Yea, go check out Manhatten and come back to us when you keel over at the price of renting a 500 sq ft aprartment! Around here in Cinci, $250-300k will get you a ~2000sq ft house. Cinci is a good inbetween area.

 

Morris' advice is spot on.

We just sold our condo and we almost broke even (buy/sale) due to the fact that the housing market has not yet recovered from the Internet burst here in Raleigh.

But that is an aside. We run some numbers and we would have paid $55,000 in rent for the 5 years we owned the condo. That would be a 25% downpayment on the place you are looking at.

Having said that you have to remember that the first few years of a mortgage you are not building much equity but paying the interest off. Mathematically speaking things don't start looking good until year 5 onwards if you follow the course of the mortgage. During the course of the average mortgage you end up paying a whopping 60% in TOTAL INTEREST. That is, if you borrow 250k by the end of the 30 year mortgage you pay back 400k to the mortgage company.

Sure, you can claim the interest as a tax deduction but unless you plan to live in the house for 5+ years you will loose any gains in agent fees, inpectors, sale repairs, etc.
Of course if the house appreciates like crazy (10% or more per year) you will still do OK. But for a $250 house you will have to sell it for AT LEAST $280 to break even. That is because the agent fees (which the seller pays) will take 7% of the sale price, interest on the mortgage (say two years) another 10% roughly, closing costs (which buyer always try to get the seller to pay), repairs, etc. with take up the rest of those 30K.


So in my opinion you have to ask yourself if you are going to be there long enough to at least break even. If not then you may as well rent. 800 sq ft is kinda small if you are planning to have kids soon. You could live there while they are babies/toddlers but it will eventually drive you crazy...

Alternatively you could hunker down on that $1300/month rental for a couple of years, do away with the unnecessary expenses (Icontrol for example OR Smoking ;-)) save like crazy and buy a bigger house. One big enough for you to feel like you could live there 10 years or so.

That is what we did ...

 

$30k? That is a premium house in good old Harrisburg.... ahahah..... actually $30k is about right these days..... just 2 years ago we paid $21,500 for a great house... i had to paint the upstairs but that was it..... nice hardwood floors, etc... 3 bedroom 1 bath.... we also paid $23k for another 3 bedroom house, hardwood floors, brick rowhouse.......


[QUOTE]Originally posted by Midnight Runner
those prices sound about right..

 

wow, that is expensive for an 800sqft condo. I bought my house here in Vegas 2/27/03 2000sqft for 172k and similar houses in my area are now selling for 270's. I am a Realtor in Las Vegas, if any of you guys ever decide to to make a move out here let me know!!!

 

new 1 br condos in dc are now 400k

 

We rented before we bought in SC and here in Michigan. While our prices aren't quite as high as in CA, Ann Arbor has some of the higher priced real estate in Michigan. It makes good sense to buy rather than rent when the prices are that close together. With the purchase at least you get to deduct your interest. With taxes and insurance in escrow our payment on a 1750 sqft house with a 3 1/2 car garage comes to ~$1250.00. Taxes run a little over 200 a month and insurance another 75 per month. That was financing ~$140,000.

 

Well, we made a bid for a townhome (the 800sq ft. place was just too small, with the baby coming and everything), and we lost the bid! We bid the place at 3k above the offering price, and someone else bid 5k above the offering price and we lost.

Still actively looking but my realtor says I should be a little patient and wait until after Jan. 1st when people would start selling again.

I'm definitely buying, but it's just a matter of location and size...

 

Sorry about your losing the bid.