Hi All,

I gotta say that this site has been great about supporting its members, and great advice has always come forward. I'd like to get some input on buying a house / condo.

I can put down a downpayment of 20K, and I know that I can qualify for a 100% loan around the 300K range. I'm single, 24, and make about 50K a year. The problem is that I live in the Bay Area, and housing prices here are just ridiculous... For example:

1 Bedroom condo - $300,000 - $325,000
2 Bedroom condo - $300,000 - $375,000
Single Family House in ok neighborhood - $450,000 - $600,000

Here's the problem...I want to retire as a landlord collecting rent from a bunch of properties. At the current prices, I don't see how I can do this. I love the Bay Area, so I don't want to move, but right now it's so difficult to be a home owner. And I feel like condo fees are not a good use of money.

Can you offer some advice on how to accomplish homeownership?

Thank you

 

The thing about getting a condo is it gets you into the housing market. That is the most difficult thing in the Bay Area is getting in. Once you're in, you can use the equity to move to a big house. All you do is keep repeating the process. My parents own about 4-5 houses in the Bay and it all started with just the one. They don't generate a lot of revenue, but more importantly, they are building equity. When it comes time for them to sell them, they will have some serious equity built up.

 

[QUOTE]Originally posted by LostWaffle
[B]Hi All,

I gotta say that this site has been great about supporting its members, and great advice has always come forward.

 

[QUOTE]Originally posted by Voodoo_S2K
[B]The thing about getting a condo is it gets you into the housing market.

 

If you can afford to buy now... do it! Interest rates are slowly rising so now's the time.

Lots of good info here: http://www.bankrate.com/brm/green/mtg/armvsfixed.asp

 

Hersheyjan,

Can you post a bit more about programs that would help?

The way I see it...a 300K place will cost about $2K a month when the mortgage, condo fees, insurance are counted up. I'm assuming I avoid PMI by doing a 80,20 split on the mortgage. I've got no debt of any sort and excellent credit.

But $2K is hard to swallow when you only take home $3K. How do people in my situation do it, or do they just not do it?

 

[QUOTE]Originally posted by LostWaffle
[B]Hersheyjan,

Can you post a bit more about programs that would help?

 

Keep in mind that once you are making mortgage payments, you do get the tax benefits, albeit, the following year. You can adjust your deductions on your W4 so that ur take home is higher.

 

good point, roloto

Hershyjan, I Pm'ed you.

 

Not to throw a wrench into what you are saying, but the numbers you threw out there seem like a real stretch to me. I make a little over 70k, and I'm currently looking at houses between $130k-$150k. I'm not saying it's impossible to do what you are thinking about, but I would find it EXTREMLY risky to put 2k/month into your house payment. Yes, it's a good investment and you will receive tax benefits, but you should also understand what those benefits are. When you buy a house, you can deduct the INTEREST of your payments from your income when income tax comes around, so if you made 50k this year, and you paid 20k in tax, your adjusted income would be 30k and so would pay tax only on 30k as opposed to 50k. Understand though, that you will also have to pay property tax. Not sure what it is in Cali, but here in Texas on a 300k property, your annual property tax would come in right around $6k, so I would highly doubt that the tax benefit on your income tax would outweigh the new tax you would be taking on. Also, not sure what your car situation is, but it would be a while before anyone would feel comfortable to loan you any money for anything else with that kind of debt/income ratio, and if you did get a loan you wouldn't get a very good loan rate. Again, not trying to rain on the parade, but it seems like you would be seriously stretching yourself thin. I love the idea of owning a home and amongst other things, it does FORCE you to save in that, you are slowly building equity in something, so if some unforseen thing did happen to you, you could pull the equity out of the house by borrowing against the house and getting all that money back minus the interest. It's a tough decision as I know that property is super expensive in your area, but I would suggest looking in the suburbs maybe as a starter home. I plan to make an investment in a home in the next few months and I know it won't be the house of my dreams, but I figure if I put in like 5 years worth of mortgage payments, I'll have a nice little downpayment towards a new house without even having to sacrifice any of the spending I have gotten used to. Just my $0.02. I'd love to hear other ppl's opinions and strategies as I'm looking to purchase soon as well.

Nick