[bmurphy]

Glad you realize it's unfair to live in that house with money from your parents. That's not fair. You need to make your OWN life. Good luck.

[Need_affordable_home]

As soon as dad explained this, right away I realized its not fair. Yes I need my own life and support myself. I dont care if you dont like my house or my location, its my life and ill buy whatever house I can afford with my own money that I earned! I am not out to keep up with the Jones or impress anyone

[macguy]

Originally Posted by Need_affordable_home

I discussed this with my dad and he has a point. The math we did:

1. Mortgage interest loss $15k the first year, $14.5k the next and so on. He says banks amortize meaning they make you pay mostly interest early on in the mortgage and very little into the principle. Its almost as bad as an interest only loan The banks love it when you pay back the loan after a few years as they make big profit on the interest and you still owe them almost all of the principle and have very little equity.
2. I already know the HOA and taxes is a $11k loss
3. Hurricane insurance is required with a mortgage so thats another $3400 a year(and rising every year)
4. If dad sells his stocks and funds to buy the house 100% down he will lose on the capital gains which will be more of a loss than the interest on the mortgage. In fact it can be as much as twice the loss depending on the type of funds and how much it appreciates per year.
5. Theres maintainence and repair costs, figure an average of $2.5k a year
6. We discussed the investment upside to decide if this deal was worth it or not. First we discussed the losses to be around $30k a year. This means in 5 years if we pay $250k for the house, it needs to be worth $400k to break even. But breaking even isnt good enough because if he didnt buy the house and left the money in stocks/funds he would have lots of capital gains and profits.
7. If instead of me living in the house, he rents it out for $21k a year(annual lease) that is still a $9k loss a year plus work to be a landlord. We figure that house which the seller wants $350k to be worth about $300k today(he paid $440k lol) and to be worth $250k in 2009 and go back up in value after the bottom. We figure about 5% appreciation per year from the bottom of $250k so in 5 years or 2014 itll be worth $319k. If we get it for $250k, which dad doubts the seller is gonna be willing to sell for less than $300k and in 7 years the house is worth $319k, that comes out to 3.55% appreciation a year average. But theres a $9k loss per year for $63k in 7 years with a $69k profit in the house. The $6k profit in 7 years is laughable for all the trouble and it doesnt come close to keeping up with inflation. Even leaving your money in the bank is more profitable than this, let alone leaving it in funds!
8. Listen carefully, after doing the math, I realise its a bad idea and not fair to my parents for me to live in that house unless I had won the lottery and have the money to pay. It is way too expensive to live in that house
9. Me and my dad will still have a look at that house. There is one reason for buying the house, if my parents decide they want to downsize and move into this smaller house. Taxes and insurance will be the same but the equity we get from downsizing will go into funds which will appreciate unlike houses which are liabilities(sorry the bubble days of 15-20% appreciation are over)
10. Murphy and a few others suggest I rent. Lets see what rent would cost. In PSL its $900 for a small, old 2 bedroom house or $1200 for a new larger 3 bedroom house. This is way too much money to lose and I will starve as I wont have enough to eat! Those houses cost too much to buy and too much to rent, both ways you lose money.
11. My dad told me $250k houses are for rich people and I thought so. You will need a 6 figure or pushing it with a high 5 figure gross annual income. Dad says a $50k house will be perfect for me. This is what ive been saying all along. Sorry Murphy, dad knows best. You arent even gonna buy a house but rent which will end up costing you just as much but you prefer renting, if its something you like doing, I respect this. I want a house and maybe ill be able to get a $50k house in PSL when house prices drop more and I get a handyman and/or foreclosure special or find a desperate seller willing to give it to me for $50k. Dad says that house in WPB isnt for me, its for rich people. I totally agree and understand.
12. Good chance I wont stay in FL unless I can get an affordable house in a safe area like PSL. There are nice big houses in the northeast for $50k in good condition "by owner" those are the good deals and not overpriced.

Congratulations, I love seeing you do those numbers, that's how it is done and it is actually fun to see it in real terms.

[bmurphy]

Originally Posted by Need_affordable_home

10. Murphy and a few others suggest I rent. Lets see what rent would cost. In PSL its $900 for a small, old 2 bedroom house or $1200 for a new larger 3 bedroom house. This is way too much money to lose and I will starve as I wont have enough to eat! Those houses cost too much to buy and too much to rent, both ways you lose money.

I don't suggest you rent. I STRONGLY suggest you rent. You have every single criteria for someone who should rent: low income, just starting out, not needing a lot of space. For example I was reading some old posts of yours. You do not need a whole room for jigzaw puzzles, for crying out loud. You need a shelf for them.

The important thing: when most people say rent they don't mean renting a house. They mean an apartment. You could always move further up in Florida, and rent. From what I've seen, rents are pretty average in places like Jacksonville. You don't sound like you need more than a 2 bedroom apartment.

Okay, so renting isn't an investment and when you leave, you didn't make any money. However, there's no law that says your house has to appreciate. It could end up losing money, esp. with rising taxes and such. That's why renting is advisable -- for you -- for at least a year. It won't kill you. I don't know who ingrained in your mind that it's a terrible idea, but it's certainly appropriate for your situation IMO.

[Need_affordable_home]

I have already rented before, been there and done that. Plus I want a house, not an apartment. Apples to Oranges. Apartments are inferior to detached houses. Low income people are more likley to get mobile homes in fact and ill take a mobile home anyday over renting, much cheaper.

Thanks for the compliment, Macguy. Those numbers sure add up!

[bmurphy]

But you still haven't answered why you need so much space. I don't get it. I truthfully don't. You could find an 1100 sq foot apartment, same size as a small, cheap house...

Not sure that I'd take a mobile home over an apartment esp. in a place like Florida.

[Need_affordable_home]

Because I collect all kinds of things. You should see my bedroom then realise why I need the space. I also want lots of fishtanks with pet goldfish and will need extra bedrooms to put my tanks. There is noway ill pay anywhere near for a condo as a detached house unless the condo is newer and much nicer. Condos feel impersonal and lack some privacy. Hope you dont mind hearing your neighboors thru the walls when you rent an apartment. Hope you dont mind having NO land. Hope you dont mind sharing the space with many others under one roof. Condos arent very popular, the majority of us want a detached single family house! I would be OK with a condo as a second home but that wont be anytime soon as I dont have the money.

I would take a house in Oil city over a mobile home in FL so its a moot point. I am going to check PSL for foreclosure deals to see if I can get a house for $50k, up to $75k if its a nice one needing little or no repairs. Otherwise I will make my home in the northeast where prices arent insane.

[bmurphy]

Originally Posted by Need_affordable_home

Because I collect all kinds of things. You should see my bedroom then realise why I need the space. I also want lots of fishtanks with pet goldfish and will need extra bedrooms to put my tanks. There is noway ill pay anywhere near for a condo as a detached house unless the condo is newer and much nicer. Condos feel impersonal and lack some privacy. Hope you dont mind hearing your neighboors thru the walls when you rent an apartment. Hope you dont mind having NO land. Hope you dont mind sharing the space with many others under one roof. Condos arent very popular, the majority of us want a detached single family house! I would be OK with a condo as a second home but that wont be anytime soon as I dont have the money.

I would take a house in Oil city over a mobile home in FL so its a moot point. I am going to check PSL for foreclosure deals to see if I can get a house for $50k, up to $75k if its a nice one needing little or no repairs. Otherwise I will make my home in the northeast where prices arent insane.

You do realize in general prices in the South, excluding Florida, are generally much cheaper than the Northeast? The South is the cheapest region for home prices, followed by the Midwest. Or it may be in the other order. In any case if you want cheap South and Midwest are the best bets.

[sunrico90]

Originally Posted by Need_affordable_home

Not even $250k? The taxes and HOA are actually normal, this is a guarded gated community and the HOA includes many other services. High taxes is because its Florida!

The number of “IF” and variables is way great. As I said in another thread, this is a business transaction and we are creating family risks that are not worth the effort.

Think is your money and might be playing the Housing Russian roulette, odds are not good. Count the replies and can you see the answer…

[Need_affordable_home]

Originally Posted by bmurphy

You do realize in general prices in the South, excluding Florida, are generally much cheaper than the Northeast? The South is the cheapest region for home prices, followed by the Midwest. Or it may be in the other order. In any case if you want cheap South and Midwest are the best bets.

WV and PA are in the northeast and both states are very affordable. Texas is a very affordable southern state. I am not interested in the midwest, too cold(much colder than the northeast)

Originally Posted by sunrico90

The number of “IF” and variables is way great. As I said in another thread, this is a business transaction and we are creating family risks that are not worth the effort.

Think is your money and might be playing the Housing Russian roulette, odds are not good. Count the replies and can you see the answer…

If you read my long post above, youd see why me and dad agree its a bad investment and also too expensive for me to live in it, wouldnt be fair to my parents. The only reason left is if my dad and mom want to downsize and put their equity into stocks/funds which appreciate much better than houses and will help stockpile their retirement.