buying real estate

[Sifmole]

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Interesting.

Well, you want to make a side bet on whether or not daryn will qualify for a loan?

I'll put up $20.

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Nothing like a 100% unloseable bet! Of course he will qualify, there is a loan for every type -- jebus you can be a bum in a cardboard box and there is a loan waiting for you ( nearly ). The bet should really be whether he can qualify for a 20% down loan at a standard market rate w/ zero points on the basis of "Stated Income" w/in 3 months. Fill in the rate and I will take this $20 bet.

[chucksim]

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another idea is buying something like a 3-bedroom house and renting 2 rooms out.

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If you're looking at something like that, why not buy a small apt bldg/double block/etc, and rent the other unit(s) to the friends at first. That way you have everything you want...out of the house, help paying the mortgage, an investment property where you live in one unit to start, and freedom of not having your buddies living in YOUR house. They WILL get on your nerves, trust me....

[daryn]

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why not buy a small apt bldg/double block/etc, and rent the other unit(s) to the friends at first.

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what is this exactly? i'm just not getting the explanation

[Shajen]

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another idea is buying something like a 3-bedroom house and renting 2 rooms out. i have some friends who are reliable (with, you know.. jobs and stuff [img]/images/graemlins/smile.gif[/img]) who are interested. i figure that rent could pay off a huge % of the mortgage payment. i do like to travel but i wouldn't mind sticking around for a while and taking care of business. anyway, do banks or whoever is giving me the loan take that into consideration (the fact that i will likely have rent coming in)?

also, about mortgage brokers.. i asked my friend for some advice. he just recently bought his 2nd home, and he told me he usually just goes to the bank and doesn't even know what a mortgage broker is. his father is in real estate though and maybe he knows something i don't.

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A mortgage broker is just more specific. Their business is home loans, so they typically know the market and business better than a bank.

Regarding your first point, I don't know about MA, but in GA, if they are not on the loan, then it doesn't matter if they will be paying rent or not. Having two roommates pay you rent is a great idea though. I'd definitely look into this if I were you.

There might be something for what you are looking for in MA, regarding roommates. I would imagine you'd need a contract signed and all that spelling out the amount of rent they'll be paying and all that though. I understand it varies from state to state.

[Indiana]

Why would you want to buy? The money that you will spend on upkeep and paying a realtor to sell will deplete any real earnings unless you live there for like 15 years. In Indiana, houses only appreciate 3.5%/yr .

Discuss,

Indy

[BoogerFace]

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another idea is buying something like a 3-bedroom house and renting 2 rooms out. i have some friends who are reliable (with, you know.. jobs and stuff [img]/images/graemlins/smile.gif[/img]) who are interested. i figure that rent could pay off a huge % of the mortgage payment. i do like to travel but i wouldn't mind sticking around for a while and taking care of business. anyway, do banks or whoever is giving me the loan take that into consideration (the fact that i will likely have rent coming in)?

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I wouldn't count on rent from roommates too much. Roommates get laid off occasionally and sometimes move out.

I think it would be fine in terms of raising spare cash, but I wouldn't rely on it as 100% steady income.

[Shajen]

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Why would you want to buy? The money that you will spend on upkeep and paying a realtor to sell will deplete any real earnings unless you live there for like 15 years. In Indiana, houses only appreciate 3.5%/yr .

Discuss,

Indy

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Two things:

1) saying "discuss" just pisses me off. Nothing personal, but if we are going to talk about it, we don't need someone telling us to. Either it gets responded to or it doesn't.

2) in the majority of situations, renting is a negative sum game. For example, I moved to Atlanta in 1998. I rented for 5 years. Average rent was $1100 a month. 5 * 12 = 60. 60 * 1100 = $66,000 with nothing to show for it. I've lived in my house for 2 years now, and in that time I've received tax breaks and my home has appreciated a decent bit. That means if I were to sell it tomorrow, I'd get a decent chunk of cash back. You can't do that renting. Owning a home gives you several advantages over renting, first and foremost is appreciation in your home. Second, there are the tax considerations. Also, you can sell your home. Finally, owning a home means you don't have to put up with a bunch of other idiots like you would if you were renting.

Renting is right in some areas (like San Fran, NYC, or SoCal), but for the majority of the country, owning is the way to go. It all depends on where you live.

Oh, Daryn, if you read this, something to consider is the Homestead Act. Google it. It's pretty awesome.

[daryn]

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Why would you want to buy? The money that you will spend on upkeep and paying a realtor to sell will deplete any real earnings unless you live there for like 15 years. In Indiana, houses only appreciate 3.5%/yr .

Discuss,

Indy

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i just want to live in the place

[Indiana]

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Two things:

1) saying "discuss" just pisses me off. Nothing personal, but if we are going to talk about it, we don't need someone telling us to. Either it gets responded to or it doesn't.

2) in the majority of situations, renting is a negative sum game. For example, I moved to Atlanta in 1998. I rented for 5 years. Average rent was $1100 a month. 5 * 12 = 60. 60 * 1100 = $66,000 with nothing to show for it. I've lived in my house for 2 years now, and in that time I've received tax breaks and my home has appreciated a decent bit. That means if I were to sell it tomorrow, I'd get a decent chunk of cash back. You can't do that renting. Owning a home gives you several advantages over renting, first and foremost is appreciation in your home. Second, there are the tax considerations. Also, you can sell your home. Finally, owning a home means you don't have to put up with a bunch of other idiots like you would if you were renting.

Renting is right in some areas (like San Fran, NYC, or SoCal), but for the majority of the country, owning is the way to go. It all depends on where you live.

Oh, Daryn, if you read this, something to consider is the Homestead Act. Google it. It's pretty awesome.

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1) I'm sorry.

2) Still not convinced. I must reveal that I run real estate deals on the side so you don't need to verse me in any homstead act stuff. Now, why do you think that the feds changed the tax on a sale situation in 1997? It because people needed incentives to buy. Tax breaks are a bullshit deal but without them the housing market would be much weaker. Whenever you are getting a tax "break" it is a "break" on the interest only. Paying interest means that you are paying somebody else's bills. Its like a rakeback. So its not really a golden break in anyway.

Let me give you an example. Ok, in Indianapolis you can get a good place to rent for $800 (californians are salivating now) per month. Now to own a decent condo its gonna be around $190K. That's going to be like, i dunno, $1200/month with 10% down with $1000 going to interest. So the tax break is like 300-400 per month. But guess what? You will spend 300/month on upkeep and condo fees. So say goodbye to Mr. Tax break. Now what does this leave? It leaves the bank with a nice payday and about $250 in equity payments. If your house only appreciates 3.5% per year then its no great deal to buy over rent. Plus as a renter you have basically no worries. Dont forget that you will pay 7% when you sell and perhaps you will pay rent for 6months in two separate places.

Indy

[Shajen]

I have a hard time reconciling an $800 a month apartment with a $190k condo.

Those are comparable in Indianapolis? Really? The housing market there must really suck.