LI down 23% in home value in 2009? (New York, Hempstead: 2010, rental, condo)

[thepokerdepot]

Originally Posted by Chrisk327

On the flip side, aggressively priced houses are selling for close to list.

I see your point,...a home that was listed @ 800k in early 2008,..then reduced to 720k in late 2008,..the reduced again to 650 in early 2009 then selling for 615k in March. It was aggressively priced in 2008,..then sold close to late listing price.

Homes that are currently being sold this year,..are either foreclosures or very aggressively priced.
You'll hardly ever get a home with positive cash flow,(Carlton Sheets Theory)..but we may test a new bottom later this year. This spring is already the first time prices haven't increased in years.

Carlton Sheets Theory of Home Valuation:
Possible rental income/m = 2500
Taxes/m = 900
Left over= 1600
1600 = 310k Mortgage
Home is worth 310k

So, if you put 20% down, you'll have a mortgage of 250k = 1280 plus 900 Taxes = 2180
you'll save 320 a month but you risk 20%

[zulu400]

Originally Posted by Chrisk327

the rent vs own calculation people should be doing is on comparable dwellings.
you shouldn't be comparing a small 1 br apartments rent to a 3 br 2 bath house. Wow the renter has more money at the end SURPRISE! I bet it works out in their favor too if they save every penny and live in their parents basement too.

I believe you need to compare rent vs buy in the same area/town also.

Don't get me wrong.... you can spend $2500-$3000 a month to rent a "comparable dwelling"....

The point is.... if you plan to own in the future, then by spending less on rent (hint... translates into renting a 2br) will get you there sooner than spending more on rent (hint... translates to renting a comparable dwelling).

[WJFM]

I thought the standard formula for rent vs buy was 15 times annual rent. So.. a 3000 per month = 36000 annual rent = 540k house price.

[thepokerdepot]

When the housing market is correct: use this,..trust me 100%
Say possible rental income of propery is 3000/m
Taxes are 10k or 833/m
Your left with 2167
2,167 pays a 405k mortgage
Add 10% to 405K =445K
445K is worth of house,..the only reason to pay more is in a rising market where you can dump and run.

Your way:
3000*12= 36000*15= 540k

I do this for part of my living,..If you look at the sold homes on the last month you'll see. ex. Homes in Levittown are selling for 285K,..
2000 Possible Rental Income
700/m taxes
1300 is left
1300 pays a mortgage of 250k
add 10%
275k

DON"T OVER PAY FOR YOUR HOME!
The bank will not give you a 80% loan anyway.
They figure it out just like I do.

[superfly10]

The listing price is a rough guideline to me... but I don't obsess over it as my wife and I are shopping for a house. That's to say - I worry about what the house is worth, not what they're asking. if the house is worth 425K and they're asking 425K, I won't feel bad paying list. If the house is worth 425K and they're asking 500K, I'm offering 425K and ready to walk if the seller isn't realistic. The idea of never paying more than 90 percent of the list or the other numbers I see floating around make no sense. Check the comps, look at the features of the house and go from there.

I've seen quite a few houses priced to sell go into contract in a week or two. I've seen other ones 50K overvalued stay on the market forever.

I've noticed quite a few estate sales that seem to really be holding onto their selling price, which surprises me. You also see it with people who've counted on the house as their retirement. It's pretty sobering, so the advice to diversify is sound.

[thepokerdepot]

I agree 100%
A person like you will know if they overpay and decide. I think most people are learning fast now,..although some will still let a mortgage broker convince them otherwise. Sub-prime,..5/1,..these are loan plans to sucker the average Joe into a lifetime of debt.
The next thing you'll see is Average Joe buying a home ,..at a good price with 30% down,..paying 2000/m,..then in 5 years getting a letter from the mortgage company saying,"Dear Joe,..your five years are up,..pay me 4000/m or else!" In 5 years Joe would have 35% equity in the home plus aprreciation,..say 15% more and has the refiance or sell quick.

Anyway,..it's a great time to buy if you know what your doing,..Good luck and let me know,..I'm in neg. with a home in Merrick,..where 40K apart but might meet in the middle. Where both getting a good deal because I understand I could lose 10% value if the market tanks again, and their happy someone has money to buy their house so they could buy a home in Florida.
************************************************** ****
Do you feel bad for People listing @ Crazy Prices?

[Mantaray14]

Originally Posted by thepokerdepot

When the housing market is correct: use this,..trust me 100%
Say possible rental income of propery is 3000/m
Taxes are 10k or 833/m
Your left with 2167
2,167 pays a 405k mortgage
Add 10% to 405K =445K
445K is worth of house,..the only reason to pay more is in a rising market where you can dump and run.

Your way:
3000*12= 36000*15= 540k

I do this for part of my living,..If you look at the sold homes on the last month you'll see. ex. Homes in Levittown are selling for 285K,..
2000 Possible Rental Income
700/m taxes
1300 is left
1300 pays a mortgage of 250k
add 10%
275k

DON"T OVER PAY FOR YOUR HOME!
The bank will not give you a 80% loan anyway.
They figure it out just like I do.

Thanks for this...this formula looks spot on.

I would also say shop for a good deal for your mortgage. I'm closing Monday and found a great deal with Bank of America. 4.5% on a 30yr fixed - no fee plus morgage. I only pay for NYS taxes (about 3k) and 1 point (another 3k). They are taking care of ALL other fees, except the prepaid interest, and my lawyer. Total closing cost with the 1 point are about 7k I think (depends on the prepaid interest). I'm not doing escrow. I don't think they offer the no fee plus deal after May, but they may have something similar. It was rough going at first but once I got them all the info, they processed my loan efficiently. There's just no hand holding - you have be the driver.

Well Fargo had good rates, but milk you closing costs. The Wells broker kept saying the no fee mortgage was a sham until I showed him the letter from BofA stating all closing cost would be covered!

[djdairyp]

Originally Posted by thepokerdepot

I do this for part of my living,..If you look at the sold homes on the last month you'll see. ex. Homes in Levittown are selling for 285K,..
2000 Possible Rental Income
700/m taxes
1300 is left
1300 pays a mortgage of 250k
add 10%
275k

DON"T OVER PAY FOR YOUR HOME!
The bank will not give you a 80% loan anyway.
They figure it out just like I do.

Where does the "possible rental income" number come from?

[dman72]

Originally Posted by Mantaray14

Thanks for this...this formula looks spot on.

I would also say shop for a good deal for your mortgage. I'm closing Monday and found a great deal with Bank of America. 4.5% on a 30yr fixed - no fee plus morgage. I only pay for NYS taxes (about 3k) and 1 point (another 3k). They are taking care of ALL other fees, except the prepaid interest, and my lawyer. Total closing cost with the 1 point are about 7k I think (depends on the prepaid interest). I'm not doing escrow. I don't think they offer the no fee plus deal after May, but they may have something similar. It was rough going at first but once I got them all the info, they processed my loan efficiently. There's just no hand holding - you have be the driver.

Well Fargo had good rates, but milk you closing costs. The Wells broker kept saying the no fee mortgage was a sham until I showed him the letter from BofA stating all closing cost would be covered!

What percentage are you putting down?

[rizza78]

Originally Posted by WJFM

I was not able to find a apt with 2 bathrooms for below 2k a month in central Nassau (2007). Most one bedroom apts were being rented for 1500, and 2 bed 1 bathroom were 2k.

My wife and I got married in July 2007 and were able to find places under 2k in south western nassau (Lynbrook, ERock). To be honest, we never found any 2 bedrooms over 2k. We wound up with a 2 bedroom for 1600.