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Old 02-18-06, 08:57 AM   #1
RedHairedScot
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Should I buy this house?

Ok, so I got a job, and I managed to get through grad school without completely blowing my savings. But before I got a job, I had some fellowships that were about to run out, and I was facing the possibility of the savings running away. So, I moved in with a friend here who had a house. It's most excellent. And now I have a job, and they pay very generously, so I've got some moneys.

But he just got a new job offer. In BELGIUM! It's gonna rock. But now I'm trying to decide: should I buy the house or go back to an apartment? It's a neat house, and it's better than an apartment, but I'm never home, so who cares? All my stuff is here already, and I'd save the 9 grand or whatever that a real estate agent would charge to help look for a house.

Basically, there are good things about apartments and houses, and I could go for either. But does it make sense monetarialy? Assuming I'm going to pay this house off in less than 15 years, it's more expensive to rent an apartment than pay for the house, right?

What do ya think?
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Old 02-18-06, 09:05 AM   #2
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If you like it and plan on staying more than 5 years, go for it.
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Old 02-18-06, 09:18 AM   #3
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Well it all depends on the housing market in your city / state. Are the prices ok or are they currently inflated. My thoughts are to check out the prices of similar houses in your area over the past 3-4 years and base the decision on that.
Personaly I would prefer the house over an appartment, but that is because I love gardening.
Do your homework and you will reap the benefits in years to come.
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Quote:
Originally Posted by RedHairedScot
Ok, so I got a job, and I managed to get through grad school without completely blowing my savings. But before I got a job, I had some fellowships that were about to run out, and I was facing the possibility of the savings running away. So, I moved in with a friend here who had a house. It's most excellent. And now I have a job, and they pay very generously, so I've got some moneys.

But he just got a new job offer. In BELGIUM! It's gonna rock. But now I'm trying to decide: should I buy the house or go back to an apartment? It's a neat house, and it's better than an apartment, but I'm never home, so who cares? All my stuff is here already, and I'd save the 9 grand or whatever that a real estate agent would charge to help look for a house.

Basically, there are good things about apartments and houses, and I could go for either. But does it make sense monetarialy? Assuming I'm going to pay this house off in less than 15 years, it's more expensive to rent an apartment than pay for the house, right?

What do ya think?
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Old 02-18-06, 09:19 AM   #4
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After 15 years, he will have a house, the renter will have nothing. Easy math.
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Old 02-18-06, 09:23 AM   #5
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Thats right. Get the house. Tax writeoff and investment. Get a nice basic 30/40 year fixed.
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Old 02-18-06, 09:26 AM   #6
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Tax benefits. And you can hammer a nail into the wall to hang a picture anywhere you want! No noisy upstairs neighbors. You can turn the stereo up as loud as you want (in case you're the noisy neighbor). Good point on the agent commissions, too.

I'd say buy it!
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Old 02-18-06, 09:27 AM   #7
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I agree with FX, if you'll be there 5 years or more, and the price is right (big savings on the real estate agent), you could gain equity on the house. A couple questions to ask, 1. Can you assume your friends mortgage? this will save on costs, especially if the interest rate is lower than the going rate today. 2. Is the house rentable, and how much would rent be compared to payments on the mortgage? 3. Is there more work on the yard than you'll do, or could you afford $100 dollars month to keep it up? 4. What repairs may need to be done in the next few years, new furnace, appliances, roof, these things are 2 to 5 thousand bucks a pop, you need to know what to expect and work price accordingly.

Real estate is usually a great investment, play it right you'll make money long term.
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Old 02-19-06, 03:58 PM   #8
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If its a Pulte, make sure its an older one with all of the inevitable problems already fixed.

Other than that, my theory about houses is that if the location is right, you can certainly get a lot more than you payed for it 20 years down the road. Me, I live in an apartment, and my theory is to invest in savings bonds, and that 20 or 30 years of that would almost certainly make more money that a house. But then again, what do I know, I'm just a stupid 19 year old community college student.
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Old 02-19-06, 04:10 PM   #9
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Quote:
Originally Posted by RedHairedScot
...and I'd save the 9 grand or whatever that a real estate agent would charge to help look for a house.
Start by doing your homework. Agents fees are paid for by the seller, not the buyer. Wham, I just saved you 9 grand. Use it as part of the downpayment.

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Old 02-19-06, 04:11 PM   #10
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You only pay realtors when you SELL a house. At least that's how it works here. Buying a house, they get paid by the seller, it is free to the buyer. (sort of )

Either way, most experts will advise you to go with a 15 yr mortgage as well instead of 30. I have a 30 however. There are very few benefits from renting a property. Owning offers several, although there are also drawbacks as well, like maintenance costs, property taxes, etc.
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Old 02-19-06, 05:16 PM   #11
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Real Estate is the best investment there is....
In doing your finances, try to factor in 13 payments a year.
How has the nieghborhood trend been since you've been there ?
Even though this probably wouldnt apply to you, a good rule of thumb
is buy the worst house in the best neighborthood as opposed to the
best house in the worst neighborhood. 'Sweat equity' is like compound
interest !!! I would always buy if I could. Money in the bank !!
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Old 02-19-06, 09:12 PM   #12
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Home Ownership is wonderful. Even if you move out several years from now, you could sell, or refinance the remaining balance in a long term loan to make the payments low, rent the house out for more than the monthly on the loan, and have someone else making the payments on your house.
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Old 02-19-06, 09:28 PM   #13
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A house is a savings account. You build equity while it accrues value. True it comes at the cost of loan interest, but not like rent where 100% is gone and you never see any of it back. If the house is reasonably priced and you can save $9k from realtor fees, you're $9k ahead of the game (profit) and most likely the house's value will grow over the next few years. Plus you save time and effort of moving.
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Old 02-19-06, 09:53 PM   #14
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One thing I've wondered but have no idea how to actually calculate, but what about the one-time expenses of owning a house that you'll never get back? Stuff like a destroyed air conditioning unit, much higher gas and electric bills, furniture, etc? Yeah, I'm not building equity with my apartment, but when the ceiling fan in my bedroom crapped out on me 2 months ago, my landlord changed it out at no expense to me. And my gas/electric bills are usually ~1/4 of my friends with houses.

So, in the end, after you've factored in the money you're paying on interest for your loan and all the extra expenses of home-ownership, how much money are you really ending up with? Yeah, my apartment is a money pit, but the cash that I save every month is going into a 401k and various other investments. What's the balance between the two?
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Old 02-19-06, 10:37 PM   #15
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Property is always a good investment. I say if you love it...go for it. If you don't love it...it'll still be a good investment until you find something you do.

Considering it's not you know...6 months later. But if you can see yourself in this house for at least 5 years...heck...take it.
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Old 02-20-06, 08:50 AM   #16
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Quote:
Originally Posted by explody pup
One thing I've wondered but have no idea how to actually calculate, but what about the one-time expenses of owning a house that you'll never get back? Stuff like a destroyed air conditioning unit, much higher gas and electric bills, furniture, etc? Yeah, I'm not building equity with my apartment, but when the ceiling fan in my bedroom crapped out on me 2 months ago, my landlord changed it out at no expense to me. And my gas/electric bills are usually ~1/4 of my friends with houses.

So, in the end, after you've factored in the money you're paying on interest for your loan and all the extra expenses of home-ownership, how much money are you really ending up with? Yeah, my apartment is a money pit, but the cash that I save every month is going into a 401k and various other investments. What's the balance between the two?
Always some expence at first movein. Being by yourself your bills should be low.No expenses to you? No not really if you think about it. 5 years in an apart of lets say 600 bucks amonth and you move,what do you have to show for that? Houses dont come along that often that you get this chance. They will not go down,even or up in price. It might be the only chance you'll get and you know more then alot of others just what your getting so go for it,you'll thank us latter.
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Old 02-20-06, 09:00 AM   #17
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Get this book and get educated: 100 Questions Every First-Time Homebuyer Should Ask by Ilyce Glick. Good stuff. I own two houses. Best decisions I ever made.

Austin is a strong market and is not likely to weaken. And if you plan on staying 2.5 years out of the next five, you should be fine capital gains-wise. But I'm no expert. Get that book.
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Old 02-20-06, 09:01 AM   #18
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i too would buy. renting is good if you're not sure about your job, location, or something might change. but if you're considering buying you might as well look at other proporities. sure, you'll save the time, expense, and hassle of moving your stuff, but that is small potatos in the long run. take a hard look at it all and make sure you want to live there and if not maybe consider renting it out.
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Old 02-26-06, 04:56 PM   #19
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Thanks, everybody! I've done a bit of homwork and looked around, and I probably will take the plunge. I appreciate everybody's advice!

giantcfr: Austin housing prices are going up pretty steadily, especially in this neighborhood.
Shifty: The house is small and modest, and it seems to be built for people who are working hard. They just put siding on it, so that shouldn't need work for a while. It needs double-paned windows, but that's just because the cooling savings will pay for the windows in the life of the house. There's definitely yardwork involved, but the lot is small, and I enjoy tinkering, so I'm considering building an automated mower. The biggest improvement I'm planning on making is to the backyard and frontyard -- all the plants are dead, and the soil is crap. I come from a long line of farmers, so in a few years I should have it whipped into shape.

55/Rad: When they bought the house, the buyer's agent and the seller's agent split the fees. But either way -- it's an extra $9k incentive to somebody.

Ranger, etc.: The house is VERY modest, especially for Austin. And since I'm single, I like it that way. I'm going with a 15-year mortgage and I'm hoping to pay it off really quickly.

Merton: Nope, no loans. That's the #1 reason I went to UT for grad school: they offered to pay. (It's why I turned Stanford down. They're a damn good school, but ask 'em about quals and ask 'em about money.)

And yes, if I leave here in fewer than 3 years then it'll be because of a great catastrophe, and the house price will be the least of my problems.

Thanks everybody! You rock!
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Old 02-26-06, 04:59 PM   #20
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Originally Posted by RedHairedScot
Thanks, everybody! I've done a bit of homwork and looked around, and I probably will take the plunge. I appreciate everybody's advice!

Thanks everybody! You rock!
Congratulations! So when's the BF House Warming Bike Ride and BBQ?
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Old 02-26-06, 07:05 PM   #21
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Congratulations! So when's the BF House Warming Bike Ride and BBQ?
August. You're all invited. He's leaving in April, and she's staying until July to finish one more class at UT.
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Old 02-27-06, 05:01 PM   #22
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Sweet!

I'll bring the PIE!

Only consideration, is this going to be an all expense payed trip?
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Old 02-27-06, 06:09 PM   #23
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If you plan on staying there for an extended period of time a house is the best way to go imho. Once your house is paid for its yours forever.
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