Author Topic: Talk me down  (Read 2194 times)

neophyte

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Talk me down
« on: July 23, 2016, 08:26:05 AM »
A beautiful 4 bed/2.5 bath house just came on the market a few blocks away from me.  Nice kitchen, small yard out back, sun porch great for storing bikes. It's in a university area so the plan would be to rent the extra bedrooms to grad students and post-docs.  After 20% down PITI is estimated to be just $1 more than my roommate and I have been paying for our run down 2 bedroom apartment (leaky roof, mice, and cockroaches, just to name the biggest issues). But I'm just not in the right place to be buying a house right now.  I'm thinking of applying to grad school in the fall and if I don't get in, I should be looking for a new job that will be more lucrative. Either might take me out of easy commuting distance. (Although I have been saying this for 3 years now...) Talk me down mustachians.

MakeSmarterDecisions

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Re: Talk me down
« Reply #1 on: July 23, 2016, 09:00:26 AM »
Sounds like you are not in a position at all to consider this. Do you have a lot in savings in case anything goes wrong? I would be happy sharing our (almost) really big mistake purchasing a property like this (and we have plenty in savings and are FI). 

ender

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Re: Talk me down
« Reply #2 on: July 23, 2016, 10:01:14 AM »
Are you single?

Could you reliably rent out rooms?

If so, you might be able to minimize the potential problems with your plan should you be able to find good roommates (bad ones will cause more problems).

neophyte

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Re: Talk me down
« Reply #3 on: July 23, 2016, 11:43:04 AM »
Financially, I'm in an ok place to buy I think.  I've got enough in non-retirement accounts to put down 50+% if I wanted and I could 'theoretically' afford the mortgage without any renters.  (I am single) I think I could rent the rooms and afford to be somewhat picky about who I rented to. It's more an issue of not knowing how much longer I'll be in this city. (The plan was originally 1 year, but that was 4 years ago.)

Choices

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Re: Talk me down
« Reply #4 on: July 23, 2016, 12:50:55 PM »
Have you always dreamed of being a long distance landlord? If not, please, please, back away from this deal.

If you buy, it will either be a giant PITA of long-distance problem-solving with your tenants or it will weight your future decisions toward staying somewhere you don't want to be. Take this as an opportunity to decide what you really want from your life and stop procrastinating. What's your 5-year plan?

There will be other houses, but you only get one life.

NoNonsenseLandlord

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Re: Talk me down
« Reply #5 on: July 23, 2016, 03:29:24 PM »
I'm just not in the right place to be buying a house right now.

Didn't you just answer your own question?  There will be other homes for sale, when you want/need them.

Dicey

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Re: Talk me down
« Reply #6 on: July 23, 2016, 03:40:44 PM »
- You're right, it seems like a good deal.
- You're right, you're not really in a certain enough position to buy a house right now.
- You're right, houses are not easily packable should your life circumstances change.
- You're right, there will always be another house, a better deal.

Is that enough positive affirmations to help you make your decision? Hope so!

arebelspy

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Re: Talk me down
« Reply #7 on: July 23, 2016, 08:34:58 PM »
I'm skeptical on it being a "deal," but if it is, and you're willing to put up with being a landlord (perhaps even a long distance one), it may not be a bad time to start building a rental portfolio.  Locking in a super low, long term (and owner occupied!) rate right now, for the next 30 years, will likely be a fantastic decision, even if not on this house.

I think it's unlikely you randomly stumbled on an actual deal relative to the market (that didn't get snatched up), but it's possible, and if so, I may be a bit of a contrarian when I say that it might be worth the risks.  :)
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Evie

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Re: Talk me down
« Reply #8 on: July 28, 2016, 03:02:31 PM »
Never discount the price of your freedom and flexibility, especially at this stage in your life.

arebelspy

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Re: Talk me down
« Reply #9 on: July 28, 2016, 04:13:35 PM »
Never discount the price of your freedom and flexibility, especially at this stage in your life.

I'm not sure which direction you mean this.  I think I read it, on its face, as "don't take on something like this because it'll impact your freedom and flexibility when you're young," but I'd argue for the opposite: You have freedom and flexibility NOW, and you may not later, so now is the time to use those things as an asset and take advantage of them to try out opportunities like this.

E.g. the wife and I started purchasing rentals at age 22.  We had the freedom and flexibility to deal with them (showings to tenants, managing them, etc.) because we were young and had lots of energy, didn't have kids yet, etc.  That let us rapidly acquire more properties, and led to an early FI.

If we were instead 15+ years older, more tired, with kids, etc. it would have been difficult to do.  Still doable, of course, but harder.

Your point of the OP having freedom and flexibility now is totally true.  And maybe that's not worth giving up.  And it's good to think about what it will cost you in terms of that freedom and flexibility, as you point out.   But I'd argue that those are things you have now that you can utilize to help rocket you to FI (trading off a little of freedom and flexibility now for a ton later... time value of freedom and flexibility).  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

yddeyma

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Re: Talk me down
« Reply #10 on: July 28, 2016, 06:22:00 PM »
Honestly, if you can afford to, I'd do it.  Sounds like even if you leave town it would make a great rental so close to the university.  My biggest regret is not buying sooner and keeping my first home to be a rental.