Rent an apartment or buy a condo?

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Matthies
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Re: Rent an apartment or buy a condo?

Postby Matthies » Thu Apr 22, 2010 2:28 pm

Agree with the others about renting for a year then buying once you know you're staying there (and then play to stay there after you graduate). Buying and selling within a year will eat up alot of your down payment in realtors commissions, fees and taxes that 20-30% your parents pit down will evaporate quickly once you factor that in. Buy and hold. I'm a slumlord I own more properties now than most of you will likely ever live in. You can't flip in this market, you can't flip in an overstated market either, not in 12 months. And yes, even in this market property is still going up in value, if you own in the right areas of town. Location, location, location. Well except Phoenix, %^&* where of course I own most of my properties. :evil:

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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Thu Apr 22, 2010 2:29 pm

gymboree wrote:http://www.nytimes.com/2010/04/21/business/economy/21leonhardt.html?scp=2&sq=rent&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



Thanks, that does help. Loved the law school Hitler Youtube video, r.i.p.

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Matthies
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Re: Rent an apartment or buy a condo?

Postby Matthies » Thu Apr 22, 2010 3:03 pm

Also you need to consider that unless:
1. Your parents live in an apartment now
2. Your parents plan to live with you in said condo
3. You can find any bank in this market willing to title the property in your name w/o a job and less than 50% down

Then the condo you parents buy becomes "investment property" which is a whole nouther can of worms in case of taxes and other responsibilities from their primary residence. Additionally the interest rates for loans on investment properties are not the same as the lower rates for primary residences. If you're willing to take a chance though you can depreciate investment property and take a huge tax "paper loss" of course when you sell you have to pay that back though. All this is FYI but something you and your parents need to consider.

rando
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Re: Rent an apartment or buy a condo?

Postby rando » Thu Apr 22, 2010 3:09 pm

Matthies wrote:Also you need to consider that unless:
1. Your parents live in an apartment now
2. Your parents plan to live with you in said condo
3. You can find any bank in this market willing to title the property in your name w/o a job and less than 50% down

Then the condo you parents buy becomes "investment property" which is a whole nouther can of worms in case of taxes and other responsibilities from their primary residence. Additionally the interest rates for loans on investment properties are not the same as the lower rates for primary residences. If you're willing to take a chance though you can depreciate investment property and take a huge tax "paper loss" of course when you sell you have to pay that back though. All this is FYI but something you and your parents need to consider.


I thought tax shelters through investment properties were largely eradicated in the current income tax code? No?

swester
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Re: Rent an apartment or buy a condo?

Postby swester » Thu Apr 22, 2010 3:27 pm


wizoz
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Re: Rent an apartment or buy a condo?

Postby wizoz » Thu Apr 22, 2010 3:37 pm

I wouldn't sell the condo after a year, which is why I think you should buy a condo that could be converted as an investment property for you by way of rental. I recall having read somewhere that if you buy and sell a house in 5 years, then you are not taxed on the appreciation. Anyone know this? I think it can only be done once in a lifetime...something odd like that.

nickwar
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Re: Rent an apartment or buy a condo?

Postby nickwar » Thu Apr 22, 2010 3:49 pm

I'm for purchasing as long as you get a good deal on the place. It seems real estate values drop faster than rental rates, especially in a college town (I'm not sure how San Diego would qualify) where they will always have students to rent.

Mortgage rates are pretty low now, too, so that's a positive.

For example --

I purchased a studio for $80,000 (thank you Obama for first-time home buyers credit) to live in during law school rather than paying $550-$600/month in rent.

Rent over three years would have been ~$21,000
Property Tax is around $1000/year
HOA fees are $100 a month.
Total fees I pay: ~$180 month
Total rent I would have paid: $600/month
Total savings: $420/month or $15,000 over three years.

Haven't had to deal with any repairs yet, luckily.

Although an increase in value is not guaranteed by any means, it will likely occur over the next few years.

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Re: Rent an apartment or buy a condo?

Postby wizoz » Thu Apr 22, 2010 4:06 pm

Anonymous User wrote:
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).


It actually doesn't matter if you have taxes of $8K...it's a credit. It works like how eitc works. You get eitc credit even if you didn't work. That's why I said buy it in your name...that way you'd get the max and not $6500.

Also, it kinda continues beyond 4/30. You just need to be under contract by 4/30 and close I think by 6/15...if you google, you'll see.

swester
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Re: Rent an apartment or buy a condo?

Postby swester » Thu Apr 22, 2010 4:17 pm

nickwar wrote:I'm for purchasing as long as you get a good deal on the place. It seems real estate values drop faster than rental rates, especially in a college town (I'm not sure how San Diego would qualify) where they will always have students to rent.

Mortgage rates are pretty low now, too, so that's a positive.

For example --

I purchased a studio for $80,000 (thank you Obama for first-time home buyers credit) to live in during law school rather than paying $550-$600/month in rent.

Rent over three years would have been ~$21,000
Property Tax is around $1000/year
HOA fees are $100 a month.
Total fees I pay: ~$180 month
Total rent I would have paid: $600/month
Total savings: $420/month or $15,000 over three years.

Haven't had to deal with any repairs yet, luckily.

Although an increase in value is not guaranteed by any means, it will likely occur over the next few years.


Damn, $80k, even for a studio. $80k would buy you a couple of parking spaces around here.

And as a previous poster noted, the $8k credit is a rebate, regardless of your tax liability for the year. It's only capped by your income above a certain threshold or the purchase price of the property.

Also note that in some cities you can also apply for a local property tax abatement program, since I highly doubt your income while in school will be much above the poverty line.

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Matthies
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Re: Rent an apartment or buy a condo?

Postby Matthies » Thu Apr 22, 2010 4:52 pm

rando wrote:
Matthies wrote:Also you need to consider that unless:
1. Your parents live in an apartment now
2. Your parents plan to live with you in said condo
3. You can find any bank in this market willing to title the property in your name w/o a job and less than 50% down

Then the condo you parents buy becomes "investment property" which is a whole nouther can of worms in case of taxes and other responsibilities from their primary residence. Additionally the interest rates for loans on investment properties are not the same as the lower rates for primary residences. If you're willing to take a chance though you can depreciate investment property and take a huge tax "paper loss" of course when you sell you have to pay that back though. All this is FYI but something you and your parents need to consider.


I thought tax shelters through investment properties were largely eradicated in the current income tax code? No?


You mean the depreciation of rental property? Its not a tax shelter, more deferred capital gain, you will still owe whatever you deprecate the value of your property to when you sell. It works with long term investment property again not primary residence, that distinction is KEY), the hope being you take the tax deduction now and sell when the property has appreciated to the extent that your new sales prices covers your past depreciation. Its a way of leveraging current equity you have in a current propty you own to buy another investment property. As far as i know Obama has not killed it yet, nor chaged the cap gains number but I think he's going to.

Again guys, with these tax things you all are talking about deductions that can be taken on your primary residence. No bank in this market is going to put this kid on mortgage with no job and only 20-30% down. Thus he won't be will be eligible for any of the primary residence tax deductions when the condo is titled in his patents name and they already have a primary residence (which I would assume they are using for it full tax benefit). Its going to be investment property and taxes on investment property work very differently, believe me I just had to pay a shit ton of them.

BTW if you do find a bank willing to put you on the mortgage with no income let me know ASAP! :)

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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Thu Apr 22, 2010 5:11 pm

wizoz wrote:
Anonymous User wrote:
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).


It actually doesn't matter if you have taxes of $8K...it's a credit. It works like how eitc works. You get eitc credit even if you didn't work. That's why I said buy it in your name...that way you'd get the max and not $6500.

Also, it kinda continues beyond 4/30. You just need to be under contract by 4/30 and close I think by 6/15...if you google, you'll see.



Interesting. So I would receive a tax rebate check, for like, $7,000 and change?

Also, we did this with my older brother and his name and my parents' names are on the title. So perhaps that is how they got out of the investment property classification.

swester
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Re: Rent an apartment or buy a condo?

Postby swester » Thu Apr 22, 2010 5:19 pm

Anonymous User wrote:
wizoz wrote:
Anonymous User wrote:
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).


It actually doesn't matter if you have taxes of $8K...it's a credit. It works like how eitc works. You get eitc credit even if you didn't work. That's why I said buy it in your name...that way you'd get the max and not $6500.

Also, it kinda continues beyond 4/30. You just need to be under contract by 4/30 and close I think by 6/15...if you google, you'll see.



Interesting. So I would receive a tax rebate check, for like, $7,000 and change?

Also, we did this with my older brother and his name and my parents' names are on the title. So perhaps that is how they got out of the investment property classification.


Correct. However, remember that the rebate is capped by the income of the purchaser and the purchase price of the property itself (obviously). And, if you were listed as a dependent on your tax return within the past 2 years (I think it's either 1 or 2 years), you are not eligible - this loophole was closed with the extension they passed last Fall. Plus, you can't have your parents be on the title, since this would not be their first home.

Oh, and you have about 8 days to close on the property before the credit expires. Good luck with that, as most title and closing agencies are probably inundated with last minute deals before the rebate ends and are backed up for quite awhile.

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Matthies
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Re: Rent an apartment or buy a condo?

Postby Matthies » Thu Apr 22, 2010 5:26 pm

Anonymous User wrote:
wizoz wrote:
Anonymous User wrote:
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).


It actually doesn't matter if you have taxes of $8K...it's a credit. It works like how eitc works. You get eitc credit even if you didn't work. That's why I said buy it in your name...that way you'd get the max and not $6500.

Also, it kinda continues beyond 4/30. You just need to be under contract by 4/30 and close I think by 6/15...if you google, you'll see.



Interesting. So I would receive a tax rebate check, for like, $7,000 and change?

Also, we did this with my older brother and his name and my parents' names are on the title. So perhaps that is how they got out of the investment property classification.


A few years ago it was much easier to do that. Since the credit crunch banks have been requiring everyone to qualify to be put on the title. If you're serious about going through with this try getting pre-qualified and see if they will work with you. The mortgage market is so tight (qualifications wise) now because of all the defaults. I refinanced a few months ago one of my properties (and I have about seven mortgaged through this one bank for years not a single late payment or anything bad) and I almost did not get approved because I did not have permanent employment even though I had shit tons or rental income. They are really gun shy these days about qualifying folks.

wizoz
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Re: Rent an apartment or buy a condo?

Postby wizoz » Thu Apr 22, 2010 6:10 pm

(S)he doesn't have to close by 4/30. Her/His property just has to be under contract. So, anon poster, you have 8 days to get under contract and then you will have 2 months to close and still qualify for the credit whether it be the $6500 or $8000 deal.

http://www.irs.gov/newsroom/article/0,, ... 71,00.html

See the section "Homebuyer Credit Expanded and Extended"

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presh
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Re: Rent an apartment or buy a condo?

Postby presh » Thu Apr 22, 2010 6:22 pm

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Last edited by presh on Sun Dec 27, 2015 2:03 am, edited 1 time in total.

swester
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Re: Rent an apartment or buy a condo?

Postby swester » Thu Apr 22, 2010 8:56 pm

wizoz wrote:(S)he doesn't have to close by 4/30. Her/His property just has to be under contract. So, anon poster, you have 8 days to get under contract and then you will have 2 months to close and still qualify for the credit whether it be the $6500 or $8000 deal.

http://www.irs.gov/newsroom/article/0,, ... 71,00.html

See the section "Homebuyer Credit Expanded and Extended"


Thanks for the clarification. But still, contract in 8 days might be a bit of a rush if he hasn't researched the market yet...

swester
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Re: Rent an apartment or buy a condo?

Postby swester » Thu Apr 22, 2010 9:00 pm

presh wrote:Really, OP?

You got some good advice. I'll give you that. But this is not "sensitive employment related information."

You're abusing the anonymous feature so that you don't seem like a spoiled brat? Grow a pair, dude, and post this in the forum where it belongs.


Haha, this coming from a guy who has a photo of a dog as his avatar. Give him a break, he can post anonymously if he wants. It's not like it "costs" anything to do so, other than the cost of dealing with your self-righteous attitude.

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presh
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Re: Rent an apartment or buy a condo?

Postby presh » Thu Apr 22, 2010 9:27 pm

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Last edited by presh on Sun Dec 27, 2015 2:04 am, edited 1 time in total.

eth3n
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Re: Rent an apartment or buy a condo?

Postby eth3n » Fri Apr 23, 2010 12:12 am

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 . . . I don't care where in SoCal I work as long as I'm making $100k+.


"spoiled" is not the first "s" adjective that comes to mind when I read this.

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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Fri Apr 23, 2010 2:28 am

presh wrote:Really, OP?

You got some good advice. I'll give you that. But this is not "sensitive employment related information."

You're abusing the anonymous feature so that you don't seem like a spoiled brat? Grow a pair, dude, and post this in the forum where it belongs.




(Thanks swester) I actually did include a question about employment in my OP. My condo purchase decision hinges upon whether or not I'd be able to transfer to a better school to get better job prospects. I'd rather my future law school (classmates) not know I'm seriously considering jumping ship just to increase my chances of obtaining a six figure salary.

Also, it's predicated upon the April 30th deadline getting pushed back again as I am not ready to go under contract. To make the future even more murky, I just got WLed from a T6 school, and you better believe I'll be riding that one out!

By the way, I love border collies. Not only are they the smartest dogs, but they're the sweetest too! (well after my closely related dog's breed, which I won't divulge out of paranoia!!!)

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presh
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Re: Rent an apartment or buy a condo?

Postby presh » Fri Apr 23, 2010 9:49 am

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Last edited by presh on Sun Dec 27, 2015 2:04 am, edited 1 time in total.

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Re: Rent an apartment or buy a condo?

Postby Anonymous User » Fri Apr 23, 2010 1:52 pm

presh wrote:
Anonymous User wrote:By the way, I love border collies. Not only are they the smartest dogs, but they're the sweetest too! (well after my closely related dog's breed, which I won't divulge out of paranoia!!!)


If you meant my previous avatar, that was actually a picture of a corgi. I do like border collies though. They are lovely dogs.



Ahh the lazy collie. Chill dogs.




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