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dy. posted:Pros: I am also looking to purchase a home that is a short sale and you should really have it on both the Pro and Con lists. Its a Pro because you can possibly get the condo for less than what is owed on it. Its a Con because it can take months to resolve, the bank might not accept your offer after weeks and work, and it will be very difficult to get a short sale taken care of before the April 30th deadline for the $8k. I would not bank on getting the $8k so do not count that into the equation on whether or not you can afford to purchase the condo.
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Feb 25, 2010 20:32
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dy. posted:Cons: This is too big a wildcard to crunch any numbers until you find out. I'm actually in the same situation, renting a $200k condo from the owner for $1025 a month, and condo fees are $375/month. I'd never break even in my lifetime buying it because of those fees. Leperflesh's advice re: the interest deduction is really important. It doesn't save you much on a $200k mortgage unless you have other deductible expenses to get past the $7500 threshold.
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Feb 25, 2010 20:38
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Doc_Uzuki posted:Its a Pro because you can possibly get the condo for less than what is owed on it. Not to jump down your throat, because I suspect you only mis-stated what you meant, but: Getting a property for less than what is owed on it is completely irrelevant. What matters with a short sale is getting a property for less than its current market price. Today there are millions of properties in America in which the owner owes more than the house is worth. Many banks seem to be reluctant to do short sales that undercut the actual market valuation, even though that's strictly necessary for a short sale to compete with a traditional or even a foreclosure (REO/Bank Owned) sale.
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Feb 25, 2010 20:52
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Leperflesh posted:Your monthly cost on buying a home is more than the raw mortgage. With less than 20% down, you'll be paying PMI (mortgage insurance); you will also have to pay your local and state property taxes. Together, these will substantially increase that estimate you've got for the monthly cost. Leperflesh posted:With less than 2 years at your current job, you will struggle to get a good loan. Having less than 20% down makes it even harder. You say you can save up money pretty easily which is good, and you also have no debts which is good, but if you wait a few months, you will miss the first-time buyer's credit (it is expiring in a few months and is not likely to be extended again), so keep that in mind. Actually short sales can take many, many months, so even if you decided to pull the trigger today, being in contract in time to get the credit might be questionable. I don't intend to do a lot of back-and-forth on the price, I basically have no interest in purchasing the property for more than $200k so if the bank does not want to deal on those terms then I'm not going to waste my time. I realize this might be an unrealistic expectation though. Leperflesh posted:Finally, even though you're living there and know the place and that's a plus, you would be well-advised to comparison shop. What are other similar places going for in other condo developments? What can you get a house for? Condo prices tend to be more volatile than houses, and in many areas (especially Flordia) there was a huge buildout of condos just before the market crashed, leading to massive levels of vacancy and plummeting prices. If condos are fairly rare in your area, that might not be so bad. Also thanks for your reply, it really helps.
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Feb 25, 2010 21:03
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Sure thing, you're welcome. I'm curious as to how you've arrived at that $200k figure, though. "Asking price" is not a good metric; what you want is "final sale price", e.g., comparable sales in your area. Any local title company should be able to provide you with a list of comps for a small fee. What I'm getting at is, plenty of sellers are still delusional about what their properties are capable of selling for, so there's tons of "asking prices" out there that are far too high. It may be that $200k is still too high for you to pay (or it might be a fantastic bargain, I dunno). Anyway, find out those fees (and plan for them to go up in the future!), find out what your local property tax rate is, and plan for closing costs of around $7k to $8k on a $200k loan*. At the moment, with only $10k, I don't think you'd even have the 3.5% down needed for an FHA-insured, minimum-down loan. *This is based on how much my loan cost in California, so, your mileage may vary depending on MA laws.
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Feb 25, 2010 21:14
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Leperflesh posted:Sure thing, you're welcome. The $200k figure is based on what I can afford - it's the number I'm working with in my head to see if I can make it all work and I think the maximum that I would be interested in paying for this property. I guess I'm trying to plan for a 'worst case' scenario. I have a friend who works for an appraisal company, so I plan on contacting them about pricing.
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Feb 25, 2010 21:21
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I personally shy away from Condos. Renting one is fine, but I wouldn't buy one.
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Feb 25, 2010 21:31
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skipdogg posted:I personally shy away from Condos. Renting one is fine, but I wouldn't buy one.
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Feb 25, 2010 21:35
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Read the OP with my warnings about HOAs a few times over. It's part of the reason why I'm having to shortsale my place for $175k rather than $220k. The HOA fees alone for a condo in a remotely financially responsible HOA should put severe severe price pressure on condos. But in reality, what happens is that most condo owners live in it for about two years then rent out their condo and deduct the HOA fees on their taxes while claiming depreciation, then before 5 years are up, they sell it and get to keep all the appreciation. HOAs are precisely what makes condos a real headache to buy to actually live in - there is no such thing as a condo without an HOA (well, unless you're doing a housing co-op or some other oddball way of pooling community resources). You might like a condo a lot, but the HOA might be run by idiots. The board members being nice is not a good metric (my real mistake - assuming that nice people run an HOA good enough). Most HOAs in the US are basically financially insolvent and we may start seeing most go bankrupt within another 8 years as the roofs and various structures in many condos built during the boom need to be replaced. It's partly why I'm completely dumbfounded by so many babyboomer-generation folks buying condos on HGTV as vacation homes - how often will you be there that a nice hotel would be more expensive or not meet your needs, and the HOA fees on these places are loving murder ($500 / mo in Bolivia? wtf?). With all that said, it's very well possible that you'll be forced to buy into an HOA or rent for basically forever in many markets. In such a situation, I would weigh the HOA as an equal factor to the financials and your living needs. Note that just because you buy into an association with lots of rich people doesn't mean it'll be any better - look at the stupid poo poo on the Real Housewives shows for an idea of what my HOA meetings could have turned into if everyone had actually shown up.
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Feb 25, 2010 21:41
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necrobobsledder posted:But in reality, what happens is that most condo owners live in it for about two years then rent out their condo and deduct the HOA fees on their taxes while claiming depreciation, then before 5 years are up, they sell it and get to keep all the appreciation. No what happens in reality is they live in it for 2 years, rent it and deduct HOA fees, then before the 5 years are up realize they are $100K underwater on a lovely apartment they got to own and declare bankruptcy. dy. you make $75K which is nowhere near what you need for a $200K loan with <20% down in Maryland (My grandparents always complain about high property taxes so I assume its around 2-3%). You won't get much benefit from the interest deduction because you probably don't have enough stuff to itemize to make it really worthwhile unless you are paying a poo poo rate. If you do get $40K to pay a 20% down payment you will pay $8K/yr in interest year one on your $160K loan. So instead of taking your $5700 standard deduction you get to take $8K instead. Lets say you have another $2000 worth of random deductible items and you get $8K + $2K - $5700 = 4300 * 25% rate you would have paid on that $4300. So you are on the hook for a $200,000 property of questionable future value paying probably $1600-1800/mo after taxes/insurance/HOA so you can save $1075 on your taxes and get an $8K credit (Which you won't get because you can't close before April 30th). Oh and you have to find $40,000 to make this work and it has to be a gift not a loan. Don't do it!
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Feb 25, 2010 22:43
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I disagree that $1800 a month is impossible to pay on a $75k a year salary, all else being equal, especially since dy. has no other debts at all (and, unless he forgot to mention it, no dependents either). I agree that it's too much to pay for a condo (or a townhouse, which is practically the same thing), and that he'll need a bigger down payment for sure.
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Feb 25, 2010 23:18
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Not impossible, but way out of my comfort zone, and almost assuredly a poor financial decision.
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Feb 26, 2010 00:23
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Leperflesh posted:I disagree that $1800 a month is impossible to pay on a $75k a year salary, all else being equal, especially since dy. has no other debts at all (and, unless he forgot to mention it, no dependents either).
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Feb 26, 2010 04:37
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I am considering something similar. I make $85k a year and can put 20% down on a $350k condo. Mortgage would be $1500/mo roughly and carrying cost would be around $2100. With deductions actual carrying cost would be around $1700, about what a 1 bedroom rents for. I am thinking of living in it for 3-5 years then renting it out. Right now it could rent for $1700/mo. 5 years from now it could go for $1900-2000. Let's say $1900. Deducting depreciation, interest, and condo fee, should make the taxable income out of that $1900 extremely low. I might be out $300/mo, or maybe $4,000 a year. That does not count what has been put against the principle though, which would almost break it even. A big variable is inflation. High inflation would be a boon, and frankly we are likely in for an inflationary environment in the 5+ year time frame. I think my situation has more cushion because I am living in DC where in the areas I would purchase in the unemployment is around 5%, I have a secure government job, I already have a nest egg, and the rental market is historically very vibrant.
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Feb 26, 2010 04:43
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Happydayz posted:I am thinking of living in it for 3-5 years then renting it out. Right now it could rent for $1700/mo. 5 years from now it could go for $1900-2000. Let's say $1900.
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Feb 26, 2010 04:46
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moana posted:Rent prices are going down, not up. This is a terribly presumptive thing to assume. Unemployment rate in my area is around 5% and the macro-view is that we are in for an inflationary period. I recognize this is a risk, but looking out 5-10 years I am not too worried
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Feb 26, 2010 04:49
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Rents were pushed up by the boom and are heavily dependent on wages and jobs. Its a sweeping generalization but most anywhere you go there will be downward pressure on rents for years since there will be downward pressure on all of those things for the foreseeable future. In general trying to rent a SFR or condo is a bad idea. If you want to buy to rent something after a few years of paying down the interest/principal you should shoot for becoming a slum lord. I'm not kidding. If that turns you off just wait for a few years. The supply of homes is huge and they aren't going anywhere. Prices will keep going down most everywhere in the US for quite a while. You may feel like you're throwing your money away on renting, but if you buy a home/condo you're still going to have money going out the door until a)you pay off the mortgage or b)you find someone to pay you more than what you bought it for or c)find someone willing to rent from you for more than the PITI. Option c is very very hard to pull off to say the least. Inflationary measures will also probably cause rates to rise, which will put more downward pressure on prices as well. FWIW I think we'll have steep inflation for a long time, but I also think they'll push rates way up. High single to low double digit interest might be a reality in a few years. I think that'll really do a number on home prices, but then I'm also considered pretty doomer, so YMMV. \/\/\/\/\/\/\/ PC LOAD LETTER fucked around with this message at 14:59 on Feb 26, 2010 |
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Feb 26, 2010 06:47
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PC LOAD LETTER posted:You may feel like you're throwing your money away on renting, but if you buy a home/condo you're still going to have money going out the door until a)you pay off the mortgage or b)you find someone to pay you more than what you bought it for or c)find someone willing to rent from you for more than the PITI. Option c is very very hard to pull off to say the least. Yeah but that's why I like the idea of using it as my primary residence for the first several years. It allows me to leverage inflationary pressures to my advantage and gives more time for the amortization schedule to work in my favor
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Feb 26, 2010 12:27
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Can you afford to pay for the condo and wherever you will be living once you start renting it? Tenants are not a guarantee. Even one month between tenants is a $1800 loss. Why would you voluntary put yourself in a situation to be out four grand a year and possibly more if you have tenant issues (plus all the headaches of being a landlord)? Personally I would never buy a condo. Rent from someone else, sure. To me condos are like all the disadvantages of being in an apartment combined with all the disadvantages of owning. The HOA fees just kill it. You could rent a 1br for $1700 for the next 3-5 years and keep your $70K as well. If you are that worried about inflation put some of your nest egg into tips or ibonds.
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Feb 27, 2010 05:07
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So, my husband and I are becoming extremely lucky and getting a 10 year old condo for 75,000 dollars which is worth 250,000 currently. It's because the grandma is moving somewhere else and we are buying it from her for that price. Well, it's in a good suburb of Philadelphia and we might have to move to DC. Do you think it would be a good idea to buy a house in DC and rent this one out? The rent would pay part/most of the mortgage on the house in DC. I want to do this, but my husband is against it because nobody rents townhouses and it's hard to be a landlord. Can anyone tell me about your experiences with something like this?
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Feb 28, 2010 22:32
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PoliSciGirl posted:So, my husband and I are becoming extremely lucky and getting a 10 year old condo for 75,000 dollars which is worth 250,000 currently. Be careful that the difference between what you're paying and the market value doesn't somehow become a (tax-due) gift of $175,000. I am not an accountant, but consult a tax adviser before you do this transaction.
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Feb 28, 2010 23:03
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Leperflesh posted:Be careful that the difference between what you're paying and the market value doesn't somehow become a (tax-due) gift of $175,000. Thanks!
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Feb 28, 2010 23:31
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Leperflesh posted:Be careful that the difference between what you're paying and the market value doesn't somehow become a (tax-due) gift of $175,000. This is a valid concern, but for Grandma, not PoliSciGirl. In the US, gift tax is the responsibility of the giver.
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Mar 1, 2010 02:54
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My wife and I just signed a contract on our first home, $98,000 + 3% sellers assist at 4.875% fixed for 30 years. Mortgage application underway, now we just need to do our home inspection, get it appraised, pray the underwriters don't find something that upsets them, and get the sellers the gently caress out of our house :P I'm so excited!
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Mar 1, 2010 18:14
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jassi007 posted:My wife and I just signed a contract on our first home, $98,000 + 3% sellers assist at 4.875% fixed for 30 years. Mortgage application underway, now we just need to do our home inspection, get it appraised, pray the underwriters don't find something that upsets them, and get the sellers the gently caress out of our house :P drat that's cheap, where do you guys live? I've been in NYC for a few years, so I am used to seeing the prices here, and feel good about finding a 2 BR co-op for only $268,000. Then I see what people pay for full houses in places that aren't NYC and want to cry. edit: I also love your avatar.
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Mar 1, 2010 19:33
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YOU want to cry? Sheesh I think we'll be putting an offer (we are seeing the place for the second time on Wednesday) for a 1 bedroom at $895,000. I feel like an rear end saying that here, having seen the other prices (after reading 90%+ of the thread), but that what poo poo costs in prime Manhattan. And gently caress it, we can afford it. Anyways, I share your excitement! 4.875 seems like a great rate - the best I'm seeing right now is about 5.1% - is it FHA or anything else funky like tha or a straigt loan?
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Mar 1, 2010 20:28
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senor punk posted:drat that's cheap, where do you guys live? Altoona, PA, population around 45k. We took our time and found a house in a nice neighborhood with a 2 car garage, 3 bed, full basement. Lot is 40x110, not huge but big enough for 2 30 somethings with no kids. That rate is conventional with 1 or 2 points, I can't recall exactly, but it cost me $349.13 to purchase the rate down from 5% to 4.875.
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Mar 1, 2010 20:47
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shadow puppet of a posted:YOU want to cry? Sheesh I think we'll be putting an offer (we are seeing the place for the second time on Wednesday) for a 1 bedroom at $895,000. I feel like an rear end saying that here, having seen the other prices (after reading 90%+ of the thread), but that what poo poo costs in prime Manhattan. And gently caress it, we can afford it. Some of my college friends bought houses in PA and it was next to nothing for a mansion. Southern California is bad, but now I guess I can always feel good I don't live in NYC anymore  Congrats jassi!
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Mar 1, 2010 22:07
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jassi007 posted:My wife and I just signed a contract on our first home, $98,000 + 3% sellers assist at 4.875% fixed for 30 years. Mortgage application underway, now we just need to do our home inspection, get it appraised, pray the underwriters don't find something that upsets them, and get the sellers the gently caress out of our house :P Wow. Prices haven't been like that around Seattle for 20+ years. Not trying to be too be too nosy, but what kept you from doing a 15yr mortgage and saving a big chunk of money over the course of the loan? Also, out of curiousity, what do places like that rent for in the area? edit: Thanks to you NYC guys for making me feel like a got a bargain again.
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Mar 1, 2010 22:49
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BeastOfExmoor posted:Wow. Prices haven't been like that around Seattle for 20+ years. Not trying to be too be too nosy, but what kept you from doing a 15yr mortgage and saving a big chunk of money over the course of the loan? Also, out of curiousity, what do places like that rent for in the area? No problem. Wife just graduated college, she went back later in life, but still. We have a moderate amount of debt with a student loan and two car payments that put us in the range of buying a house but not able to swing a 15 year mortgage. We had a good downpayment (not 20%) but we will come out of this with a moderate savings in reserve and a very reasonable monthly payment. We decided to move now, because our apartment is a rotten shithole, and this house is pretty much exactly what we want for the amount we can afford. My wifes current employement is as secure as can be, but we're hoping in 6-12 months she'll find a better paying job and we can start making significant overpayments on the mortgage. Until then we won't be in over our head banking on her future income. Rent in this area can vary wildy, although I'd say over $700 would be a palatial apartment. We pay $575 a month for a 3 bed townhouse that was built on the cheap and has no soundproofing. Plus neighbors get govt. assistance and are generally not polite and respectful people with well behaved children. This drove our desire to GTFO into our own place where we own all 4 walls.
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Mar 1, 2010 23:06
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moana posted:Manhattan is crazy insane. I remember going to visit one of my friends up around 100th St and her apartment was seriously a 8x8ft cubicle with a tiny bathroom attached. How big is your place? Well the place we are looking at now is 800 sq feet in a nice area of Chelsea Manhattan. So its not technically SUPER prime, but pretty close (West Village would be more expensive). Its nicely laid out with basically two pretty big (~20 x 15) rooms. We've looked at lots of place in the 1.1-1.3 mm range too. But buying below a million will allow us to get a conforming mortgage (below $730k mortgage amount) with our down payment of between 20% and 25%. The more expensive stuff is either a little nicer or bigger (you can still get up to 1200 sq feet for nice areas at around $1.25mm).
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Mar 1, 2010 23:39
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shadow puppet of a posted:Well the place we are looking at now is 800 sq feet in a nice area of Chelsea Manhattan. So its not technically SUPER prime, but pretty close (West Village would be more expensive). Its nicely laid out with basically two pretty big (~20 x 15) rooms. We've looked at lots of place in the 1.1-1.3 mm range too. But buying below a million will allow us to get a conforming mortgage (below $730k mortgage amount) with our down payment of between 20% and 25%. My god, that is insane. I'm not sure what the sq. ft of the house I'm buying is, i'd estimate 1300-1600? I looked at one that was 2100 sq. ft but it was in a high risk flood zone, and would cost aroune $2600/yr in additional flood insurance. No thanks to that. That home was asking $95,000, so out of a flood zone in this area it would probably be in the $110,000-130,000 range.
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Mar 1, 2010 23:42
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From someone who has started to looking at local housing costs, I'm glad I do not reside in Manhatten. On the otherhand, I'm in Vancouver which is not much better.
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Mar 2, 2010 01:43
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shadow puppet of a: That is why I live in Astoria, hahahaha. Though to be fair it's a modest and not very big 2 BR on the 5th floor of a 90 y/o walk up. As ridiculous as the prices are it's sadly just the way it goes in NYC's market, and especially in Manhattan. I love Manhattan, I love being a paramedic in Manhattan, but I can't really afford Manhattan on paramedic pay. Someday... 
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Mar 2, 2010 07:43
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senor punk posted:shadow puppet of a: That is why I live in Astoria, hahahaha. Though to be fair it's a modest and not very big 2 BR on the 5th floor of a 90 y/o walk up. As ridiculous as the prices are it's sadly just the way it goes in NYC's market, and especially in Manhattan. And living in Astoria gives you the pleasure of having hipster neighbors everywhere you look  The reason there's such a premium for living in Manhattan is...it's great. Tons of (EXTREMELY) high paying jobs right at the doorstep, the best restaurants, etc. It's easy to look at a 2BR on the upper east side vs. a mansion in the midwest with similar costs and see the homes themselves can not compare, but the atmosphere can not compare either.
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Mar 2, 2010 15:34
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Reggie Died posted:From someone who has started to looking at local housing costs, I'm glad I do not reside in Manhatten. On the otherhand, I'm in Vancouver which is not much better. Vancouver is probably worse as it's a result of a relatively recent explosion in prices. It looks very much like a bubble. Manhattan's prices have always been like this and they've stood the test of the real estate cycle...I guess it just really is worth it to people living in Manhattan.
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Mar 2, 2010 16:54
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This seems like the right place to ask this. I've got about $130k saved up and I have zero debt (student loans, credit cards, etc. all paid off). Would it be a better idea to buy a condo outright, make a large down payment on a house or condo, or just make a smaller (20-40%) down payment on a property? I know about the potential nightmares with a HOA. I guess my question is, is it a better idea financially to buy outright or to carry a mortgage?
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Mar 2, 2010 21:55
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bad news brown posted:This seems like the right place to ask this. I've got about $130k saved up and I have zero debt (student loans, credit cards, etc. all paid off). Would it be a better idea to buy a condo outright, make a large down payment on a house or condo, or just make a smaller (20-40%) down payment on a property? What's your income? Expenses? You'd be in a very different situation if you were making $150,000 a year compared with $50,000 a year.
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Mar 2, 2010 22:30
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Don Wrigley posted:What's your income? Expenses? You'd be in a very different situation if you were making $150,000 a year compared with $50,000 a year. I make about $70k per year. I don't have my exact expenses handy (I'm at work now), but I generally have $900-$1200 left over after all my expenses.
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Mar 2, 2010 22:57
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greasyhands posted:Vancouver is probably worse as it's a result of a relatively recent explosion in prices. It looks very much like a bubble. Manhattan's prices have always been like this and they've stood the test of the real estate cycle...I guess it just really is worth it to people living in Manhattan.
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Mar 2, 2010 23:05
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