Buying A House: C or D?

well fuck me, I'm an apartment owner now. Just went over to see the place empty. I need a drink now.

Congrats (I think)

The walls and floors are pretty bad. I knew this going in but it just looked worse than I remembered. We're getting the whole place professionally repainted so I guess they'll deal with the grime and visible settling cracks and whatnot. Similarly, the horrible, filthy carpet they have is coming out, and we're refinishing the worst of the floors. Hideous vertical blinds will have to be replaced as well. These people were a little neglectful. Somehow, miraculously, it has a nice renovated kitchen.

The layout still seems good overall but it's smaller and a little less open than I remember. Our place right now has a really great open layout and I'll miss that a little. Won't miss living in a one bedroom though.

Things always seem smaller without furniture in it. Also one thing I learned is to always request in the contract that the seller remove anything you don't want to deal with (carpet, blinds).

after we closed on our place, i remeber suddenly noticing all the cracks and peeling paint, etc. different eyes once it is yours.

Empty is the best time! You can really get down to fixing things up when they're empty. And cleaning! SO much easier.

after we closed on our place, i remeber suddenly noticing all the cracks and peeling paint, etc. different eyes once it is yours.

Things always seem smaller without furniture in it.

This is oddly true. Our current rental looked way smaller to me when we first saw it (empty) than it does with our stuff in it.

Yeah walking into "our" house for the first time was a crazy experience of seeing all the awful, horrible things that were terribly wrong and realizing we'd made the worst mistake in our lives (still there six years later, nothing has gone wrong).

Congrats though, and it's still fascinating to me as a lifelong small/medium sized town person to think about buying an apartment. Everyone I know who lives in big cities rents and I have no idea how such a thing works.

the empty rooms looking smaller thing is true

why would that be the case?

paint and cracks are nbd as long as the structure behind is okay. cosmetic problems are fun to fix. i've almost totally forgetten the huge black smear across one wall that we painted over once we were finally in

Is it true that buying an apartment at 1.5x your current salary is a good guideline?
It seems that a mortgage payment on an apartment would be about the same
As the rent I'm paying now, but co-op fees add around $500-800 on top of that,
Which would be a stretch.

Rooms look smaller because it is hard to determine scale without furniture in it. My broker told me they always want furniture in rooms for pics (unless it is terrible furniture).

VP, I think coop boards want your monthly payments to be under 25-35% of your total monthly gross income.

Whether it's a good guideline depends on a lot of things. For one thing, the mortgage "guidelines" probably don't have co-ops in mind, where you pay high maintenance fees (although on the other hand, those fees generally include your real estate taxes and the maintenance of the building, whereas in a house, you pay your own taxes and maintain the house yourself). But you also have to consider your whole financial picture in terms of debt, monthly expenses, stability of your job, how long you plan to stay in one place, etc. I don't really believe in going solely by the "guidelines" when you can do a more detailed budget and really figure out what you can afford.

I don't have much debt but I have a relatively small salary; what's a public servant to do? So, even if a bank approves you for a certain
Monthly payment, the coop people could decide you can't cut it?

Oh I think I misunderstood what you were asking. But yeah, that could happen. We had friends who got rejected for a co-op because the guy had had a few different jobs in the last two years, so their income didn't look stable even though they could currently afford it. They also care how much you have in the bank. But if you have a stable job, some savings, and can afford the payments (mortgage and maintenance) on your salary you should be good.

love my house in glendale
great investment

starter church near me! start that uh...churchy thing you wanted to do...

http://www.newenglandmoves.com/property/details/682371/MLS-71536350/7-Church-St-Montague-Turners-Falls-MA-01349.aspx

Took down all the hideous vertical blinds and got rid of the bulky left behind furniture tonight. Really started to get a feel of how nice the apartment could actually look fixed up, just like I thought I could sense when we saw the place and it was filthy and full of clutter. It's a nice feeling. Psyched to see it painted and with the floors refinished.

Planning to buy in 2014 (have decided I like this city and job enough to put down roots), but the process still seems overwhelming to me. I can get through this, though, because if my doofus brother can buy a house then I should be able to do it standing on my head.

research agents and find one you really like and it all gets do-able from there

Just signed the offer to lease my new clinic space. 2 weeks to plan the design and get construction drawings done.

Does buying a place for cash have any downside?

Short-term financial inflexibility, for one.

Well, long-term also.

On the other hand, if you can afford it, you have a much better chance of getting your offer accepted.

I guess the conventional wisdom on that would be it depends on what else you could do with the cash. For example if you had an investment opportunity that could earn a larger return than the likely appreciation of your house. But that's not that likely right now. Other examples might be if you had high-interest debt to pay off (credit card, student loans, etc.), or just didn't have much liquid savings available for emergencies.

Well, we do have some savings. Two years worth, after buying? We are being jerked around by the underwriter, and I want to tell them to just stuff it.

adding: the offer has already been accepted.

adding again, no debts; however, we are both in our 50s. I am employed, husband not.

I guess the only other thing I could think of is that if you're buying in a really heated up market and think there's a decent chance home values will go down, having a mortgage gives you the opportunity to walk away potentially without as big a loss (although I guess even that depends on the recourse laws in your state). But it seems unlikely to me that you'd be buying at a price you think could realistically be too high.

Anyway, sounds like you have enough savings by most people's standards, although maybe the new normal of our economy should change that calculation. Are you in an industry where long periods of unemployment are common? Do you plan or want to take a long period of time off before retirement? When you say you have two years of savings, I assume that's not including retirement savings, right?

I'm really enjoying giving financial advice with my new display name

No, I think we negotiated a pretty good price, I think some of the other condos in the building were a bit high, but I think the condo prices in our area are pretty stable.
So, instant equity, right? But no mortgage deductions for income tax. No idea how much that would even be.

Believe me, I *do* appreciate it, JP ;)

keep in mind that, by definition, the mortgage tax deduction benefit is going to be significantly less than the amount of mortgage interest you are paying. Because it's only the interest that you're deducting. So if you pay, say, $8000 of mortgage interest in a year, and your tax bracket is 25%, you're only getting a $2000 benefit, but you're paying all that interest. When you pay cash, there's no mortgage interest. That greatly outweighs the tax deduction.

I feel like I didn't explain that well, did it make sense? Short version: not having a mortgage at all saves you more money than the mortgage tax deduction.

No I know what you mean, I think the total interest would end up something like more than twice the condo price or something close.

Oh, excellent. I think we will do it. And that will be about $1K per month I can save or invest or whatever. Thanking U, JP Morgan CEO. ;D

Planning to buy in 2014 (have decided I like this city and job enough to put down roots), but the process still seems overwhelming to me. I can get through this, though, because if my doofus brother can buy a house then I should be able to do it standing on my head.

― Johnny Fever, Wednesday, 20 November 2013 07:08 (1 week ago) Permalink

fwiw, we found our place without an agent, using the Redfin app. It posts listings straight from MLS so there's no bullshit listings like on Trulia. The app lists the name of the sellers' agent, and then I'd just google the agent and call them to set up an appointment to see the place. Agents sometimes favor you if you don't have your own agent, because it means no one for them to split commissions with. OTOH, if you're short on time and/or DON'T enjoy obsessively checking a real estate app on your phone, a good agent can be very helpful, since they know what they're doing.

Ooh nice. I've been using zillow to look, but I know I'm not seeing everything.

My buyer's agent was indispensable.

mine too. our purchase would have been close to impossible without him.
i like the zillow app more than the redfin app, but it's true that zillow doesn't have every listing.

iirc redfin not only has all listings but has them faster. And because it's MLS-based, that also means that when listings go into contract, it says that they're in contract, and when a place is sold it shows that it's sold.

fwiw I was also looking in a small geographic area (one neighborhood) in which I already lived, so it was easy to set up appointments. And the lawyer we used helped me in terms of putting together the documents I needed.

Also I spent a lot of time looking at sales in the neighborhood so I had an idea of what kind of an offer to make.

Redfin is nice but some markets are covered better by Zillow or Trulia, and some sites have content (e.g. pictures of the of the interior, video walkthroughs, property history, etc.) that the other doesn't. But all of them are delayed compared to the actual MLS listings, so if you're in a highly contended market, that small window between something popping up on MLS vs. subsequently popping up on the sites can make a huge difference.

Also in my experience all the sites are terrible at actually posting when a property goes to Pending or etc.

Also a buyer's agent may have an idea of which properties are about to go on the market via word of mouth. No replacement for experience.

Just throwing this question out there to see if anyone will know. Is a condo association fee something that's carved in stone or can it be negotiated? There's one right around the corner from the apartment that I'm currently living in, and it's been on the market since July (first through FSBO and now an agent), but the condo fee seems absurdly high for what's offered and for the condition of the property (not a dump by any means, but not luxury accommodations either). Just curious about that.

no doubt about that. But the benefit of not using an agent can be significant when it comes to bargaining power and/or being favored by the sellers' agent. And even if you use an agent, it's a good idea to check something like redfin regularly as well, since agents are only going to devote so much of their time to you.

fwiw, redfin is very fast -- I more than once had the experience of calling a sellers' agent right away and having them say "Whoa, I just put that up."

xp condo association fees are not negotiable afaik. I bought in a co-op, and a high fee can sometimes be a sign of a recent or ongoing large repair or renovation. I don't know if that's how it works with a condo. Maybe the management company is just ripping people off. But I'd also keep in mind that a high fee sometimes results in a lower sale price, because people tend to calculate their total monthly cost when they make an offer.

thx