You're asking the same guys who make $60,000 a year + but bitch about spending $90 on a pair of running shoes for financial advice? I would never ask a financial question on Letsrun.
You're asking the same guys who make $60,000 a year + but bitch about spending $90 on a pair of running shoes for financial advice? I would never ask a financial question on Letsrun.
I leave all the tenanting to a third party.(real estate co.)
It is cost effective and leaves all the hard decisions to someone else.
Where I come from they take about 5% of the rent + the first week's rent should a tenant leave and be replaced.
By keeping the rent slighly lower than the Market average you can avoid high turnover of tenants.
My tenants are mostly long term(5years or longer) and I have never had to chase money or had anything damaged.
My advice.
Buy near good public transport and schools.
The worst house in the best area.
Make sure it is structually sound.
Checkout the neighbours before you buy.
Screen prospective tenants thoroughly.
There are some bad eggs out there(both tenants and landlords).
Stay friendly with your tenants but "keep your distance".
trackster..... wrote:
You're asking the same guys who make $60,000 a year + but bitch about spending $90 on a pair of running shoes for financial advice? I would never ask a financial question on Letsrun.
haha. yes we should all get financial advice from people who make less the 60k and still have no problem with dropping hundreds of dollars on running shoes. good point.
Get a 15 year mortgage. On a 130k house (with a 10% down payment) your payments will be in the range of 260 bucks a month higher than with a 30 year mortgage. Difference is that over the life of each loan the 15 year will save you about 80k.
Checkout the property market thoroughly in your area.
Sometimes it is better to buy today(with your current deposit) if property is appreciating at a solid rate.
Saving more for a bigger deposit can actually cost you dearly because the house you want to buy today can become unaffordable quickly in a Bull market.
Having said that,you must be comfortable that your repayments are affordable.
There was a time when lending companies had some scrupples.
These days they wiil give you way more than you can afford as long as there debt is covered by the value of your assets.
Finding a balance is the way to go.
or if you live in boston....you're basically f*cked.
no one who makes less than 100k a year can afford decent housing here.
it's laughable
Well...I was looking at buying this place before Pop gave away a chunk of my money.
try this again
$75,000,000 is nice, but that is only half of what Aaron Spelling's widow is asking for her house.
Mtn Dew wrote:
Get a 15 year mortgage. On a 130k house (with a 10% down payment) your payments will be in the range of 260 bucks a month higher than with a 30 year mortgage. Difference is that over the life of each loan the 15 year will save you about 80k.
That is assuming that your financial situation does not change in the next 15 years. What my wife and I did was get a 30 year mortgage and make payments at a 15 year rate as long as we could afford it. Now with 2 kids and her not working, the 30 year payment is much easier. You lose a little on the interest rate, but the interest is deductible and the flexibility is great.
In 1990 I purchased a $55k dollar condo with 20% down. Sold it 4 years later for $92k and purchased a $210k home on a 15 year mortgage. In 3 years the house will be paid in full. I will be 43 years old then. My neighbor just sold their home for $325k which is the same exact floor plan as my place. Real Estate is always the safest route of investing. My current income is only $56k.
a better option would be to pay the 30 year mortgage and invest the 260 a month into a Total Stock market index fund. Make sure you put it into a ROTH IRA
At a very modest 8 percent interest (you have a good shot at doing even higher than that) you'll have $91,491 in 15 years. In 30 years you'll have $381,719 if you keep putting the same amount into the index fund.
and 8 Percent is fairly easy to make over the space of 8 years.
Plus you have the added bonus of being more diversified.
Given this is all under the assumation that you have the discipline to keep putting 260 dollars a month into an index fund for 30 years. Most people don't
I'm surprised at the answers so far, and generally I would agree with the save money first, and then buy idea, but saving for 15%-20% down on a house is very tough, especially since the value of the houses typically goes up as you're saving.
The thing is though that right now you have TOO much debt to be getting a decent loan for a decent house. Also, right now in most areas of the country (probably Cincinannati too) housing prices are at a peak, so it wouldn't hurt you to wait for a little while (not too long though -- not more than 2 years).
Get the car and the credit card debt gone. Don't worry about the student loan debt. THEN start looking.
Even if you have to pay PMI initially, do it. It sucks to have to pay it, but keep track of how much you've paid toward the principle and (and this is the important part) how much the house goes up in value. When I bought my house, we could only put 3% down, but because the house gained value, it only took two years for us to be in a position to refinaince and get the PMI gone (we needed to own 15% of the value of the house, and at the re-finance closing, we had to give them an extra $2,000 for the PMI to be gone, but it was worth it). In our case, not only did we get a better rate, but with the PMI gone, it saved us about $300 a month. We could not have saved up the money fast enough in 2 years time to be able to buy a house outright with 15% down to have no PMI to begin with. We were working on a single income at the time.
Oh, of course your credit rating will have everything to do with how much you can take a loan out for too. Based on my income (in 1998), initially they told me I could only have an $80,000 loan and to start looking at town homes, but when they got my credit score back, they told me that pretty much the sky was the limit (with a reasonable ceiling of about $175,000). We went for a house that was a little less than that reasonable ceiling.
Good luck.
If your making $48,000, paying 25% taxes, you make about $3,000 per month. Est. current payments are auto @ $280/mo, student loan @ $150/mo. Likely both of these payments are fixed are very good interest rates, it would be rediculous to pay them off, however it is always good to keep your credit card debt clean. A house payment of $1000 would be pretty reasonable ($165K). Also keep in mind there will be additional expenses, more bills, maintainence, ect... Short term interest rates have increased recently, make sure to get yourself into some kind of a fixed rate, probably 30 year, and you will never have to worry about it changing. A house can be a very good "LONG TERM" investment. Keep in mind that your first years will be mostly interest payments. In the market right now in most of the country, you can't count on short term appreciation. So if your payment is $1000, your interst will start at $840/mo (can you rent for cheaper) Either way be patient and make a decision off of emotion, always sleep on it! Good Luck!!
I wouldn't wait on a decision to buy because of PMI. There are other options. When I bought my house, I only put down 10%. Instead of paying PMI, I got a TAMI loan from Countrywide...stands for Tax Advantage Mortgage Insurance. The loan interest rate was slightly higher, but there was no PMI payment. The actual monthly payment on my end was about $5 less with the TAMI loan than it would have been with a standard loan plus PMI. Plus, because I was paying more interest (due to a higher loan rate), I was able to deduct more off my income taxes at the end of the year. This saved me even more. My house appreciated quickly and I refinanced when I had 20% equity, as rates had dropped considerably.
Probably not a good time to invest in real estate unless you are planning on putting 20% down and living there for a long time. Everytime I suggest that housing will go down, I get flamed by people with a vested interest in the equity of their home or investment property. I won't rehash my prior comments, just post a link to a recent wall street journal article interviewing Kenneth Heebner, the fund manager of the largets real estate fund out there. The success of his fund speaks for itself. When he talks, people listen.
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WSJ: How is the housing market?
Mr. Heebner: A significant decline in prices is coming. A huge buildup of inventories is taking place, and then we're going to see a major [retrenchment] in hot markets in California, Arizona, Florida and up the East Coast. These markets could fall 50% from their peaks.
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Surprise!
You are right that house values will likely drop in many areas of the country. This has already started in the DC area where my brother just bought a house (a house for $720,000 that was built new for $250,000 in 1999!). He and his wife know that they will need to stay there for a good long time in order to make any money on it.
For sure. After all is said and done, I think we'll be back to the days of tighter lending practices where good credit and 20% down are required to buy a house. The affordability index is so out of whack right now, that most people couldn't buy given conventional lending measures. Flagpole, most of your posts contain a frugal and common-sense approach to fiscal management. This type of attitude will be rewarded heavily in the coming years.
Some of these replies are pathetic. People suggesting spending 40-50% of your income on your house payment? Buying a $200k house on a $48k/year salary? Rest assured, these people either don't have a home, or have nothing in in theirs, because they can't make a sound financial decision to save their lives.
Surprise! wrote:
For sure. After all is said and done, I think we'll be back to the days of tighter lending practices where good credit and 20% down are required to buy a house. The affordability index is so out of whack right now, that most people couldn't buy given conventional lending measures. Flagpole, most of your posts contain a frugal and common-sense approach to fiscal management. This type of attitude will be rewarded heavily in the coming years.
Surprise!,
I definitely agree with tighter lending practices. I think the main thing is that home buyers should have a stellar credit rating. I could not have bought the house I did and put 20% down on it, so I'm glad they allowed me to put just 3% down. One of the reasons (other than flat out greed) that lenders were dealing with people with less-than-stellar credit is that the rates were so low. Now that they're going back up it's more risky even for lenders to deal with people who either put much less than 20% down or have bad credit.
I hope you're right that my frugalness will be rewarded. That's the plan. Currently, my house is the only debt I have. Most of my retirement money though is in my 401k or other separate funds (made up of stocks and bonds), so I'm at least a little bit dependent on the market doing well over the next 19 1/2 to 22 years (when I plan to retire from full-time work; somewhere between age 59 1/2 and 62). If the market doesn't do well during that time, I will either have to work longer, hope that my earnings were enough anyway, or I could do something NOW to guard against a poor market showing. As we have just one income right now and as much as I can put into my 401k goes there, I don't have much extra to work with. For the next 2 or so years, I'm probably going to have to be stagnant with investing, and that's ok.