetically if Hyundai built a car that had great styling and performance that either met or exceeded the 996, I doubt that I'd be interested even if the car cost thousands less than a 997. Now of course I could rationalize my choice by stating that the Hyundai just doesn't communicate with the driver as does the 911, but to be honest, status would be a large factor.

Nissan and Toyota recognized how important the status component was in a car buyer's decision. When they introduced their upscale models, they came up with the new Infiniti and Lexus brands, and they established an entirely new Dealer network to cater to their buyers. GM was the only company that was able to successfully sell an "upscale car" through their existing network, and that car is the Corvette.

tbill

I'm in the fantasists group, as I don't want the Illinois Dept. of Welfare employees to see me in my '05 911. So true about the feelings of guilt. Had the monthly bank payments directly deposited out of my welfare check! Sure not much left to buy groceries on! lol

MMD

Agreed. Possible exception for younger guy who is starting out and doesn't have a family etc. ... . Even so, would be smarter to invest (not blow) the money.

lawjdc

Guilty as charged. Not only with the 997S, but also with all previous 911's and even with a Mazda twin turbo RX-7.

A comment on OCBen's efforts to gain home ownership: My first house was purchased with a down payment from a bonus I received after working 6 months as a newbie attorney. With the $10,000 down payment, the monthly was $1200+ on an $81,000 house. The interest rate was floating and it was a loan with a 3 year call. Jimmy Carter was president and the interest rate was 14 or 15 percent. I stapled sheets to the windows - obviously no money for drapes. My ex father-in-law swore that I was the stupidest guy on the planet. According to him, the housing bubble would soon burst and the price for a nice home would go back to $30,000, where it should be.

Within 2 years the house was worth $110,000, and I sold it and bought a house for $160,000 with a payment that was much less than the first house. Thank you Ronald Reagan!! You know the story from there.

Will this be OCBen's experience? Who knows? But I suspect that he would be foolish not to give it his best shot.
Good luck Ben!

PV

So, don't look at statistics and don't look at advices from the bank. They don't care how much you have left over. Just look at you own situation. What are you willing to spend on what. If you don't feel comfortable with the resulting figures, don't do it. On the other hand, I agree with your point regarding people sitting on top of their money and realize too late that they should do something with that money. However, not at any risk.

OCBen

Thanks.

Believe me, I've been mulling this over a long time. And were it not for the fact that the house is in a highly desirable area (Irvine) I would probably back down from the deal (I still may yet). The demand for housing is still high in So. Cal., especially in the nicer areas. So even if appreciation flattens out elsewhere, the better areas are expected to fair better in this department and are expected to continue to appreciate, albeit at a slower pace.

We signed the contract to purchase in mid November and the house is expected to be ready for move-in sometime in April. Every weekend since the day of the sale I've been going to the site to photograph and record the progress. The homes are over engineered construction-wise, which is the way I like anything to be that doesn't need to move or fly, but just sit there solid as a rock. Because of the soil conditions and exceeding California seismic standards by far, the homes are built on 18 inch thick slabs of concrete that are reinforced by a lattice network of steel cables under tension. In the event of an earthquake these platforms with the house on top will float on the soil and keep everything intact so that the house will never suffer structural damage due to a shaker. It may end up looking a little like the Leaning Tower of Pisa after The Big One, but it will survive intact and remain livable.

You think modern cars are part computer and part machinery with all the wiring bundles and cables, you should see how modern homes are wired these days. Data cables, video cables, audio cables, phone lines, security lines, a master control center – man, I'd hate to see what a typical electric bill will be!

I still have the option to back out of the deal. Even with a 25% down payment I’m concerned that the $7k monthly outlay will cramp our lifestyles too much. And to really cramp matters the wife would like to start a family and have a kid someday. I'm starting to have cold feet just thinking about the whole thing. If we do buy it, I hope we have clean sheets for covering the windows, 'cuz we won't be able to afford decent window treatments for a long time.

JARO

here is how I look at things being a 2nd generation immigrant from Poland. I'm 32, work for the largest oil co. in the world in the IT area. I also buy apartment buildings which I fix up and sell and also keep some for apreciation and cash flow. All that produces total gross income of about 150k. I'm married (not sure how much longer) but live on N. Side of Chicago in a 400k 3 bed condo. I want to retire around 50 and unlike most of you I'd like to retire in a place where living expenses are not as high as they are in US or Europe. Coast of Brazil or Argentina sounds great. I do not invest in stock and 401k is there but it is not something I'm counting on. I do not have a ambition to have a million $ house, have 5 kids and 3 ex wife's. Life is too frickin' short. I also do not buy cars new. I let someone else take the hit and everytime I sell it I do not loose or at least do not loose much. I have a 03 Cayenne S and will get into 911. I can afford it now sure but I can wait another year or two....

Porky

I know someone who pays USD 36,000 per month on rent but drives a early 90's Volvo for the wife and a 2002 BMW - he can't justify a Porsche - too expensive and too flashy : ) Each to their own! I also know a dude who only earns USD 120,000 per year and drives a USD 80,000 Porsche! Once again - each to their own!