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moana posted:No, no, no. Do not buy, it makes absolutely no sense and would be a terrible idea just based on this reason alone. You're opting into a high-stress, high-volatility investment that ties down your options for everything else in your life. I would 100% recommend against it unless you find, like, a house made out of unicorns. moana, I'm not sure even about the house made of unicorns. You know how much it costs to clean up all the rainbow droppings? Need specialists to come out and everything.
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Feb 2, 2012 20:14
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GanjamonII posted:
What the others have said, and then this. Many people assume if their mortgage payment is less than they can rent it for, then it will turn a profit when in reality that's a pretty awesome way to lose money. Chances are you'd be losing hundreds a month, and then not be able to buy a house wherever you end up.
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Feb 2, 2012 21:05
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Dazzleberries posted:What the others have said, and then this. My personal anecdote: closed on a property July 2011. Minimum mortgage payment is 1350 a month and HOA (it's a town home) is $275 a month. I successfully rented out the property within a month at $2200. I've been contacted by the renter approximately four times since I rented out with various issues like the bathtub leaking, garage door not opening and closing properly and smoke alarm not working. Luckily for me, the contractor I got to remodel the bathroom when I bought the place takes great pride in his work and he fixed the bathtub leaking issue for me at no cost (he had to re-set the tub) or that probably would have cost me a couple hundred at least. I also live like 3 miles away from the place I bought so for the smaller issues I can just take care of them myself. Property tax is about $5000 a year, so after all costs I'm still turning a little bit of profit. However, if I wasn't living so close and had to hire people to fix all the little things I did myself I probably wouldn't be.
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Feb 3, 2012 01:00
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Yeah, all of your profit and then some will be instantly swallowed as soon as you have a major expense (replace the roof), two months of vacancy, or of course if you ever wanted to sell (six percent commission plus a bunch of expenses).
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Feb 3, 2012 08:11
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This thread is gonna be a great resource for getting my dad to leave me alone about this townhouse he thinks I should buy. I got a promotion and ~30% raise a few months ago and have been looking for a new place to rent, and asked for his help looking at places because he's a bit better at spotting problematic stuff in homes. Last week he called me about how his friend has a townhouse for sale, asking 65K, and has been hounding me about it ever since. My job is grant-funded, so there's no guarantee I'll still have it after two years. If/when that grant money dries up, I plan to try to move to another state as I've lived in this one my whole life. He keeps telling me I can just sell the place after two years if that happens which seemed really strange, and now I have some stuff to point him to that will hopefully get him off my back. In case it's not clear, I have a very bullheaded father and I don't get along with him very well
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Feb 4, 2012 04:49
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Trying to resist parental pressure to buy can be tough, but if he ever uses a line like "40 years ago I bought a house and it's turned out great!" you should point out it's not 40 years ago for starters and that buying a place and selling you take on a lot of risks with the place having problems that aren't your responsibility as a renter, tie yourself down at a career stage when you have zero stability (making moving harder has been a major, major factor in my own career), and the only way you'd come out ahead financially is if prices were to go up to match what you pay out in closing costs as a seller 2 years from now. And home prices are basically determined now more by demand and if the area's stagnant you're betting on things getting better. The tax deductions for a lower priced house are few as well. My parents keep telling me I should just buy a place for tax deductions given my high tax rates but I say that's like going out and buying a new car because I'd get a 27% discount so long as I keep the car. If you have to, you can say you heard of a guy that lost $110k+ over 3 years of owning a place at 23 after being pressured by family to buy because "it's a great long-term investment" and you're spooked as hell. Oh yeah, it gets fun to marry someone with their own property and you have to merge houses when neither of you expected to have someone else move in when buying.
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Feb 4, 2012 07:22
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John Galt Project posted:This thread is gonna be a great resource for getting my dad to leave me alone about this townhouse he thinks I should buy. I got a promotion and ~30% raise a few months ago and have been looking for a new place to rent, and asked for his help looking at places because he's a bit better at spotting problematic stuff in homes. Last week he called me about how his friend has a townhouse for sale, asking 65K, and has been hounding me about it ever since. You can tell your dad some random dude on the internet said this: "I am a mortgage underwriter, if you buy a house with the intent of selling it 2 years later when you relocate you are a loving idiot." The transactional costs of selling are huge on their own, never mind the fact that you've built up all of $12 of equity that early in your amortization table and basically the entire drat country is still a declining market. My parents are very much of the "if you're renting you're throwing away money" mindset, and they are so wrong on this point it hurts. I know it can be hard to defy your parents, but this is a huge financial gently caress up waiting to happen. Don't let him bully you into anything, a foreclosure/short sale/general late payments can gently caress you over for many years into the future when you may actually be ready to settle down.
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Feb 4, 2012 08:52
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Captain Windex posted:
Oh, I have no problem doing something other than what he wants (I've had a lot of practice). I'm going to look at the place with him this afternoon just to get him to shut up about it and to see if the owner would be interested in leasing, but I'm definitely not going to be talked into buying.
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Feb 4, 2012 16:54
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Aren't home appraisers sort of "under the table" expected to appraise a home for at least the projected sales price? For an appraisal to come in below the contract price it really must be an issue. The hard part of buying a home is taking the emotion out of one the biggest financial decisions you'll ever make and it's good to see that you realize that paying over appraisal is silly and the seller will have to come to terms with that as well. The home next door to mine has been vacant for over two months after the people that were renting it moved out. Renting a home is awesome when you have good tenants, but losing $2K a month while it sits empty can't be too great.
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Feb 4, 2012 21:10
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Realjones posted:Aren't home appraisers sort of "under the table" expected to appraise a home for at least the projected sales price? They used to be and that was part of the problems leading to the bubble. Now they are contracted by a third party and they don't even know the contracted sales price. This is supposed to make them independent.
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Feb 4, 2012 21:56
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Elephanthead posted:... they don't even know the contracted sales price. I don't think that's the case. At least, it wasn't two years ago. The contracted sales price is actually a very important factor in an appraisal, because it represents the best data on what that particular house is actually worth. The logic is that if it was worth less, the buyer wouldn't have bid that much... and if it was worth more, the seller wouldn't have accepted so little. The use of comps is not to determine that price, but rather, to test the default assumption (that the price is correct). Only if comps, condition, or some other factor clearly indicates that the price is off, should the appraiser value the house other than the contracted price. If this has changed, it's both very recent, and in my opinion a bad idea.
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Feb 4, 2012 22:26
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Elephanthead posted:They used to be and that was part of the problems leading to the bubble. Now they are contracted by a third party and they don't even know the contracted sales price. This is supposed to make them independent. Appraisers are supposed to review the entire purchase contract so they will know the price. That said, I see plenty of appraisals that come in greatly below (and sometimes above) the price listed in the contract. Some appraisers will just take the contract price and try to find comps that fit it, but there are people who suck at their job in every profession. The good appraisers will find the properties that are most similar to the subject and use those to establish the price, not the other way around. This of course does not mean that the appraiser necessarily did a bad job just because they came in at the same price as the contract. Ideally buyers and sellers would be looking at other recent sales in the area to establish their asking/bid prices so if they did good research they can come to the same conclusion about value that the appraiser will. It usually doesn't work out that way, but it's possible. Leperflesh posted:The use of comps is not to determine that price, but rather, to test the default assumption (that the price is correct). Only if comps, condition, or some other factor clearly indicates that the price is off, should the appraiser value the house other than the contracted price. The appraiser should be looking for comps that are most similar to the subject and using those to estimate the value whatever it may be. Having a preset idea of what the value "should be" and then finding comps to try to force it to that value would be weird and, I suspect, a violation of USPAP standards.
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Feb 5, 2012 10:28
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I know we're all about never buying a house and what not and how renting is throwing away money, but hear me out. I currently pay 565/mo for rent in a 5 person room share arrangement. Rent in the area for a similar thing is about 550-650/month so I have a decent price. I kind of want to get a studio apartment, they're about 60-70k with 300/mo HOA fees. My 'job' is pretty stable for the next 6 years at least (graduate student receiving a stipend 29k/year) and I have around 20k saved up tied up in investments (10k in Roth IRA)and decent credit 720. Assuming that I don't have to pay too much on property tax I'll be saving a little under 10k (after taking into account interest for a loan) in the long run when I'm looking to sell when I graduate (hopefully I can sell) I'll be willing to sell at a loss as long as I break even. I mainly just want a studio for the sake of convenience and not having to put up with crappy roommates. Alternatively I can rent a nice studio for about 800-900 a month.
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Feb 5, 2012 16:48
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It's still pretty risky in your case. Special assessments, property taxes (which could easily end up being $5k or more over the time you're in the house), repairs, and all of the costs of selling the house are going to eat into that $10k in savings pretty quickly. If you're comfortable taking that gamble, go for it. Just realize that there is a reason rent on those other apartments is $900/month. They are mostly likely held by somebody who's keeping them over the long term and thus doesn't have to worry so much about the housing market going down or paying transaction fees in a few years.
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Feb 5, 2012 18:59
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When you're buying anything with an HOA, you should scrutinize the HOA more than your place itself because over the long term (more than 5 years) the costs of the HOA dues can easily outstrip your mortgage and property taxes. I've never heard of HOA dues going down in a year among any HOA newer than 20 years. It's basically impossible to control costs of HOA dues and they're not deductible on your taxes unless you rent the place out, so your costs can quickly approach those $900 / mo places. I'm really not sure what kind of community would have $300 / mo for dues but have studio apartments available for under $100k either.
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Feb 6, 2012 17:24
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Singe, I understand wanting to live in a studio, however I'd not recommend buying. Between mortgage, HOA, insurance, and taxes you're barely ahead. As was pointed out a single assessment, increase in HOA, unexpected maintenance could really wipe out any financial advantage to buying. Also you are exposed to a large single risk (house market in your city) where as when you are invested you are diversified. Lastly you have reduced flexibility. I knew a friend who KNEW he would be in this grad program for seven years but after three some things happened and he had to transfer out. Plus even if things go exactly to plan you'll be moving out in six years which is about the bare minimum where buying could be cheaper.
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Feb 6, 2012 18:12
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Leperflesh posted:I don't think that's the case. At least, it wasn't two years ago. The contracted sales price is actually a very important factor in an appraisal, because it represents the best data on what that particular house is actually worth. The logic is that if it was worth less, the buyer wouldn't have bid that much... and if it was worth more, the seller wouldn't have accepted so little. We just had our house appraised and I have no idea if he knew how much we owed, but he definitely used comps as the basis to arrive at our value. The forms literally had the comps and +/- dollar amounts for various features, like our value was -1500$ because we didn't have a second fireplace relative to house A etc.
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Feb 6, 2012 18:39
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Dazzleberries posted:We just had our house appraised and I have no idea if he knew how much we owed, but he definitely used comps as the basis to arrive at our value. The forms literally had the comps and +/- dollar amounts for various features, like our value was -1500$ because we didn't have a second fireplace relative to house A etc. That's how our appraisal went when we purchased last summer. Those adjustments are subjective, but that's the process as I understood it.
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Feb 6, 2012 18:54
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Do Never Buy... I just received notice that my one-bedroom apartment will be going from $1200 to $1300+ a month if I sign up for another year's lease. There are several condos in two nearby communities that I've been keeping my eye on over the last few weeks. One or two of which are 2bd/2ba in the $150k-$160k range. Even adding their HOA/Condo fee, property taxes, and a few other items to the mortgage, at 30 Years they still seem to have quite a bit of savings over the $1300+ rent. I know this thread's opinion on condos, but if I'm committed to staying in this area for at least the next several years...and a condo would suit my needs in the short term... gah, I need you all to convince me out of making an appointment to go look at them. Northern Virginia Housing and Rental Market 
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Feb 8, 2012 02:41
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Untagged posted:at 30 Years they still seem to have quite a bit of savings over the $1300+ rent You need to look at the financials for 5, 10, 15, and 20 years. You're comparing the savings over 30 years to staying for "several" years, which is vastly different. With closing costs and how much it costs to sell, you really need to look at how long you have to stay there for it to be worth it financially.
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Feb 8, 2012 03:26
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ObsidianBeast posted:You need to look at the financials for 5, 10, 15, and 20 years. You're comparing the savings over 30 years to staying for "several" years, which is vastly different. With closing costs and how much it costs to sell, you really need to look at how long you have to stay there for it to be worth it financially. Yeah, I guess I should have said my time horizon for "apartment / condo" style living is likely 5+ years currently. Several years was more meant as in this area or neighborhood, as the apartment and the condos complexes are literally less then two blocks from each other.
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Feb 8, 2012 04:12
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See how much the condos are renting for. I'm sure there's a few dumb schmucks who bought them, and now need to rent them out. Really though, Condo's are the loving devil... The DEVIL. All the disadvantages of home ownership and communal/apartment living rolled into one giant ball of poo poo.
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Feb 8, 2012 04:59
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At thirty years, sure that could work out, now what happens if you want to move in 5 years? 10? Don't forget the 6% agents fees and risk of special assessments when doing the math!
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Feb 8, 2012 06:21
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Untagged posted:Northern Virginia Housing and Rental Market However, my general point about HOAs still stands - there's just not enough regulation on them to keep them from becoming the worst of any possible human organization and in 10+ years, the HOA dues will eclipse the rent you're charging, mark my words.
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Feb 8, 2012 06:35
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necrobobsledder posted:Contrary to the thread's general consensus, NoVA's real estate market is the complete reversal of the rest of the country in that rents are blisteringly higher than actually buying the place (the way any stable market should be I suspect if you capture the costs of home ownership into rent). The same townhouse I'd have to rent at $2500+ / month would be about $1900 / mo to buy w/ maybe a $90 / mo HOA due. But the thing that keeps me from buying even if I had some massive windfall is that we dunno what'll happen if we start getting even a few percent defense spending cuts, and after I lost $150k+ on the place I bought in 2007 thinking the area was safe, I don't think I'll ever have a mortgage again. Listen to this guy. I will also be renting for a big premium over buying, but I am unsure of the HOA situation and I am glad to have it rolled into rent. Also, budget cuts could have an impact here, and we might see a bit of the recession that already hit the rest of the country.
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Feb 8, 2012 17:36
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Whats wrong with condos as rental properties? You don't have to provide lawn maintenance or pay for the roof. Or are they strictly the devil in terms of living in / trying to sell? Is it the really steep assocation fees? The condos I used to live at charge 300 dollars a month, but they come with cable and water so you are basically paying 200 dollars a month to not have to worry about fixing a roof or termite damage.
Kneel Before Zog fucked around with this message at 22:02 on Feb 8, 2012 |
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Feb 8, 2012 22:00
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Kneel Before Zog posted:Whats wrong with condos as rental properties? You don't have to provide lawn maintenance or pay for the roof. Or are they strictly the devil in terms of living in / trying to sell? Is it the really steep assocation fees? The condos I used to live at charge 300 dollars a month, but they come with cable and water so you are basically paying 200 dollars a month to not have to worry about fixing a roof or termite damage. In your example, you pay the condo board your cable and water instead of to the utility companies directly. You (probably) can't choose to not have cable/water, or go with another company, or upgrade your cable to HIGH DEF BLAZINGLY FAST INTERNETS (or down to dial-up if that's your thing). If the roof collapses or gets eaten by termites, they'll assess a special fee from all units to pay for the repair/replacement, and this is ON TOP OF that $200/mo you're already paying for cable/water. Those condo fees go to the condo equivalent of a HOA. There's no regulation of said HOA/condo board, so they can keep jacking up the fees and make all the "special assessments" they want for whatever reason they want, and there's not jack diddly squat you can do about it but suck it up and pay (or sell, or majority rule to fire the board and take over, good luck with that). HOAs are the devil. They will eventually fall to corruption within the ranks.
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Feb 8, 2012 22:07
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We have been looking at smaller fixer-upper houses around $50,000. We figured out the cost of mortgage for 25 years with 3-5% down (can't afford a higher% right now) plus the cost of utilities, and it works out way less than rent. To be honest (and we know it goes against everyone here), we despise renting. Especially because we were hit twice with bedbug infestations that the apartment owners treated poorly. I have stable income, so does the bf, so exactly what pitfalls would we be looking at? Can someone explain closing costs to me?
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Feb 8, 2012 22:12
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The Peacock posted:We have been looking at smaller fixer-upper houses around $50,000. We figured out the cost of mortgage for 25 years with 3-5% down (can't afford a higher% right now) plus the cost of utilities, and it works out way less than rent. To be honest (and we know it goes against everyone here), we despise renting. Especially because we were hit twice with bedbug infestations that the apartment owners treated poorly. Out of curiousity, where are you? I know the NoVa market is a little insulated, but we're on the very bottom of that in Fredericksburg (I think) and there's nothing within $20,000 of that that isn't literally a basement on a plot where the house burned down. I know prices change a lot by location, but wow. If we could find something small that needed work for that price we'd have been living in it for the last 8 months already, even a project that needed gutting. Instead it's been a long string of disappointing small houses with unfixable structural problems between $120,000 and $130,000 and we're burned the gently caress out. I don't want to buy a house anymore and that isn't going over well with her. Splizwarf fucked around with this message at 22:22 on Feb 8, 2012 |
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Feb 8, 2012 22:20
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The Peacock posted:We have been looking at smaller fixer-upper houses around $50,000. We figured out the cost of mortgage for 25 years with 3-5% down (can't afford a higher% right now) plus the cost of utilities, and it works out way less than rent. To be honest (and we know it goes against everyone here), we despise renting. Especially because we were hit twice with bedbug infestations that the apartment owners treated poorly. Don't. I did this. It required a gut and renovate, and I did everything DIY with only hiring a semi-pro plumber and drywall guys. It's cost me at least an additional $25k, and it's not like I'm putting down marble floors and gold leaf. My friends and I were of the opinion that I should have just bulldozed the drat place and built from the ground up because then it would have been cheaper. Besides, that 3-5% down is a FHA loan, and the FHA isn't going to approve a house that's a clear fixer-upper. If you can only afford 3-5% down, how are you going to afford the fixing up part?
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Feb 8, 2012 22:34
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Splizwarf posted:Out of curiousity, where are you? I know the NoVa market is a little insulated, but we're on the very bottom of that in Fredericksburg (I think) and there's nothing within $20,000 of that that isn't literally a basement on a plot where the house burned down. I know prices change a lot by location, but wow. If we could find something small that needed work for that price we'd have been living in it for the last 8 months already, even a project that needed gutting. Instead it's been a long string of disappointing small houses with unfixable structural problems between $120,000 and $130,000 and we're burned the gently caress out. I don't want to buy a house anymore and that isn't going over well with her. Southwestern Ontario. I have a feeling some may be bank forclosures, but all we want is a 1 level, with or without basement, 1-2 bedrooms, big kitchen. We've seen at least 4 so far with newer roofs and windows, updated water heater, etc. Many have garish paint jobs, but my bf is a painter, so that's perfect. The ones we like have many pictures to look at, most look pretty nice. daggerdragon posted:If you can only afford 3-5% down, how are you going to afford the fixing up part? We had to spend a lot of money in a short period of time replacing furniture and the bed due to the ultimate infestation of bed bugs, and it was at a time when it was just 1 income whereas now it's both. The Peacock fucked around with this message at 22:39 on Feb 8, 2012 |
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Feb 8, 2012 22:36
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Mar Vista - California 2bedroom Condo 1,243 sq/ft going for 390k shortsale with an HOA of 230. Currently renting for 1600. Think it'd be worth it to offer 350k with 120k down? It's in a popular spot near Venice California and condos are pretty much our only option if we don't want to commute. Otherwise I'd be all for a regular house but they look like they're in the 600k -700k range right now. Our monthly income is about 8k net.
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Feb 8, 2012 23:15
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The Peacock posted:We had to spend a lot of money in a short period of time replacing furniture and the bed due to the ultimate infestation of bed bugs, and it was at a time when it was just 1 income whereas now it's both. Whether or not you buy a "fixer upper", I would take some time to build at least a 20% down payment before committing. Which should be pretty fast if you've added a second earner, no?
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Feb 8, 2012 23:34
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daggerdragon posted:Besides, that 3-5% down is a FHA loan, and the FHA isn't going to approve a house that's a clear fixer-upper. If you can only afford 3-5% down, how are you going to afford the fixing up part? It turns out this is irrelevant (because Ontario is in Canada... and by the way, guys, really, you need to mention what country you live in if it's not the USA when you ask housing questions because that's kind of relevant) but... FHA does offer a fixer-upper style loan. FHA works directly with the contractors to do the work, too, which (supposedly) makes it less likely that you wind up having costs wildly above initial estimates - and the loan includes a set-aside margin to cover minor cost overruns.
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Feb 8, 2012 23:48
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Hahaha, the whole time we were talking about NoVA some of us thought you were talking about Northern Virginia (United States), not Nova Scotia. I didn't know people referred to Nova Scotia as just Nova though, my bad.
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Feb 9, 2012 05:58
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The Peacock posted:We had to spend a lot of money in a short period of time replacing furniture and the bed due to the ultimate infestation of bed bugs, and it was at a time when it was just 1 income whereas now it's both. You know how you just spent a bunch of money on your furniture and bed because of bedbugs? Houses make that look like pocket change, especially fixer-uppers. Even if you're both handy any project is going to take ten times as long as you think and cost at least twice as much. And if you want any prayer of having major things done correctly you're going to have to pay professionals to do it (and put a lot of effort into finding good ones). Especially anything related to plumbing or electrical is filled with all kinds of counter-intuitive gotchas if you're making major changes. As for random fun costs out of nowhere: we had our furnace replaced a year ago and just had to pay $500 to get it working again and get the pipes unfrozen so we could actually have hot water. This is considered a cheap repair as home maintenance goes.
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Feb 9, 2012 17:56
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So have been living in our home for coming up on 3 years and plan to probably live here another two more. Sick of living by people and interested when we sell, to buy land and then by a pre-fab house to put on it while we build our dream house. Anyone done anything similar? How do the loans work if you are buying just land and then buying a house after the fact? Two separate loans?
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Feb 9, 2012 23:21
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Commander Hen posted:Mar Vista - California I don't think you can really afford 350k given your income. Also why are you putting 120k down? Renting for $1600 is far below a typical mortgage payment isn't it (with just 20% down).
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Feb 10, 2012 03:53
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n8r posted:I don't think you can really afford 350k given your income. Also why are you putting 120k down? Renting for $1600 is far below a typical mortgage payment isn't it (with just 20% down). This doesn't make much sense. Cmdr Hen is looking at a ~230k mortgage, nobody is talking about 20% down. Monthly PITI payments should be in the 1700-1800 range, so the current rent is not far below. And with 8k net monthly income I'd feel very comfortable with this kind of mortgage, if the income is stable. Not to say anything about the whole condo/beach situation, just pointing out that the numbers are not as ridiculous as you make them out to be.
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Feb 10, 2012 05:50
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n8r posted:I don't think you can really afford 350k given your income. Also why are you putting 120k down? Renting for $1600 is far below a typical mortgage payment isn't it (with just 20% down). Should I put more down? Mortgage would be about 230ish.
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Feb 10, 2012 06:53
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