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Best Answer
- Joan Braunschweiger, "Morris County NJ"
- Contributions:1543
Why is it priced higher than the others in the neighborhood? How long are you planning on living there? Is the neighborhood in transition?
Personally, I renovated a 2 bed cape into a 5 bed colonial 2006. This resulted in definitely having the biggest, newest house on the block. I knew this is a real estate no no but I had lived in this neighborhood for years and wanted to raise our kids there. I just recently sold it for about what it was worth as a 2 bed cape before the renovation, with the price hit being a direct result of the market. We had a ton of showings and a lot of positive feedback about the house but it was obvious that it was not in line with the neighborhood and many potential buyers passed for that reason.
If I hadn't been forced to sell, I wouldn't have cared. But that wasn't the case. Of course, if it had been in a neighborhood more in line with the house, we would have been able to expect significantly more for it.
For investment purposes, RE's not so great right now and may not be for many years but if recouping your money somewhere down the line is important to you, unless the neighborhood is improving and on the upswing, I would say to keep looking.
If this house rings all your bells and you can easily afford it and know that you will be happy in this location for years to come, it may be worth going for. I would definitely pinpoint why the house is priced so high compared to others and maybe talk to some neighbors to find out if this is really the place for you to live.
- Tyler Bundy, "Tyler Bundy"
- Contributions:46
as a general rule you want to find the ugly duckling and buy that home so that you dont out grow the neighborhood when you update your home.
- sunnyview
- Contributions:25127
Congratulations calf9685! That is great news. Hope your closing goes off without a hitch and that you are happy in your new home. When you close, come back to celebrate. I love a virtual housewarming party. I'll even bring the cake... :)
- hpvanc
- Contributions:2570
Congratulations Calf9694!
I don't want to rain on your parade, but please don't loose sight of the fact that it may have appraised for $150K, but the new fair market value of the property will be $142.9K less any concessions you received from the seller. There is no such thing as instant equity in times of low inflation, and it is doubly true in a market that is recovering or recently recovered from over valuation.
I don't want to rain on your parade, but please don't loose sight of the fact that it may have appraised for $150K, but the new fair market value of the property will be $142.9K less any concessions you received from the seller. There is no such thing as instant equity in times of low inflation, and it is doubly true in a market that is recovering or recently recovered from over valuation.
- calf9685
- Contributions:24
Yay! It appraised at $150k and the home inspection went very well. There's basically nothing wrong with the house except a few electrical outlets that need grounding. Very pleased with this purchase and we close on Feb 21st!
- calf9685
- Contributions:24
Settled on a price of 142,900, which is slightly more than I wanted to pay but they're not incredibly motivated to move and won't go lower. We have the contingency that we will do the appraisal first thing and if it doesn't appraise at or above the sales price we reserve the right to walk away with a refund of our earnest money. We'll see how it goes, but my agent thinks it will probably appraise pretty well.
- sunnyview
- Contributions:25127
It sounds like you have run all the numbers and if the area is stable or rising that is good news. Thanks for the nice update and my fingers are crossed for you!
- calf9685
- Contributions:24
@sunnyview: That is my thought as well. We went to visit a few more houses today and finished with a revisit at this house. The more we look at it the more we love it! We drove around the neighborhood some more and it looks like several other houses have been remodeled or are in the process, and a new bunch of houses are going in a couple of blocks a way, so I feel like the area is going to progress pretty nicely. We put in an offer of 137k with 3k of closing costs paid so we'll see what happens.
- sunnyview
- Contributions:25127
1100 sounds like reasonable rent to cover your expenses. As long as you buy a house that can carry itself, you should be in good shape because you will be able to build equity and not be forced to sell when the market is down. You may not buy at the lowest low, but you have time on your side so that is less important overall.
I think that buying a house that is a positive cash flow rental for a first house is a great way to buy. It gives you good flexibility, allows you to own your own home and build value over time.
I think that buying a house that is a positive cash flow rental for a first house is a great way to buy. It gives you good flexibility, allows you to own your own home and build value over time.
- Joan Braunschweiger, "Morris County NJ"
- Contributions:1543
16% transaction costs??
You may be able to negotiate for less than 6% commission. Where I am, it is often less than 6%.
Transfer fees and taxes vary state to state but figure somewhere around 2-4%.
In north Jersey we use an attorney for the majority of RE transactions, usually a flat fee and not all that costly.
Some sellers pay for their own appraisals (a few hundred dollars) to back up their listing agent's market analysis and recommendation of offer price but that's purely optional.
Things often crop up during the buyer's inspection but if you make an offer on this house, research inspectors carefully before hiring them and make sure they do as thorough of a job as can be done so you are very aware of any potential issues before closing. If you do your due diligence, you won't have any surprises upon selling.
Your timeframe for selling as well as being the best house on the block does not make this house a great investment. However, your numbers make sense (I know in my part of NJ rents are often significantly higher than mortgage/taxes) and your desire to buy is palpable. Obviously this is ultimately your decision and you are doing the right thing by researching, crunching the numbers and doing what is ultimately right for you.
You may be able to negotiate for less than 6% commission. Where I am, it is often less than 6%.
Transfer fees and taxes vary state to state but figure somewhere around 2-4%.
In north Jersey we use an attorney for the majority of RE transactions, usually a flat fee and not all that costly.
Some sellers pay for their own appraisals (a few hundred dollars) to back up their listing agent's market analysis and recommendation of offer price but that's purely optional.
Things often crop up during the buyer's inspection but if you make an offer on this house, research inspectors carefully before hiring them and make sure they do as thorough of a job as can be done so you are very aware of any potential issues before closing. If you do your due diligence, you won't have any surprises upon selling.
Your timeframe for selling as well as being the best house on the block does not make this house a great investment. However, your numbers make sense (I know in my part of NJ rents are often significantly higher than mortgage/taxes) and your desire to buy is palpable. Obviously this is ultimately your decision and you are doing the right thing by researching, crunching the numbers and doing what is ultimately right for you.
- calf9685
- Contributions:24
@sunnyview: I checked craigslist and it looks like 1100 is probably a reasonable estimate, maybe a little over conservative. If we stick with that number, and a purchase price of 140k (I'm hoping to get it for less) then the home value would have to depreciate 6.7% over the next 5 years before I would be better off renting an equivalent home. Maybe the bubble hasn't finished popping yet, but I'm hopeful that probably won't happen. I do intend to rent the place after I move if I am unable to sell. I'll run the numbers again when the time comes and see which would be a better choice.
@Pasadenan: What additional transaction costs are you referring to? To be fair I haven't really investigated to extensively into the selling costs, but I was under the impression most closing costs were paid by the buyer unless negotiated otherwise? Are you referring to the expense of getting the home in showing condition? If so, then wouldn't taking good care of the house and my maintenance estimate already cover that? Just curious what these extra costs are.
@Pasadenan: What additional transaction costs are you referring to? To be fair I haven't really investigated to extensively into the selling costs, but I was under the impression most closing costs were paid by the buyer unless negotiated otherwise? Are you referring to the expense of getting the home in showing condition? If so, then wouldn't taking good care of the house and my maintenance estimate already cover that? Just curious what these extra costs are.
- Maria Avellaneda, "MAvellaneda"
- Contributions:274
it looks like you received plenty of advised, regardless of the asking price you should offer what you and your realtor establish as the value. The owner will take or not. Either way even the most expensive house in a neighborhood has to upraise if you are taking a loan and if doesn't the owner has to lower the price or not sell.
if it is an investment property and you ae going to rent it should be a great deal.
Good luck
if it is an investment property and you ae going to rent it should be a great deal.
Good luck
- Pasadenan
- Contributions:21450
As long as you have factored in all the "ownership" expenses, and believe you have done sufficient research on both the market, your finances while in school, the neighborhood, and resale value; "go for it". But 6% Realtor commissions is only a small part of the transaction costs. Each time I add it up, I come to 16% transaction costs, and that still excludes one's personal time during the buying/selling transactions.
There are many "expenses" home owners expect that renters never see and never have to worry about.
There are many "expenses" home owners expect that renters never see and never have to worry about.
- sunnyview
- Contributions:25127
You're doing the right thing by running the numbers first before you make an offer. If renting is more expensive than buying and rents are relatively stable, then you should come out ok.
Just make sure that you know the rents in that area. Talk to a property manager and check craigslist for that area. Tenants like better looking houses, but rents tend to top out no matter what the house quality is so make sure you have a realistic idea about them.
When my sweetie went to grad school, we rented out our house for enough to cover basic expenses plus management plus a little. It was great to be able to know that no matter what life brought after graduation, then house was not going to hold us down or keep us from relocating for the perfect job.
Just make sure that you know the rents in that area. Talk to a property manager and check craigslist for that area. Tenants like better looking houses, but rents tend to top out no matter what the house quality is so make sure you have a realistic idea about them.
When my sweetie went to grad school, we rented out our house for enough to cover basic expenses plus management plus a little. It was great to be able to know that no matter what life brought after graduation, then house was not going to hold us down or keep us from relocating for the perfect job.
- calf9685
- Contributions:24
@Pasadenan:
I ran the numbers again as you suggested with the zillow estimate for rent at this address, which is 1100/month (I feel like that's probably an under estimate given the renovations), assumed the market doesn't appreciate at all (0%), and included all my actual numbers from my mortgage preapproval, actual taxes, estimated closing costs, 1% yearly maintenance estimate, and 6% realtor commission when I resell. With these numbers I STILL save 11k buying over renting, and that's with a flat market. If we go conservative like you said and estimate the rent at 950/month (actual houses going at this rate are crap compared to the house I'm thinking of buying), I just about break even (save 2k if I buy). Several people are urging caution, but I keep running the numbers and they keep saying buy... Unless the houses significantly depreciate, I'm going to come out ahead or even as far as I can tell.
I ran the numbers again as you suggested with the zillow estimate for rent at this address, which is 1100/month (I feel like that's probably an under estimate given the renovations), assumed the market doesn't appreciate at all (0%), and included all my actual numbers from my mortgage preapproval, actual taxes, estimated closing costs, 1% yearly maintenance estimate, and 6% realtor commission when I resell. With these numbers I STILL save 11k buying over renting, and that's with a flat market. If we go conservative like you said and estimate the rent at 950/month (actual houses going at this rate are crap compared to the house I'm thinking of buying), I just about break even (save 2k if I buy). Several people are urging caution, but I keep running the numbers and they keep saying buy... Unless the houses significantly depreciate, I'm going to come out ahead or even as far as I can tell.
- Pasadenan
- Contributions:21450
"We want a house!" -
There are plenty of houses for rent for all price ranges and sizes, in most communities. Even more with the difficult some have liquidating that presently need to be living somewhere else. In many cases, the landlords are presently subsidizing the tenants.
And as already mentioned, I own a house, but am no longer making any payments on it. I did not whittle away the equity by paying transaction costs for getting something "different" on a "frequent" basis. (Yes, I consider anything less than 7 years "too frequent").
There are plenty of houses for rent for all price ranges and sizes, in most communities. Even more with the difficult some have liquidating that presently need to be living somewhere else. In many cases, the landlords are presently subsidizing the tenants.
And as already mentioned, I own a house, but am no longer making any payments on it. I did not whittle away the equity by paying transaction costs for getting something "different" on a "frequent" basis. (Yes, I consider anything less than 7 years "too frequent").
- calf9685
- Contributions:24
Ok fair point, plenty of time was not the most accurate haha... But I do have more time than I will in the MD years, that's for sure. In any case, I've crunched the numbers, and may or may not come out ahead depending on what the market does, but we still think it's worth it. I have a feeling some of you must live in really nice apartments or it's been a long time since you've had to live in a tiny basement shack haha... We want a house!
Anyways, back to the original question, my realtor said that the seller's agent thinks they would accept something in the high 130's, and after looking at comp's that's probably actually a reasonable assessment. We're going to look at 5 more houses tomorrow and then revisit this one, and we'll see how we feel then.
Anyways, back to the original question, my realtor said that the seller's agent thinks they would accept something in the high 130's, and after looking at comp's that's probably actually a reasonable assessment. We're going to look at 5 more houses tomorrow and then revisit this one, and we'll see how we feel then.
- Pasadenan
- Contributions:21450
"plus I'm in the PhD phase not the MD phase for the next 3 years and will have plenty of time." -
Have you written a doctoral thesis before? Have you known people that have done so? Have you done doctoral research before?
Having known hundreds of people that have gone though that process, they didn't have "plenty of time".
If you want to check the "rent verses buy", I would look at the "equivalent rent" numbers posted on the home details pages on Zillow (rent-Zestimate), based on rental units advertised on Zillow. But remember, these are always on the high side, as they do not consider existing rents on already rented units, and they don't consider "actual rents" after negotiation by a potential renter, and they don't consider "privately rented" that were not public advertised on a media source like this one.
And again, we are not talking about just comparing monthly costs that are missing most of the other required costs that were excluded from the comparison, but also "transaction costs". The "break even" mentioned previously assumes "exactly the same" monthly payment costs, including gas, electricity, water, sewer, trash, yard work, cleaning, appliance repair/replacement, insurance, property taxes, city assessments, roof repair, plumbing, carpets, ...
For a better idea of rental cost verses owner cost, one might want to look at the U.S. Census data as it does break it down by Census block group, and with and without utilities... but this still excludes the "transaction costs".
But in the end, it is "your choice", and all the financial and time impacts are yours and your finance's and no one elses. Do your research well, and decide what is really important to you... owning "now", verses saving for owning after you have been relocated.
Have you written a doctoral thesis before? Have you known people that have done so? Have you done doctoral research before?
Having known hundreds of people that have gone though that process, they didn't have "plenty of time".
If you want to check the "rent verses buy", I would look at the "equivalent rent" numbers posted on the home details pages on Zillow (rent-Zestimate), based on rental units advertised on Zillow. But remember, these are always on the high side, as they do not consider existing rents on already rented units, and they don't consider "actual rents" after negotiation by a potential renter, and they don't consider "privately rented" that were not public advertised on a media source like this one.
And again, we are not talking about just comparing monthly costs that are missing most of the other required costs that were excluded from the comparison, but also "transaction costs". The "break even" mentioned previously assumes "exactly the same" monthly payment costs, including gas, electricity, water, sewer, trash, yard work, cleaning, appliance repair/replacement, insurance, property taxes, city assessments, roof repair, plumbing, carpets, ...
For a better idea of rental cost verses owner cost, one might want to look at the U.S. Census data as it does break it down by Census block group, and with and without utilities... but this still excludes the "transaction costs".
But in the end, it is "your choice", and all the financial and time impacts are yours and your finance's and no one elses. Do your research well, and decide what is really important to you... owning "now", verses saving for owning after you have been relocated.
- calf9685
- Contributions:24
@Dan: That's very interesting, I hadn't thought of that. All the more reason to make sure I get a good deal now in case that really does happen I guess...
- calf9685
- Contributions:24
Ok, I must have googled the wrong statistics. Even if I assume appreciation stays flat, the fact that renting a comparable home is significantly more than the mortgage, insurance, and tax payments combined seems to make it a good deal. I'd lose about the same amount of money on the extra rent payments as I would on the resell costs.
As far as the equity issue, according to zillow on this loan in 5 years I'd pay down 14K of principle. If that's not equity, what is? Maybe I'm missing something...
My fiance will be living here too so it wouldn't just be me working on the house, plus I'm in the PhD phase not the MD phase for the next 3 years and will have plenty of time.
As far as the equity issue, according to zillow on this loan in 5 years I'd pay down 14K of principle. If that's not equity, what is? Maybe I'm missing something...
My fiance will be living here too so it wouldn't just be me working on the house, plus I'm in the PhD phase not the MD phase for the next 3 years and will have plenty of time.
- Dan, "the_country_hick"
- Contributions:4693
When you consider buying a house factor in the cost effect that interest rates have on house prices.
If a persons only has a stated amount to spend each month on a mortgage consider the effect interest rates have on buying power.
A 30 year $100,000 mortgage costs $491.94 a month at 4.25%.
A 30 year $82,000 mortgage costs $491.63 a month at 6.00%
A 30 year $80,000 mortgage costs $492.57 a month at 6.25%
A 30 year $69,000 mortgage costs $494.32 a month at 7.75%
A 30 year $67,000 mortgage costs $491.62 a month at 8.00%
A 30 year $56,000 mortgage costs $491.44 a month at 10.0%
That says when (not if) interest rates rise if incomes do not also rise dramatically house prices will be pushed lower to meet buyers ability to borrow money.
To see more look about this at the threads below.
History of 30 year fixed rate mortgages. Why low interest rates cause house price drops..
WHy the 1970's saw higher house prices and why that will not repeat once interest rates rise now.
Correlation of Mortgage Rates With Real Housing Prices
If a persons only has a stated amount to spend each month on a mortgage consider the effect interest rates have on buying power.
A 30 year $100,000 mortgage costs $491.94 a month at 4.25%.
A 30 year $82,000 mortgage costs $491.63 a month at 6.00%
A 30 year $80,000 mortgage costs $492.57 a month at 6.25%
A 30 year $69,000 mortgage costs $494.32 a month at 7.75%
A 30 year $67,000 mortgage costs $491.62 a month at 8.00%
A 30 year $56,000 mortgage costs $491.44 a month at 10.0%
That says when (not if) interest rates rise if incomes do not also rise dramatically house prices will be pushed lower to meet buyers ability to borrow money.
To see more look about this at the threads below.
History of 30 year fixed rate mortgages. Why low interest rates cause house price drops..
WHy the 1970's saw higher house prices and why that will not repeat once interest rates rise now.
Correlation of Mortgage Rates With Real Housing Prices
- hpvanc
- Contributions:2570
On housing appreciation, keep in mind that housing appreciates at the rate of inflation. Extremely low inflationary cycles like the one the US has been in for the past 10 years, have generally lasted 20-30 years both in previous US cycles and other advanced nations (Japan is 23 years into a similar cycle). While there is no guarantee inflation will follow the normal cycle, it is the most likely course. The gist of what I am trying to say is that housing is likely to continue to depreciate or appreciate at a maximum of 0-2% annually for the next 15-20 years.
- Pasadenan
- Contributions:21450
We are not talking about a "crash"... there has been no market "crash" anywhere in the country, and there will not be. We are talking about a "bubble", and a "NORMAL" correction for that bubble. Besides, any change in value is simply the inflation factors indicated by the CPI, and they tend to cancel out, unless on buys near a bubble peak.
But the "values" of residential properties in Nashville have not gone up 0.1% over the past 12 month, but rather down 2.7% over the past 12 months:
Nashville Local Trend Information
And for the "rent verses buy"; Realtor.com does not factor in the transaction costs that were being referenced for "break even". Their "goal" is to "increase" those transaction payments to the members of NAR, so they are not going to break out those details.
Transaction costs can run as high as 25% of the purchase price (full cycle, buying & selling, including loan processing fees, inspection fees, occupancy permit fees, closing costs, title transfer fees, title search fees, staging, Realtor fees, your personal time in the buying selling process....).
Transaction costs could be as low as 6%, but that is fairly rare. Typically, one could assume between 10% and 16% of the purchase price.
And if one hasn't owned before, how would you know if it is "more satisfying", especially if you plan to invest lots of time and money in decorating and customizing, only to have to move in less than 7 years? Especially as most buyers never appreciate what any seller has put into a property?
If you are really a medical student, I really don't see how you are going to have the time to put into the house and grounds for all the things that are presently the landlord's responsibility.
And remember, if you have a "mortgage", the lender "owns" the property (first on the title, with a right to sell if you don't keep your contract) and you are still "renting", but you are 100% responsible for all repairs, maintenance, and upkeep. For the first 7 years, most of the mortgage payment only goes to interest, and doesn't even pay down the debt, so it is not "building equity", no matter how much "sweat equity" you put into the property.
Yes, I'm an "owner", and have been for a long time, but I paid off my loan, and prioritized paying off the loan, and the purchase was not made during a "falling" economy, and I did not buy as a "stepping stone" for something else later.
But the "values" of residential properties in Nashville have not gone up 0.1% over the past 12 month, but rather down 2.7% over the past 12 months:
Nashville Local Trend Information
And for the "rent verses buy"; Realtor.com does not factor in the transaction costs that were being referenced for "break even". Their "goal" is to "increase" those transaction payments to the members of NAR, so they are not going to break out those details.
Transaction costs can run as high as 25% of the purchase price (full cycle, buying & selling, including loan processing fees, inspection fees, occupancy permit fees, closing costs, title transfer fees, title search fees, staging, Realtor fees, your personal time in the buying selling process....).
Transaction costs could be as low as 6%, but that is fairly rare. Typically, one could assume between 10% and 16% of the purchase price.
And if one hasn't owned before, how would you know if it is "more satisfying", especially if you plan to invest lots of time and money in decorating and customizing, only to have to move in less than 7 years? Especially as most buyers never appreciate what any seller has put into a property?
If you are really a medical student, I really don't see how you are going to have the time to put into the house and grounds for all the things that are presently the landlord's responsibility.
And remember, if you have a "mortgage", the lender "owns" the property (first on the title, with a right to sell if you don't keep your contract) and you are still "renting", but you are 100% responsible for all repairs, maintenance, and upkeep. For the first 7 years, most of the mortgage payment only goes to interest, and doesn't even pay down the debt, so it is not "building equity", no matter how much "sweat equity" you put into the property.
Yes, I'm an "owner", and have been for a long time, but I paid off my loan, and prioritized paying off the loan, and the purchase was not made during a "falling" economy, and I did not buy as a "stepping stone" for something else later.
- sunnyview
- Contributions:25127
Based on your situation, I would not buy this house and would look for one instead that would make a better rental in case the market softens and you cannot sell as planned. Compare the PITI (mortgage+taxes+insurance) on this house to what it would rent for.
If you change your strategy and look for a the "worst" (or an un-updated) house in a better neighborhood, you will always find people willing to rent it because the buy in cost for a purchase is more than they can afford. That approach often gets you better more stable neighbors as a bonus.
I understand your desire to buy, but you need to think long term and buying a house that is decent live in, but will make a good rental. That would be good way to keep your options open, but still own. Then when you graduate with your MD/PhD, you will be able to move without selling and rent in another market when you do your residency while still building equity.
If you change your strategy and look for a the "worst" (or an un-updated) house in a better neighborhood, you will always find people willing to rent it because the buy in cost for a purchase is more than they can afford. That approach often gets you better more stable neighbors as a bonus.
I understand your desire to buy, but you need to think long term and buying a house that is decent live in, but will make a good rental. That would be good way to keep your options open, but still own. Then when you graduate with your MD/PhD, you will be able to move without selling and rent in another market when you do your residency while still building equity.
- calf9685
- Contributions:24
So you scared me when you said the break even point would be 12 years, so I ran the numbers again using realtor.com's rent vs. buy comparison, and it says I would actually save $34k by buying over 5 years. Rent on a house that nice is between 1.1 and 1.5k/month, which would add up fast. My monthly mortgage payment (including taxes and insurance), would be less than 1k/month. That doesn't sound like a bad deal to me...
Nashville's housing market didn't crash nearly as much as other cities (appreciation down 1.6% last 2 years but up 2.2% last 5 years and up 0.1% last 12 months), so maybe that's why. I feel like it will probably continue to rise assuming our government pulls itself together.
Nashville's housing market didn't crash nearly as much as other cities (appreciation down 1.6% last 2 years but up 2.2% last 5 years and up 0.1% last 12 months), so maybe that's why. I feel like it will probably continue to rise assuming our government pulls itself together.
- Dan, "the_country_hick"
- Contributions:4693
"All I'm hoping for is to be able to resale the house at a similar amount to what I paid for it."
Even if you sold it for exactly what you paid for it expect to see about 10% of the sales price disappear when you factor in buying and selling costs.
Consider the ideas in the links below before making a buying decision.
"Does it make more sense to buy, or to rent? Here is the way to find out for sure."
"Why rent if you could buy for less money? Valid reasons inside."
Even if you sold it for exactly what you paid for it expect to see about 10% of the sales price disappear when you factor in buying and selling costs.
Consider the ideas in the links below before making a buying decision.
"Does it make more sense to buy, or to rent? Here is the way to find out for sure."
"Why rent if you could buy for less money? Valid reasons inside."
- calf9685
- Contributions:24
I don't have major reservations about the house, I'll be moving because my career will require it. I'm an MD/PhD student with about 5 or 6 years left in my program. After it's done, I'll be moving on to residency someplace else. I realize I won't be making money compared to renting, but renting is so much less satisfying. It is worth it for me to be able to make my own modifications, decorations, etc. All I'm hoping for is to be able to resale the house at a similar amount to what I paid for it.
- Pasadenan
- Contributions:21450
If you are only planning on staying 5 to 7 years, you will lose more buying and selling ANY property than renting, just due to "transaction costs". 7 years is the "break even" point in a "normal" market. We are not in a normal market presently, and one can expect the "break even" point between buying and renting to be closer to 10 to 12 years to cover transaction costs. And don't forget about maintenance and repair costs, and extra insurance costs...
It is not "throwing away money" to rent; that is called "cost of living"; and there is a cost of living regardless of what one chooses.
It is "throwing away money" to be paying unnecessary interest and mortgage insurance. It is "throwing away money" to pay transaction costs more often than necessary.
If you only plan to live there 7 years, you obviously don't "love" the house, and have major reservations for one reason or another. People that "love" their house keep it in their family for 50 to 80 years or more.
It is not "throwing away money" to rent; that is called "cost of living"; and there is a cost of living regardless of what one chooses.
It is "throwing away money" to be paying unnecessary interest and mortgage insurance. It is "throwing away money" to pay transaction costs more often than necessary.
If you only plan to live there 7 years, you obviously don't "love" the house, and have major reservations for one reason or another. People that "love" their house keep it in their family for 50 to 80 years or more.
- Joan Braunschweiger, "Morris County NJ"
- Contributions:1543
Thank you calf9685 for the BA, much honored. I just saw this- great way to start the day.
- ProudFather
- Contributions:16
I don't think there is anything wrong with owning the nicest house on the block. I know that goes against the advice, but you are the one who lives there. And if you love it, thats the most important. Good luck, my friend.
Best house on the block, but I love it...
I've been looking at houses and found one that I really really like. It has been remodeled, well cared for, and has pretty much everything I was looking for when I started. The only problem is, the asking price is 150K, which I would absolutely be willing to pay in a different neighborhood, but all the homes around this house are selling at between 80k-120k. It's not a bad neighborhood, I've looked at crime maps and it's one of the safest in the area. I've also driven around and the neighborhood seems nice, it's just that home values are significantly less than the one I'm interested in.
Is this a bad investment? Should I go for it anyway and try to drive a hard bargain? How much am I gonna get burned on the resale? My thought is that if I get a good bargain and it's still the most expensive on the block, at least I'll be able to recoup my money, but this is my first home purchase so I don't want to do something stupid. Thanks for your help!
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