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quaint bucket posted:My math's probably off in some aspect, let me know if I did anything wrong. I don't think your mortgage would actually be $1319.84/mo. Does this figure include property taxes, insurance, PMI since you are putting less than 5% down and factoring in repairs? I would expect your payment to be approaching $2000/mo even without taking into consideration maintenance but I may be off. I also think you will be paying slightly more towards your principal than your figures show, but not by much. If you are comparing renting vs owning I think you should take into account all the other things that isn't just the principal/interest payment.
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Feb 1, 2011 21:28
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My girlfriend and I have been together for 3 years, and both she and my parents are convinced we need to get a house because prices are starting to rise again (citation: my mom). This would be in San Francisco bay area, probably in either the city or peninsula because I don't want to live in the east or south bay. My mom says that since this is San Francisco, there are still enough jobs and that the location is desirable enough where the price will not get much lower. I don't know enough about the housing market to know whether she is correct or not, but I am sceptical. Currently we are renting a 2 bed 2 bath condo for 2000 a month but it is small and sucks. I am 28, she is 25. We would not get a house unless we are married. On to numbers: We have a combined income of about $170,000, I have no debt, about 65k in a 401k and 65k in cash in the bank, she has sizable student loans, about 8,000 in retirement (mostly roth IRA I think), and I have no idea how much she has in the bank, probably around 5,000-15,000 I would guess. My parents also have enough money to help out if it was needed. Would it make sense to look into a house? Is there any articles or graphs that I can use to show my mom why it would be a good idea to wait (or a good idea to buy now now now!) Many of my girlfriends friends own houses but she is from a rural area where the houses that cost them $50,000 would probably cost us $850,000.
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Feb 1, 2011 21:39
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You are receiving this broadcast as a dream...We are transmitting from the year one nine... nine nine ...You are receiving this broadcast in order t
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The mortgage is after the downpayment and mortgage insurance on top of the mortgage itself, so the payments are definitely before property taxes and maintenance fees (HoA for USA, Strata for CDN). I did mention that the cost of repairs aren't included which shows that real estate is a losing proposition even if rent raises by 6% each year, you're still coming out significantly ahead as a renter.
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Feb 1, 2011 21:41
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LloydDobler posted:No, they're smart people who leverage their money to make more money. Low net worth people have to borrow, which radically changes the return on investment. If that is the case I don't understand your point: rich people borrow money to make money (is good) but it is bad if poor people use leverage? (Unless perhaps you mean that rich people can borrow at lower interest rates?) Is this like that old Mad magazine piece: "If you are rich you are "eccentric" if you are poor you are "crazy" "? P: You're a glutton R: You're a gourmet P: You breed kids like rabbits R: You're blessed with a large family P: You throw away your money on booze. R: You have a well-stocked bar. P: You own a mutt. R: You possess a mixed-breed.
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Feb 1, 2011 21:44
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Pain of Mind posted:My girlfriend and I have been together for 3 years, and both she and my parents are convinced we need to get a house because prices are starting to rise again (citation: my mom). This would be in San Francisco bay area, probably in either the city or peninsula because I don't want to live in the east or south bay. My mom says that since this is San Francisco, there are still enough jobs and that the location is desirable enough where the price will not get much lower. I don't know enough about the housing market to know whether she is correct or not, but I am sceptical. Currently we are renting a 2 bed 2 bath condo for 2000 a month but it is small and sucks. I am 28, she is 25. We would not get a house unless we are married. How would an acceptable place in an acceptable area cost you? e: NM, November case-shiller numbers are out - SF is still dropping - http://www.economicpopulist.org/content/case-shiller-home-price-indices-through-november-2010-3992
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Feb 1, 2011 21:48
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WorldTravelerX posted:If that is the case I don't understand your point: rich people borrow money to make money (is good) but it is bad if poor people use leverage?  ), rich people are saving much more money by deducting mortgage interest. That's just one megahuge reason that comparing the two situations is idiotic.
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Feb 1, 2011 22:41
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Pain of Mind posted:San Francisco I'm an SF goon and I bought in December of 2009 in Concord, so perhaps I can provide some perspective. First, the city proper is very different from the rest of the bay area. It has essentially no new construction since the 1950s on any kind of real scale, and it's not going to in the future, because of the nature of the city. This is why houses cost so drat much there, and are always going to be among the most expensive in the bay area. But there are several segments in the City, and you probably don't want to consider some of them. E.g., you are unlikely to really want to buy a house in Ingleside or Bayview/Hunter's Point; that's the areas where you can find a house for $300k. You could buy in a nicer area - say, Outer Richmond or Outer Sunset - but now you're talking well into the $600k zone. You could buy an apartment or condo of course, and those are generally more available, but they'll come with big HOA fees that could easily climb. For my own part, I dismissed apartments & condos, along with anything else bearing HOA fees, before I even started looking. I simply decided I wasn't going to consider them, period. So, you have a good income, but not, I suspect, good enough to afford an actually nice house in the City. Also, you're not married; others will caution you about putting both of your names on a title and mortgage if your relationship is not yet fully committed, as in, rest-of-your-life kind of thing. I'll leave it to you to evaluate that. But you also mentioned Peninsula. There are more affordable areas to buy on the peninsula, for sure. You'll need to look at each area on its own, though; I'm guessing you care about how easy it is to get to work, that kind of thing. You can get cheaper places in Pacifica, but there's basically no viable public transport into the City from there. Whereas anywhere along BART/Caltrain is much easier to get into the city without driving, but generally more expensive. If BART is an option, though, I urge you not to dismiss the entire east bay out of hand. Yes, Richmond is a horrible den of crime and decay, avoid it. Much of Oakland is similarly frightening (but there are enclaves within Oakland of wealth and class). But places like San Leandro and Emeryville might be palatable, and significantly less expensive than the Peninsula. Or you could do what I did and move past the Caldecott Tunnel. My wife takes about 45 minutes to BART in to SF from Concord; you could afford a bit nicer, so you could consider Walnut Creek, which is really very nice. Orinda/Moraga are very nice, and have some of the best school districts in california. If you do decide you absolutely must buy on the peninsula, take your time. Prices are still very soft, there's still tons of foreclosure activity, and interest rates are not showing signs of heating up yet either. The minute any of those start to turn around, we can expect a huge amount of selling activity, as people who aren't bankrupt but want to sell for other reasons, and have been waiting out the downturn, finally throw their property onto the market. I bought a foreclosure in Concord for 240k just over a year ago, and it's now likely lost about 10% of its value. That's OK with me, I'll be here for 8-10 years at a minimum, and a lot longer if I need to. Whatever you decide to do, have the same attitude; be sure you're ready to commit to that neighborhood and that house for a decade, or don't buy. Because the boom the Bay Area underwent in the last 20 years has given a lot of people, people like your parents, the impression that "normal" means 5% or more appreciation every year. Those people think that this has been a terrible downturn but that as soon as things return to "normal", property will start to climb at that rate again. That is not guaranteed, though, and we should take the lesson from Japan. Sometimes a burst bubble never re-inflates. We could easily see a decade of prices that stabilize right where they are now, or even 10% lower than they are now.
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Feb 1, 2011 23:30
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quaint bucket posted:The mortgage is after the downpayment and mortgage insurance on top of the mortgage itself, so the payments are definitely before property taxes and maintenance fees (HoA for USA, Strata for CDN). Oh wait, I misunderstood. I took a second look at Page 2 and realized what you really meant. Yeah, you'll be saving much less than $600. e: regarding monthly payments, it would roughly come to $1800 after prop. tax, strata fees, and water ($200~ a year). quaint bucket fucked around with this message at 23:51 on Feb 1, 2011 |
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Feb 1, 2011 23:48
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quaint bucket posted:Page 1 was considering the difference in cost with renting and buying a property to "pay yourself" and earn equity. The property in question is $314,900 with $15,000 down (<5% by like $600-800). Mortgage insurance of 3.19%, iirc. I know it was at least $8,000 anyway. Your numbers are off. First the interest rate on the mortgage 3.8%. Unless you are looking at an ARM or something 30 years are around 5% right now. It also doesn't look like you factored in the deduction for mortgage interest. The big thing when doing rent vs buy is that you have to compare equal size dwellings - ie buying a house vs renting one the same size. For, example you can't compare a 1 bedroom apt to a detached house. A $315K home should rent for more than $1200 a month, probably closer to $1600. What it really boils down to is appreciation. If the value stays stagnant or appreciates a little a year (say 2%), then you will be break even and be ahead of renting after the first five years or so - that's why people say don't buy a house if you aren't going to stay in the area for a while. In a depreciating market buying doesn't beat renting. Homes aren't good investments. Realjones fucked around with this message at 23:54 on Feb 1, 2011 |
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Feb 1, 2011 23:51
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Realjones posted:Your numbers are off. First the interest rate on the mortgage 3.8%. Unless you are looking at an ARM or something 30 years are around 5% right now. It also doesn't look like you factored in the deduction for mortgage interest. Pretty sure QB is Canadian and they do something weird that involves only locking the rate for 5 years and that's just how a mortgage works. In return they are looking at rates around 3-4% right now. Why? Someone else can probably explain better.
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Feb 2, 2011 00:04
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Yeah that's correct. For some insane reason it's literally not possible to get a 30-year fixed rate in Canada. Or even a 10 or 15 year fixed rate.
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Feb 2, 2011 00:07
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Arzakon posted:Pretty sure QB is Canadian and they do something weird that involves only locking the rate for 5 years and that's just how a mortgage works. In return they are looking at rates around 3-4% right now. Why? Someone else can probably explain better. Yes and no. You can lock the rate for 1-5 years open or closed, fixed or variable, up to 35 year mortgage (until march 18th when the new regulations come into effect). If I recall correctly, you can also lock in for 5-15 years but I'd have to double check. Current variable is at 2.15% for 5 years with a somewhat controlled increase of .25% annually (on average, but really, it depends on the market) but can drop or increase. Current fixed rate is 3.79% for 5 year. 315k is actually for a condo of 950 sqft in PoCo, not a house. $1200 rent is for a 2 bedroom condo at 700 sqft in Burnaby. e: As to why the mortgage works the way they do, good question. We don't know, honestly. quaint bucket fucked around with this message at 02:32 on Feb 2, 2011 |
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Feb 2, 2011 02:16
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quaint bucket posted:e: As to why the mortgage works the way they do, good question. We don't know, honestly. To be fair, it's the american system that's a bit weird. Planet Money had a good podcast on why a 30 year mortgage is a strange thing.
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Feb 2, 2011 03:10
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Leperflesh posted:Yeah that's correct. For some insane reason it's literally not possible to get a 30-year fixed rate in Canada. Or even a 10 or 15 year fixed rate. Actually fixed-rate mortgages are pretty rare outside the U.S., especially with such a long maturity. It's kind of a huge interest-rate risk for the lender, especially with prepayment. edit: beaten
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Feb 2, 2011 03:10
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Well I'm getting the boot from the place I'm renting and I haven't heard a peep from my short sale. Would it be a decent idea to just find a place close by and rent until the bank gets their poo poo together? I already have financing and the offers approved and it's really irritating to have a down payment in the bank sitting around making 0.4% interest.
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Feb 2, 2011 07:03
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My wife asked a pretty good question a while ago re: strata financials. Is there a rule of thumb as to how large a strata's contingency fund should be? Is it something like 10k per unit or...?
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Feb 2, 2011 08:27
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WorldTravelerX posted:Umm, I thought a definition of "leverage" was borrowing money to multiply your investment? That's one definition. Another, which I thought the context of my statement was pretty clear on, is taking your money and buying an asset which you then use to make more money. No borrowing. Or maybe defined loosely, borrowing from yourself. Bottom line is that anyone saying "real estate is a great investment" and then saying "because rich people do it" in the same sentence is completely missing the point of the negative advice in this thread, which is aimed specifically at people who would have to borrow to get into it. Without a good down payment, any profit you might make is wasted on interest. Again, rich people (banks) leveraging their money (loaning it to us with a house as collateral) to make more money (interest). LloydDobler fucked around with this message at 21:24 on Feb 2, 2011 |
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Feb 2, 2011 21:21
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LloydDobler posted:That's one definition. Another, which I thought the context of my statement was pretty clear on, is taking your money and buying an asset which you then use to make more money. No borrowing. Or maybe defined loosely, borrowing from yourself. You think wealthy people don't finance their real estate investments? A whole lot of wealthy people spend years leveraged to the hilt in real estate. In the past, it's worked out pretty well overall. Real Estate investments have been a reliable wealth creator for generations. The last 5-8 years notwithstanding, I would venture it has created more millionaires than any other industry *citation needed. Yes, people who buy 1 house with a 3% down payment and subprime interest rates aren't going to be getting rich, but you don't have to be wealthy to put 30% down on a 150k house and use your equity to get into some rental properties and end up with a net worth well north of a million dollars in a pretty reasonable amount of time. And you don't even have to get into rental properties *or* be wealthy to take your time, save up a good down payment, wait on the right deal, and make a purchase and come out way ahead of renting 15 years down the line.
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Feb 3, 2011 19:57
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I'd make a strong wager that a great deal of these people that have gotten rich bought at least 15 years ago when spreads were a lot better than they are now. Everyone in my family that's gotten rich(er) through real estate bought their properties 20+ years ago at least and paid them off quickly, oftentimes as inflation grew in the early 90s. All of us that bought in the mid-90s up til now haven't gotten remotely close to the performance they had in, say, the mid-90s. Trying to get in on that is basically chasing the market though, so I've eliminated real estate as a major holding in my investments. I'd like to point out Elizabeth Warren's excellent paper on what's been bleeding the middle class dry and the top three things that have changed to be much higher than 30 years ago are: 1. mortgage 2. health insurance / healthcare in general 3. taxes http://www.yale.edu/law/leo/052005/papers/Warren.pdf When the middle class is completely overleveraged, what can you expect but for them to cut back on their biggest items?
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Feb 3, 2011 20:52
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necrobobsledder posted:I'd like to point out Elizabeth Warren's excellent paper on what's been bleeding the middle class dry and the top three things that have changed to be much higher than 30 years ago are: 1. mortgage 2. health insurance / healthcare in general 3. taxes You're either misinterpreting or mis-characterizing Warren if you lump in taxes with the other 2 categories. If anything, she's probably for higher progressive taxes considering that they're at historic lows. I agree with you about the middle-class bleeding dry but I'm curious whether high (relative to household income) housing prices are sustainable in the long-term. By definition, shouldn't we see prices gradually fall to what people can afford?
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Feb 3, 2011 21:25
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necrobobsledder posted:I'd make a strong wager that a great deal of these people that have gotten rich bought at least 15 years ago when spreads were a lot better than they are now. Everyone in my family that's gotten rich(er) through real estate bought their properties 20+ years ago at least and paid them off quickly, oftentimes as inflation grew in the early 90s. All of us that bought in the mid-90s up til now haven't gotten remotely close to the performance they had in, say, the mid-90s. Trying to get in on that is basically chasing the market though, so I've eliminated real estate as a major holding in my investments. This I agree with, a lot of people making arguments against real estate as investments are looking at it through the distorted lens of the last 5-8 years where an enormous bubble was created and prices were going up 20% a year. That, rather obviously now, isn't sustainable and isn't how you make reliable money in real estate. It takes 10-20 years so of course the people you're looking at who got rich started 15-20 years ago- that's how it works. Just like anything except hitting the invention/startup jackpot, it isn't magical overnight wealth. As for it being a decent inflation hedge, I also agree with and think we're going to see some pretty significant inflation in the next couple of decades- another reason to get in when you find the right deal. Anyone who posts a "rent vs buy over the first 5 years" cost calculation and considers that a meaningful argument against buying has lost the plot, in my opinion. All of my opinions are based on markets that aren't completely insane coastal markets- I'm in Texas where prices never got way out of whack and are really quite cheap in several areas now. Personally, I can't imagine ever thinking a 300k 1500 sqft house was a good idea and if you argument against real estate as an investment is based solely on those markets then I agree with you, but in the Midwest it's still a pretty nice revenue generator. People who are looking at the carnage from the past decade and saying "DO NEVER BUY" are the same people who were saying "equities are over" when the s&p was at 600. Housing is a basic human need- it will always be around and it will always be in demand. greasyhands fucked around with this message at 02:26 on Feb 4, 2011 |
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Feb 4, 2011 02:15
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shrike82 posted:You're either misinterpreting or mis-characterizing Warren if you lump in taxes with the other 2 categories. If anything, she's probably for higher progressive taxes considering that they're at historic lows. shrike82 posted:I agree with you about the middle-class bleeding dry but I'm curious whether high (relative to household income) housing prices are sustainable in the long-term. By definition, shouldn't we see prices gradually fall to what people can afford? I don't know how much people can take and I haven't heard any expert even try to guess, but the baby boomers (and even some generation Xers) desperately clinging to their home values is not helping all of us in this thread looking to buy our first or even second homes. Every person that overpays for a house contributes to the problem as well.
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Feb 4, 2011 02:42
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If you ask me right now, I think my biggest take away from all this is that houses need to be far, far more liquid assets than they are. We need to eliminate 95% of the paperwork necessary to buy or sell a house, eliminate the need for expert agents, and thereby eliminate the automatic 6% agent fee on a sold house. Not that this will suddenly make rationality king in the real estate market, because when it comes to the place they call home, human beings are not and never will be "rational". But at the very least, it would be good if people who buy houses had the ability to create a stop-loss sale similar to what I can do when I buy equities; basically, lower the risk of buying a house without lowering the potential upside. Because this: greasyhands posted:People who are looking at the carnage from the past decade and saying "DO NEVER BUY" are the same people who were saying "equities are over" when the s&p was at 600. Is hogwash. I can invest in equities and set up an automatic transaction (a standing stop loss order) that, while not absolutely guaranteeing that I'm limiting a potential loss (because during sudden huge plunges and huge bid/ask spreads a market order to stop a loss can be executed at some horrible temporary hideous low), I'm certainly reducing my risk by a very large amount. Compared to real estate, where it takes at a minimum a month or two to sell a house, and realistically more like six months or more, and at a giant transaction cost; and worse, with common and widely available mortgage arrangements that virtually guarantee the owner is underwater (after transaction costs) for at least a few years. And of course part of the irony here is that it is entirely possible to "invest in real estate" via the equities market, where those mechanisms for limiting risk are identical to that of stocks. E.g., buy and sell real estate stocks. So people who said "equities are over" when the S&P hit 600 were a special kind of alarmist, basically predicting the collapse of Western civilization. Whereas anyone currently saying DO NEVER BUY is instead only pointing out that the downside is potentially large, the costs are high, and the upside is, right now, highly questionable... that is, investors should seek investments with a better risk/reward profile. If you understand and accept that buying a house isn't and shouldn't be about investing money or saving money over renting, but instead, be about your desire to own a thing, then the only real question is "can you afford it", and a lot of the people who come into this thread and post some details of their finances, the answer to that question is "hey probably not". And that's got nothing to do with the state of the real estate market.
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Feb 4, 2011 05:21
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greasyhands posted:Yes, people who buy 1 house with a 3% down payment and subprime interest rates aren't going to be getting rich, We agree completely. greasyhands posted:but you don't have to be wealthy to put 30% down on a 150k house and use your equity to get into some rental properties and end up with a net worth well north of a million dollars in a pretty reasonable amount of time. Read back through this thread and see if there's anyone even remotely close to this kind of financial situation posting in it. The closest one I found was going to be gifted $40k and then talked of taking out an unsecured federal loan that can't be discharged in a bankruptcy to make the payments on his secured loan. The people saying DO NEVER BUY aren't being naysayers in general, they're talking to specific people. People who barely have 5% saved up, and think they're going to profit by becoming homeowners. Or people to whom a relative says "Take my $20k and my co-signature to buy a starter home to get you on the road to financial success" with none of the reality to go along with it. The advice in this thread is about doing math and dispelling myths more than actually discouraging real estate as an investment. You're clearly correct when you say real estate can be a good investment, but it has to be qualified with the right circumstances. It's just not a universal truth, and it's untrue for young people living just above month to month, or people who "will have their debt paid off in just a few more years". This isn't really a disagreement as much as we're just talking about two very different things.
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Feb 4, 2011 08:39
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You're generally right but; I'm actually saying outright that real estate is a lovely investment. The blanket and unsupported assertion that really wealthy people all make money on real estate and that's how they get rich is basically not true, or at least, not true when we're talking about single-family dwellings bought with a mortgage in 90% of the housing markets in the US. Purely as an investment, the vast majority of people will make more money (or lose less) by buying bonds. Houses are for living in. Leave real estate speculation to rich experts who can afford to diversify, pay cash, buy in hyper-restricted markets, and sell at the drop of a hat with no serious hassle or consequences. Some of those people have indeed become fabulously rich that way, but it's a niche investment market that the vast majority of us cannot hope to compete in.
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Feb 4, 2011 09:33
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greasyhands posted:People who are looking at the carnage from the past decade and saying "DO NEVER BUY" are the same people who were saying "equities are over" when the s&p was at 600. Housing is a basic human need- it will always be around and it will always be in demand. I don't literally mean do never buy - I mean don't buy in an overpriced market (most of them), don't buy if you're broke (most of the people who post here about buying), and don't buy if you have a lot of uncertainty ahead of you (young, unmarried, etc.).
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Feb 4, 2011 16:28
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If you are going in with the expectation of buying a piece of property with the intention of flipping it in a short amount of time, you're probably going to find yourself in a bad spot real quick. However, this is a real good time to become a landlord. The real difference is long term investing (landlord) vs. short term investing (flipping) and if you can get in the mindset of long term investing, there are a lot of opportunities out there.
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Feb 4, 2011 18:56
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Leperflesh posted:lots of stuff about differences between equities and RE markets. I wasn't trying to say equities and buying a house are the same kind of investments, I was just saying people who scream "its all over" when long-term established markets are in a steep downturn essentially always lose.
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Feb 5, 2011 06:16
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greasyhands posted:I wasn't trying to say equities and buying a house are the same kind of investments, I was just saying people who scream "its all over" when long-term established markets are in a steep downturn essentially always lose. No, not really. Sometimes they escape just before the country collapses into civil war and anarchy, leaving behind people with less foresight to get machete'd to death by the roving mobs. I mean, that doesn't seem likely here in the US, but any student of history can tell you that it happens. It happens quite a lot. Or, if you feel that's hyperbole; Japan's real estate bubble collapsed in the early 1990s, and arguably it still hasn't recovered, twenty years later. Someone who looked around at the steep downturn in, say, 1993 (three years after the bubble popped) and decided "ahah, time to buy!" would not, in retrospect, have been among the winners. Whereas those who screamed "it's all over" and got their money the gently caress out, and maybe bought gold or Sony stock or US Manga exports; those guys were winners. Personally I feel pretty optimistic about the long-term prospects (I did buy a house a year ago, after all), but it is simply not the case that alarmists are always wrong. Leperflesh fucked around with this message at 10:53 on Feb 5, 2011 |
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Feb 5, 2011 10:45
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The only way that houses are any decent of an "investment" is when you rent them and rents continue to keep pace (and increase faster than) with your overall costs whether it be property taxes, your commercial property mortgage, or maintenance of the property itself. It's also not the point of this thread either come to think of it. This is how most of my family has ever made any money off of real estate and what I was encouraged to do back in 2007. My position is that this method has limited sustainability because most of the past observable "growth" has been based upon Americans leveraging themselves further at terrible costs to their quality of life. If this continues, Americans will mostly be a working poor state with zero state-sponsored support and a few rich people - like those Latin American countries we talk about with such pity here. The best returns are in slums anyway it seems, so maybe I'll learn Spanish and buy up various plots later on with play money. I think we can all agree that past performance does not indicate future returns, it's just we disagree on where it'll head in the future. Based upon historical performance, we can say that now's a good time with a fairly decent time, but there are many fundamentals that point to the contrary that weren't as strong factors before. My basic point from above is that the best returns are long gone anyway and that long term prospects aren't that good given the general state of the demand curve for real estate over the next 15 years.
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Feb 5, 2011 21:23
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My fiance and I are looking at a $300,000 bank owned (Fannie Mae) house in Florida. It's in great shape. A couple questions: 1. Does anyone have any idea what percentage below list price Fannie Mae is accepting? 2. When we get our pre approval letter (we're looking to get $250,000 pre approved)does the letter say how much you're pre approved for? Basically I don't want to show my hand to potential sellers.
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Feb 7, 2011 17:49
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UrbanFarmer posted:My fiance and I are looking at a $300,000 bank owned (Fannie Mae) house in Florida. It's in great shape. A couple questions: Regarding # 1, you're best option is to find an experienced real estate agent in the area who has helped people buy other FM houses in the area. They'll have contacts in area, and general market experience that can help you make the best offer. 2: Pre-Approval is worthless. It's basically a quick check to see if your eligible for a mortgage. As for 'showing your hand', Florida had a huge housing bubble burst, there's plenty of homes on the market, make a smart financial purchase, don't fall in love with one specific house. General Advice: DO NEVER BUY. I wouldn't think about buying a house right now, especially in Florida. If you insist on this, pay for a really good inspection, and get Hazard and Flood insurance quotes ahead of time, understand what HOA fees and property taxes are on the property, and get the total ownership picture before you buy. Just because you can afford the mortgage on a 300K house doesn't mean you can actually afford all the extra poo poo that comes with home ownership. You DO NOT want to end up 'House Poor' Last thing you want to do is buy a house and then find out Flood insurance is going to run 200 bucks a month and your Hazard is 300% of what you estimated it would be and now your reasonable mortgage payment has blown up to destroying all your disposable income every month.
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Feb 7, 2011 18:25
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skipdogg posted:Regarding # 1, you're best option is to find an experienced real estate agent in the area who has helped people buy other FM houses in the area. They'll have contacts in area, and general market experience that can help you make the best offer.  skipdogg posted:2: Pre-Approval is worthless. It's basically a quick check to see if your eligible for a mortgage. As for 'showing your hand', Florida had a huge housing bubble burst, there's plenty of homes on the market, make a smart financial purchase, don't fall in love with one specific house. We're looking to start a family and the home we're looking at also comes with 3 acres which is VERY attractive to me as I want to grow as much of our own food as possible (see my username). My fiance and I combined make about $200k a year in very safe fields and are putting down around $100k, so we shouldn't be house poor. We live well below our means in other areas as well. I WAS surprised at how much property taxes are there but it turns out Florida doesn't have income tax. With our income, that means it's actually cheaper for us to live there than many states with income taxes, even with the hurricane insurance. And we're buying in an area with no HOA, yay! A couple more questions that came up as I read and responded to your post: 1. Can inspectors make sure that there's no chinese drywall in a house or is that a highly involved process? That's one of my bigger concerns. 2. Is it a bad idea to put more than 20% down? With the 100k down, we'll still have about 50k in cash for home improvements. UrbanFarmer fucked around with this message at 18:45 on Feb 7, 2011 |
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Feb 7, 2011 18:36
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UrbanFarmer posted:My fiance and I are looking at a $300,000 bank owned (Fannie Mae) house in Florida. It's in great shape. A couple questions: My wife and I just bid on a Fannie Mae Foreclosure so here's some things to consider and just to preface all this, we have a great agent we trust guiding us so find one for you as well): How's the neighborhood? Does the house seem like a steal at its price? It may have multiple offers (my current situation). If so, you'll need to put your "best" offer in before the cut off date. Fannie will take whichever offer is "best" and will not make any counters. So if you bid a bit low, someone who bid just over asking may get it for only a few thousand more than you. Of course, a cash buyer could come in lower than your bid and get it as well. Fannie Mae has a special financing program for their foreclosures called HomePath. It's a lot like FHA but with no PMI. Something to consider. How long has the property been on the market? If it has been a while, then you can bid a bit lower but, remember, you are dealing with a bank/large entity so they aren't typically as flexible as a current homeowner. If newly listed, expect multiple offers (if you get a buyers agent, they can look into this before you bid).
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Feb 7, 2011 18:44
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Thwomp posted:How's the neighborhood? Does the house seem like a steal at its price? Thwomp posted:It may have multiple offers (my current situation). If so, you'll need to put your "best" offer in before the cut off date. Fannie will take whichever offer is "best" and will not make any counters. So if you bid a bit low, someone who bid just over asking may get it for only a few thousand more than you. Of course, a cash buyer could come in lower than your bid and get it as well. Thwomp posted:Fannie Mae has a special financing program for their foreclosures called HomePath. It's a lot like FHA but with no PMI. Something to consider. Thwomp posted:How long has the property been on the market? If it has been a while, then you can bid a bit lower but, remember, you are dealing with a bank/large entity so they aren't typically as flexible as a current homeowner. If newly listed, expect multiple offers (if you get a buyers agent, they can look into this before you bid). Thank you for your insight!
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Feb 7, 2011 18:51
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UrbanFarmer posted:It's in a rural area of Florida that has a TON of foreclosures. I mean crazy amounts. The asking price DOES seem like a steal (especially compared to the Miami suburbs where we first looked), but then as I went around to other houses, they're all pretty comparable. Simply put, prices have dropped like a lead covered rock. That said, if you guys really want a house, it sounds like you certainly have the finances to suffer a drop in value of $80k-100k or so without losing your poo poo, so if you are fine with that sort of loss, go ahead.
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Feb 7, 2011 18:56
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My girlfriend and I are looking at homes in Los Angeles with a max of $325,000. We've found one house that wasn't a complete shithole in five months- it was a short sale where the owner fled to mexico, good times. We have two real estate agents and are constantly scouring redfin, but I feel like we are missing something and are being too passive. Are there other websites that are worth my time? I consistently check realtor.com, zillow, and trulia, and at least 95% of the listings on there are also on redfin, and they don't let you filter pending sales, which is infuriating. It's getting to the point where I'm considering just driving around and calling for sale signs. And I don't need a lecture on why I shouldn't buy in LA, prices, investment, etc. My gf is a published architect and I'm going to be the GC on the renovations.
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Feb 7, 2011 19:09
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gvibes posted:FYI, Florida prices are still quite high compared to their historical values. For instance, in the Tampa and Miami metropolitan areas, prices are still like 35-45% above 2000 levels (http://www.thebasispoint.com/wp-content/uploads/2011/01/CaseShillerIndicesNov2010.jpg - 100 level = price in 2000), and the runup started even before 2000. I think Florida housing prices still have a lot of downward trending to do. 1. We don't view this as an investment. 2. We're not interested in trying to time the market bottom. 3. We're buying this house with the intent on staying there the rest of our lives. To the point that I've been researching sea level changes and am excited that this house is 9 feet above sea level compared to the 1-6 most houses in FL are  4. We're both in our 30's and want to try to start a family right after we're married. We're both the kind of people that want to have a nice, comfortable nest for our kids day one. We live in a rental now, and while we take care of it, it just doesn't feel like home as we know we're going to move from it one day. I REALLY appreciate you guys checking that I'm not being a moron though, it's very cool of you! And I'm sure I AM being a moron in some ways with this that I don't realize yet, so by all means, keep trying to find some holes
UrbanFarmer fucked around with this message at 19:18 on Feb 7, 2011 |
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Feb 7, 2011 19:12
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gvibes posted:FYI, Florida prices are still quite high compared to their historical values. For instance, in the Tampa and Miami metropolitan areas, prices are still like 35-45% above 2000 levels (http://www.thebasispoint.com/wp-content/uploads/2011/01/CaseShillerIndicesNov2010.jpg - 100 level = price in 2000), and the runup started even before 2000. I think Florida housing prices still have a lot of downward trending to do. People make this argument a lot. Why would you expect houses to revert to the prices of over a decade ago? Assuming you are using 2000 levels as a basis of comparison because you believe housing was reasonably priced at the time, at a historically normal 3-4% appreciation, houses would now be appropriately priced compared to 2000 levels. 2000 was a long time ago.
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Feb 7, 2011 19:18
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greasyhands posted:People make this argument a lot. Why would you expect houses to revert to the prices of over a decade ago? Assuming you are using 2000 levels as a basis of comparison because you believe housing was reasonably priced at the time, at a historically normal 3-4% appreciation, houses would now be appropriately priced compared to 2000 levels. 2000 was a long time ago. But I personally think that prices will drop to below historical levels. That is typically how bubbles work when they pop. We will see how much the feds continue to intervene.
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Feb 7, 2011 19:25
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