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Post by NOTTHOR on Feb 24, 2010 16:48:27 GMT -6
Alright wasteland, I need your help. As you all know, I am a giant pussy and am having a hard time deciding whether to buy a condo or to just upgrade my current rental.
My situation:
Assets:
Cash $120k (earning shitty returns)
Securities $110K
Retirement (not in play for decision): $125k
Liabilities:
Student loans (locked at 1.6% for 22 more years): $40k
Income after insurance and retirement: $200k
Condo prices have plummeted in Chicago, such that I can get a decent 2BR for under $300k, which all in would be a little less per month than a rental with tax benefits. There is a $8k tax credit that I qualify for if I buy before 4/30. I could deduct the mortgage and interest, which would reduce my gargantuan freaking tax bill and possibly make me less of an insufferable douche whenever tax discussions arise.
However, I am worried the market still has some room to go down. Plus, god only knows how high monthly assessments can get if proles who also own in the building become delinquent on their payments, so that is one huge risk. Second risk is that condo prices could still fall a lot further. Upside is that if the market turns, I could make some decent cash in 10 years (I knew someone who bought a loft in Manhattan for like $40k in early 80's who sold it for over $2 mil in late 90's - but Chi ain't NY).
Now some websites are saying that the condo buildings are starting to have section 8 proles in them, which is going to obliterate the value of the building if that continues. I have no way of knowing if that is happening in any building. Chicago is in bad fiscal condition, so taxes could also skyrocket. Should I buy or continue to rent and let some other jackass get stuck holding the bag if prices continue to plummet or should I buy on the chance of an economic recovery and the potential for a nice return in a decade, plus lower income taxes, plus the building of equity (assuming no more price depreciation)?
Ma really wants to buy something because she wants to upgrade our place and get the tax benefits, but she doesn't grasp how prole creep can totally destroy American neighborhoods bince she is from Japan and prole creep doesn't happen there. Please help me.
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Post by Gumbyhawk on Feb 24, 2010 19:37:22 GMT -6
You have that much money burning a hole in your BVDs and you're asking US for advice? Really??  |
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Post by hawkeyedug on Feb 24, 2010 19:55:03 GMT -6
Financially, I think it makes sense. But I am not smart because I am a prole. You are paying rent now, basically throwing the money in a fire. You said the mortgage would be less than you are currently paying. Worse case scenario even if the building gets turned into a project at least you can sell it for a couple of cases of OE and a carton of menthols. You aren't going to get anything for your rental.
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Post by NOTTHOR on Feb 24, 2010 20:13:02 GMT -6
(1)You are paying rent now, basically throwing the money in a fire. (2) You aren't going to get anything for your rental. (1) So wrong. I am getting a place to live. EVERYBODY I worked with said the same thing when I started my job in early 2006, my mom's realtor friend said the same thing, my buddies said the same thing. We just looked at a condo that sold for 480 in 2006, today it is on the market for 290. Yesterday we looked at one that sold for 465 in 2005, today it is listed for 249. Seems to me like the guys who are trying to short sell those condos right now and the banks who lent the cash to them were the ones throwing money in a fire, not me. (2) I get the ability to walk away. That's worth a lot. |
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Post by hawkeyedug on Feb 24, 2010 21:00:20 GMT -6
(1)You are paying rent now, basically throwing the money in a fire. (2) You aren't going to get anything for your rental. (1) So wrong. I am getting a place to live. EVERYBODY I worked with said the same thing when I started my job in early 2006, my mom's realtor friend said the same thing, my buddies said the same thing. We just looked at a condo that sold for 480 in 2006, today it is on the market for 290. Yesterday we looked at one that sold for 465 in 2005, today it is listed for 249. Seems to me like the guys who are trying to short sell those condos right now and the banks who lent the cash to them were the ones throwing money in a fire, not me. (2) I get the ability to walk away. That's worth a lot. You also get a place to live if you buy. You may not turn a profit, when you sell the condo, but if you pay $300,000 and can only get $200K when you sell, it is a hell of a lot better than paying that same $300K and getting $0 back My quick math says that your asshole hurts $200,000 less in the buying scenario. But like I said, I'm smart enough not to claim that I am smart. |
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Post by NOTTHOR on Feb 24, 2010 21:11:03 GMT -6
You also get a place to live if you buy. You may not turn a profit, when you sell the condo, but if you pay $300,000 and can only get $200K when you sell, it is a hell of a lot better than paying that same $300K and getting $0 back My quick math says that your asshole hurts $200,000 less in the buying scenario. But like I said, I'm smart enough not to claim that I am smart. If you buy a place for $300k and sell it a year later for $200k, you've effectively paid well over $8k a month for rent for a place you could prolly rent for $2k a month. Also, just because you own it doesn't mean you don't have monthly expenses. Even if you fully pay the place off, you still have taxes, assessments and insurance, your $300k house on a mortgage if paid off over 30 years, plus taxes, plus assessments, plus insurance, plus crap going wrong is probably close to a million all in. I'd rather pay $300k in rent and get nothing back than pay nearly a million and get $200k back, wouldn't you? For instance the place I looked at today has $1000 in expenses a month before you even touch the mortgage because the taxes are $4600 a year and the assessments are over $600 a month. |
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Post by hawkeyescott on Feb 24, 2010 21:41:00 GMT -6
Personally I would think real hard about buying right now. Like you said the market sucks ass right now but it won't stay down, it may not be the boom it was in the late '90's early '00's but it will come back and you can find some great deals right now.
You could always be like me, I bought my house in 06 right before the fucking market crashed and I couldn't get anywhere near out of my house now for what I bought if for so I guess I will be living in this house for a few more years. In all honesty if I would have waited about another 6 months I probably could have bought my house for 20% less than I did and that really pisses me off now.
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Post by NOTTHOR on Feb 24, 2010 22:58:19 GMT -6
In all honesty if I would have waited about another 6 months I probably could have bought my house for 20% less than I did and that really pisses me off now. No lie, my mom and stepdad bought a house in the U that was featured in a DM Rag article about how ridiculous the housing bubble was in Neck Moines. She was not happy. Timing is everything. |
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Post by Master Blaster on Feb 24, 2010 23:15:48 GMT -6
I'm currently buying a house in florida. Pulling up the tax apparaisal records it sold for 365k in 2007. I put in a offer of 230k and they jumped at quick. 3 acres of land in town and a house that is 2200 square feet. I think we aren't at the bottom yet, but we are close.
As for you, buy the condo. You can always turn it into a rental property and move on if you need to with your asset situation. 300k seems about the right neighborhood. You can go a little more and get the lake view....
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Post by socal on Feb 25, 2010 8:01:47 GMT -6
(1)You are paying rent now, basically throwing the money in a fire. (2) You aren't going to get anything for your rental. (1) So wrong. I am getting a place to live. EVERYBODY I worked with said the same thing when I started my job in early 2006, my mom's realtor friend said the same thing, my buddies said the same thing. We just looked at a condo that sold for 480 in 2006, today it is on the market for 290. Yesterday we looked at one that sold for 465 in 2005, today it is listed for 249. Seems to me like the guys who are trying to short sell those condos right now and the banks who lent the cash to them were the ones throwing money in a fire, not me. (2) I get the ability to walk away. That's worth a lot. You've apparently made up your mind, so what the fuck are you asking us for? Personally though, I think you should buy a train. |
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Post by lpcalihawk on Feb 25, 2010 8:56:12 GMT -6
I have owned and I have rented. I preferred renting. I didn't have to deal with all the bullshit repairs.....just called the landlord. As a home owner, I have sunk money into fixing a consistently leaky roof. I'm not going to see that money back on any kind of return when I sell because I'm just trying to get the house to a point of passing inspection. When we rented in California, we had it easy and I never considered myself pissing money away.
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Post by hawkeyedug on Feb 25, 2010 9:46:01 GMT -6
Where are you looking BTR? The GF's Aunt just bought another condo in this building. I think she spent $750,000 or so on this one, not sure. She already has a 1 Bedroom in the building. It has a pretty sweet location. Overlooks the pier/lake, or Millennium park, or the Skyline, depending on where you are in the building. it is about a 2 minute walk to the park, and a 3 minute walk to Michigan Ave. www.urbanrealestate.com/Chicago/New-East-Side/155-N-Harbor/profile/ |
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Post by NOTTHOR on Feb 25, 2010 11:40:21 GMT -6
I'm looking south loop. The place Ma likes has a balcony, is a block from the red line, 2 stops from Comiskey, there's a Whole Foods and Target nearby, it has a sick lakeview, is two blocks to Grant Park and is close to the tunnel for me to go under Lake Shore to run on the lakefront. I'd rather just rent down there because I like the neighborhood, but Ma is hellbent on buying something.
The problem with the neighborhood your GF's aunt bought in is there is no public transportation over there other than one bus and the last time I was over there, there was no grocery store, no restaurants, no bars, etc. It's on the edge of downtown, but it's really in the middle of nowhere because of the crappy layout of the streets. Barber used to live over there and he hated it.
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Post by Saggitariutt Jefferspin (ith) on Feb 25, 2010 11:46:54 GMT -6
Currently - we have Lake, Dupage, and Cook county listed in a distressed market. Most of California has moved to a stable or 'soft' market (though there are a couple areas still listed as SEVERELY distressed areas)...just to give you a comparison.
Mortgage companies seem to have shied away from the condo business because it bit us in the ass, hard. Obviously you're going to need and dip into those assets for a down payment since most banks aren't going to finance over 80%.
Those two things said - how long are you planning in the condo? If it's over a couple of years, I would think you should come out ahead. You make take an immediate loss, but would think the bounce back would be around 2011.
That's just like, my opinion, and stuff.
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Post by 101 on Feb 25, 2010 12:35:17 GMT -6
Your income after insurance and retirement is only $200K? You're a fucking prole man. No wonder you're renting still.  |
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Post by NOTTHOR on Feb 25, 2010 12:36:52 GMT -6
Thanks for the scoop itheus. I was planning on putting 20 or 25% down. If I make an offer, I'm gonna lowball it because I could tell by looking around last weekend that the overwhelming majority of people in the market now are either FHA buyers (which short sellers won't work with) or investors (no investor would buy the place we like because it would probably be negative cash flow).
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Post by NOTTHOR on Feb 25, 2010 12:38:09 GMT -6
Your income after insurance and retirement is only $200K? You're a fucking prole man. No wonder you're renting still. I know - the job market has gotten soft and our firm is taking full advantage of the situation. Oh well, I can't blame them, I benefitted tremendously when the PE/M&A boom was in full swing, so I can't complain. |
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Post by 101 on Feb 25, 2010 12:45:16 GMT -6
You handed me an opportunity on a silver platter and I wasn't about to miss out on that. On a more serious note, while the real estate costs and decreased, be sure to check on the taxes and see if they have been appropriately reduced based on the lower market rates. Monthly assessments can be steep and they will most probably have not been reduced at all, even with the lower purchase price. Also, make sure you understand what type of cash reserves the association has. Far too often, some type of maintenance will need to be done to the building and if they don't have enough $$$, bingo, a special assessment is levied. When Marla lived downtown Chicago, it was re-building the entire parking garage. That was to the tune of $300 per unit per month for 36 months. Ouch. Your income after insurance and retirement is only $200K? You're a fucking prole man. No wonder you're renting still. I know - the job market has gotten soft and our firm is taking full advantage of the situation. Oh well, I can't blame them, I benefitted tremendously when the PE/M&A boom was in full swing, so I can't complain. |
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Post by hawkeyedug on Feb 25, 2010 12:48:02 GMT -6
The problem with the neighborhood your GF's aunt bought in is there is no public transportation over there other than one bus and the last time I was over there, there was no grocery store, no restaurants, no bars, etc. It's on the edge of downtown, but it's really in the middle of nowhere because of the crappy layout of the streets. Barber used to live over there and he hated it. Makes sense. They don't live in either of those condos. They own a house in Oak Park next door to the Frank Lloyd right house. They just go to the condo's for holidays, and special occasions. I don't even know if they stay there over night. I guess it is a nice location for a visit or a weekend, it would be a pain in the ass to live there, though there is reserved parking underground but I wouldn't want to fuck with driving down there. It really isn't that bad of a walk to a train though. |
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Post by socal on Feb 25, 2010 12:53:53 GMT -6
I'm looking south loop. The place Ma likes has a balcony, is a block from the red line, 2 stops from Comiskey, there's a Whole Foods and Target nearby, it has a sick lakeview, is two blocks to Grant Park and is close to the tunnel for me to go under Lake Shore to run on the lakefront. I'd rather just rent down there because I like the neighborhood, but Ma is hellbent on buying something. The problem with the neighborhood your GF's aunt bought in is there is no public transportation over there other than one bus and the last time I was over there, there was no grocery store, no restaurants, no bars, etc. It's on the edge of downtown, but it's really in the middle of nowhere because of the crappy layout of the streets. Barber used to live over there and he hated it. That's why I told you to buy the fucking train. |
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Post by twine on Feb 25, 2010 12:57:58 GMT -6
200k??? That's upper middle proledom!!!
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Post by NOTTHOR on Feb 25, 2010 14:45:22 GMT -6
You handed me an opportunity on a silver platter and I wasn't about to miss out on that. On a more serious note, while the real estate costs and decreased, be sure to check on the taxes and see if they have been appropriately reduced based on the lower market rates. Monthly assessments can be steep and they will most probably have not been reduced at all, even with the lower purchase price. Also, make sure you understand what type of cash reserves the association has. Far too often, some type of maintenance will need to be done to the building and if they don't have enough $$$, bingo, a special assessment is levied. When Marla lived downtown Chicago, it was re-building the entire parking garage. That was to the tune of $300 per unit per month for 36 months. Ouch. Yeah, the building is pretty new and I have the report from the company that inspected it before the condo association went after the developer for breach of warranty (which happens on every building). There looked to be a few doozies, like failure to use epoxy coated steel in the parking garage structure and some shoddy roof work. I'll check to see if the roof thing fixed, but I should plan on paying for a new garage sometime in the next 20 years if I plan on staying that long. They've already built up a $700k replacement reserve, which ain't bad for a building that new and they have $400k in reserves in the general operating fund. |
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Post by NOTTHOR on Feb 25, 2010 14:46:51 GMT -6
200k??? That's upper middle proledom!!! No, it's mid proledom. Low prole, mid prole, high prole. High prole doesn't kick in until $500k. |
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Post by thejesus on Feb 25, 2010 15:01:34 GMT -6
This thread is douche-riffic.
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Post by hawkeyedug on Feb 25, 2010 15:09:34 GMT -6
Fuck, hoa fees. Move to the burbs buy a house, ride the train.
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