Profile picture for aparikh3

I want to buy

I am interested in purchasing a home here in Massachusetts, because me and my two siblings will be here for at least another 6 years pursuing our undergraduate degree.

My father is willing to invest into a home that is reasonable, thus our budget cap is about 750k USD. I need advice on how to convince my father that purchasing a home is better than rental in the long run, and that housing prices will either remain or gain and not drop as it did in 2008.

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November 09 2010 - Boston
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Answers (17)

Profile picture for the_country_hick
Add to Stevens list how much to replace the furnace, the roof, and other general maintenance including simple paint.

You see owning, you may  have some expensive problems arise and you MUST fix them. So adding in repair costs only makes sense. It can easily happen.
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November 21 2010
1st off, do the math.  

Figure out the monthly cost of a rental property of the same size, with all expenses u may have to pay, gas, electric, etc.


Then do the math on your monthly payment for a mortgage and taxes, and expenses, on the same type property. 

Make sure you factor in the tax deduction, of owning a home also.

Esp with the low interest rates, buying is usually more of a better deal these days.  But math dosnt lie, so get out that pencil. 
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November 21 2010
While impossible to guarantee a flat to rising housing market, an economic case can be made for home ownership vs. renting.  I am happy to construct some rent vs. own illustrations with data about your contemplated purchase.   Contact me if you would like.  I wish you success with your schooling.
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November 10 2010

There's both good and bad to your situation.  While buying,  you can at least see where your money is going every month….and that would be in an investment property instead of rent.  WHEN YOU RENT YOU ARE BUYING SOMEONE ELSE A HOUSE….. There are some GREAT TAX ADVANTAGES to owning an investment property like this that few people are aware of but your dad would need to discuss this with a Tax Advisor.  The best thing is, right now is a fantastic time to buy and finding a good deal is out there that COULD benefit him greatly in 6 years from now.  The Real Estate Market will come back…it always does. I recommend he find a good Buyers Agent/ Realtor in the area and at least look at what is out there.  Get all the facts about any property then he will be able to make a more informed decision.

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November 10 2010
I have to come back and defend income property. I don't think a condo is a good investment for students' parents in Boston.  I do think if one buys a property based on rental income this is a good investment.  The falling prices on the web is based on primary residences not investment property. Buying a property near universities can make sense if one looks at the income and utility.  If you others think you can make an argument of rents going down by 30% next year for students at Harvard, Tufts, BU etc etc and can do this from CA -- then take the advice with one grain of salt.  Buying an investment property has risk but if done right and if one works at it then it can make a lot of sense.  And yes as a REA I put these deals together every month but it does not change reality.  A 2 unit in Medford can have a nice 4-5 bed unit owner unit and another 3 bed down stairs with decent income for $400K to $600K.  I like the stack 3 or 4 units with 2 bedrooms or 3 bedrooms a unit so there is an ease of renting and more than only one income coming in.  For $750K there are a lot of options and upside.  So from that perspective I am giving my advice.

Eric
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November 09 2010
In my opinion, it would be a wise investment to purchase a property for three siblings as opposed to renting a 2-3 bedroom for 6 years.

I think the market has bottomed out and in 6 years, you will make a profit and have saved 72 + rental payments.
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November 09 2010
Profile picture for shapiroamg
Perhaps a Condo at the W. They should be undergoing a price drop soon.
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November 09 2010
Profile picture for Lady Chattel
LOL, the high $$ figure has local REAs frothing at the bit........they will skew any number and info to convince you to purchase.   If your father is the type you that much home......let him burn it and buy a home and help a REA to make his mortgage payment for a few months....
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November 09 2010
Profile picture for sunnyview
Hello. You might want to check out the Good Neighbor policy here and the guidelines for posting here. Zillow is a little different than some other sites so generally contact information is left on your profile page. Hope it helps.
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November 09 2010
Hi aparikh3,

Would it be possible for your father to speak directly with a Real Estate Professional to go over the pros and cons of purchasing a home for you and your siblings?

There are many things to consider, and your are wise to seek out advice on websites like Zillow.  The fact of the matter is, the person who is providing the financing should be involved in these conversations.

Feel free to contact me, or have your father contact me, if I can be of any assistance in helping you come to a decision!

Good luck!

Judy Boyle
RE/MAX Signature Properties
[contact info removed by moderator due to self-promotion]
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November 09 2010
Profile picture for sunnyview
Wow 6 years is a long undergraduate degree. You must have very understanding parents. Purchasing a home for you and your siblings while you go to school would probably not be better if he will be selling in 6 years. Long distance rentals are a pain and the market is still adjusting there. It looks like all risk and few benefits.
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November 09 2010
Profile picture for the_country_hick
Perhaps the link below will help.
Massachusetts

"In the greater Boston metropolitan area, which accounts for roughly two-thirds of the state's population, high unemployment and rising job losses will contribute to more foreclosures even in the upper end of the market. The community will have to work through the excess inventory of homes before it is able to stabilize, which is developing but at a very slow pace.

As troubled properties are sold-off, including short sales in which banks cooperate with homeowners to sell a property for less than what is owed on a mortgage, conditions are expected to improve. Boston is now forecast to see average home prices decline just 4.2% for the year."


House prices are STILL FALLING. Odds are they will for a few more years. If you are looking at a 30 year mortgage when you include amortization tables and realtor fees for selling with closing costs added on both sides you will be about 7 years to break even in a market where prices do not drop or rise.

Perhaps looking at the following blogs can help. Leaving out any price change assumptions (I think they will fall more) you can see which makes more economic sense based on your numbers.
"Does it make more sense to buy, or to rent? Here is the way to find out for sure."

And sometimes, renting at a slightly higher cost is really the best way to go. For more details read the blog below. This is a very different way to look at this question and well worth considering.
"Why rent if you could buy for less money? Valid reasons inside."

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November 09 2010
The best way to educate your father is to show market analysis on homes in the area that you are interested in purchasing in.  Interest rates are at a historic low and rental rates are increasing each year.  Experts are predictating homes values are on the rise. If you any further help please feel free to contact me.
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November 09 2010
Although I believe home values will be higher than they are now in 6 years, it could take longer.  It may even be sooner, no one knows.

No one can predict the future with any certainty and sometimes, you just need to make your best guess.

The real estate market, like the stock market, is cyclical and although we don't know where the tops and bottoms are, buying now is certainly better than buying during a rapid rise like 2008.  We also have the benefit of having low interest rates now.  Could they go even lower?  Of course, but you cannot and do not need to catch the bottom in prices or interest rates.

Those that will tell you to wait, will likely buy at a higher price than current prices sometime in the future because they will wait until after the bottom and catch the upswing.  The only way they will know it is an upswing is after it rises, guaranteeing they will miss the upswing.

If you buy well now, you have an increased chance of making a better investment than if you wait and you will have the added benefit of living in the home in the meantime.  Renting is fine for short term, but if you have 6+ years I believe you will be better off buying.  If you want a guarantee, they don't come with homes or any other investment, but you can't live in your 401k..
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November 09 2010
There is a great website called HouseLogic http://www.houselogic.com/ that is brought to you by the National Board of Realtors and it contains many useful articles, information, etc. that would be of great assistance to you in your current situation. The following link is just one on many articles that discuss the current and future Real Estate Market and reasons why it is a great time to buy. One of them being the low mortgage interest rates!http://www.houselogic.com ... g-market/http://www.houselogic.com/news/articles/realtors-cautiously-optimistic-about-future-housing-market/
[content removed by moderator due to self-promotion] if I can be of any further assistance.
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November 09 2010
If you are buying near the major universities and purchase solely on income, then you should be ok on equity.  I would suggest to look at at least 2 unit properties with 3 or 4 units better.  If you are planning on living with your siblings in one unit, then you can rent the other units for income.  Once you have operated the property for the next 6 years your family can keep for rental income until you want to liquidate.  If you send me the schools you are attending I can give you some ideas on where to look for property.

Best of luck in your studies,

Eric
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November 09 2010
I think you stand a good chance of creating a good investment with the current market.  Please let me know how I can help.  Sorry this is a little vague but I need to know more about your current needs before I can make a strong recomendation.

One thing to keep in mind is that interest rates are at a RECORD low.  By purchasing you can essential build your own equity and either keep the property for passive income later on or sell it outright if you choose. 

Please contact me I am here to help .   I specialize in the Boston market.
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November 09 2010
 
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