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Making payments on one, they should be fine.
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"In the beginning was the Word. Then came the ******* word processor." -Dan Simmons, Hyperion -
OK, go the following calculator, enter in the amount that the condo is being offered for minus 5% (for the down payment that the landlord will cover), with an interest rate of 6%.
How does that monthly figure compare to your current rent?I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Rent is a couple hundred dollars more."In the beginning was the Word. Then came the ******* word processor." -Dan Simmons, HyperionComment
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Even though you don't have the down payment, do you have a couple thousand cash available?I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Yeah."In the beginning was the Word. Then came the ******* word processor." -Dan Simmons, HyperionComment
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No offense DanS, but all your questons are only relevant if Koy & co are looking for a 10+ ownership.
When, as I understand it, it's 3-5 years ownership, the question is if there are a risk if the value of it will drop below what they can sell it for when they want to leave.With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion.
Steven WeinbergComment
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Well, I don't know how things all add up in the end, but at the very least I'm finding them useful as things to think about."In the beginning was the Word. Then came the ******* word processor." -Dan Simmons, HyperionComment
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A very relevant point. Housing is overpriced in regard to actual value. Housing prices are dropping. Not a lot in Dallas, but San Francisco and other places are, and righfully so.Life is not measured by the number of breaths you take, but by the moments that take your breath away.
"Hating America is something best left to Mobius. He is an expert Yank hater.
He also hates Texans and Australians, he does diversify." ~ BraindeadComment
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OK, here's the scoop as I see it. I'm no expert, so take it for what it's worth. I bought the condo that I was renting, so I do have some small experience -- from a guy from Maine, no less.
Anyway, the real estate market is crapping the bed. According to S&P, Boston home prices are dropping at about 0.8% per month. That means that your 5% down payment would last only about 6 months before you are "underwater" -- you owe more than the place is worth, less realtor fees -- if the market continues as it has been going. Add to that the fact that condo prices tend to change faster (both positively and negatively) than house prices.
Being underwater is very bad, because for most people, it locks you into your house until you are no longer underwater (by making payments or by an improvement in the market) -- that is, unless you have the cash available to make up the difference between the mortgage amount and the value of the place.
The market may change for the better in the next 6 months, but my sense is that it may not change for the better for a while. Boston's market peaked in September 2005. Only 2 other markets (Detroit and Cleveland) of the markets that S&P tracks peaked earlier than Boston's. Because of this, we might expect Boston's market to turn for the better before most others.
The current owner could give you a below-market deal, in which case you might have more of a cushion than the 5% down. This seems unlikely, but those types of situations are to be recognized and exploited.
More to come...Last edited by DanS; January 1, 2008, 22:34.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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As you say regarding your market, the 3 bedrooms are probably being bought because those folks are staying put for a while. Also, it sounds like the market that you are in isn't huge. Lastly, the area is seasonal -- more sales would occur at the end and beginning of semesters.
The upshot here is that the market for a 1 or 2 bedroom condo may be not be "liquid" when you need it to be liquid -- meaning that not very many sales take place.
On the other hand, I doubt the economy in your area is impacted very much by the economy nationwide. What this means is that if the economy goes into recession, it won't impact the real estate values as much.Last edited by DanS; January 1, 2008, 22:26.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Next were a set of questions about income and spending going up/down. The rule of thumb is that you would need to be in your place for at least 3 years for you to look toward owning it. Income or spending fluctuations have the danger of putting you out of your condo before that time period is up, either by the sherriff's deputy kicking you out for foreclosure, or by your desire for a different place.
Next were a set of questions about external circumstances that might make you need to move out of town. If something like that happens, you need to be able to get out of your condo.
Based on your answers, none of those situations seem likely. But try to think of odd stuff happening. Could you handle it if you're in a condo?Last edited by DanS; January 1, 2008, 22:26.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Regarding the difference between a mortgage payment and rent (a couple hundred dollars you said), you'll also be on the hook for more stuff as a condo owner. Insurance, PMI (mortgage insurance), maintenance, etc.
On the other hand, the gov't will give you a tax break on the interest payments that you make -- the amount of the tax break depends on the marginal income tax rate of you and your fiance. The way mortgages work, the first payment will be mostly interest and each month you will pay more principle. To get a rough calculation of your tax break at the beginning, take your marginal income tax rate times your mortgage payment.
Lastly, there was a question about cash-in-hand. Even though the owner will provide the down payment and there is no realtor, there are other expenses as well. There are closing costs, such as attorney fees, title search, title insurance, government fees, etc. Also, there's the appraisal fee, which can run several hundred dollars. You may get the current owner to cover these.
Good luck!Last edited by DanS; January 1, 2008, 22:26.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Probably not, but after spending an hour digging out cars and reflecting on the 50"+ of snow we got last month, Florida doesn't sound half bad. Hell, even Texas might be worth a shot.Originally posted by DanS
Next were a set of questions about external circumstances that might make you need to move out of town. If something like that happens, you need to be able to get out of your condo.
Based on your answers, none of those situations seem likely. But try to think of odd stuff happening.
Excellent Dan, thank you very much. Still have the same kinda iffy feeling about it as before, but at least it's better founded now and I can see some of the reasoning behind it."In the beginning was the Word. Then came the ******* word processor." -Dan Simmons, HyperionComment
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You're welcome.
You sound like you are in a good position, but a friend of mine grew to have a bad relationship with her doctoral advisor. She hated him so badly, that she ended up being awarded a masters and she left town. You don't have to plan for everything, but you never know what will happen (life's a box of chocolates).
Again, good luck!I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Oh yeah...if it were an option, would you guess that waiting another year or so would be advantageous as far as prices and interest rates go?
I know, it's a guess, but..."In the beginning was the Word. Then came the ******* word processor." -Dan Simmons, HyperionComment
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