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  #11  
Old 11-23-2007, 05:56 PM
natedogg natedogg is offline
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Default Re: Real Estate people: I want to buy a house, advice?

One thing I've noticed about real estate: don't buy in urban areas with tons of room for development unless you can afford to buy in the impacted center of the population.

Las Vegas, Phoenix, Sacramento, Austin, are surrounded by wide open spaces to build on. I don't know about the Austin market but Las Vegas and Phoenix and Sacramento have tanked badly, precisely because builders overbuilt during a price runup. It's too easy. There's nothing but room. As soon as things go sour, the builders have a backlog of a year's worth of projects still building. Vegas, Sacramento and Phoenix are so flooded with properties that nobody can sell anything anywhere close to what they bought it for in 2005-6.

Places with no room to grow are where you should buy, but of course, they are already pricy. However, they aren't going down. If the housing prices of a major impacted urban center go down, then everyone's in trouble at the time too, but your longterm prospects are even better if you can buy property cheap in a place like that while everyone is negative. (e.g. NYC 2001-2, they were giving property away relatively speaking)

natedogg
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  #12  
Old 11-23-2007, 07:08 PM
scotchnrocks scotchnrocks is offline
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Default Re: Real Estate people: I want to buy a house, advice?

It depends on where you are trying to buy property. For houses in the $120k range it sounds like you're probably 50+ miles from a large city. A reliable rent vs. buy calculator will be much more valuable than anything anyone can tell you about the market. It's different for everyone, and it's hard to give good input without a lot of the variables.
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  #13  
Old 11-23-2007, 07:23 PM
Taylor Caby Taylor Caby is offline
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Default Re: Real Estate people: I want to buy a house, advice?

OP,

I was in your exact situation almost two years ago.

I'll give you some points to think about:

1) You won't make any money holding a place for 2-3 years and selling, not even close. Even if prices (somehow) do go up somewhat significantly over the next 3 years, your transactions costs, home improvements, repairs, taxes, etc. will eat up any gains you see. Typically you'll want to hold on to a place for 5-6+ years to start to make it a +EV investment over investing the $ and renting, and that is with historical RE returns, which I don't think we will see anytime soon.

2) Don't underestimate how much it costs to maintain a house. You'd be surprised, and it's something you plan for when you are buying.

3) You'll spend a lot of time dealing with/worrying about/etc. issues that you won't have if you just rented a place.

All this said, here is what I'd do if I were you. I'd buy a place in a very good location within Austin that had room for improvement. Not the nicest place, but a place that has some space with which you could improve (adding a pool, rooms, finished basement, landscaping, whatever).

I'd try to find some roommates, and rent out a bedroom or too. If this isn't possible, not a big deal, but it'd be nice to have.

Finally, I would commit to owning the place for 5 years, barring something unforseen in your financial situation. Over the first year or two, I'd make some small improvements in the house and monitor the market situation. If things look okay, I'd keep making improvements and then possibly start to look at acquiring another house.

If you decide to move within 5 years, you can always rent your place out and then go rent or buy somewhere else.

If you don't have a plan to hold for at least 5 years, I really doubt it is in your best interest to be buying a house. Yeah, it's cool to own a house, but realisitcally, it's one hassle you don't really need at 22. I wish I hadn't bought my house, so now when I am considering a move, I have to figure out a way to rent it out, or take a loss on my "investment."

At this point in time, I can't really see any situation where you should buy two houses. You seem to be very inexperienced in RE (not unusual or knocking you), our economy/RE market are going through very uncertain times, and you are 22 years old.

tc
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  #14  
Old 11-23-2007, 07:42 PM
DesertCat DesertCat is offline
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Default Re: Real Estate people: I want to buy a house, advice?

I can't paste from my IPhone. But you can find the fortune article by searching the site.

And no one needs to buy a house. They need rationally gauge the cost of renting vs. buying and make the best decision based on their specific circumstances. Typically renting is cheaper than owning over the short run, but appreciation makes up for it. But today any appreciation looks very iffy over the next 2-5 years.
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  #15  
Old 11-23-2007, 08:30 PM
Thremp Thremp is offline
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Default Re: Real Estate people: I want to buy a house, advice?

[ QUOTE ]
2) Don't underestimate how much it costs to maintain a house. You'd be surprised, and it's something you plan for when you are buying.

[/ QUOTE ]

This is very true and depends a lot on the age of the property as well. New homes have far less repairs than older homes etc. Condos will have less than homes...

But yeah, it can cost a decent amount to fix the home back up to sell after living in.
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  #16  
Old 11-23-2007, 09:21 PM
stephenNUTS stephenNUTS is offline
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Default Re: Real Estate people: I want to buy a house, advice?

Good post/advice Taylor

Stephen [img]/images/graemlins/cool.gif[/img]
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  #17  
Old 11-23-2007, 09:28 PM
spex x spex x is offline
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Default Re: Real Estate people: I want to buy a house, advice?

Similar topics have been posted on at length recently. Search the forums for a wealth of information. As a general comment, I'll say that 1) with your liquid assets you should have not problem finding a lender for as many properties as you want just about regardless of a short credit history and at very reasonable interest rates; 2) you need to take some time learning how to make money in RE - I'm concerned about the vagueness of your buying an investment property.
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  #18  
Old 11-23-2007, 09:58 PM
vetiver vetiver is offline
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Default Re: Real Estate people: I want to buy a house, advice?

Why buy two 120k houses w/ one as investment (when RE investment prospects look anywhere from grim - breakeven) when you can buy a better house to live in ($200-240k) at a better location farther inside Austin?
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  #19  
Old 11-23-2007, 10:08 PM
bwana devil bwana devil is offline
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Default Re: Real Estate people: I want to buy a house, advice?

[ QUOTE ]
Well I wouldn't necessarily buy them both at the same exact time, I was just throwing out an idea of something i'd want to do. But the area I was interested in was Austin Texas since I plan to be moving there in the future and would want a house to live in as well as for investing. I would be fine with just getting 1 house though obviously until learning more about it.

[/ QUOTE ]

austin real estate market is doing pretty well. we have had a mild slow down in appreciation and houses are staying a bit longer on the market then in the previous few years but we are not seeing any type of economic meltdown like many cities.
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  #20  
Old 11-23-2007, 10:50 PM
prohornblower prohornblower is offline
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Default Re: Real Estate people: I want to buy a house, advice?

[ QUOTE ]
Why buy two 120k houses w/ one as investment (when RE investment prospects look anywhere from grim - breakeven) when you can buy a better house to live in ($200-240k) at a better location farther inside Austin?

[/ QUOTE ]

Because he can live in one home and sell the 2nd when the market goes back up. In the other scenario, if he lives in one home twice as expensive, then when he sells he has to turn around and re-buy back into the same market, which has also already appreciated. So keep one home for utility, and the other for investment.

Doing the one home thing would only work if he planned on re-buying into a cheaper market. In the US, there aren't a heck of a lot of markets cheaper than Austin.
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