YART: Fiance wanted to buy a "new" condo instead of renting

[JImmyK]

by the way NEVER rent

I bought the home last year august for 445,000 its currently appraised at 550, my neighbor whose place is NOT has nice as mine sold his for 560.... so Ive probably got 130k in equity already....

My dads an engineer but only times he has ever really made money in his life has been in realestate. He has bought and sold 4-5 homes in his whole life but they all netted him a total of 800K in cash.

That is why out of college he made me buy that townhouse which I couldnt afford but now I know it was the best decision of my life.

 

[dabuddha]

I wouldn't buy sh!t together until you're married at least.

 

[PandaBear]

Originally posted by: sygyzy
My god, how do you both have so much saved up? I know, living at home, but still. Crazy!

1) Carpool wherever you go, and you drive, and fill up every single seat in your compact car. Ask people each to pay full price of gas and advertise the heck on craigslist. I drive 60k a year between SF and LA and between home and work. You get transportation cost taken care of plus extra.

2) Only eat out on the cheap and with someone you have to eat out (social, asking for a favor, etc). Learn how to cook good is a very important investment.

3) Resist buying anything for fun, only buy things to replace worn and broken stuff you already have. (No new CPU/MB/RAM/HD/etc)

4) Get every single rebate credit card out there that has an advantage over others, Chase business for restaurant and home improvement, citi for gas, drug, and groceries, Chase for gas during their double rebate.

5) Learn how to do car maintanence on your own. I can do everything on regular schedule except timing belt, as well as brakes, radiators, shocks, thermostat. That saves a lot when you drive as much as I did.

6) Find job that has good growth potential for your next job, not just high paying right now. I was raped on the last job for $35k a year for 2 years, and what I learn from that I get $63k per year in this job. Both were in firmware/software engineering. I am still underpaid but will ask for a raise when my company turn profitable next year (hopefully).

7) Find a girlfriend/wife that is as cheap as you are (the most important one).

 

[gigapet]

what kind of college students leave college with 30k and 80k in the bank?

wtf?!?!?!

 

[IronWing]

If you decide to go for a condo, don't buy in a new building, get one in a sold out building. Otherwise if you need to sell it you will be competing with the builder. Guess who has the newer looking unit and can sell cheaper?

 

[spidey07]

Originally posted by: gigapet
what kind of college students leave college with 30k and 80k in the bank?

wtf?!?!?!

ones that don't leave the nest.

 

[rh71]

Originally posted by: spidey07

Originally posted by: gigapet
what kind of college students leave college with 30k and 80k in the bank?

wtf?!?!?!

ones that don't leave the nest.

yay for that. If I'm in college or just graduated, I'd hate to spend nearly $1k every month on rent just because I can't bear the idea of living with parents. If you can stay home until marriage time, do it.

 

[PandaBear]

Originally posted by: gigapet
what kind of college students leave college with 30k and 80k in the bank?

wtf?!?!?!

We didn't leave college with that much in the bank. I left with about $15k saving (working part time and paid intern last year in school). She left with a $12k debt.

She then worked 2 years before going back to school, paid off the debt and saved $30k before entering, she was paying her parent $400 a month when living at home, and bought my parent's used car for $500 (almost a giveaway). During grad schol she got tuition paid and some income by working for a professor, I help the rest of her living expense, so she came out with all the saving intact.

Meanwhile I save up everything and have the following income:

0.75 year at $54k
1 year at $35k
1 year at $50k
1 year at $63k
$15 per day carpool income round trip

and the following expense:

$400 per month to rent for a year
$500 per month to my parents for a year
$100 per month cell phone bill (me, gf, both my parents, in a freaking family plan)
$350 per month gas every month
$80 per month bridge toll
$40 per month DSL for living at home
$2000 car maintanence for 2 cars in 4 years total
$200 new monitor
$250 new PC (DELL poweredge sc420 super deal) for my dad
$200 new suit for interview
$300 gifts for multiple friends getting married
$1400 trips for me/gf to Florida
$350 road trips x 4

$4780 diamond engagement ring.

other misc expense of having a relationship (eating out, movies, operas, gifts, etc) total about $5000 in 4-5 years.

That's about it. The rest goes to savings.

 

[Stuxnet]

Originally posted by: Minjin
I can't help but find it hilarious that a couple making a combined $120k is living with their parents...

How about moving to an area without earthquakes, insanely high costs of living, and rediculously long commutes?

Mark

Couldn't have said it all better myself. EXACTLY what I was thinking after the OP.

 

[CTrain]

God damm I hate people that keep throwing the phrase "renting is throwing money away" crap without even examining the situation.

How about examining his exact situation.

Lets say hes taking out a $500K loan.
- Hes paying $2900/month without ins. or property tax.
its gonna be around $3500 with ins and taxes.
- So in 2 yrs, he'll be paying $84,000.

- Lets say hes renting for 2 yrs for $1000/month.
Thats $24,000.

RENTING.
Lets say he put away the difference of $2500 into a simple saving account of 4.5%, he'll have $62,000 after 2 yrs.

BUYING
He'll have $13,500 of equity in 2 yrs.

So for him to break even by buying, the HOUSE needs to appreciate ~$50K in 2 yrs.
Will his house appreciate $50K in 2 yrs ?? Probably....probably not since the market in SF is at an extreme high right now.
Nothing is certain

This does not even include, closing costs, repairs and such for owning a home.
Of course, he'll get tax breaks with owning a house.

What I'm saying that its not as cut and dry as "renting is throwing your money away.

 

[Stuxnet]

Originally posted by: mugs

Originally posted by: ColdFusion718
well in California it's insanely expensive. Houses for $200-300K are basically unheard of.

That doesn't mean it makes any more sense to buy a $600k home with their income.

Exactly. All that means is that it's time to GTFO of California.

 

[Stuxnet]

Originally posted by: ElFenix

Originally posted by: Modeps
you CAN claim any interest paid toward a mortgage on your taxes.

that little loophole in the income tax scheme may get closed up a bit soon.

Crackhead much?

That would absolutely annihilate the US economy, so don't hold your breath.

[edit]

Well crap... I just saw the Yahoo homepage.

This could suck...

 

[AbsolutDealage]

Originally posted by: PandaBear

Originally posted by: gigapet
...

That's about it. The rest goes to savings.

I know it's been said before, but I don't think you can afford a place in cali.

You are probably talking ~$4000/month for PITI on $600k (probably more, depending on taxes). Add to that utilities, and any other misc bills, and you are easily over $5000/month. Now add on groceries, house maintainance, etc. and you are drowning. I would rent and save, and then move away in a couple of years when the time is right for you.

 

[Stuxnet]

Originally posted by: AbsolutDealage

Originally posted by: PandaBear

Originally posted by: gigapet
...

That's about it. The rest goes to savings.

I know it's been said before, but I don't think you can afford a place in cali.

You are probably talking ~$4000/month for PITI on $600k (probably more, depending on taxes). Add to that utilities, and any other misc bills, and you are easily over $5000/month. Now add on groceries, house maintainance, etc. and you are drowning. I would rent and save, and then move away in a couple of years when the time is right for you.

That's the thing... at the rate these two people are saving money, if they could stick it out in some low rent dump for another year or two, they could pay cash for a pretty decent home in most areas, or put 75% and get a castle.

Look to the midwest. It's cheap there.

 

[mugs]

Originally posted by: CTrain
What I'm saying that its not as cut and dry as "renting is throwing your money away.

You're right, it's only true if you plan to live there more than 3-5 years.

But I don't think the examples you gave were really comparable.

 

[CTrain]

Originally posted by: mugs

Originally posted by: CTrain
What I'm saying that its not as cut and dry as "renting is throwing your money away.

You're right, it's only true if you plan to live there more than 3-5 years.

But I don't think the examples you gave were really comparable.

WHY ??
I took what he said and gave a pretty realistic example of his situation.

 

[vladgur]

Originally posted by: dxkj


and take a 200k hit when the bubble bursts in those overinflated area.s

Puhleeze. Ive heard about the housing bubble burst for at least 14 years here(Bay Area). The economy crumbled, we went through 3 wars, 3 presidents, and one thing is constant, the real estate here is the best investment of your money, something that out-of-staters cant understand. If you can afford the mortgage and related expenses, there is no other place that will have a less risky ROI than real estate in California.

 

[desy]

Yep
Owning is a lifestyle choice and not a guarantee of an appreciating asset
Renting if your single and can put up with roomates is the cheapest way to go.
No property tax ,less utilities , less crap lawnmowers, garden tools, power tools to'fix it yourself' No laundry machines to buy , broken dishwashers to repair and on and on.

Still owning a 'home' is enjoyable and usually a good way of diversifying your assets, you have to live somewhere. When you get married find someplace you both can be happy living in thats more important than the money part.
Although I find owing the bank a half mil when you only bring in 120K a bit much and might make you house poor. . .

 

[vladgur]

Originally posted by: CTrain


So for him to break even by buying, the HOUSE needs to appreciate ~$50K in 2 yrs.
Will his house appreciate $50K in 2 yrs ?? Probably....probably not since the market in SF is at an extreme high right now.
Nothing is certain

Youre talking about $600k house appreciating at least $25k a year thats a 4% increase a year on a house in Bay Area. This is not only probable, its certain. Did you know that in Santa Clara County, which is the heart of Sillicon Valley, a median house makes $90k while the average person makes $78k a year?

 

[mugs]

Originally posted by: CTrain

Originally posted by: mugs

Originally posted by: CTrain
What I'm saying that its not as cut and dry as "renting is throwing your money away.

You're right, it's only true if you plan to live there more than 3-5 years.

But I don't think the examples you gave were really comparable.

WHY ??
I took what he said and gave a pretty realistic example of his situation.

Because I doubt a $1000/month rental is comparable to a $600k condo. Yeah, he may be able to find a $1000/month apartment, but you're comparing two entirely different standards of living.

 

[TallBill]

I dunno, I just cant wait untill my wife and I get to the point where we both have decent incomes. Its still gonna be 5+ years away. Of course by then we'll probably have kids so it'll be a moot point.

 

[PingSpike]

Everyone likes to tout that its such a great investment and that renting is throwing your money away.

But if you can't afford it, you can't afford it.

 

[vladgur]

Originally posted by: PingSpike
Everyone likes to tout that its such a great investment and that renting is throwing your money away.

But if you can't afford it, you can't afford it.

Generally speaking, when people talk about investing money, they talk about money that you can afford to invest, right? If you cant afford to buy a house, youll have to find other less profitable ways to invest your money. Like a 4 months trip around the world that I did last year

 

[Mr N8]

That "beater" house would get you >3000 square feet within less than a block from Lake Michigan, here.

I would forget about the fiance, too. You won't make it five years with the differences you seem to have.

 

[CTrain]

Originally posted by: mugs

Originally posted by: CTrain

Originally posted by: mugs

Originally posted by: CTrain
What I'm saying that its not as cut and dry as "renting is throwing your money away.

You're right, it's only true if you plan to live there more than 3-5 years.

But I don't think the examples you gave were really comparable.

WHY ??
I took what he said and gave a pretty realistic example of his situation.

Because I doubt a $1000/month rental is comparable to a $600k condo. Yeah, he may be able to find a $1000/month apartment, but you're comparing two entirely different standards of living.

I would totally agree with that.
But I only took from what he said at the beginning of the post, I didn't make these numbers up.