Buying in 78745? (Austin, Meadow: low income, fit in, for sale)

[maiyen]

We are thinking about buying our condo in 78745, live in it for at least five to ten years and then either sell or hopefully keep it as a rental property. It would be our first home so we can't afford much and we don't have a huge list of needs. It is in a low income area of '45 so we do have some concern about that...will the fact that it is not in a prime area outweigh the low purchase? We feel safe here, but the school districts aren't great. This does not affect us since we don't have kids, but we realize that this could be a big factor for future renters in addition to location, etc. But with the price of rent now being really high, our options are either to buy this place or probably be forced to move a lot farther away from downtown.

Is it crazy to sacrifice a picture perfect neighborhood in order to be 4-5 miles from Town Lake/downtown, walking distance to 78704 (we walk a lot), etc? The property also needs work which would also explain the lower cost. We have rented the unit for two years, but the owner wants to sell it and is giving us first dibs. We can tolerate it now, but certainly know where the unit needs fixing up. Thanks!

[EzPeterson]

You can't replace proximity. '45 is likely going to be one of the next hot zip codes.

[CptnRn]

If it were a SF Home I'd say go for it, but condo's are a different breed. There is some good information in these threads:

//www.city-data.com/forum/austi...se-condos.html

//www.city-data.com/forum/austi...nt-austin.html

//www.city-data.com/forum/austi...nvestment.html

[atxcio]

If you've already lived in the unit for 2 years, you probably know a lot more about the place than any other purchaser possibly could. So use that information: what is the trend of the neighborhood? Is there upscale construction going on, or are things declining? Do a lot of your neighbors own their own unit and live in it (good sign)? How is the HOA? Can you sit in on one of their meetings? Does the rent you pay cover the projected mortgage payment?

If you decide to go forward, remember that the owner would be probably saving some commission money buy having you buy it. So don't be afraid to make a lower, fair offer based on the amount of work you think it will need. That's deferred maintenance, something they would eventually have to pay anyway.

[maiyen]

EzPeterson, proximity was the major draw and we were willing to make some sacrifices to move to that location.

CptnRn, so your view is that condos are never a good investment? What if somebody cannot afford to purchase a SF or if they can, they would have to make very large compromises in regards to location, etc? In your opinion is it better to keep renting?

I appreciate the links that you provided because they give some good info. Def something to think about.

atxcio, our area hasn't seen too much activity since the economy declined. Just prior to that, a new condo complex was built nearby and I think it was supposed to be a larger project than what it turned out to be. But they never got past the first phase and I don't know if they ever will? '45 in general has various areas of higher income (around Brodie) along with lower income (around S 1st) with random pockets throughout. Directly behind Central Market is a mix of well-established neighborhoods right next to the projects. And right across the street from the projects you can find half a million dollar homes with huge lots and beautiful old trees. My 'hood' is more spread out and is about equal distance to South Park Meadows and 78704 so I am not sure how that will affect us as far as positive growth in the future. There is a new housing project being advertised just down the street from us, but I don't know if that will ever happen or when (homes close to $300k).

I do need to look more into the HOA guidelines and sit in on one of the meetings. I am not sure what the % of owners to renters is, but I need to find that out too. The owner has offered to pay closing costs outright (not adding it to the mortgage total) and ensured that they would fix everything that was wrong with the unit, non cosmetic of course, prior to closing.

Thanks for the input.

[EzPeterson]

Condos aren't the "best" investment long term, since HOA fees tend to eat into quite a bit of margin (condos tend to run higher than SFH), but they can make decent future rentals if you get them at the right price in the right location. I really feel that '45 is going to be the next '04 with infill projects and rehab flips over the next few years - driving rental prices a bit higher.

It really sounds like you're on the road to getting a solid deal on this unit, but do some price comparisons, using Austin real estate | Homes for Sale Austin | Austin Homes | Austin real estate | Homes for Sale Austin | Austin Homes to see what comparable units are listing for. Dig into the HOA for sure, it sounds like you'll already know if they're one of the "militant" organizations, but find out what the fee structure looks like, attend a meeting and talk to a couple of neighbors. If you have any friends that are realtors, they might be able to find out what units in your complex have sold for recently to give you a good baseline.

[CptnRn]

Originally Posted by maiyen

CptnRn, so your view is that condos are never a good investment? What if somebody cannot afford to purchase a SF or if they can, they would have to make very large compromises in regards to location, etc? In your opinion is it better to keep renting?

No I did not say that. I think you have to evaluate the investment very carefully to determine if it is a good deal for you. I provided the other links so you could see a lot of other opinions on it. You should run some numbers on it to determine if you would be better off to continue renting or if buying makes sense. Is the property likely to appreciate much in value? It may, but probably not as much as a single family home. You could benefit in the long run from the property appreciating in value, but meanwhile you will have higher expenses, such as home owners insurance, HOA fees, interest and property taxes. Could you continue to afford the payments if one of you ends up unemployed for an extended period of time? Would you even have enough other deductions to be able to itemize and deduct your interest payments? Many people do not. What if the HOA fees go up, are there any large maintenance or repair costs likely in the near future?

Are you sure you could not qualify for a loan on a single family home?

I suggest you contact a mortgage company to find out what you would pre-qualify for. There is no cost, I think you can even do it on-line here. https://www.vlender.com/t/thenelmsteam/ We used this company, Tommy Nelms, to help us arrange mortgages on our second home and refinance our first home, which is now a rental property. They were great to work with.

Edit to add:

http://www.huffingtonpost.com/ben-ha...b_2213304.html
Yet the deduction simply doesn't help that many people. Many low-income homeowners don't claim the credit, because they can't claim enough deductions on their tax filings to make it worthwhile. Renters, of course, are out of luck, as are people who have paid off their mortgage. In fact, just 1 in 4 Americans claimed the benefit on their taxes in 2010, according to the nonprofit Tax Foundation.

[CptnRn]

Maiyen, Maybe these will help you evaluate the decision.

http://www.nytimes.com/interactive/b...ator.html?_r=0

Rent or buy calculator: Should I rent or buy a home? - MSN Money

[dave bacon]

hi maiyen,

The first thing you want to do when buying a condo is to find out your financing options; specifically is the complex FHA and or VA approved, and is it warrantable? If the complex is not FHA or VA approved, and is non-warrantable, you’ll have to put a minimum of 20% down.

You can start by calling your association and asking if they know if they are FHA/VA approved and if they are warrantable or non-warrantable. You can run an FHA and VA condo approval search on the FHA and VA websites, and you can have your HOA fill out a questionnaire called an HOA certification to find out if they are warrantable. Moderator cut: no soliciting business

Here are the general rules for a warrantable condo:
• Most of the units are owner occupied (not renter or investment properties)
• On established and existing projects, at least 90% of the units must be sold
• For new and currently converted construction, 70% of the units must be pre-sold (closed or under contract)
• 15% or less of the units can be 30 days delinquent on HOA dues
• No more than 10% of a project can be owned by a single entity
• No more than 20% of the project can consist of non-residential space
• The Homeowners Association must have at least 10% of its budgeted income designated for replacement reserves
Additionally, other conditions do exist—pertaining to building insurance, HOA budget, etc., but the above conditions are generally deemed the most important to Fannie Mae and Freddie Mac—and therefore to most lenders.

[maiyen]

You all have given me some very good information and many things that I had not considered/not known to check out. I did get my hands on a copy of the HOA guidelines and am currently in the process of finding out whether the complex is warrantable versus non-warrantable. Our landlord originally thought that the condo complex was not FHA approved, but a search online shows that it is. We do have a couple of friends who are real estate agents so we're going to see if one can swing by and do a rough appraisal based on the current state of our condo without any improvements. The owner seems pretty firm on his price, but the same type of unit in better condition recently sold for the same price that he's asking. If we decide to put in an offer and it is lower because of all of the necessary work that will be required, hopefully a real estate's 'estimate' on our unit will help back up our reasoning.

We do plan on getting pre-approved if we decide to go through with this. We're just trying to weigh our options now and be very thoughtful about everything. We might be able to pre-qual for a SFH, but the house might be in worse condition (we worry about lots of maintenance costs) or on the very edge of Austin and as central as we can get is where we want to be; however we are open to all possibilities. Especially since I've been reading how condo financing can be much more difficult/expensive.

Thanks again to all of you. It is extremely helpful!