buying a condo

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BaberhamLincoln
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Re: buying a condo

Postby BaberhamLincoln » Thu Feb 20, 2014 10:17 pm

Kay,
I don't disagree, I just don't understand what you mean.

No matter what, I have to pay for housing. I am going to either rent or pay my own mortgage. The money alotted by my loans for housing is 1400-1700/month according to the breakdown of the COA.
My housing if I paid mortgage would be less than 1300.
I would still have some funds leftover from my housing. Are you saying that the leftover money (100-300) is all my excess money for clothes, food, etc?

If that's what you're saying then I have NO idea how other people in Chicago make due since rent is rarely less than 1000. I know most students at NU are in apartments that cost 1200-1400 per month. (And they're not splitting this with a roommate.)

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kay2016
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Re: buying a condo

Postby kay2016 » Thu Feb 20, 2014 11:44 pm

leigh912198972 wrote:Kay,
I don't disagree, I just don't understand what you mean.

No matter what, I have to pay for housing. I am going to either rent or pay my own mortgage. The money alotted by my loans for housing is 1400-1700/month according to the breakdown of the COA.
My housing if I paid mortgage would be less than 1300.
I would still have some funds leftover from my housing. Are you saying that the leftover money (100-300) is all my excess money for clothes, food, etc?

If that's what you're saying then I have NO idea how other people in Chicago make due since rent is rarely less than 1000. I know most students at NU are in apartments that cost 1200-1400 per month. (And they're not splitting this with a roommate.)


It depends on the school I suppose and I may have misunderstood (if so, I apologize).

Check and see what the total cost of attendance is (that's the max you can take out for loans). At Chicago (first school in chicago I googled) that appears to be 78k and some change... They have Housing at 13k which would be about 1300 per month for 10 months or 1100 per month.

But if you take the COA minus tuition and fees, that leaves you at about 25k for the semester for everything (food, bills, books, clothes, gas, computer if you need one etc). So if this is the case you'd have about 2000/month for everything.


So if the actual Housing budget is listed at 1400/month, then I wouldn't be 100% against if I were in your shoes.. But you'd have to consider if 600 a month (or probably 500 after you account for big one time purchases) is enough for you to live off of otherwise in Chicago. If so, then yea I think it's worth considering.

Sorry for jumping the gun earlier!

kartelite
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Re: buying a condo

Postby kartelite » Fri Feb 21, 2014 2:47 am

Odds are, you will come out ahead. But are you interested in living there after law school or in renting it out as an investment property if you leave town?

People don't recommend buying short-term for two reasons:

1) You pay about 8% in closing costs and in broker fees when you eventually sell it. This is hard to make up in a year or two (in most housing markets).

2) The market could stagnate or go down short-term, while that's not likely to happen over a 10 or 20-year horizon.

If you're open to keeping it after law school and can afford the down payment, my vote is to go ahead.

[Disclaimer: I bought in 2007 with disastrous results, and then again in the Bay Area at the end of 2012, which in all likelihood will turn out much better. You never know what will happen.]

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BaberhamLincoln
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Re: buying a condo

Postby BaberhamLincoln » Fri Feb 21, 2014 10:45 am

Thanks guys!
All great advice. I will definitely consider all of this before I decide.

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chem!
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Re: buying a condo

Postby chem! » Fri Feb 21, 2014 11:01 am

leigh912198972 wrote:I randomly found this thread and thought I would ask opinions on my somewhat-similar situation.
I live in Chicago and plan to attend a school in this area. There are some condos here at great prices.
Schools I am looking at are estimating 1400/month for living expenses. The condos I am considering would cost me exactly that or less per month to OWN (of course, with a heavy downpayment first that I luckily saved up for).

Any thoughts on this? I would NOT do as the OP, I would have no roommates. The condos are all studios/1-bedrooms and it would just be me living there so I wouldn't have to worry about finding a renter or having a shitty renter. Just paying my own payments every month. Also, unlike the OP, this would be owned by ME not my parents and I would be looking to hold onto it for as long as humanly possibly since I will stay in Chicago after I graduate and either live in it myself or rent it out to someone else after law school.

Thoughts?
Thanks guys.

Don't forget that along with ownership comes the responsibility for repairs.

sabrina8740
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Re: buying a condo

Postby sabrina8740 » Fri Feb 21, 2014 12:22 pm

As a home-owner preparing to sell after three years, here are a few other things to consider:

1. Location: I bought in DC in 2011 with the intention of staying here long-term (law school and beyond), but did better on the LSAT than expected and had a really great admission cycle. Now, Chicago is obviously in a different tier from GULC, but if there is any chance you might end up in another city after graduation, I would hold off.

Luckily, I bought in an area in DC that has had tremendous growth in the market so even with closing costs and paying off an additional loan to my dad (who helped with about 50% of the down payment), I'll break even.

2. Other costs/factors if you keep it, but move out of Chicago: I've thought a lot about keeping it while in school, but the added stress of being in another city and costs of a management company (usually about one month's worth of rent for the whole year, excluding repairs or additional things that crop up) aren't worth it right now. That's my personal opinion, but definitely something to consider. Plus the process of finding renters, as others indicated, can be awful.

3. Job market vs. Loans: Not sure which school you're looking at in Chicago, but do you really want to graduate with $200k+ in law school debt and another $200k+ in real estate loans? I'm of the opinion that the real estate debt doesn't "count" as much since a condo is a more tangible asset than a degree (at least in this market), but as others have suggested, you never know what housing prices will look like in three years.

4. Interest from 1L loans: Let's say you go to Chicago, which is currently about $79K per year. Factoring in summer costs, 2L summer income, 3.5% tuition increase and 5% Cost of Living increase, you're looking at a total of roughly $265K over three years. (Note: It's my understanding that payment is deferred during school, but interest still accrues so at graduation you'd owe somewhere around $287k). Let's say you're on a 10 year repayment plan ($3,210/month). Over the course of repayment, you'll end up paying roughly $385K - so over $100K in extra interest.

If you used $80K of savings to cover your first year of law school, you'll only take out about $185k in loans. At graduation, that's $193k - not having an extra $80k in first-year loans accruing interest for two years saves a lot of money. Over 10 years, that's $260k. So you'd save a total of $125k by putting that up-front money towards school. It's possible that you'd make that, and more, back over 10 years of condo ownership, but is it worth the gamble?

5. Repairs, repairs, repairs: Even, and in DC especially, if you buy new construction THERE WILL BE ISSUES. I cannot stress this enough. I'm pretty handy and have been able to cover things myself but you never know what will happen. What happens if you take out your full amount in student loans to cover cost of living/tuition, and your roof caves in? Or your tub starts leaking into your neighbor's unit? Or your dishwasher breaks? Or your AC goes? You need to be able to put money away each month to a contingency fund for these sort of things, and given that you will (most likely) have NO disposable income, that's not an option.

That said, I'm planning on moving back to DC after graduation (job search permitting). If things keep going at this rate, the place I'm about to sell will be worth $100k+ more... but, I'd rather miss out on that money now than end up even further in debt later.

(Please feel free to message me if you have questions - I've thought a lot about this and have plenty of spreadsheets that show my various debt options. It hasn't been an easy decision and lots of people disagree with my rationale to sell, but based on what I've outlined above I am pretty confident that this is the right decision, at least given my circumstances.)




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