Small house vs. apartment

[pontifex]

looking for a place to live and not too sold on the apartment idea for several reasons. Would like a house but don't have the money to really afford one.

small house is listed at $69,000. It's a town house connected to other houses. 3 bed, 1 bath. new furnace and windows. Looks nice in the pics but haven't seen it yet. House is in town and I'd prefer to be outside of town but I guess beggers can't be choosers, right?

My dad knows the people selling it so I could probably get it cheaper than $69k.

A 2 BR apartment around here is going to be in the $600-700 a month range.

so many pros and cons to both that I have no idea what would be best or how to figure it out.

I know a lot of ATOTers are financial gurus, so what am I looking at financially here? Obviously a house is going to have more things that I need to handle myself but at least I'll own it and not just be throwing money into an apartment which I'll never own.

 

[SandEagle]

Just stay a few more years in your parents basement

 

[Svnla]

I am in the same boat at you, looking for houses to settle down.

This is what I know.

Houses = there are other expenses beside the mortgage. Property tax plus insurances are must in house, and then private mortgage insurance if your down payment is less than 20&#37;. Then the repair expense. Make sure you stay in the house for a few years before you move again or you will lose money <most of the time>.

Go here and see how much house you can afford = http://cgi.money.cnn.com/tools/houseafford/houseafford.html

Darn, the housing cost at your area is cheap. 2BR for less than $700? Not a ghetto area, right?

 

[DesiPower]

I think you will be paying close to 650 with mortgage taxes and insurance. A house that cheap has to be crappy will not last 30 years, house price for that elcheapo house will not rise, if you are 100% sure that you can sell without taking a loss, then go for it

 

[apac]

I <3 being a homeowner. The freedom to do anything you want, inside or out, just has so many advantages.

 

[caspur]

Annual rent in apartment: 8400. Small house purchase price: 69,000. Ratio is a little over 8:1. (Assuming similar utilities, sq footage, maintenance, etc. this ratio is better than some of Forbes top cities to buy in, such as Miami, Jacksonville, and Phoenix)

Also, calculating a 30 year mortgage on a 69k house w/10% down, you are looking at an under $400 a month payment (depending on credit) which is cheaper than rent in your area.

 

[pontifex]

I am in the same boat at you, looking for houses to settle down.

This is what I know.

Houses = there are other expenses beside the mortgage. Property tax plus insurances are must in house, and then private mortgage insurance if your down payment is less than 20&#37;. Then the repair expense. Make sure you stay in the house for a few years before you move again or you will lose money <most of the time>.

Go here and see how much house you can afford = http://cgi.money.cnn.com/tools/houseafford/houseafford.html

Darn, the housing cost at your area is cheap. 2BR for less than $700? Not a ghetto area, right?

on that site, how do you know what the mortgage rate and property taxes, and homeowner insurance costs?

depends on what you define as ghetto...

I'm currently in a rural area and would like to stay in a rural area. it's certainly not an upscale area but it's not a gang infested warzone either. Houses aren't usually that cheap but this is a small townhouse.

 

[pontifex]

Annual rent in apartment: 8400. Small house purchase price: 69,000. Ratio is a little over 8:1. (Assuming similar utilities, sq footage, maintenance, etc. this ratio is better than some of Forbes top cities to buy in, such as Miami, Jacksonville, and Phoenix)

Also, calculating a 30 year mortgage on a 69k house w/10&#37; down, you are looking at an under $400 a month payment (depending on credit) which is cheaper than rent in your area.

but then i have to pay for oil, taxes, insurance. Any problems have to be repaired by myself or I have to pay someone to do it. Plus any other maintenance costs.

wow, so if i can't put down 20% theres a mortgage insurance fee. no way i can put down 20%, maybe like 4-5%

 

[iGas]

but then i have to pay for oil, taxes, insurance. Any problems have to be repaired by myself or I have to pay someone to do it. Plus any other maintenance costs.

wow, so if i can't put down 20&#37; theres a mortgage insurance fee. no way i can put down 20%, maybe like 4-5%

Don't you have to pay for oil/hydro/renter insurance in an apartment?

Up keep cost is nil in renting, but wouldn't the $200~$300 in saving per month be ample for maintenance?

And, let not forget the tax deductible on mortgage interest that associated with buying.

I'll buy that house cash and assume all maintenance liabilities and rent it to you for $650/mo if it is in okay neighborhood, pending the property tax on foreign investor.

IMHO 20% down is less than the cost of most cars ($69K * 0.2 = $13,800).

In my area the cheapest town house that you can buy vs. rent is around 20:1 ratio, house start at 30:1 and up.

 

[AMDZen]

Whatever your choice, move away from the shithole that is PA

 

[Modelworks]

If you are not planning to live there for 30 years then I would go with apartment.

 

[Modelworks]

Don't you have to pay for oil/hydro/renter insurance in an apartment?

Depends on the apartment. Here I get the apartment , only utility I pay is electric. The water, sewer, trash is included. They also provide all the kitchen appliances and regularly replace the air filters on the central air system and even change the batteries in the smoke detectors, so that is covered to. If something breaks it is fixed next day. Apartments can be great if you find the right places.

 

[BoomerD]

A townhouse is basically just an apartment anyway...you still have all the neighbor-related problems that you get in an apartment...PLUS you'll probably have a "maintenance fee" or HOA fee on top of your mortgage and other normal costs.

 

[Svnla]

on that site, how do you know what the mortgage rate and property taxes, and homeowner insurance costs?

depends on what you define as ghetto...

I'm currently in a rural area and would like to stay in a rural area. it's certainly not an upscale area but it's not a gang infested warzone either. Houses aren't usually that cheap but this is a small townhouse.

Mortgage rate = Go to bankrate.com and look up the rate for your area. Or call several banks/credit unions around your area and ask for the best rate they offer (make sure your credit score is good).

Property tax = Call your local property tax assessment office. They can tell you the amount. Different states/local areas set up the rate different.

Home insurance = call your insurance agent.

When you said "small", I am assuming it is about 1000 to 1500 sq. ft.?

 

[pontifex]

Don't you have to pay for oil/hydro/renter insurance in an apartment?

Up keep cost is nil in renting, but wouldn't the $200~$300 in saving per month be ample for maintenance?

And, let not forget the tax deductible on mortgage interest that associated with buying.

I'll buy that house cash and assume all maintenance liabilities and rent it to you for $650/mo if it is in okay neighborhood, pending the property tax on foreign investor.

IMHO 20% down is less than the cost most cars ($69K * 0.2 = $13,800).

In my area the cheapest town house that you can buy vs. rent is around 20:1 ratio, house start at 30:1 and up.

depends on where I rent but the apartment i looked at last I would only have to pay for electricity, phone, and internet, and renter's insurance.

 

[BurnItDwn]

Townhouse most likely means homeowners association... meaning on top of mortgage, taxes, property insurance, you'd likely be paying a monthly assessment too....

I lived in a townhouse that costed about 115K (peaked around 145K, but, was back down to 115K by the time I sold it, and now is worth about 70K) ....

I HATED it. Shitty neighborhood, homeowners association was worthless and a big pain in the ass. Would have preferred an apartment for the $$ I was paying.


Since then I've bought a detached home without an association... much much better.

IMO, I'd continue renting until you could afford a detached home...
If you want a detached home, see if there are any for rent in your budget... I know the old 2 bedroom 750-1200sq foot houses around here cost about the same amount as most 2-3 bedroom apartments to rent....

Once you are certain what you want to buy, and you plan to stay there for 10+ years ... that's when you want to buy ... until then ... probably not worth the risk.

 

[thedarkwolf]

Paid $42k for my house ten years ago. Still happy I did it. The way things have gone I really doubt I could get my $42k back but still cheaper than renting and its MY HOUSE. I can have my dogs and do whatever I want to it which is a huge plus. I can afford a nicer house now but really don't need one. If you are going to live in the same area for 5 years it is worth thinking about buying.

 

[pontifex]

Mortgage rate = Go to bankrate.com and look up the rate for your area. Or call several banks/credit unions around your area and ask for the best rate they offer (make sure your credit score is good).

Property tax = Call your local property tax assessment office. They can tell you the amount. Different states/local areas set up the rate different.

Home insurance = call your insurance agent.

When you said "small", I am assuming it is about 1000 to 1500 sq. ft.?

It's 1316 sq ft.

also it says minimum house price under results. shouldn't that be max house price?

 

[pontifex]

On the realtor site it it says "taxes: 500"
is that yearly property tax?

 

[BurnItDwn]

On the realtor site it it says "taxes: 500"
is that yearly property tax?

realtor.com usually shows taxes as the total annual taxes for previous year... so I'd guess yes ...

 

[DaveSimmons]

Townhouse isn't a real house since with attached walls you can't set up a nice home theater with subwoofer.

You probably also have shared areas (with surprise maintenance bills for them) and a homeowner's association with monthly dues.

Houses in my area are $800K+ so I just rent an apartment and put the difference between rent and mortgage into my brokerage account.

It would be nice to have a real house, but it's also nice having a pile of cash and no anchor of a mortgage around my neck. If I had to change jobs I could move anywhere I wanted without needing to sell or rent out a house, and the brokerage account could pay the bills for quite awhile if I had trouble finding work.

 

[sjwaste]

A townhouse in a rural area is usually a bad investment. Where land is plentiful, why built lots of small houses on small lots? It's for the segment of the market that can't afford an average lot in the area. Will probably be difficult to resell. Might not be the best neighborhood in your area, either, comparatively speaking.

Plus, do you you have any inclination to move? If so, the transaction costs are a factor. That and see above, it might be a difficult property to resell.

 

[iGas]

Townhouse isn't a real house since with attached walls you can't set up a nice home theater with subwoofer.

You probably also have shared areas (with surprise maintenance bills for them) and a homeowner's association with monthly dues.

Houses in my area are $800K+ so I just rent an apartment and put the difference between rent and mortgage into my brokerage account.

It would be nice to have a real house, but it's also nice having a pile of cash and no anchor of a mortgage around my neck. If I had to change jobs I could move anywhere I wanted without needing to sell or rent out a house, and the brokerage account could pay the bills for quite awhile if I had trouble finding work.

I din't think that home in Bellevue, WA , because the real estate listing shown that there are detach houses around $300K, and $800K houses are much nicer than the average houses in better neighborhoods.

 

[jtvang125]

I was in the same boat not too long ago. I was staying in a crappy apartment with my brother and another guy for $600 a month. We were asked to leave so I tried looking for a place a little nicer but everything was $1100+. Saw a few nice townhouses but the HOA fees were like $350 a month. We gave up on the idea of renting after 2 months of searching and decided to buy. We closed last month and the feeling of owning your own place has been great. Of course there are more responsibilities though.

 

[vi edit]

I'm not going to get into the argument about townhomes vs. detached or wheter a townhome is a good buy or not. It is *entirely* market specific.

That being said here's all I have to say about buying...

Do you have $1500 extra laying around to pay for a new furnace/ac compressor/water heater/ect should one of those fail? How about money for a new stove or fridge if one of those crap out?

Also, do you have serious plans to stay there for 5+ years? If not you can kiss away $5000+ in realtor fees and state/city fees getting out of the place if you move.

Buying isn't a slam dunk no brainier idea. There are a lot of unnaccountable costs that you have to plan for and it's not any where as easy to pick up and leave if you aren't happy where you are.