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jackyl posted:Counterpoint: buy cheap condos near campuses, strip them, put in cheap rear end laminate and craigslist appliances, then go hog wild with mommy/daddy as a co-signer for your tenants. Good times based on what I've seen... Your slanginess makes it hard to understand what you're trying to convey.
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Jun 14, 2012 03:57
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Pweller posted:Your slanginess makes it hard to understand what you're trying to convey. What slanginess? He turned a single condo with a $20 cash flow into a majority vote on the complex HOA using nothing but basic DIY renovations. The key point was buying next to a campus and making parents cosign his tenants' rental agreements.
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Jun 14, 2012 04:10
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That still sounds like something very, very dicey and really close to the level of "my friend made a bunch of money playing slot machines, how can I do the same?" The big danger of doing something like that is getting pushback from the other people in the condo, up to and including the HOA placing a ban on renting to college students or something. Students can be loving awful neighbors and it only takes a few loud parties to seriously piss off the rest of the complex, especially if you don't control most of it yet.
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Jun 14, 2012 18:35
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Plus, even if mommy or daddy cosign, it may be hard to collect from them if they live hundreds of miles away in another state or are judgement-proof. Even with a local cosigner, parents of a college-bound kid are a big credit risk, since they might take out huge private loans and max out other credit sources to help their kid pay for college.
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Jun 14, 2012 19:07
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The condo will have a pretty vested interested in keeping renters out, there's all sorts of FHA restrictions on multi-tenant buildings and how much can be rented before you can't get an FHA loan.
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Jun 14, 2012 19:18
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I'm planning on buying my own home within the next 6 months (that's when I'll start looking for a house, I mean), and was wondering what kind of far off planning and work I can do while I wait? I am pretty sure I have no credit, which I will check on soon, but I've never had a credit card or anything else really. I'm a little terrified but a lot excited.
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Jun 14, 2012 19:43
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Cetaphobia posted:I'm planning on buying my own home within the next 6 months ... I am pretty sure I have no credit Do you have 100% cash to buy a house? If not, you will need credit. I do not believe you can build a reasonable credit score/profile for housebuying in 6 months, unless you live somewhere where houses are extremely cheap, or you have extraordinary circumstances (you have a huge income and can document it very well, you have a large inheritance, etc.). It is really terrible that the system does not really differentiate between people who have always been so responsible that they never needed to borrow money (no credit history), and people who have been so irresponsible that they've never managed to pay back the money they owe (destroyed credit), but that's the way it is. And there is one grain of reasonableness to this system: having never borrowed money, creditors can't really tell if you're the kind of person who can borrow responsibly or not. That said, you might be able to find a lender - particularly a local bank - that is willing to extend you a reasonable loan based on your income and assets even without a credit history. I suspect that if you can find such a deal, it will come with higher-than-market-rate interest, more restrictive borrowing limits than your income would normally qualify for, and perhaps more points (up-front cash). Unless you're in some kind of huge rush (what's the rush?) you might be better off pushing your plans out from between 6 and 18 months while you work to establish a credit history.
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Jun 14, 2012 22:08
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Leperflesh posted:Do you have 100% cash to buy a house? If not, you will need credit. I do not believe you can build a reasonable credit score/profile for housebuying in 6 months, unless you live somewhere where houses are extremely cheap, or you have extraordinary circumstances (you have a huge income and can document it very well, you have a large inheritance, etc.). My younger cousin had such a hard time purchasing a place. I believe he was 21 or 22 years old, with a great paying job, with an 80% down payment. And no credit. He fought for a YEAR to get a mortgage and went to every bank and lender in the area. He also told all the lenders that he refused to ever get a credit card as he had no need for one. Finally one bank caved in and he had his condo paid off in a year. Which is ridiculous. Anyway. I've had a credit card since I was 19, and have never missed a payment. This means that I never need a deposit when I have power hooked up, new cell contracts, etc. It also meant absolutely zero hassle when I got my mortgage on a 5% down payment. And my credit card? Everything goes on it. I get cash back at the end of each year, and as I have my balance paid once a month, it means the credit card company is paying me to use their card. If I put as much money into my mortgage as I did into rent, I will have the place paid off in 5 years. Ridiculous. Either way, always build up your credit! Even if you don't need a credit card, get one. Put everything on it, but only if you have the money in your chequing account and don't touch it until you need to pay off your card once a month.
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Jun 14, 2012 22:20
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Having the power turned on tomorrow so the appraiser can verify the electrical and let me close next friday. ..do never even try to buy.
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Jun 14, 2012 22:21
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rainbow kittens posted:Even if you don't need a credit card, get one. Put everything on it, but only if you have the money in your chequing account and don't touch it until you need to pay off your card once a month. This is not terrible advice, but it can be a dangerous practice if you're not highly disciplined about your monthly bill. It's easier these days to set up automatic payments and such, but when I first started getting into credit cards (while I was still in college) back in the mid-90s, I had tons of credit and it was easy to move the balance around for free (0% intro rates with no-fee balance transfers were the norm and widely available). And I eventually got into trouble and built up a large balance. One day the 0% intro rates disappeared (or you had to pay 3% balance fees) and I realized I needed to pay down a fairly largish balance and it was, at any reasonable affordability, going to take me at least five years to do it. A credit card puts you one step removed from your cash. Instead of figuring out "do I have the money to buy this today", you are figuring out "will I have the money to pay for this by the due date of my next bill", which can be more than a month out (if you make a transaction the day after you just paid your balance, but before that balance was due, it won't be due until the end of the next payment period). That seemingly small step of removal is how you wind up in trouble. People with no credit do this using payday loans and pay a ruinous interest rate. My suggestion is to use a credit card for a recurring, predictable payment that you already have budgeted. Rather than "everything I spend anywhere". Put your cable bill or your phone bill on the credit card. You're already used to paying it monthly, and you'll know in advance what your regular bills will be. And you'll avoid the possibility of overspending on your credit card. I don't know for sure, but I suspect doing this is almost as good at building a credit history as the Rainbow Kittens method, but with a lot less risk.
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Jun 14, 2012 22:38
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Leperflesh posted:I don't know for sure, but I suspect doing this is almost as good at building a credit history as the Rainbow Kittens method, but with a lot less risk. Hence why I said "only if you have the money in your chequing account"  It's all about self-control. I use the credit card for everything, but only use the credit card if I have the money  Your way is good, too!
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Jun 14, 2012 23:24
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My sister bought a house with no credit history. The FHA has an alternative credit rating process that can be used. My sister had to show on time rent and utility bill payments for the last 12 months, regular banking deposits and have a really solid work history. It can be done, and would need someone familiar with the process.
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Jun 14, 2012 23:27
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Also, the appraiser says the house has a remaining economic life spam for 25 years, so i'll need to take a 25 year term instead of 30. Smells like BS, but with biweekly payments and a few extras i'll have the thing paid off in 15 easy.
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Jun 15, 2012 00:17
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Ozmiander posted:Also, the appraiser says the house has a remaining economic life spam for 25 years Good lord. Are you talking about a mobile home? That's not really a "house". Otherwise this'd be an enormous red flag for me... can you provide anything more specific? Is the house literally rotting away? (Also, and totally non sequitur, but I only just now realized your username isn't "Ozimander")
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Jun 15, 2012 00:28
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Leperflesh posted:Good lord. Are you talking about a mobile home? That's not really a "house". Nope, it's about 100 years old, but is in great shape according to both my inspector and the bank's appraiser. I'm not really sure how he came to this decision either.
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Jun 15, 2012 00:36
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Thanks for your input, guys. I suppose I could move into an apartment while I save up to just buy a house in cash.
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Jun 15, 2012 06:40
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I'm currently in the process of buying a second house. It will begin as a place for my in-laws to live and eventually be a rental property. Suntrust bank has a program where you can buy a home for parents if you can prove they cannot afford the house themselves. The house will be in my name. The benefits are a lower interest rate than an investment properly and a lower downpayment requirement (5%). The shortcoming is that I have to prove more than sufficient assets to outright buy the house. That's kinda crazy. I don't have to commit it, but I have to prove I have it. House is assessed at $123K and I'm getting it for $53K. Housing market is painful but the house is in great shape and is move in ready. Just for background: I am 42 and my wife bought the house we live in prior to our marriage so I have no mortgage in my name. Total family income is about $140K.
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Jun 15, 2012 15:32
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Ozmiander posted:Nope, it's about 100 years old, but is in great shape according to both my inspector and the bank's appraiser. I'm not really sure how he came to this decision either. That's bullshit. My house was built, at the latest, 1885, and it's still trucking along just fine. Sure, it's got its problems, but it's not gonna fall down in 25 years, especially not after all the reinforcement I did to it with a gut + renovate. If your house really was going to fall down in 25 years, your inspector wouldn't (shouldn't) let you buy it.
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Jun 15, 2012 16:24
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I'm considering buying in a year or two, but where't eh best place to squirrel away my money? I have a 95k salary and no debt but I already consider myself a bit of a money hamster at 28 with 25k in savings, 30k in a roth, and 45k in my TSP (govt employee version of a 401k). I have no illusions about coming out ahead of even breaking even on a house, I regard it as a place to live where I can do what I like (run surround sound/networking wires, set up my homebrewing stuff, have a bike work space, have a dog and a garden, etc.) The options I was considering: Ally savings account - Already getting 200 per paycheck tossed into it. I could without pain bump that to $800-1000 per pay period (recent promotion + just moved to lower priced rental) Open a new investment account - I've been considering doing this already. The downside of course is the money will be open for investment losses. Dump it into the TSP - There are "loan" options from the TSP for new property purchases. The money gets pulled out of investment and charges "interest", however that interest is deposited into the account as the loan is paid back. The TSP has to option of a 4% return government securities fund, which beats the pants off any savings account or money market fund. Also the calculators are indicating I can afford a $400k property with my goal 50k down payment which seems... oddly high.
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Jun 16, 2012 16:29
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Just put in in a savings account. If you intend to use it for a down payment, you don't want to take the risk of losing in, or paying fees, etc. It isn't a good return, but it is the safest place. Also, don't go by what the calculators say you can afford. It is in their best interests to get you to take out as much money as you can so you can pay more in interest. Figure out what you would be comfortable spending and paying for your mortgage every month, and look for homes in that price range. The mortgage calculators tell me that my husband and I can afford a home that is $745K. I'm not kidding you. We are looking at $150k tops (which gets you a pretty good house where we live). Edit: Apparently, running throught it, an 'aggressive' target for the home we could afford is $820k. WTF? We make a good amount of money, but not "buy an $800,000 house" kind of money. sheri fucked around with this message at 16:38 on Jun 16, 2012 |
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Jun 16, 2012 16:35
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I would definitely agree with that point. The online calculators say I could afford up to 400k based off my numbers. That's just utterly ridiculous to me. We're looking at 200 max when we start seriously shopping next year.
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Jun 16, 2012 16:54
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Don't view the numbers coming out of the online calculators as any kind of target. They're more an upper bound on how much you are capable of spending on housing if you devote the absolute maximum possible to it. Obviously, that's a dumb thing to actually do. Set your own budget based on not spending like a moron and then maybe use the calculators as a sanity check at most. Shifty Pony, my finances were pretty similar - you're a little better off in savings than I was - when I bought for $215k last year. I had set a hard limit of $250k as the most expensive house I would even visit when shopping. A year later I still feel like that was the right range for me, but of course it depends on what that amount actually buys in your market. As for where to squirrel away money while you prepare to buy, seconding the savings account or similarly low risk option. The goal is just to have that money available for the down payment & other costs associated with the purchase.
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Jun 16, 2012 17:57
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A ladder of CDs would give a slightly better return than savings accounts, and is still FDIC insured. The drawback is that the money is locked up for a while, but since you're not planning on buying for another year or two, that should be OK.
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Jun 17, 2012 05:00
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sheri posted:Edit: Apparently, running throught it, an 'aggressive' target for the home we could afford is $820k. WTF? We make a good amount of money, but not "buy an $800,000 house" kind of money.
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Jun 18, 2012 17:47
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gvibes posted:Yeah, most calculators are pretty crazy. I just plugged some numbers into the one at money.cnn.com, and it says I should have a mortgage of 4.5x-5.5x annual gross income. That's crazy. I got the same thing, apparently if your mortgage/tax/insurance payment is not 50% of your income you're doing it wrong.
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Jun 18, 2012 17:52
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I'm saving up to buy a small 800-1000 square foot condo, or at least that's the hope. We could get a 1000 square foot 2br condo for the high 300's in an older wood-framed building, or get a smaller 1.5 or 1 bedroom condo for the same price but in a newer concrete building. I really want more space but I worry about the longevity of an older building. I guess this is something a condo inspector would be good money for? Both of us just make 15 bucks an hour so we're pretty poor, but we've got a huge savings so we'll be putting the full 20% down. Online calculators tell us we could get around 280k mortgage but all the condos we like are more 300k range. Should we hold out for our dream condo or buy smaller now and potentially "trade up" later? Also god drat housing prices are insane. We went on a condo tour and anything built in the last 10 that we could afford are little 300-400 sqft micro-units for like 250-300k. Want 1 bedroom? Try 400+ ! Nuts. Yet people are making money renting them out. Which raises another question! Buy a micro-unit not to live in but to rent to tourists/short term stay? The money sounds really good but it seems like you'd be stuck at the whims of the tourism industry. Baronjutter fucked around with this message at 20:31 on Jun 18, 2012 |
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Jun 18, 2012 20:26
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Baronjutter posted:I'm saving up to buy a small 800-1000 square foot condo, or at least that's the hope. We could get a 1000 square foot 2br condo for the high 300's in an older wood-framed building, or get a smaller 1.5 or 1 bedroom condo for the same price but in a newer concrete building. I think 62k/yr is nowhere close to being able to carry a 280k mortgage, especially in a condo situation with significant fees on top.
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Jun 18, 2012 20:33
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Owch I guess it's the parents low-rent basement suit for a few more years then! It's a great hobbit-hole to save money in though. We're putting away about 50% of our income every payday. I know if we rented though we'd no longer be able to really save anymore. Rents and mortgage payments for what we'd like are pretty similar. We're in a very lucky situation at the moment where we're living in a suite where we pay only a few hundred a month as opposed to the 1000+ we'd be paying in even a lovely apartment. All the online calculators I've used say about 280k or so and the mortgage specialist we chatted wit recently told us the online calcs are notoriously conservative and we could safely go a bit higher. A lot of the units we looked at would see us having a 900-1100 a month mortage (equal to renting) plus about 250 in strata fees (which most cover heating and hot water). We'd most likely only buy in a building that allows renting, so if things go sour (like someone loses a job) we could move back to the hobbit-hole and rent out the condo (which we won't make money on but we'll about break-even) Baronjutter fucked around with this message at 20:48 on Jun 18, 2012 |
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Jun 18, 2012 20:44
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It all depends on what you can comfortably pay every month for living expenses. Our lender gave us a price range we could comfortably afford but once I really got into the details, I wanted to buy something about 30-40k cheaper. It's all very ridiculous what some people are told they can afford. Why would you want to spend all of your money paying for your housing with nothing left for vacations, savings, entertainment, etc. ?
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Jun 18, 2012 20:52
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Yeah we need to work all that out. We live very frugally but she wants to be able to go to europe every couple years. I told her that alone might impact what we can afford. Neither of us drink or smoke or do drugs or go to expensive concerts every other week so that saves us a poo poo-ton too. We're putting away 50% of our income right now, and that's not even really trying. If we can do that comfortably does that help gauge what we can afford?
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Jun 18, 2012 21:02
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I think what it boils down to is that two people making $15 an hour cannot afford to make payments or rent in an expensive, inner-city area like downtown san francisco, manhattan, etc. It's great that you are in a situation where you can save up cash, but eventually you need to seriously consider one or more of the following four options: 1. Increase your income. If prices are as high in your area as you say, incomes are probably also high too. Get some of that. 2. Move out of the city. Perhaps you can commute in to your current jobs or perhaps you can find jobs outside the city too. If it's a career you love (but doesn't pay well), your option is the same as that of millions of others who move into less expensive suburban expansion zones and then spend one to three hours a day commuting. 3. Rent or buy a tiny, really lovely place that you will hate, especially if you some day want kids. Millions of people who do the low-paying service jobs that keep cities running live in crappy studio apartments, rented bedrooms in group living arrangements, or with their parents. You will still pay through the nose for a place in most of the country would be considered a closet, but it's sustainable if not much fun. 4. Stay where you are forever. Sounds like you've got a decent gig with your current suite, but I don't know if it's an open-ended arrangement or what. My wife and I were looking at a less-severe version of the first three options for a long time. But then in 2008, suddenly the housing market crashed enough that we were able to afford #2; specifically, we bought a house near the BART rail system in Concord which lets my wife commute in to SF where she works, and I mostly work from home so my one-day-a-week hourlong commute isn't too soul-scouring. Even this option wouldn't have been possible without prices in this area dropping by around 70% from their highs, though. We had pretty much resigned ourselves to either renting small places indefinitely, or eventually leaving the bay area if we ever wanted more space or to buy (in part because we were both agreed we did not want to buy a condo, apartment or townhome). e. For comparison: my wife and I make a combined income of just under $100k. She has $30+k in student loans, and I still owe around $12k in low-interest debt. We own our vehicles outright, have no kids (and don't plan to), have excellent credit, and bought a house with no HOA. I feel like $250k was a hard limit for us. We could have stretched for a little more, if we were willing to really cut budgets to the bone, but we weren't. I think with less than two thirds our income, even with no debts at all, $280k is too much. Especially when that's not including condo fees (which can rise unexpectedly). Leperflesh fucked around with this message at 21:13 on Jun 18, 2012 |
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Jun 18, 2012 21:07
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Baronjutter posted:I know if we rented though we'd no longer be able to really save anymore. Rents and mortgage payments for what we'd like are pretty similar. If you'd be in a situation where you couldn't save any money, it's a bad idea.
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Jun 18, 2012 21:09
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What's really scary about mortgage calculators is when you have friends who are terrible at money management with horrible credit. Then they're told they can afford a $200k house so they start shopping. They ended up in a house that needs all new windows and all new HVAC, but they have not a single penny left to do it. I've tried to coach them but there comes a point where you risk losing the friendship because you're pointing out stupid mistakes over and over. I love them to death, they're great friends, but the way they spend is like watching them step on a rake and smack themselves in the face over and over and over.
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Jun 18, 2012 21:23
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Should I expect the re-fi interest rate to drop in the next 2 weeks or so? I am holding on my current rate? Also, I am curious if I'm getting screwed. I had an informal GFE given over the phone, then when the loan officer gave me the official one the closing costs were $800 higher. The bulk of that difference was in the amount in escrow. But is the money in escrow something I would get back anyway, if I was overcharged at the end of the year?
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Jun 18, 2012 22:05
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Closing on friday. Got a bank statement they wanted in today, and any minute the appraiser should be back out at the house to verify electrical service. ...aka flipping a light on to see if the power actually work. the wiring and box/panel were already inspected. I may drive myself mad before then.
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Jun 18, 2012 22:26
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quote:e. For comparison: my wife and I make a combined income of just under $100k. She has $30+k in student loans, and I still owe around $12k in low-interest debt. We own our vehicles outright, have no kids (and don't plan to), have excellent credit, and bought a house with no HOA. I feel like $250k was a hard limit for us. We could have stretched for a little more, if we were willing to really cut budgets to the bone, but we weren't. I think with less than two thirds our income, even with no debts at all, $280k is too much. Especially when that's not including condo fees (which can rise unexpectedly). Horrible. Guess we'll be living in my parents basement for the rest of my life then! It still doesn't quite make sense to me though that if we're able to put away half our income right now, and that's not even really being too smart with our money, why we can't end up putting that half towards a tiny starter condo and putting that same money into it, on top of maybe being a bit more frugal so we can continue to build our savings? We have no debt, no kids, no expensive hobbies, just food and clothing and we're good. I don't think moving is an option really because if we moved to a cheaper city we'd probably end up having to get a car and drive everywhere. That's another problem, if we get a condo out in the burbs or something that means driving, that means a car. She's getting some good career prospects though for the long term (maybe), mine suck and are unstable and I feel lucky even making 15 for the rest of my life. Baronjutter fucked around with this message at 22:38 on Jun 18, 2012 |
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Jun 18, 2012 22:36
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Baronjutter posted:Horrible. Guess we'll be living in my parents basement for the rest of my life then! It still doesn't quite make sense to me though that if we're able to put away half our income right now, and that's not even really being too smart with our money, why we can't end up putting that half towards a tiny starter condo and putting that same money into it, on top of maybe being a bit more frugal so we can continue to build our savings? Nothing wrong with doing this, just build your down payment first until you're not borrowing more than say 2.5-3x your combined annual gross income. No car is certainly an argument for going near the top of that range, that's a big expense most people have.
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Jun 18, 2012 22:40
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Yeah we don't have the same expenses as many people so I think some american's ideas of what you need to live is a little off. No car, government health insurance, all that jazz.
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Jun 18, 2012 22:54
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Baronjutter posted:Yeah we don't have the same expenses as many people so I think some american's ideas of what you need to live is a little off. No car, government health insurance, all that jazz. Yeah, but you said yourself that if you got a place in the price range you were looking you'd have nothing left for savings. That is a problem.
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Jun 18, 2012 23:03
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Well we wouldn't be able to do 50% savings, we'd be doing like 5-10% savings, which would mean we wouldn't be able to really save up for a down payment fast enough and the whole goal is to get our own place, NOT rent. I'm fine paying 1100 mortgage but not 1100 month rent. The goal is to own a place, once we've got that goal everything extra is a bonus. I love remodeling and renovating and you just can't do that in an apartment. Want a fixer-upper condo I can make gorgeous for us and add value for the future if we ever sell/upgrade. Was actually thinking about living where we are now for the first few months so we can really gut the place and not have to sleep in a construction site. Just did some more looking. If I'm not fussy about the neighborhood I could get 1000sqft in the low 200's in a fully remediated 90's building. It's not ideal and I'd have to bus to get anywhere but maybe 5 years down the line we could upgrade and maybe even make some money selling it after we've made it nice. Baronjutter fucked around with this message at 23:21 on Jun 18, 2012 |
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Jun 18, 2012 23:11
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