Rent an apartment or buy a condo?

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Anonymous User
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Rent an apartment or buy a condo?

Postby Anonymous User » Wed Apr 21, 2010 11:34 pm

I'm posting this anonymously so people won't consider me a spoiled brat.

I'm going to be attending San Diego in the fall and my parents and I are trying to decide whether we (they) should buy a condo in San Diego or not. My parents are leaning towards yes. They would put down 20-30% and we'd split the monthly payment. Then, after 8-10 years, we'd sell and split the profits.

My only concern is about transferring. I know everyone says not to bank on transferring, but I am sure I'll do very well at SD, but not sure about employment opportunities even if I do well. I think I'd be better off transferring to USC or UCLA after 1L and trying to get into the top 25%-33% there than be in the top 5-10% at SD. Also, I don't care where in SoCal I work as long as I'm making $100k+.

Any thoughts?

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patrickd139
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Re: Rent an apartment or buy a condo?

Postby patrickd139 » Wed Apr 21, 2010 11:39 pm

Anonymous User wrote:
Any thoughts?


Yes. That you're foolish for assuming you'll do well enough to transfer.

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pleasetryagain
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Re: Rent an apartment or buy a condo?

Postby pleasetryagain » Wed Apr 21, 2010 11:58 pm

patrickd139 wrote:
Anonymous User wrote:
Any thoughts?


Yes. That you're foolish for assuming you'll do well enough to transfer.


and for buying a condo.

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General Tso
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Re: Rent an apartment or buy a condo?

Postby General Tso » Thu Apr 22, 2010 12:08 am

it's a huge assumption that you will do well enough to transfer to UCLA (USC doesn't take many transfers...do some research before you make plans), but if that is indeed your goal, why on earth would you buy a condo in San Diego?

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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Thu Apr 22, 2010 12:09 am

I am actually considering the same thing. I get you on the spoiled thing too. I am also planning on going to a CA school. It depends on the market for condos in the area in which you want to live and you have to be sure you will be there for 3+ years, otherwise it is definitely not worth the investment. Being there for all 8-10 would be even better. I don't think its something to reject out of hand, it depends on your personal circumstances and desires.

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A'nold
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Re: Rent an apartment or buy a condo?

Postby A'nold » Thu Apr 22, 2010 3:44 am

I would say it is a horrible idea, although, if your parents are rich enough to do this, I doubt it will matter that you have to sell it for a loss.

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Grizz
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Re: Rent an apartment or buy a condo?

Postby Grizz » Thu Apr 22, 2010 3:51 am

Anonymous User wrote:Also, I don't care where in SoCal I work as long as I'm making $100k+.

Any thoughts?


Good luck with that.

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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Thu Apr 22, 2010 3:59 am

Why don't you guys like condos? And why do you think I'll have to sell it for a loss?

Obviously, I wouldn't buy one if I thought I was going to transfer. I am considering living on campus for the first year, buying the second year. But then I'd just be throwing 10-12k down the drain in rent instead of building equity.

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General Tso
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Re: Rent an apartment or buy a condo?

Postby General Tso » Thu Apr 22, 2010 4:54 am

Anonymous User wrote:Why don't you guys like condos? And why do you think I'll have to sell it for a loss?

Obviously, I wouldn't buy one if I thought I was going to transfer. I am considering living on campus for the first year, buying the second year. But then I'd just be throwing 10-12k down the drain in rent instead of building equity.


You will only "build equity" if the condo increases in value. Have you ever taken a look at an amortization schedule? All of the interest payments are frontloaded...if your mortgage payment is $2000 a month, for the first year about $1750 of that will be interest. It goes down gradually -- eg) year 2 -- $1650 -- year 3 $1500 all the way until about 10-15 years into the mortgage when you are finally paying about $1000 interest/$1000 principal.

http://www.amortization-calc.com/

Just as a general guideline you should never buy unless you intend to keep for at least 5 years. Even then you are banking on an increase in value.

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pleasetryagain
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Re: Rent an apartment or buy a condo?

Postby pleasetryagain » Thu Apr 22, 2010 10:22 am

I dont support condos because if I own a piece of property I dont want to have to answer to a condo committee telling me I cant paint my house/change my porch setup/add a satellite dish/install a sunscreen/have a grill on my deck/where I can park my car/add some shrubbery etc etc.

swester
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Re: Rent an apartment or buy a condo?

Postby swester » Thu Apr 22, 2010 10:33 am

pleasetryagain wrote:I dont support condos because if I own a piece of property I dont want to have to answer to a condo committee telling me I cant paint my house/change my porch setup/add a satellite dish/install a sunscreen/have a grill on my deck/where I can park my car/add some shrubbery etc etc.


I know of plenty of neighborhoods where some of the same restrictions apply. The condo vs. single-family home debate has no clear winning side; each has its distinct advantages and disadvantages. Personally, I love not having to worry about making repairs to anything outside of minor items in my actual unit, and if you have a building with decent amenities (e.g. gym, concierge desk, secured parking, pool), it more than makes up for the HOA cost. And you can have just as nightmarish neighbors living in any neighborhood as you can have in a condo. You just have to do the appropriate research beforehand. Someday would I love to own a house? Sure. But for now, this works out fine.

But as for diving into the renting vs. purchasing debate, it really comes down to your mid-to-long term expectations. And if you are planning to buy, always plan for the worst case scenario; if the numbers still show you doing significantly better than renting, then it might be worth it.

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pleasetryagain
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Re: Rent an apartment or buy a condo?

Postby pleasetryagain » Thu Apr 22, 2010 10:39 am

swester wrote:I know of plenty of neighborhoods where some of the same restrictions apply. The condo vs. single-family home debate has no clear winning side; each has its distinct advantages and disadvantages. Personally, I love not having to worry about making repairs to anything outside of minor items in my actual unit, and if you have a building with decent amenities (e.g. gym, concierge desk, secured parking, pool), it more than makes up for the HOA cost. And you can have just as nightmarish neighbors living in any neighborhood as you can have in a condo. You just have to do the appropriate research beforehand. Someday would I love to own a house? Sure. But for now, this works out fine.


I wouldn't live in those neighborhoods either. to each his own I guess.

ScaredWorkedBored
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Re: Rent an apartment or buy a condo?

Postby ScaredWorkedBored » Thu Apr 22, 2010 12:44 pm

Anonymous User wrote:Why don't you guys like condos? And why do you think I'll have to sell it for a loss?


I'm thinking you're a little too dumb to either count on transferring to UCLA or earn money to buy said condo on your own. Other than the amortization schedule that has been mentioned, if you did succeed in transferring, you would need to sell the condo in a hurry. A buyer of any sophistication recognizes a forced sale when they see it. You lose all leverage on price. And if you don't sell immediately, you have to pay LA rent + San Diego carrying costs.

This of course assumes that real estate prices in California of all places would actually go up net of carrying costs. Yeah, right.

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baboon309
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Re: Rent an apartment or buy a condo?

Postby baboon309 » Thu Apr 22, 2010 12:48 pm

Anonymous User wrote:I'm posting this anonymously so people won't consider me a spoiled brat.

I'm going to be attending San Diego in the fall and my parents and I are trying to decide whether we (they) should buy a condo in San Diego or not. My parents are leaning towards yes. They would put down 20-30% and we'd split the monthly payment. Then, after 8-10 years, we'd sell and split the profits.

My only concern is about transferring. I know everyone says not to bank on transferring, but I am sure I'll do very well at SD, but not sure about employment opportunities even if I do well. I think I'd be better off transferring to USC or UCLA after 1L and trying to get into the top 25%-33% there than be in the top 5-10% at SD. Also, I don't care where in SoCal I work as long as I'm making $100k+.

Any thoughts?


Wuddup?

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JTX
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Re: Rent an apartment or buy a condo?

Postby JTX » Thu Apr 22, 2010 12:49 pm

+1 to buying a condo, making 100k and/ or tranferring.

real estate always goes up in value.

wizoz
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Re: Rent an apartment or buy a condo?

Postby wizoz » Thu Apr 22, 2010 12:56 pm

I think you should by the condo if your portion of the mortgage could be covered by rent. Check out rental prices in that area. I'd get a condo that I could rent out and this info will be in your bylaws. That way, if you decide to transfer and can't sell right away at least someone else could cover the expenses while you build equity. Cha-ching!

Also, you could probably get a roomate and have them cover your part of the mortgage and your parents cover the other. I say it's a deal.

Prices for homes are so cheap now that you'll prolly do quite well. Plus, you'll get the tax advantage on the mortgage interest payments and I'm suspecting you don't already own a home so then you'd also get $8k if you can get the property under contract b4 4/30. If you can, I'd make your parents buy it in your name so you can get the 8k credit. I think it's a great deal. I love that your parents have done well enough to put you in this great situation. Congrats!

Anonymous User
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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Thu Apr 22, 2010 1:38 pm

wizoz wrote:I think you should by the condo if your portion of the mortgage could be covered by rent. Check out rental prices in that area. I'd get a condo that I could rent out and this info will be in your bylaws. That way, if you decide to transfer and can't sell right away at least someone else could cover the expenses while you build equity. Cha-ching!

Also, you could probably get a roomate and have them cover your part of the mortgage and your parents cover the other. I say it's a deal.

Prices for homes are so cheap now that you'll prolly do quite well. Plus, you'll get the tax advantage on the mortgage interest payments and I'm suspecting you don't already own a home so then you'd also get $8k if you can get the property under contract b4 4/30. If you can, I'd make your parents buy it in your name so you can get the 8k credit. I think it's a great deal. I love that your parents have done well enough to put you in this great situation. Congrats!



Thanks for the underlined part. I think it's the first useful advice I've received so far! And makes me feel more confident about buying, since I realize transferring is a long shot anyway.

I don't have $8k in taxes for that credit to matter, but my parents could still get $6,500. But I think that offer might be gone soon. Anyone know if that is going to continue beyond 4/30/10?

Also, I was interested in people's take on employment prospects on top 5-10% @ USD versus top 33% at UCLA or USC (God forbid they let me in).

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nealric
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Re: Rent an apartment or buy a condo?

Postby nealric » Thu Apr 22, 2010 1:55 pm

real estate always goes up in value.

:roll:

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JuTMSY4
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Re: Rent an apartment or buy a condo?

Postby JuTMSY4 » Thu Apr 22, 2010 1:59 pm

A condo in San Diego is still overvalued...when all is said in done, I don't see there being any profits.

Just rent, it'll make life easier and this was it won't be a factor in any decisions you make. Plus, you can always buy a condo in 2011...

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neimanmarxist
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Re: Rent an apartment or buy a condo?

Postby neimanmarxist » Thu Apr 22, 2010 2:07 pm

jtxcounitah wrote:
real estate always goes up in value.


Are you joking, or have you been living in a cave for the last three years?

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booboo
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Re: Rent an apartment or buy a condo?

Postby booboo » Thu Apr 22, 2010 2:10 pm

Why not just rent for your first year and then get the condo if you can't transfer after 1L?

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Matthies
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Re: Rent an apartment or buy a condo?

Postby Matthies » Thu Apr 22, 2010 2:11 pm

jtxcounitah wrote:+1 to buying a condo, making 100k and/ or tranferring.

real estate always goes up in value.


Except in Phoeix and Las Vegas. :(

rando
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Re: Rent an apartment or buy a condo?

Postby rando » Thu Apr 22, 2010 2:11 pm

neimanmarxist wrote:
jtxcounitah wrote:
real estate always goes up in value.


Are you joking, or have you been living in a cave for the last three years?


so dense...

that comment was clearly tongue in cheek

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gymboree
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Re: Rent an apartment or buy a condo?

Postby gymboree » Thu Apr 22, 2010 2:16 pm

http://www.nytimes.com/2010/04/21/busin ... ent&st=cse

Good article about when it's right to buy or rent.

Basics:

Take rent (for example $1000), multiply annual rent by 20 ($12,000 x 20 = $240,000) -- 20x annual rent is a sign of a housing bubble. If the total cost of buying the house/condo is roughly equivalent to 15-17x then you might have a good buy.

For example, if the sales price for condo that would rent for $1000 is around $192,000 ($12,000 x 16).

HTH

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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Thu Apr 22, 2010 2:19 pm

rando wrote:
neimanmarxist wrote:
jtxcounitah wrote:
real estate always goes up in value.


Are you joking, or have you been living in a cave for the last three years?


so dense...

that comment was clearly tongue in cheek



Clearly.

But the truth is, over the long term, real estate does always go up. The only exception has been this latest lending debacle that allowed strawberry farmers with $15,000 in annual income get $700,000 mortgages.

Since that won't happen again in the next 40-70 years, and since prices have been driven down so low, now seems like a good time to buy.

Remember Warren Buffet's quote: When people get greedy, get scared. When people get scared, get greedy.




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