Author Topic: On buying a home  (Read 3783 times)

RyanHesson

  • 5 O'Clock Shadow
  • *
  • Posts: 69
On buying a home
« on: July 05, 2014, 07:08:15 PM »
Hello,

I'm not quite ready to buy a home, but I may when my lease ends if I'm confident I'll be here for a while (though that's not for a long while).

I don't really need to do all the planning now for this, but I figure, I'm here right now, why not ask. So:

1. How big of a house? There's not really 1 bedroom 1 bathroom houses around. So 2 bedroom 2 bath? 3 bedroom 2 bath? 3 and 3? The additional bedrooms would mean I'm renting them out. I could do something like include utilities and charge $500 or so for a bedroom and bathroom. Maybe even $550 depending on how much prices inflate by then. Or maybe even more if it's a newer home.

2. Take a mortgage or not? There's a good chance I'd be able to put 100% down by then, but is that the smart move? Should I take the mortgage and put 20% down? Keep the other money in investments?

3. Where exactly? I live in a small town (one grocery store, one liquor store, a few bars, and one church), but there's a bigger city (with a hospital, a pretty big library, normal stores like Walmart and Target, several restaurants, normal city stuff) about 20 miles away. Prices are slightly cheaper in the city, but with the commute it pretty much kills any difference and then some. There's also another town about 25 miles in the other direction, which is similar to here (except even more remote because it's even farther from the city), that could be an option, but it has no apparent advantages.

4. Will the market be strong enough? It seems to me that women are more likely to want to have the house, men are less likely to care. This town is mostly single men in their 20s and 30s.

5. How old a place? Pretty much everything in this town will either be more than 100 years old or less than 15 years old. Nothing much inbetween that. There's more of a range in the city.

My big concerns are that I live in one of those towns where everyone works for the same employer. If they don't they're related to someone who does. There no market for housing here except for employees of one company. If my company cuts jobs then I'm stuck with a house in the middle of no where with no jobs around where no one wants to live. The other thing, I don't like living here. I'm here because the company pays very well, but if I could find similar pay elsewhere I'd be gone. And if I wasn't working here (so when I retire, hopefully young), I wouldn't live here.

For prices, right now in this town I can see:
110K for a 2 bed 2 bath condo built in 2002
130K for a 5 bed 1 bath house built in 1909 (looks well maintained, but considering the pay here I'm thinking very few will be inclined to share a bathroom with 5 people, so it will be hard to rent out those rooms, and 105 years old is pretty old)
140K for a 3 bed 2.5 bath condo built in 1998 (looks like of like a dump though)
170K for a 2 bed 2.5 bath condo built in 2008 (and absolutely beautiful, looks VERY nice - this could definitely rent for more than other places)
180K for a 3 bed 2.5 bath house built in 2000

In the city:
95K for a 2 bed 2 bath condo built in 1987
115K for a 2 bed 2 bath condo built in 2001 (much nicer than the 95K one, and in a better location)
Literally dozens of 3 bed 2.5-3 bath houses built in 2000-something for 165-185K.
205K for a 4 bed 2.5 bath house built 2005
205K for a 3 bed 3 bath house with some land (like 1/3 of an acre) and beautiful, built in 1998 but with all new appliances
225K for a 6 bed 4 bath multi-family house, built 1988, 2800 sqft. Location is good and house is big but looks kind of dumpy.

Just to give an idea of the prices I'm looking at.

Any advice? Again though, this won't be for a while.

deborah

  • Walrus Stache
  • *******
  • Posts: 9263
  • Location: Australia or another awesome area
Re: On buying a home
« Reply #1 on: July 05, 2014, 10:16:42 PM »
Looks like you could use this information to create a database about how well real estate investing works in your area.

RyanHesson

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: On buying a home
« Reply #2 on: July 05, 2014, 10:27:03 PM »
I don't understand what you mean.

deborah

  • Walrus Stache
  • *******
  • Posts: 9263
  • Location: Australia or another awesome area
Re: On buying a home
« Reply #3 on: July 05, 2014, 10:36:10 PM »
You've got together all this information about the houses that are for sale. As they get rented, you can find out how much they rent for. You will become an expert in the real estate in you area, and be able to figure out just what is the best type of real estate in your area for investors. This will help you a lot when you are ready. You will know whether your area is OK or not, and what types of things do well, and do poorly.

clifp

  • Pencil Stache
  • ****
  • Posts: 541
Re: On buying a home
« Reply #4 on: July 06, 2014, 12:52:32 AM »
You've got together all this information about the houses that are for sale. As they get rented, you can find out how much they rent for. You will become an expert in the real estate in you area, and be able to figure out just what is the best type of real estate in your area for investors. This will help you a lot when you are ready. You will know whether your area is OK or not, and what types of things do well, and do poorly.

Yup.

"All real estate" is local and in your case more than most. You live in a small company town which makes your real estate situation even more unusual than most.
You are approaching the process in smart, strategic, and systematic fashion congratulations
I'm no real estate expert, but even if I was I couldn't give you any useful advice, that wasn't generic (buy the worse house in the  best neighborhood).  Cause you know already know way more than I'll ever know about your local real estate market.
I might possible make an opinion about mortgage vs no mortgage but I'd need to know things like the loan rate, your age, and tax bracket.

At some point I'd interview a couple of the local realtor. Find the ones that have sold the most houses the last two years. I think they will be able to give you eve more insights.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 8940
  • Registered member
Re: On buying a home
« Reply #5 on: July 06, 2014, 11:10:18 PM »
If you are renting out extra rooms, this may be a place where bigger is better, as higher sqft houses usually sell for fewer $/sqft.

SDREMNGR

  • Bristles
  • ***
  • Posts: 324
Re: On buying a home
« Reply #6 on: July 12, 2014, 08:34:04 AM »
Heck, have you thought of moving and getting new job?  It sounds sort of depressing living in a town full of only dudes.  Doesn't sound that different than jail...

RyanHesson

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: On buying a home
« Reply #7 on: July 12, 2014, 06:47:40 PM »
Heck, have you thought of moving and getting new job?  It sounds sort of depressing living in a town full of only dudes.  Doesn't sound that different than jail...

I had a few other options for jobs out of college, this paid like 50% more than any of my other options (maybe like 40% more than my next highest paying option). There's a good chance I won't be here for more than a few years, but for now the pay is great. And I might be exaggerating a little, still maybe 15-20% of the town is female. The city nearby is much closer to 50-50, it's only this little town that's got this dramatic difference. The city has normal city stuff with normal gender ratios.

waltworks

  • Magnum Stache
  • ******
  • Posts: 3503
Re: On buying a home
« Reply #8 on: July 12, 2014, 08:03:35 PM »
Well, buying might make sense if:
-You're going to be there a while (5+ years?)
-Rent is crazy high, but buying is crazy cheap.
-Rent is high enough to use the place as a rental down the road and you're ok being an out-of-town landlord/hiring management.
-You have a crystal ball that says appreciation is going to be nuts.
-All of the above.

It sounds like right now, you should just sit tight until you're more sure of what your future holds. If this is an oil/gas/fracking boom town, I'd stay far away from buying, personally. Extractive industries change fast and you could end up owning a nice piece of a ghost town.

-W

RyanHesson

  • 5 O'Clock Shadow
  • *
  • Posts: 69
Re: On buying a home
« Reply #9 on: July 12, 2014, 08:25:24 PM »
Well, guess I won't buy here then.

TheHouseStache

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: On buying a home
« Reply #10 on: July 14, 2014, 11:15:30 AM »
If this is an oil/gas/fracking boom town, I'd stay far away from buying, personally. Extractive industries change fast and you could end up owning a nice piece of a ghost town.

-W

i was reading this and thinking that this sounds an awful lot like Pennsylvania and their boom and bust with fuels (coal, NG, etc).  I actually have an uncle who took advantage of this situation exactly, and buys properties to rent to the natural gas guys.  Heck, some of them have actually improved his homes for him because they wanted some amenities the home didn't have!

Depending on your goals, you could make a town like this work.

SDREMNGR

  • Bristles
  • ***
  • Posts: 324
Re: On buying a home
« Reply #11 on: July 14, 2014, 08:24:26 PM »
If you plan on moving in less than 5 years, I'd only look to buy if it makes sense as a rental investment.