Should I buy a house to save on rent?

A few things:

1) With an FHA loan, you only need a small percentage of a down payment, so the $4k you have on hand should be good for a $40-50k house.
2) Keep in mind that there are a lot more expenses that come with a house other than a mortgage payment. Additionally, the less you pay for a house and the older it is, the more likely it is to require major emergency repairs. A new roof for example could cost thousands or more. You will need to factor all this in and make sure you have enough savings in reserve to cover the unexpected. And don't forget about all the closing costs, which could easily use up a lot of that $4k (unless you roll it into the mortgage).
3) How long do you actually plan on living there. You said not >10 years, but does that mean 8-9 or 2-3?
4) Do you plan on living in it by yourself or getting roommates/renters right away? Assuming you had friends who you trusted (for now....) that could help to minimize your out of pocket expenses and you could possibly live for free.
5) From a long term perspective, one should NOT get into renting a house because it sounds "kind of interesting". It can be a great investment, but has many, many risks. Especially if you don't live nearby or if you can't do your own minor repairs. You should also get very familiar with the rental laws in your state. In other words, don't jump into a house thinking you will be renting it out when you move without doing a lot of research.

Based on the info you provided, no.

Quote from vaultaddict : Based on the info you provided, no.

How do you get a house for 40k? a condo is 3 times that here

edit just checked zillow and holy crap that is a cheap housing market! granted most are crap for that price but its still a house that could be fixed up.

should i rent an apartment to save on mortgage?

i am also in simillar kind of Boat.... very good topic for a discussion... in my area a condo cost about 170K roughly... in norhtern NJ, and a town house is out of the question... i am thinking to own the apt, that, i am living in.. but considering all the factors "phonic" mentioned... i think it would be wise for me hold on to rental .... atleast until i have exactly double of the downpaymnet amount to handle enexpected costs and and in case

Quote from parmi4u : i am also in simillar kind of Boat.... very good topic for a discussion... in my area a condo cost about 170K roughly... in norhtern NJ, and a town house is out of the question... i am thinking to own the apt, that, i am living in.. but considering all the factors "phonic" mentioned... i think it would be wise for me hold on to rental .... atleast until i have exactly double of the downpaymnet amount to handle enexpected costs and and in case

owning a condo there are much less unexpected costs. The roof/siding is covered by the association dues as is the homes insurance. You're only responsible from the studs in...so biggest things would be ac/furnace, water heater, and appliances. 5k on hand should be enough to cover any of those if something came up.

Quote from nizzy1115 : owning a condo there are much less unexpected costs. The roof/siding is covered by the association dues as is the homes insurance. You're only responsible from the studs in...so biggest things would be ac/furnace, water heater, and appliances. 5k on hand should be enough to cover any of those if something came up.

HOAs do not always cover the costs....in which case you may be hit with a "special assessment"

Quote from PiratesSayARRR : HOAs do not always cover the costs....in which case you may be hit with a "special assessment"

Thats easy to figure out if it will be the case. You can get the HOA's financials before buying and see how large a reserve fund they have. Typically one thats been around a while is much better off than a new subdivision.

Quote from nizzy1115 : Thats easy to figure out if it will be the case. You can get the HOA's financials before buying and see how large a reserve fund they have. Typically one thats been around a while is much better off than a new subdivision.

Perhaps...but aging units also require a lot more maintenance.

Quote from PiratesSayARRR : Perhaps...but aging units also require a lot more maintenance.

Typically though associations keep up on maintenance and slowly raise dues every year to cover the aging process. Also the more units in a complex the safer you are.

Quote from nizzy1115 : owning a condo there are much less unexpected costs. The roof/siding is covered by the association dues as is the homes insurance. You're only responsible from the studs in...so biggest things would be ac/furnace, water heater, and appliances. 5k on hand should be enough to cover any of those if something came up.

Quote from PiratesSayARRR : HOAs do not always cover the costs....in which case you may be hit with a "special assessment"

Noooooooooooooooooooooooooooooooooo.

First, yes, with Condos, the "common elements" are not your direct responsibility, they fall under the Association (in most cases). HOAs have similar covenants, but obviously you don't have shared walls or anything like in a condo, so you would still assume all costs for issues with your house. And in a condo, a shared boiler, A/C system, etc. would be a common element.

However, do not be fooled into thinking that you still aren't indirectly responsible for the payment of these items if they break. Also, you are indirectly responsible for the payment if something unrelated to your unit needs to be fixed or replaced. As Pirates said, this can easily result in a special assessment, or at the very minimum, raise monthly/quarterly/annual dues.

For example, we rented a condo a few years back, and I happened to be on the association's board (don't ask). This was a typical condo complex that used to be apartments that then got converted into condos during the market bubble. Anyway, after so many years, there were two major repairs that were outstanding. First, the roofs of almost all of the seven buildings needed to be replaced. Second, the interior plumbing (shared main pipes) needed to get torn out and replaced. We were talking about hundreds and hundreds of thousands of dollars in upcoming expenses. To make matters worse, about a third of the units were either in default, bank repossessed, or had remained unsold from the now defunct developer. That meant that the number of units actually paying their dues was much less, which strained the budget even more.

The monthly dues were about $250, and depended on the size of the unit. That included basic common elements, a gym, a pool, a club house, a maintenance guy, on-site management staff, etc. Not too bad right?

Well, after we figured out the total cost of repairs that were needed (and desperately needed soon), it was determined that the only way we could pay them would be to either somehow qualify for a loan (which was impossible due to the issues with the number of units not paying or lived in) and jack the monthly rates up by over double, or to require a $7,000 special assessment fee. Yes, $7,000. How many people do you think had the funds to handle that, let alone would be willing to part with it?

Fortunately, not only was I not an owner, but I moved out and resigned from the board shortly thereafter and bought a house, so I never knew what ended up happening. But the issues that plagued that Condo Association will forever make me never want to own one. Not only do you only have the normal communal expenses, but you can have major ones as well. And if the board/association requires an assessment, you have no recourse to challenge it and need to pay it. Otherwise, they can apply penalties and fees, put a lien on your home, and foreclose on it.

So don't be kidding yourself by thinking that moving into a condo will eliminate any added expenses.

Quote from nizzy1115 : Typically though associations keep up on maintenance and slowly raise dues every year to cover the aging process. Also the more units in a complex the safer you are.

So then the $600/month these downtown condos are charging in San Diego must be my imagination.