Hi Folks,
I’m in a situation where I have to move. (no, I don’t have to buy, I could rent, but it would be about $1500/mo. to rent)
I found a house that is one of the cheaper homes in a nicer neighborhood. The house was originally listed about $60k more than it is now. (curr. 229) There are other homes on the market in the neighborhood listing higher (249 to as much as 339 - good luck selling that).
My thoughts/questions are:
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I offered low 200 and closing help. Tax records show he got this for just under 70k.
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I realize the amount is subject to appraisal, but I would have the equity in the property.
The property is near a university, so I rent a room& bath (it’s a 4/2, finished basement) to soften the payment if necessary.
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In “nicer” neighborhoods, is the value more likely to hold / return when the market comes back?
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Did I make a good purchase decision?
If there are somethings I missed, please let me know. Your feedback is appreciated.
Thanks, Rn
I wouldn’t necessarily consider it mandatory to buy your personal residence with the same standards you buy a rental. I work so that I can have a nice place to live, not so that I can live in one of my rentals. So, if you were able to buy your personal residence at a discount, then that’s a good thing.
Mike
what city???
my 2 cents
Robert A. Doncaster, Jr. - “RAD”
Import/Export Entrepreneur & Investor
*** DO YOUR HOMEWORK ***
Chicago Illinois USA
& sometimes Salzburg, Austria
Here’s some questions YOU need to get answers for…
- Where in the country is this home located??? What were prices like in 2000 in this area?
- How motivated are the sellers? Do they NEED/HAVE to sell?
- With everything added in…Taxes, Insurance, Mortgage,PMI, EVERYTHING, how much per month is your payment???
- What is the rental market like in this area??? Don’t even respond to this question until you have PHYSICALLY looked at and in at least 10 rentals in your area. How do they compare? How flexable are the owners on the monthly rent they charge?
Here’s the deal…Right now in my area (the Northeast) rents are actually FALLING. If you are a decent person, with good references and credit, you can name YOUR rent payment around here. We have a TON of “flips” that were purchased by idiots who thought it was as easy as the TV shows make it look. Well guess what? IT AIN’T!!! So now we have a boat load of homes for rent because people have not yet realized the game has changed. They’re buried in them and can not admit they screwed up. They will shortly!!! Can everyone say purhased with ARM’s?
I have no idea what your market is like but if you experienced big price run ups like MOST of the country in the last 6 years, I would RENT because next year this mess is going to REALLY get going.
If I were you I’d sit back, make some absolutely LOW BALL offers on at least 5 homes a week. Get pre-approved, not pre-qualified, and carry that paper with you to EVERY home you look at.
The HUGE ADVANTAGE YOU HAVE is you DO NOT need to SELL A HOME inorder to BUY ONE!!!
I can not stress enough how BIG that is. You find someone who HAS TO SELL, and I GUARANTEE they have shown their home to 30 people who have to sell THEIR house inorder to buy the one your looking at. In THAT scenerio YOU WIN. Someone in a tight spot could easily leave $60,000 or MORE on the table just to get OUT. Remember LOT’S of people went ahead and BOUGHT homes BEFORE selling their old ones. These people used BRIDGE loans (interest only) to do this, and they are now paying BOTH mortgages. You find yourself one of those people, and you’ll find the BARGAIN of a lifetime!!!
BE PATIENT.
I"m in the mid atlantic, an hour outside of DC. OK, so let’s say I rent. As interest rates are about to skyrocket, what should I do?
I am a firm believer in cash. ShouldI not be concerned about the increasing interest rates?
I am researching the 7 yr history of prices. more later.
OK here are the findings: rents were $200 less than today. Home prices on a neighborhood to neighborhood comparison - 50% OR more, less than today’s sales.
I see the value. I get your point. I’m stuck on capital and leverage. I thought if I bought (which at this point is only slightly more than renting) I would have substantial equity to borrow against. OPM for deals.
I’ll be able to save some cash, but I wouldn’t have as much as the equity/HELOC etc.
I do have to move, but no, I don’t have to buy. Given that rents in are nearly as much as buying, that’s why I thought I would buy. I see the golden goose egg value of waiting.
I just dont know what to do to be ready for harvest.
Carry the pre approval around for a year? continually refreshing my approval and hoard cash savings?
feedback appreciated.
So here’s what I got from your response…
Prices= That house has gone up by 50% in the last 6 years. So subtracting a 50% increase means the house would have cost around $170,000.
The question you have to ask yourself is very simple…
Do I think housing prices in THIS area will come down?
If you think they will, then wait. If you think they won’t then buy.
Look at what is going on in your market. REALLY LOOK. Don’t assume, find out how long houses are staying on the market? Find out how many houses are for sale this year compared to last? If there are more that does not bode well for increasing prices. How many foreclosures are you seiing in your market? If banks own lots of homes they eventually DUMP them, that brings down comps and therefor prices.
Do the research…
You don’t want to buy THINKING that you will have equity because if your market continues to fall YOU WON’T!!!