Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I've seen some people get some very prescient real estate advice around here, so I thought I'd see if anyone was willing to help out with my situation. Bear with me, but I'll try to give as many details as I can.
I'm 24, single and female. Depending on bonus, I make about $40-$45k per year at a job that's reasonably stable for the economy. My company is very small, but it has continued to grow throughout the recession. My boss (who owns the place) has told me recently that I should have no worries about stability or job security, and he's usually pretty candid with me. I work in a creative industry, though, so I have some built-in nervousness on the subject.
I've been out of college for two years and just recently moved back to the Atlanta area, where I was born and raised. Since my lease ended in July, I'm living with my parents for a few months until a friend graduates in December and she moves to Atlanta (there is no doubt that she will), at which time we'll get a place together.
We had planned to rent, but prices are so reasonable that we'd probably pay less for a nicer place if I bought. I have no plans to leave my job or leave the area in the immediate future, and I'm not opposed to staying in Atlanta for the rest of my life - it's home. By the time my friend graduates and finds a job, I'll likely have $10-$20k in savings for a down payment and absolutely zero debt - no student loans, no credit cards, nothing.
Also, my parents have volunteered to "help" me with a down payment since they'd like me to stay in the area. I don't know exactly what that means in dollar amounts, but my parents are reasonably affluent and have been largely unaffected by the recession because of the fields in which they worked (they're both retired), so a significant contribution to a down payment wouldn't be a financial hardship for them (if it would be, I wouldn't accept it, and I never would have asked them for it if they hadn't offered).
The market makes me a little nervous because of the economic climate, and I don't know if it would be foolish to buy at this point without a more established career or larger savings account. I work from home, so a commute wouldn't be something to consider at this point, and I'd be looking for a condo or townhouse intown.
I've looked at mortgage calculators and a lot of listings, and I think that what I want and what I can afford intersect somewhere around $200,000-$220,000 with a $40k downpayment, assuming a contribution from my parents. I'll have a guaranteed roommate for the first year, and likely for several after that, and all of these things combined make the idea of buying pretty attractive.
Should I start looking to buy around the time when I'll have a roommate? Rent for a year and then buy? Put off buying entirely until later in life? I'm kind of confused, so advice or insight from anyone that has any would be appreciated.
ETA: Sorry this is so long, but I wanted to include everything that might be relevant to those answering.
Last edited by WriterDawg85; 08-01-2010 at 10:26 PM..
A $200,000-$220,000 mortgage with a $40-$45k per year income, and dependency on a roommate puts you at serious risk.
Have you considered a mortgage in the range of in the $120,000 to $140,000 range which is what
lenders typically loan based on your income?
If not, just make sure you don't get in over your head. The market is now full of foreclosures because folks have "bitten off more than they could chew".
I've seen some people get some very prescient real estate advice around here, so I thought I'd see if anyone was willing to help out with my situation. Bear with me, but I'll try to give as many details as I can.
I'm 24, single and female. Depending on bonus, I make about $40-$45k per year at a job that's reasonably stable for the economy. My company is very small, but it has continued to grow throughout the recession. My boss (who owns the place) has told me recently that I should have no worries about stability or job security, and he's usually pretty candid with me. I work in a creative industry, though, so I have some built-in nervousness on the subject.
I've been out of college for two years and just recently moved back to the Atlanta area, where I was born and raised. Since my lease ended in July, I'm living with my parents for a few months until a friend graduates in December and she moves to Atlanta (there is no doubt that she will), at which time we'll get a place together.
We had planned to rent, but prices are so reasonable that we'd probably pay less for a nicer place if I bought. I have no plans to leave my job or leave the area in the immediate future, and I'm not opposed to staying in Atlanta for the rest of my life - it's home. By the time my friend graduates and finds a job, I'll likely have $10-$20k in savings for a down payment and absolutely zero debt - no student loans, no credit cards, nothing.
Also, my parents have volunteered to "help" me with a down payment since they'd like me to stay in the area. I don't know exactly what that means in dollar amounts, but my parents are reasonably affluent and have been largely unaffected by the recession because of the fields in which they worked (they're both retired), so a significant contribution to a down payment wouldn't be a financial hardship for them (if it would be, I wouldn't accept it, and I never would have asked them for it if they hadn't offered).
The market makes me a little nervous because of the economic climate, and I don't know if it would be foolish to buy at this point without a more established career or larger savings account. I work from home, so a commute wouldn't be something to consider at this point, and I'd be looking for a condo or townhouse intown.
I've looked at mortgage calculators and a lot of listings, and I think that what I want and what I can afford intersect somewhere around $200,000-$220,000 with a $40k downpayment, assuming a contribution from my parents. I'll have a guaranteed roommate for the first year, and likely for several after that, and all of these things combined make the idea of buying pretty attractive.
Should I start looking to buy around the time when I'll have a roommate? Rent for a year and then buy? Put off buying entirely until later in life? I'm kind of confused, so advice or insight from anyone that has any would be appreciated.
ETA: Sorry this is so long, but I wanted to include everything that might be relevant to those answering.
This hits remarkably close to home, so I thought that I should chime in. I also bought a house quite young, at 22. While my situation is somewhat different, I'll give you my experience. My boyfriend and I purchased a foreclosure 3 years ago in a great established swim/tennis neighborhood in a top notch school district. While the house was structurally sound, it was built in 1989 and was accordingly decorated. At the time, we got a great deal for the house, as there were several listings in our neighborhood for $75k more and higher. While we can comfortable afford our mortgage and the expenses to go with it, the time is really what was most shocking. The constant painting, fixing, mowing, doing, it was really more than we had bargained for. However, both of our parents knew exactly what we were getting into, haha. Also, did you know that a new A/C is over $3k? One of our compressors broke within the first year. Do you want to know how much a new roof is for a 3,000 sq ft house with a 12/12 pitch? Do you know how much it is to keep a house this size cooled and heated? Or, do you know how long it takes to clean a house this size??? While we can afford the things to keep the house going, at 25 I can think of much better things I can do with my money. So, at the end of this week we are begrudgingly putting our house on the market. As we speak, I am looking at 2 bedroom apartments, haha. I don't want to sound like Debbie Downer, we truly love this house and will miss it immensely. I just don't want you to make the decision without at least a little advice from the other side.
Also, if you increase your budget by $100k, I know of a great updated house in Lawrenceville that's about to hit the market .
I would rent. You are young and right now, there is no evidence that the housing market is suddenly going to surge and you would instantly have a huge "profit" from owning.
Renting is the ultimate flexibility at a time when you should be enjoying that flexibility. What if a great job in another city comes your way? What if you meet the love of your life and they own a home as well...
Speaking from an agent standpoint, it IS a buyer's market, with low home prices and low interest rates. However, no one has the crystal ball to know what the market will do in the future. Lenders used to lend higher amounts than people could comfortably afford, and it's up to YOU to know your true spending limits.
Take your time, think things through - the repairs and maintenance stories are true - everything needs some work every now and then - even if you buy something in great shape now.
You sound like you're making decent money now with a pretty stable company in a rough economy - congratulations! But please don't forget to stash back for a rainy day - it always rains, you know! You need to have enough set back to get you through any unpleasant future situations (job loss, major expenses, etc).
As far as foreclosures go, be careful with those, and if you do buy, make SURE you get your own pre-purchase/offer inspection done or have someone knowledgeable about home conditions look with you. Some people have left their homes with an attitude of 'I don't care - I'm going to lose it anyway' and you never know what you'll find with some of the homes.
I can't advise whether to rent or buy, only to look at all options and do what's best for you.
Oh, and if anyone comes across an accurate crystal ball, will they let me know?!
Buying is definitely a risk. I would suggest giving a lot of thought to this before making a decision one way or the other. There are lots of benefits to buying:
The housing market in Atlanta is such that rents in some areas are actually higher than mortgage payments. When you own a house, it's yours. Sure, this does mean that you have to take care of the maintenance, but it also means that you don't have to deal with landlords, leases, rising rents, etc. The tax benefits of buying are good. I would suggest talking to a tax accountant to see exactly how much you'd save on taxes if you buy. This will help you make a more informed decision.
I definitely do not think you should plan on making money with real estate over the next three to five years. Also, since this is your first house, I would recommend something with low maintenance requirements. This usually means something newer (or, at least, new plumbing, electrical, and appliances), with little to no yard, etc.
Also, make sure that you consider location very carefully. This is the main factor in resale.
A $200,000-$220,000 mortgage with a $40-$45k per year income, and dependency on a roommate puts you at serious risk.
Have you considered a mortgage in the range of in the $120,000 to $140,000 range which is what
lenders typically loan based on your income?
If not, just make sure you don't get in over your head. The market is now full of foreclosures because folks have "bitten off more than they could chew".
Well, as I said in my post, I'd have a rather large down payment. The mortgage itself wouldn't be for $200,000, it'd be for $160,000. I've gone through the pre-approval process, just to see what I could get, and I was pre-approved for 200k.
Based on what most mortgage calculators say (including property taxes), I know I can handle the payment myself for a $160-$180k mortgage, based on what I've previously paid in rent. I wouldn't be dependent on a roommate, but having one for the first few years would make it very easy to make the payments and continue to save, which is my goal. If I'm going to have her for at least a year (and probably more) anyway, then I'd much rather have her paying part of my mortgage than throwing away money on rent with me. But that might be the most responsible decision, I'm not sure.
But anyway, I know I can make the payments in that price range by myself - I've tried to do the math to the best of my ability before posing this question to the forum, and a little over $1k (on the lower end) would not be a hardship. Because I work from home, lots of my expenses are relatively low.
This hits remarkably close to home, so I thought that I should chime in. I also bought a house quite young, at 22. While my situation is somewhat different, I'll give you my experience. My boyfriend and I purchased a foreclosure 3 years ago in a great established swim/tennis neighborhood in a top notch school district. While the house was structurally sound, it was built in 1989 and was accordingly decorated. At the time, we got a great deal for the house, as there were several listings in our neighborhood for $75k more and higher. While we can comfortable afford our mortgage and the expenses to go with it, the time is really what was most shocking. The constant painting, fixing, mowing, doing, it was really more than we had bargained for. However, both of our parents knew exactly what we were getting into, haha. Also, did you know that a new A/C is over $3k? One of our compressors broke within the first year. Do you want to know how much a new roof is for a 3,000 sq ft house with a 12/12 pitch? Do you know how much it is to keep a house this size cooled and heated? Or, do you know how long it takes to clean a house this size??? While we can afford the things to keep the house going, at 25 I can think of much better things I can do with my money. So, at the end of this week we are begrudgingly putting our house on the market. As we speak, I am looking at 2 bedroom apartments, haha. I don't want to sound like Debbie Downer, we truly love this house and will miss it immensely. I just don't want you to make the decision without at least a little advice from the other side.
Also, if you increase your budget by $100k, I know of a great updated house in Lawrenceville that's about to hit the market .
I think that some of those concerns are addressed by the fact that I'm looking for a condo or townhouse, not a single-family home. In fact, I don't want a single-family home for exactly those reasons. I know that a certain amount of maintenance is still the responsibility of the owner, but I'd be looking to move in to a development with a strong HOA and reserve fund for things like roofing or major structural fixes.
As far as how much it costs to cool a house - I'm not moving into a house. Most of the units that I'm looking at are about 1000-1300 sq ft, and I lived in a unit that size for several years before I moved back to Atlanta. I handled all the bills in that unit with my roommate, so I'm acquainted with the energy costs necessary for that amount of footage in a multi-family development.
Renting still may be the better idea, and the fact that I'm sort of balking at buying should probably tell me that, but I have given some thought to maintenance costs and upkeep.
Also, I should probably add that I'm actually looking forward to doing interior renovations - painting, work in the kitchen and bathrooms, etc. I come from a family of people that love to renovate. So I'm familiar with that sort of work, at least by proxy. That's one thing that really irritates me about apartments - I don't get to change anything. It's actually one of the big things in the "pro" column for buying instead of renting, for me at least.
I'm guessing you've already considered this, but when you work from home, you do get additional tax benefits if you buy a place that has dedicated office space. Just another thing to take into consideration.
I forgot to mention being able to do interior renovations as one of the benefits of buying. I like to do work on my home, which is part of the reason I'm a buyer not a renter. So, I can definitely relate to what you say about that.
There is a lot of doom and gloom about real estate right now, so you'd probably be balking no matter what. Certainly, the doom and gloom should make you even more careful about your decision-making process, but don't let it stop you from considering buying as an option. It seems to me like you are not making an impulsive decision one way or the other, which is good.
You seem extremely level-headed and like you've pretty well weighed the pros and cons already yourself. A couple of extra things to consider:
1. Condos can have steep HOA fees for all that maintenance (and amenities) so that's another monthly cost to account for (generally anywhere from $200 - $700+/mo. depending on building, etc.). Different HOAs include different utilities as well so your HOA may or may not cover basic utilities;
2. Condos are a much tougher resell at the moment (and historically) and likely to remain so for the foreseeable future, so getting out of it if you get into trouble can be very difficult. Be sure you check the condo docs regarding whether or not you'd be allowed to rent your condo (not likely, most have a cap on the percentage of rentals at any one time and in this market most buildings have a multi-year waiting list to be able to rent).
Personally, I'd prefer to buy than to rent, but that's a totally personal decision (I also prefer to buy books than get them out of the library). If you do decide to buy, do a lot of research on the condo market trends in whatever neighborhood you're looking in. Midtown's condo market is horrible and likely to remain so for at least 5 years. Other areas that didn't experience such a huge surge in condo building from 2002-2007 don't have such an enormous over-supply. If I wanted to buy a condo, I'd look in Virginia-Highland, Decatur, or maybe Inman Park -- all of which are very popular areas without the condo density of Midtown.
Townhomes are generally a little safer than condos as far as resale simply because there aren't as many of them, but of course, that's entirely dependent on the development. And many, many townhomes are fee simple so you'd probably still be required to handle any maintenance yourself.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
.
