2
   

Is It wise to buy realstate right now?

 
 
DrMom
 
Reply Sat 27 Sep, 2008 08:56 pm
My dh ( dear husband) thinks this real state market is an opportunity to buy. We just paid off the house we live in. I feel we should be relieved now despite the economy. I feel we don't know what is going to happen and I also fear this will become a stressor for him to manage and or lease the other property.
Any advise, comments?
 
cicerone imposter
 
  1  
Reply Sat 27 Sep, 2008 09:21 pm
@DrMom,
The idea may sound good, but trying to buy a second home in this liquidity market isn't going to be that easy. Even first time buyers with good credit are having difficulty.
0 Replies
 
Robert Gentel
 
  2  
Reply Sat 27 Sep, 2008 09:25 pm
@DrMom,
The general consensus among economists is that the real estate market still has some devaluing to do. Additionally, loan terms may not be that favorable.

I'd wait until housing prices turn the corner, and try to get in right when they start going up again. I suspect that if done right you'd be buying lower than you would right now anyway, and you'd not risk a liquidity problem if the value keeps dropping and takes longer than anyone expects to pick up again.
ehBeth
 
  1  
Reply Sat 27 Sep, 2008 09:27 pm
@DrMom,
What is the purpose of the proposed purchase? If it's for investment purposes, now doesn't seem a particular wise time. Things are still moving around as Robert has noted.
0 Replies
 
Bi-Polar Bear
 
  1  
Reply Sat 27 Sep, 2008 10:23 pm
@Robert Gentel,
sound advice.
0 Replies
 
DrMom
 
  3  
Reply Sun 28 Sep, 2008 08:41 am
Thanks , This is really helpfull.
What he has in mind is this. THis current house is bigger than our needs. If we rent it then the rent could be used to pay the mortgage for the other property. So in time this house which currently holds all of our savings, will generate another property.
I feel in theory this is a good idea but the practicalities of it are not that pleasant. We just moved to be in this house, we had problems with the tenant earlier, and the house needs attention and upkeep.
JPB
 
  1  
Reply Sun 28 Sep, 2008 08:45 am
@DrMom,
I'd be very wary of turning your current home back into rental property until the economy stabilizes. Putting yourself in a situation where you depend on someone else being able to pay their rent in order for you to live in the other property is quite risky at the moment.
0 Replies
 
cicerone imposter
 
  2  
Reply Sun 28 Sep, 2008 09:56 am
@DrMom,
Dr Mom, Our neighbor bought another house in a higher class neighborhood with higher home prices, because their home in our area was too small for their growing family. They recently completed some renovations on this home, and rented to a young couple within a month of their move to their "new" home.

For some "magical" reasons, the home prices in our ZIP code has held their value quite well; as a matter of fact, the last report shows home prices increased 0 -20% year over year, but the number of homes sold dropped by over 30%.

We used to own income property, but I sold when I retired, because I did not wish to "manage" anything in my (early) retirement. It was a very good investment, but it did take work to keep it occupied with good tenants, keep it maintained, and collect the monthly rent. When I sold it, the price was double what we paid for it.

Good luck.

JPB
 
  2  
Reply Sun 28 Sep, 2008 10:01 am
@cicerone imposter,
good point... the rental market in your particular area is a key consideration, DrMom.
DrMom
 
  3  
Reply Sun 28 Sep, 2008 12:43 pm
@JPB,
we live in South Florida where housing market took the hardest hit. In our particular neighborhood though most people who want to sell are still able to maintain their homes. Prices have come down but no foreclosures or auctions or anyting. In our community currently their is only one other house for rent, she is not accepting less than 4000 for rent and she has no upgrades to her house compared to our house. So based on this the realtor tells us that the chances of renting this house for 4000 to 4500 are bright.
I feel that a house like this built in 1990 on a acre lot needs constant maintainance and it will be a constant stressor to do it after it is rented.
I was thinking, if we have to do it we might be better off getting a condo on the beach( within 10 miles of this house) and either rent that condo or move in that condo. Dealing with landscapers, pest control, pool people, cleaning people repairs and all is quite bothersome for me, doing it for two properties will only double that.
On the other hand we have never lived in a condo so we don't know what is involved in maintaining or renting a condo.
Miller
 
  -1  
Reply Sun 28 Sep, 2008 12:45 pm
@DrMom,
The only safe thing to buy today is a US Savings Bond.
cicerone imposter
 
  1  
Reply Sun 28 Sep, 2008 12:56 pm
@DrMom,
You're already recognizing the stress factor, and that's a red flag you should heed. Your health is more important.
0 Replies
 
DrMom
 
  2  
Reply Sun 28 Sep, 2008 02:11 pm
What to say to Dh ?
Things like, "lo0k what impact it can have on your health" are not working, as he replies" I will be in more sress knowing all of my money is tied to this house and is not doing anything !!!
JTT
 
  0  
Reply Sun 28 Sep, 2008 02:13 pm
@Miller,
GWB recommends Lehman Bros stock. And who could you possibly trust more?
0 Replies
 
cicerone imposter
 
  2  
Reply Sun 28 Sep, 2008 02:14 pm
@DrMom,
Sounds like a negative no matter which way you look at this "plan."
DrMom
 
  2  
Reply Sun 28 Sep, 2008 06:29 pm
@cicerone imposter,
Thanks for the valuable input, I read him all the posts and he has agreed to three prerequisites, he will wait until market turns around and starts going up, he takes a personal developement course ( Landmark forum, which might change his perspective on many things) and we pay off all of our credit cards and have money saved for the closing costs involved.
JPB
 
  2  
Reply Sun 28 Sep, 2008 08:25 pm
@DrMom,
Quote:
...we pay off all of our credit cards and have money saved for the closing costs involved.

I'm sure all three things are sound and valuable but paying off your cc debt is an excellent idea!
cicerone imposter
 
  1  
Reply Sun 28 Sep, 2008 08:54 pm
@JPB,
That's what most finance counselors with any skill tell their clients; pay off your credit card first.
0 Replies
 
DrMom
 
  1  
Reply Mon 3 Nov, 2008 01:00 am
I appreciate all input it helped us a lot.
We are entertaining another idea. We have invested all our saving in this house so we don't have to worry about mortgage. It is a bigger than what we need right now. My husband travels as he is a soft ware consultant. He makes more money this way but travelling is not easy for his health and wellbeing.
What if we rented this house. (The realtor tells us it will rent for 4-5 thousand)Got into another smaller condo or townhome between 1000 to 1500 and then used this extra income to either pay off the credit card debt or mu husband could find a local job which would pay less but will not involve travel. Or I could travel with him off and on ?
cicerone imposter
 
  1  
Reply Mon 3 Nov, 2008 03:20 pm
@DrMom,
Not many people are capable of paying that kind of rent, and even if there were, you are not assured of full occupancy to pay for your mortgage and rental of a condo. See how the market is reacting to rentals in your price range before you commit to anything.
 

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