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Old 02-08-2011, 05:02 PM   #7
Join Date: Jan 2011

To put it in perspective: We still owe around 150k on our townhouse. With a 5% mortgage, we are paying roughly $850 a month in interest+taxes (not counting the money that goes to principal). Add in association fees (for us), and that goes to $1150, which is about a wash between renting and owning in our area- but our property has appreciated a bit in the years we've owned it, so the investment in equity will probably pan out. For that, we assumed the risk of paying for repairs on our own (though much of the maintenance is done through the HOA).

You will be borrowing double the money, have a more expensive property, have a higher interest rate, and will pay PMI on top of that. The first few years you will not see a break-even point unless the apartments you're looking at cost more than $1500 (or even higher) a month- you can find 2br houses renting on Phinney Ridge for less than that. And you will be locked into investing in your own house's equity, which has proven risky in a number of markets. If you're in it for the long haul, eventually you will be paying more towards principal and less towards interest, but it takes a long time to break even between owning and renting if you assume a flattish real estate market, and if the market really is flattening out or depreciating it makes more sense to rent and sock the money away for a down payment - no one can predict the real estate market accurately, though, which makes it all more complicated.
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Old 02-08-2011, 05:03 PM   #8
Join Date: Jan 2011
Location: USA

I'm not familiar with the taxes/real estate laws in WA.

here in AZ, taxes are about $1-1800 for that price of home. Closing costs are about 2.5%.

I usually tell my clients its about 150-200 a month for taxes/insurance. It should be a little less for insurance since its a townhouse. Might be a bad example but a townhouse i own in phx is about $500 a year.

PMI isn't that bad, i would ask your lender about once your property hits 80% ltv if you can get rid of PMI. Ie appraisal to remove the PMI in a few years or hopefully a couple when our market picks back up.

Apartment IS throwing money down the drain. Sure you will hve to spend more on a mortgage, but the tax write off is a savings alone. Paying $1k a month for say 5 years for an apt is a waste. $60,000 over 5 years with no write offs or appreciation.

If you can qualify to buy a house now, you should. Specially if you can afford it and come in with little to no money down.

Benefit being you just bought a $300k house, hopefully appreciates over 10 years at 6% *conservatively* $18k a year of equity on paper.

I can talk about real estate till i'm blue in the face, the potential is great! Here in AZ, our capt gains tax on primary residence is something along the lines as tax free after two years. Not a tax guy so don't quote me, just a realtor/investor. I'm just going by what i see here, and depending if you can unlock that equity later on, there's the opportunity of leveraging your property for other while keeping the one you are about to purchase as a rental.

Yes your payment goes up if you take out equity but you have to look at it like a 401k on steroids. If you're negative couple hundred a month that's only $2,400 a year. Having two properties that appreciate both at 6% will more than even that out since its a write off anyway.

Anyway don't want to insult your intel if you already know all this but real estate is great way to make money. Everyone will always need a place to live.

If you haven't found an insurance person yet, shop around. They should tell you exactly what to pay. If you have a realtor have him pull other similar homes in that neighborhood if any have closed and look at the tax records. I don't know how that MLS works but we can see what people pay in taxes a year.

You're lender will/should be locking your rate sometime soon so that should give you a good pinpoint on exactly what your payment is. Don't stick to the program he says, tell him to see what other programs you can qualify for, sometimes a 30yr fix is better than a 3/5 ARM or vice versa. Of if you can qual for the new FHA, i think its called ameridream or whatever. Are the sellers/builder paying any closing for you?

I've been a realtor/investor here in az for awhile. Right now is such a great time to buy since FHA is back, finding sellers to fork over 6% to buyers is very helpful. 3% towards closing, and 3% towards down.
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Old 02-08-2011, 05:04 PM   #9
Join Date: Jan 2011
Location: USA

It's simplistic and false to couch it in terms of 'throwing money down the drain'. You're paying for a place to live, and maintenance on that place. If I lived in Las Vegas right now I would surely rent rather than buy, because I could rent a place for less than I would be paying in tax-adjusted interest on a mortgage, and I wouldn't be sinking money into a depreciating asset.

Your tax savings will vary based on your bracket - there's a break-even point between owning and renting for everyone. It involves a fair bit of math and some optimistic and pessimistic assumptions about what the real estate market will do to get best-case and worst-case scenarios. Home ownership is a tradeoff. If your situation changes and your place no longer meets your needs, or if your financial situation changes, you won't be able to get out of a house/condo nearly as easily as getting out of a lease. You are investing money in your property, and you are responsible for stuff breaking, which usually means that you end up with better quality stuff, but that you assume a lot more risk- routine maintenance and the like aren't built into the cost of owning a home, unlike the cost of renting.

Since (one of) you can deduct mortgage interest from your taxes- to readjust it to post-tax dollars multiply by one minus your marginal rate (i.e. if you were in a 25% tax bracket multiply by 0.75). Add in property tax, insurance, fees and estimated utilities and compare that number to what you would be paying in rent (with those same utilities included). If it comes out to more, then unless your place is appreciating faster than other investments, you end up in a bad spot.

There are plenty of people who got in on the tip of the bubble in some markets only to end up sinking money into a depreciating asset. Assuming 6% appreciation is somewhat ludicrous at this point- it's very dependent on the area and the market. Historically condos don't appreciate as quickly as houses, though that's turned on it's ear very recently.
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Old 02-24-2011, 05:12 AM   #10
Join Date: Feb 2011

Homes in Seattle do NOT have air conditioning because it's rarely needed. But you can pick a wall unit one up for around $100 at Lowes or Home Depot during the summer. There's also portable units that run around $300-$400.
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Old 07-28-2011, 08:18 AM   #11
Join Date: Jun 2010

Before you start looking at places, you should make a list of all the things you’re interested in for your new home. List off your must-haves (how many bedrooms, what type of property, etc) and your hope-fors (locations, what type of amenities, etc.) These will help you sort out your necessities from the things you may be able to give up if you come across an otherwise perfect home.
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Old 08-03-2011, 02:48 AM   #12
Join Date: Jan 2011

In buying a house you have to consider the neighborhood and the community around the place. Ask for some feed backs about your prospect estate.
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