House prices forcasted to drop 20-25% another says 30% (Palm Beach, Bell: loan, to buy)
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So, after reading through every thread about this topic I am wondering what each of you would do to this scenario:
We found a 1600 sq. foot home in my desirable Hollywood Lakes (South Lake area) for sale for $399K. House is FSBO as a 95 year old lady was living in it until recently when she fell and broke her hip. They need to sell to help pay for her care. Structurally, the home is in good condition. It needs a ton of updating. We would need to enclose the car port for added space. The home is three houses in from the Lake and has water views. Houses on either side are 1.2 million and 1.5 million but much, much larger. To be able to afford this we would have to sell our townhome BUT we could borrow on the equity and get a 50K down payment This would mean carrying two mortages until IF and WHEN our townhouse would sell. Perhaps we could rent it out but we would have to rent for $2000/month to cover mortgage, HOA. It is a 2BR/3 BA (three full baths, odd, huh?) It is 1/2 mile from beach in West Lake Village; a nice spot.
The interest rates really low now.
How does the Homestead work on a 2nd property? Does it transfer over once the townhouse sells?
Trying to fix up the place and carry two mortgages would be a struggle for us. But, the reward is that we would get into this very desirable area that I am extrememly envious of those who live there (see my Green monster post!)
Is this a good or bad financial decision? Help!!
What would each of you do?
The St. Pete Times had a good article on the Florida market. It noted that we will start seeing drops in prices well into 2007, with some areas such as Naples or Ft Myers seeing possible Crashes (anything over 10% adjustment). In the article it remarked that Tampa is the "Correction Bucket".
I, for one, am anxious to see what the market is going to do.
Housing starts are slowing in my area of Ocala, we have Many MANY homes that are empty and have been for months (New Construction). We have also noticed several newer homes back on the market with the families trying leaving the area... From Marion County all the way into Lake County.
Here is the link to the article:
sptimes.com/2006/10/09/Columns/Home_values_on_the_wa.shtml
How does the Homestead work on a 2nd property? Does it transfer over once the townhouse sells?
Right now the state does not allow carry over on Homestead Exemption that vested homeowner currently have now... and you would not have a homestead exemption on your second property. (This is how I understand the current tax situation)
So, after reading through every thread about this topic I am wondering what each of you would do to this scenario:
We found a 1600 sq. foot home in my desirable Hollywood Lakes (South Lake area) for sale for $399K. House is FSBO as a 95 year old lady was living in it until recently when she fell and broke her hip. They need to sell to help pay for her care. Structurally, the home is in good condition. It needs a ton of updating. We would need to enclose the car port for added space. The home is three houses in from the Lake and has water views. Houses on either side are 1.2 million and 1.5 million but much, much larger. To be able to afford this we would have to sell our townhome BUT we could borrow on the equity and get a 50K down payment This would mean carrying two mortages until IF and WHEN our townhouse would sell. Perhaps we could rent it out but we would have to rent for $2000/month to cover mortgage, HOA. It is a 2BR/3 BA (three full baths, odd, huh?) It is 1/2 mile from beach in West Lake Village; a nice spot.
The interest rates really low now.
How does the Homestead work on a 2nd property? Does it transfer over once the townhouse sells?
Trying to fix up the place and carry two mortgages would be a struggle for us. But, the reward is that we would get into this very desirable area that I am extrememly envious of those who live there (see my Green monster post!)
Is this a good or bad financial decision? Help!!
What would each of you do?
From your last post your household income is about $100K. That's nearly double mine, I'd be a homebuyer here if I made that, The Lakes area is great and will always be ripe for appreciation because it's on the coast. A $399K home FSBO by an old lady ain't selling for asking price in this market, so lets assume you can get it for probably closer to $350K, that's stretching some on your income, but doable if you don't have car payments or other debt, and if you can put 20% down cash, not borrowed. If that in fact is your case, then go for it. If not, then get cheaper cars without notes, clean up debt, and save some cash. Buying that house is a great idea, but only if done right.
So, after reading through every thread about this topic I am wondering what each of you would do to this scenario:
We found a 1600 sq. foot home in my desirable Hollywood Lakes (South Lake area) for sale for $399K. House is FSBO as a 95 year old lady was living in it until recently when she fell and broke her hip. They need to sell to help pay for her care. Structurally, the home is in good condition. It needs a ton of updating. We would need to enclose the car port for added space. The home is three houses in from the Lake and has water views. Houses on either side are 1.2 million and 1.5 million but much, much larger. To be able to afford this we would have to sell our townhome BUT we could borrow on the equity and get a 50K down payment This would mean carrying two mortages until IF and WHEN our townhouse would sell. Perhaps we could rent it out but we would have to rent for $2000/month to cover mortgage, HOA. It is a 2BR/3 BA (three full baths, odd, huh?) It is 1/2 mile from beach in West Lake Village; a nice spot.
The interest rates really low now.
How does the Homestead work on a 2nd property? Does it transfer over once the townhouse sells?
Trying to fix up the place and carry two mortgages would be a struggle for us. But, the reward is that we would get into this very desirable area that I am extrememly envious of those who live there (see my Green monster post!)
Is this a good or bad financial decision? Help!!
What would each of you do?
I would not buy it before selling the old town house. Selling is tough now even if you have a good price. Buyers expect lower prices even if you are low to start with. Everybody is expecting further declines in pricing and so they should. If you really LOVE this new house put your property on sale immediately and get a feel, only after then approach the other house. Buying before selling is a great risk and you can read some sad stories on paper about people who have done just that.
I dont know much about the area therefore commenting on the price of that house may not be appropriate however if you post the zip code we can check it out.
If you are NOT crazy about this house just wait a little while better houses at better prices may not be a long shot in 2007. Everybody knows after thanksgiving the market will literally come to a complete stop and selling will be tougher. Reseach the market more, check with other sellers and how they are doing. That'll give you some idea.
Last edited by josephhawkinson; 11-17-2006 at 08:30 AM..
From your last post your household income is about $100K. That's nearly double mine, I'd be a homebuyer here if I made that, The Lakes area is great and will always be ripe for appreciation because it's on the coast. A $399K home FSBO by an old lady ain't selling for asking price in this market, so lets assume you can get it for probably closer to $350K, that's stretching some on your income, but doable if you don't have car payments or other debt, and if you can put 20% down cash, not borrowed. If that in fact is your case, then go for it. If not, then get cheaper cars without notes, clean up debt, and save some cash. Buying that house is a great idea, but only if done right.
I agree in many ways with Sunnydog.
Lets look at the facts:
very Desirable area - homes worth much more and larger (this means the subject is potentially functionally obsolescent for the neighborhood = less attractive in $$$ terms) - Needs tons of updating = further unattractive and less $$$ - Owner is in distress= less $$$ All this = major advantage for any buyer. This is a very opportunistic event and someone will no doubt take full advantage.
I don’t know the area personally – That being said and I hate to sound cold but, with the owner’s distress, the fact that the house is not up to the neighborhood standards, nor is it updated to today’s standards there is a high probability of stealing a dog of a house in a gem of an area. This in my opinion IS the best of all possibilities especially if you are willing to do much of the work yourself. You can make that house a gem for you and get a handsome return in the future
Q. Is the house on a large lot, can it support a much larger house of the types next door? If so in the right market it may be worth near asking for the lot alone ie assume a 350k purchase just for the lot and proposed building of 3000 sq ft Cost of 250 per sq ft for 3000 sq ft =750K + 350 for the land = 1.1mil in-line with houses next door. This could be an advantage in the future if things don’t quite go your way
Unfortunately the buy advantage of the current market works against you on the sale side. – if you are aggressive with you sale price and willing to make it the most attractively price product (and then some) of similar nature in your area then is should sell relatively quick – underline aggressively priced. If you rent you may not get enough to cover the monthly expenses in the current environment, so ask yourself if loosing say $300-$500 per month for about a year is worth the advantage of stealing this property 50K+ below market
If either scenario and numbers above works for you then you get the joy of working on and living in a construction zone for the next say 2 years but from what I hear IT WILL BE WORTH THE PAIN
You can only homestead one property at a time. In the event that you close before the end of the year then you will have to decide what property to homestead for 2007. If you close after Jan 1 2007 then the current assessed taxes on both properties stays in effect until 12/31/07 (check with the county tax assessor’s office).
There is some risk here mainly in waiting out a transitioning real estate market. You need to think about your cash reserves and what you would be willing to forgo if things get tight. What’s the down side – think about it. If you needed to bail what would you lose and who does it impact (ie kids)?
I personally would take the risk but my kids are grown and if i lost everything I’m not afraid to start from scratch nor do almost all the work myself.
I am really appreciating everyone's advice. I guess our thoughts were exactly what Shores9 said about taking advantage of a rare opportunity. The houseis on a big lot. There is a guest cottage in the back but it is in horrible condition but could one day be quite nice. Also, many people in this area also build up a level but I have heard horror stories about pulling those permits to do so, not to mention the cost. Our problem is we aren't exactly handy but I suppose we could learn to be. We are both teachers so we do have some time off of work that we could invest. We do have two very young children though; but the house is just down the street (walkable) to the elementary school.
If To SunnyDog; we do have the two car payments, but no other debt but we don't have 20% down (that would have to come from the equity of our townhome) and we would certainly be tight for a long time with the costs of updating and eventually expanding. So that is good advice to wait to free up some money but therein lies the problem; if we wait it may be too late. We both said we could try to get extra classes to teach to help offset this but then maybe we would be too tired to enjoy it!
How costly is it to enclose a carport?
We are going to see the house again tonight. I will let you know what we think but agian, I REALLY appreciate the opinions and advice offered by all!!!
Although I usually disagree with Shores9 , this time he sounds reasonable. IF everything else around the house worth tons more than this house's asking price and if you can negotiate further and bring the price down another 10-15% and if you can fix the house yourselves to save money , buying may not be a too bad decision.
Just make sure you can sell your home first if you can. It is a big risk to take at this time when FL real estate is really tanking. If you hear otherwise dont believe it just read the papers and look at the housing figures coming out from the census b every month. Housing -in general- is going down and gaining momentum as it goes down.
Big Lot - big plus not just for you now but for future use by you or another. Can’t make more land especially in a desirable area! Guest cottage makes it all the more sweeter even in rough shape it could be a future project.
Handy?? You’re a teacher – you know we all start somewhere. Its never to late to learn, start with small steps and progress. It’s all about taking your time and thinking it through, before you know it becomes second nature
If you really get serious about this property get a good home inspector/inspection preferably someone who is a state licensed general contractor or at minimum a American Society of Home Inspectors (ASHI) Member.
Also a good idea is to get an independent appraisal by a state certified appraiser – cost about $350-$500 and will probably not be usable for your bank financing . Ask him/her to be as conservative as possible especially with regard to condition. You may get a good idea from the appraiser what the house would be worth if it were just remodeled and if it were expanded/renovated. In any case you can use that information and the report to negotiate with the seller. FYI if you decide on an appraisal get the home inspection first and let the appraiser see the inspection report. The appraiser may not see all that a trained inspector sees and you want the appraiser to give an honest value regarding condition.
How much do you believe your townhouse is worth? If it sells for $200k, you are at least halfway to paying off that $400k house in your dream desirable location. If you both make near $100k and take out a $200k mortgage, its doable that youll be able to pay it off. Youll be paying property taxes of around $7000 a year and hurricane insurance of another $5k to $7k. There may be HOA fees as well. Plus whatever TLC costs for that $400k house incurred. It is a very expensive project to take on. You must carefully decide if you can really afford that $400k house without getting into financial trouble. Are there other houses like that for sale in the lake area? What about a location near the lakes area for cheaper?
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