Purchasing first home on Nov 8, advice/am I doing anything wrong?

Quote from saladdin : When you sell you will pay at least 6% commission and closing costs again. You will still be paying mortgage, taxes, insurance and all up keep. Then throw in the headache you will have when you try to sell and it takes 8 months longer then you thought.

Are you in the same market he's in? How do you know if this is relevant? I just sold my house for 4% commission. Buyer paid closing costs.

Also, mine was on the market for about 4 weeks.

It's possible that he'll come out ahead buying. It's possible he'll come out ahead renting. By your own (and many here's) admission, you're not going to predict the housing market in 3 years. And in the next line you claim to know for sure he's making a mistake. Impossible. Real estate markets are too varied for you to claim with certainty anything in your own market, much less somebody else's.

There are some intangibles that come from owning -- knowing that you can do what you want, that you can fix what you want, that you can modify what you want, etc. Obviously, there are some limits to this in a condo. But an apartment is nothing more than a nice (sometimes) hotel room you're staying in for awhile. The owners don't need to care about you. You can't do any remodeling. And, should you go bankrupt, it's much easier to force you out of an apartment than a home. But, IMHO, the best part of owning is that, besides taxes and insurance, you know what you're going to pay as soon as you lock in your mortgage rate. An apartment lease can change every year and you might need to go through a housing search if they raise the rates significantly.

Quote from gdx : The $4000 is upkeep. The HOA is $391/mo mainly because of the Concierge/security. Taxes are $1171/year. The Total for renting a place @ 1400/mo for 3 years was $50,000. For the appeasement of those in this thread I took out HOA, Taxes, etc and still was left with $30k. Further took it down via 6% selling cost, and potential maintenance on a 1300sq ft condo ($4000) and was still left with a net of $20k over 3 years vs renting.

Nothing's guaranteed, but you're doing the right research. Don't let the naysayers talk you out of it. Some people have been badly burned in this market and project onto others. Some just like a very conservative strategy.

The one thing that you DO need to take away from others is the belief that there's a value to the house (that matters) besides the market value. It can be assessed for whatever -- the city wants a high assessment so you pay more in taxes. It can be appraised for whatever -- the insurance company wants to maximize their profit-to-risk. But a house is always, always, always worth only what somebody wants to pay for it. Real estate is one of the last true free markets left. You bought as much a $1million condo as you did a $140k condo for $124k. You bought a $124k condo. Now, your hope is that, in the future, when you wish to sell, the market considers it worth over $124k. But in the mean time, just enjoy it.

I will disagree with those that say you're "throwing your money away". Situations change over time and even location. The main thing you have to look at, if things don't swing wildly out of proportion with today, will the cost to own this place become higher than the cost to rent it?

This is based off the costs to buy the place, fix it up to the level of comfort you want, mortage cost(well not in your case, maybe interest you would have earned keeping the money where it was?), HOA fees, and the costs involved in selling the property. We can guess that housing prices will go way up or down, but unless we know Atlanta and probably the neighborhood we can't say for sure. I'd assume a constant condo value. If all those costs averaged over those 3 years come out less than what you would pay for rent for the same place then it makes sense.

If you can afford to buy your home, buy it. It's that simple. It's incredible how many smart arses think they can break this down into numbers. "If it costs more to own than rent, then rent"....horse hockey! Wake up to the real world. I just spent the last 3 years renting and it sucks. They did an average of 3 to 4 inspections every year. How would you like some strangers going through your stuff all the time and you can't say anything about it? Fire alarm inspections, general inspections, the list goes on, they have every reason to go inside your place and you can't add locks to the front door, you only get the one lock the place comes with. Put a price on that wes.

Want to paint your room blue? I had to ask permission for that first. Then I found out I had to paint it back to the original color before I left. The light in my kitchen went out. I had to wait 2 days for Management to fix it and put in a new one. You can't sit outside on the lawn, there's a rule against it in the bylaws. Put a price on that wes.

I just bought my 2BR 2BA condo 3 months ago and I am LOVING it!!! I have all granite counters in kitchen and baths, cherry cabinets, and stainless steel appliances. It is my first home purchase and even though I only had 5% down I don't regret it for one second. I have already built a loft bed in the second bedroom and I'm adding crown molding in a few weeks. You cannot put a price on freedom.

Now is the time to buy. Interest rates are at historical lows, take advantage of it if you can. If you can't get a mortgage oh well, paying cash saves you interest. You don't automatically lose 6% from selling, such a crock. People go FSBO (for sale by owner) all the time and save the money. There are also services like Redfin that will only take about half of the regular commission and let you use an agent as well if you want to go that route.

I do like the freedom of owning and being able to fix what i want how i want. the op is buying a condo so he will be limited on what he can do to the outside...personally i like working in the yard and having my place look different than the other homes. my first home purchase was a condo last year..made a big down payment, put 2k in repairs and moved a renter in the next month. for young people, busy people or people who just don't care about exterior maintenance i think condos are good. they are often closer to the city too which cuts down on driving time.

Quote from gdx : I appreciate the insight, but this condo sold in 2004 for $230,000 prior to the massive real estate inflation/run-up. Aside from that though, anything even remotely comparable is $1300-1400/mo in rent. I'm unsure why I'd pay almost $16,000 a year to rent when that money is basically being retained in my pocket. Over the course of 3 years, even after HOA & Taxes, it is still $30000 saved.

I'm a 32yo also Atlanta area. Like you, I could buy a home at any time and pay for it almost entirely in cash, but I find renting to be far more favorable for me than owning. It sounds like you're fairly far along in buying the condo and I cant offer any advice on purchasing a home. However, if you're buying it just because you think renting is wasting money, have you considered the alternative of investing that $125k while you rent?

Invested conservatively, that $125k could bring in $4k annually in capital gains, but invested aggressively it could potentially be $8-10k+ annually. At the end of 3 years renting you would end up paying $50k in rent, but could potentially have $12k+ in gains from the investment. So the net cost of renting for 3 years could be $38k (invested conservatively) or maybe even $20k or less (invested aggressively). During that time, the full $125k is readily available if you need it.

Meanwhile the condo purchase 3 year sunk costs would be around $30k ($3k property taxes, $14k for HOA, $7k for agent commissions, plus the insurance, maintenance, closing costs, attorney/inspection fees, etc.) This $30k sunk condo cost guesstimate is not far off from a potential $20k to $38k net renting cost.

Obviously no one can predict the future of the markets and this comparison makes a lot of assumptions such as the stock market doing decently, that you're comfortable investing, that the condo doesn't gain or lose value from 125k, that it sells when you want it to, that there are no expensive HOA assessments, and of course ignores the intangible aspects of renting vs buying.

Just something for you to consider. Best of luck!

Don't ever let a realtor select a lawyer, home inspector or anything for you. They are more than likely getting a kickback. Additionally, $1200 for an lawyer? What do you get for $1200? I'm in NC, and the most I have paid is $375.

I know California has Stated Income loans. As long as you can put 20% down they don't care much about your 3 years of income taxes. Is this similar to any Georgia policy?

good luck tomorrow OP!

Quote from gdx : I appreciate the insight, but this condo sold in 2004 for $230,000 prior to the massive real estate inflation/run-up. Aside from that though, anything even remotely comparable is $1300-1400/mo in rent. I'm unsure why I'd pay almost $16,000 a year to rent when that money is basically being retained in my pocket. Over the course of 3 years, even after HOA & Taxes, it is still $30000 saved. And yes, it is in a very desirable area, near the main shopping malls of Atlanta, night clubs/bars, and restaurants. I do appreciate the individual who posted about looking in to the HOA and such, something I assumed the closing attorney would do but is not. Which is making me question the almost $1200 she is charging, and making me want a different closing attorney (current one procured at behest of agent).

Ok, what do you mean by "remotely comparable?" Don't you have actual comps? It is a condo, what are the last sales for exact comps in that building? If there aren't any then you might want to consider why.

Also maybe I missed it but what is the rental/owner occupied ratio?

You are buying with cash because you don't qualify for a loan but you are in danger of buying a property that may also not qualify for a loan and you are absent that information because you have no lender investigating the property (and I do not mean a home inspection).

I have properties in condos in a desirable 100% rented area in one of the few areas of the country that did not experience a serious real estate loss. But before I bought them, the specif building did experience a major loss simply becasue of a change in mortgage rules a couple of years ago.. It was 50% owned by the original developer from 30 years ago. He had build them, sold half half, market conditions changed in early 90's and his widow decided to keep them fro income. so 50% were kept by the original developer. even though the developing entity held them not because of distress or inablity to sell, but because of better rental rates, the fact that they kept them massively decreased the value 30 years later when the new owner occupancy ratio mortgage rules took effect

I bought them last year for 35% less sq/f of comps on the same block, same build quality and coditon simply because they do not qualify for residential loans. I am doing very well renting them but I know they are not liquid due not qualifying for residential mortgages.

If someone was buying cash from me, they might look at comps, they might check the deed perfectly, they might do a home inspection perfectly, but unless they applied for a mortgage a buyer like you would not know that their fair market value is 35% less than an identical condo in same area that is 85% owner occupied.

Be careful -- due diligence for a self financed buy is VERY different and necessarily much more detailed than what you read.

Quote from bonkman : Nothing's guaranteed, but you're doing the right research. :

No offense but he hasn't presented a wit of data the mortgage company would research. the data he is presenting seems to be from reading what you should do if buying a mortgage financed , where the bank is looking at the really important stuff to protect their investment

They are going to be looking at actual owner occupant/rental ratios, actual rental rates, condo statements, reserves, how many people are not paying their fees, etc.

We haven't heard whether this is FHA qualified, or as is increasingly the case, qualification for any kind of residential mortgage.

You do realize huge numbers of condos are no longer FHA qualified, and an alarming nubmer dont qualify for any type of standard residential mortgage?

It is an excellent time to buy real estate. The people opposed to buying now have bad instincts and were probably advocating buying at the peak.

But the OP has not presented any of the important data or or shown they have the answers to the key questions and that worries me for his/er sake

Quote from aero : No offense but he hasn't presented a wit of data the mortgage company would research. the data he is presenting seems to be from reading what you should do if buying a mortgage financed , where the bank is looking at the really important stuff to protect their investment They are going to be looking at actual owner occupant/rental ratios, actual rental rates, condo statements, reserves, how many people are not paying their fees, etc. We haven't heard whether this is FHA qualified, or as is increasingly the case, qualification for any kind of residential mortgage. You do realize huge numbers of condos are no longer FHA qualified, and an alarming nubmer dont qualify for any type of standard residential mortgage? It is an excellent time to buy real estate. The people opposed to buying now have bad instincts and were probably advocating buying at the peak. But the OP has not presented any of the important data or or shown they have the answers to the key questions and that worries me for his/er sake

Had the appraisal done a far as comps in the within a .25 mile of the there (all are condos or town homes as it is a major street).. Rental cap for the the Association is 20%, it is an FHA approved community, so someone getting a loan would be approved. Only 2 units went up for sale in the building out of 45 units since 2008, built in 1988. There are a total of $10,000 in unpaid fees, $60,000 in reserve funds (after roof was redone two years ago), I do appreciate the concern though. I checked the bylaws, reserve fund, read the HOA rules, they recently(this year) had a financial audit done & came out good, etc. So hoping that I did everything correctly. But closing is today at 3pm, so unless something unbelievably compelling comes up, I can't walk away without losing earnest money.

congrats! be prepared for hand cramps as you sign.

It seems like you've calculated your risks and return, and with anything with money... there's always a risk, and you're well aware of them, so, at this point enjoy it.