RIP Philo

Is there any reason to get an apartment

So these teenager like apartment managers are screwing me with upcharges on an apartment.  No point in dealing with them.

I am paying 100 more than what it costs to actually remove into the place.  wtf sense does that make.

Is renting a house or buying a house way better than renting an apartment.  I would buy a house, but I know I might not be in the same place for too long.
Permalink Bot On Ubuntu 
March 29th, 2007 12:41pm
Sorry, what are you trying to say actually?

From what I understand, apartments in your part of the world tend to be full-service places: if something breaks, you're not the one fixing it. This certainly has its advantages.
Permalink Send private email Flasher T 
March 29th, 2007 12:46pm
since when did teenage apartment managers become prevalent?
Permalink Send private email Kenny 
March 29th, 2007 12:48pm
If you're going to move within the next 5 years (cities or just neighborhoods), buying a house probably doesn't make economic sense.

One pays for options with apartments.
Permalink Send private email strawberry snowflake 
March 29th, 2007 1:06pm
I bought an apartment on a 25-year lease, and not only do I now intend to stay there for 25 years (obviously), I have a sneaking suspicion that five years from now I'll have either sold it or rented it out.
Permalink Send private email Flasher T 
March 29th, 2007 1:19pm
25-year loan, sorry.
Permalink Send private email Flasher T 
March 29th, 2007 1:21pm
I wish I would have bought my home earlier. You might want to own instead of rent.
Permalink son of parnas 
March 29th, 2007 1:21pm
In the US, the seller pays 6% brokerage fee upon selling. So with no mortgage at all the market has to go up 6.38% (0.06/(1 - 0.06) just to break even (not factoring all the other transaction costs). If you mortgaged 80% at a 6% loan most of your mortgage that first year goes to interest not principal and so the appreciation of the underlying asset has to be something like 24% to break even.

Do the math. I mean get an Excel worksheet and work out the opportunity costs, the interest rates, the maintenance, etc. There's a point between month 1 and month 300 where buying is better than renting. But the crossover depends on the inputs/assumptions.

In a hot market, one can come out even after only 1-2 years. In a normal market around 5. In a slow market, it'll be longer.

That's all I'm saying: Do the math. It never hurts.
Permalink Send private email strawberry snowflake 
March 29th, 2007 1:43pm
When I bought my apartment, it cost 730,000. Now the same apartment on the same floor in the next, identical house on the development costs 810,000. I'm moving in at the end of April, and that house won't be finished for at least six months. The value of my property has appreciated 11% since April before you figure how much of a premium I could get for the chance to move in right away.

And this is in a cooling market that's been damaged by undersupply, overdemand and insane price jumps last year, with the speculators now dumping properties. ;)
Permalink Send private email Flasher T 
March 29th, 2007 1:48pm
Like what kind of actual numbers.  For example, a single person in the ATL (and probably Houston or Austin in the next couple of months) would run about $250k?

What would that run me downpayment.  Also, what would the monthly be:  If I were guessing:

8k down payment.

1000 a month?
Permalink Bot Berlin 
March 29th, 2007 1:51pm
8k is 3.2% of the price, which is awfully low.

1K a month means a 20-year loan *before interest*. Probably closer to a 30-year loan in real terms.
Permalink Send private email Flasher T 
March 29th, 2007 1:57pm
"since when did teenage apartment managers become prevalent?"

I can't speak for Bot, but for me it was when I turned 35.  Those damned youngsters.
Permalink Lurk Machine 
March 29th, 2007 2:03pm
Most people do between 10 and 20% down and get a 30 year fixed mortgage.  If your credit is good, interest rates are hovering around 6% at the moment, I think.

I can personally not afford a 250k house right now.  A 150k house is quite doable financially.  I just don't know where to buy one yet.
Permalink the great purple 
March 29th, 2007 2:03pm
> The value of my property has appreciated 11%

Again, it all depends on the inputs/assumptions. The real estate appreciation figures for the US are around 8% over the last 60 years. So I took that to be the norm and came up with 5 years as the break even point (at a 80% mortgage, etc, etc). 11% is heck of a lot better than 8%.

There are cultural differences between US and Europe too. More Americans rent. We move around a lot -- the difference between Houston and Atlanta is a lot smaller than between Stockholm and Paris. We are more trustworthy of non-"real" investments like stocks and bonds, while Europeans (especially post-Soviet ones) love to own something physical. That too impacts prices.
Permalink Send private email strawberry snowflake 
March 29th, 2007 2:04pm
> $250k?

> What would that run me downpayment.

20% is standard down payment in US. 20% of $250K is $50K.

>  Also, what would the monthly be:

The monthly on a 30-year 6% mortgage on $200K is $1200 per month. If you get a mortgage for the down payment too (at say 8%) it would be $1550 total.

Excel is your friend. The PMT function does all this like magic.
Permalink Send private email strawberry snowflake 
March 29th, 2007 2:11pm
I bought an apartment that used to be some guy's rental property.  And boy did it show.  Think of buying a used rental car that was in service for 30 years.

The bright side is it's not a situation that stays bad.  Few people repaint apartments they're renting (unless they have pussy whipped boyfriends who will do it for them).  I repainted my place the first thing before I moved in, because it's MINE.

I used to tell the landlord to fix my broken shower-head and they drag their feet and replace it with the cheapest crappiest one they can find.  In the apartment you own, when your shower-head breaks you feel good about buying the most expensive one Home Depot sells. Your morning shower becomes a sensual treat instead of another routine chore.

An apartment full of expensive, pleasing appliances and fixtures are an investment in future happiness that pays huge dividends.
Permalink Michael B 
March 29th, 2007 2:16pm
Maybe 250k is out of my price range.  Hmm.  150k-200k maybe.  There are these places downtown that are where all the hippies, community college kids go.  Not a bad area, but would put me 40 minutes away from my job.
Permalink Bot Berlin 
March 29th, 2007 2:16pm
Once I'm convinced value isn't going to take any steep dives in the next few years, I've decided to take the leap.

Looking at it from the perspective of wanting to break even may be slightly warped. You nowhere near come out 'even' in renting. No equity means everything is flushed.

Even if you take a slight loss in a short-term ownership situation, so long as that loss is less than rent would have been over the same period, then you have come out better. Without some sort of serious decline, it's hard to imagine a situation where that happens.
Permalink JoC 
March 29th, 2007 2:37pm
*It's hard to imagine a situation where the loss you take is greater than whatever the total you'd pay for renting over the same period unless there is some major decline in housing prices.
Permalink JoC 
March 29th, 2007 2:39pm
What about time frame.  I am sure most people dont ever move from their places.  But I see myself moving at least every 5 years (that has been my pattern at least).  How long does it take to sell the house normally?  Plus, I would hate to home two homes at the same time (or even a house and an apartment).

My parents moved all the time and it took them sometimes a year to resell their house.
Permalink Bot Berlin 
March 29th, 2007 2:42pm
At 10k-25k down payment. Yikes.
Permalink Bot Berlin 
March 29th, 2007 2:43pm
>>> How long does it take to sell the house normally? 

Only people in your area can answer this.  Some $900,000+ apartments sell in a matter of days here, with people bidding above the asking price.

So what?  This isn't Atlanta, what heppens there is probably very different.
Permalink Send private email Ward 
March 29th, 2007 2:45pm
Actually I will probably move over to houston or austin once I am done with these projects.  My dad is in houston now, so I can probably stay there for a little.  Housing a lot cheaper I think.
Permalink Bot Berlin 
March 29th, 2007 2:56pm
The down payment is all equity though... minus closing costs perhaps. It's like putting that into savings, assuming a major dip in prices doesn't happen. The same influences affect your ability to sell.

$700/mth is decent for a 1-bedroom here.

$700 * 60 (5 years) = $42,000

$200k will buy you a decent 2, maybe 3 bedroom home.
.06% fee when you sell = 12k.
42k - 12k = 30k.

So you basically have $30,000 total, or $6,000/yr of 'headroom' over the course of those five years for depreciation and any maintenance costs before you hit a point that you will come out worse than renting.

I don't see it as possible that a $200k home could depreciate all that much, the land and materials have to have a bottom somewhere! It could very well go up in value (you get 0% chance of making anything off renting an apt).

If you get into a situation where you can't sell it and don't want two places, you either rent it, or lower the price. As long as you don't sell it for less than $170k, you've effectively 'broken even' with renting.

Arguably a home is better than renting for other reasons too.

I could damned kick my own ass for having rented as long as I have after I really thought about this.
Permalink JoC 
March 29th, 2007 3:15pm
Did you look at getting a townhouse?

Advantages: You own it; outside maintenance is taken care of; exterior maintenance is taken care of; They're cheaper than standalone homes.

Disadvantages: You only own the land the house sits on (+/- 6 feet); You still have neighbors (but at least they aren't on top of you); You have to pay ~$150 a month in dues.
Permalink xampl 
March 29th, 2007 3:17pm
And actually, pay wise (right now anyway) I am doing ok.  If I didnt go out every week (sometimes 3 times a week), learned to cook I could probably get that house.

Thanks for the info.  I might not do it and live in a apartment till I am 40, but at least I have the info.
Permalink Bot Berlin 
March 29th, 2007 3:18pm
strawberry snowflake!

you need 20% equity to cancel PMI payments. But very few actually pays 20% down.

Maybe the days of easy credit and piggyback 80/20 loans are coming to an end. But no one I know put more than 10% down.
Permalink arg! 
March 29th, 2007 3:35pm
>  houston or austin

Pick carefully.  I've never visited either, but austin sounds like an oasis in the middle of the Texas desert.

Family is nice, but don't be pulled into the wrong city.
Permalink z-z-zed 
March 29th, 2007 3:36pm
I really wanted to move to Cali or NY or something.  But that looks like an impossibility (because I am too chicken).  I have a lot of family in the capital city so a little bit more reasonable.

I have 7 more months on my lease, so something will happen probably around then.
Permalink Bot Berlin 
March 29th, 2007 3:39pm
On another note: Atlanta is more fun than Austin, I know the magazines and hype will sway you the other way; but there is a way more going on.  Austin just kind of shuts down at 12am.  It is a safe, clean city, but a little too normal.
Permalink Bot Berlin 
March 29th, 2007 3:40pm
This kind of covers it.

http://www.city-data.com/forum/atlanta/56103-atlanta-austin.html
Permalink Bot Berlin 
March 29th, 2007 3:42pm
back "on topic"

"Is renting a house or buying a house way better than renting an apartment."

renting a house is the EXACT same as renting an apartment. You still have property management types doing annual inspections, checking up on the place, raising rent every year, making sure you are tending the lawn, etc.

I have found that buying a house gives you a sence of roots. It empowers you to paint the walls the color you want, knowing you will not have to double coat white over it a few months in the future. You buy nicer things- not a waste of money, they are certainly worth it... but a $15 stainless steel paper towel rack is warrented if you have roots. Suffering with the free cardboard tube is for renters who must accept they might be gone in several months.

These things to me were with the extra couple hundred a month that buying costs over renting.

that and the whole "building equity" thing...
Permalink arg! 
March 29th, 2007 3:56pm
How old were you when you bought your first home.
Permalink Bot Berlin 
March 29th, 2007 4:00pm
> But no one I know put more than 10% down.

fair enough.
Permalink Send private email strawberry snowflake 
March 29th, 2007 4:02pm
"Suffering with the free cardboard tube"  WAA?
Permalink  
March 29th, 2007 4:14pm
"How old were you when you bought your first home."

22, though I'll move in just a few days before turning 23. (There's a thread on Blah detailing how you can send me housewarming/birthday presents. ;))
Permalink Send private email Flasher T 
March 29th, 2007 4:17pm
that is spoken like someone who has never experienced a $15 stainless steel paper towel rack!

So how long have you been renting?
Permalink arg! 
March 29th, 2007 4:18pm
comment directed towards WAA complainer not Flasher T

BOOYA!
Permalink arg! 
March 29th, 2007 4:19pm
I was talking to the guys at work at lunch about this. I want to build my own pit bbq, and make a room for gaming, poker, and pool playing. Not really room for that in an apartment.

And last time I set a fire in the open lawn area they called the police. (Ok, not really.)
Permalink JoC 
March 29th, 2007 4:41pm
Ironically, my grandmother lives walking distance from university of texas.  That place is a cool area for college kids, sad that my mother is not much of a partier.  Might check out that area.
Permalink Bot Berlin 
March 29th, 2007 4:53pm
This is where I live, nice reviews:

http://www.apartmentratings.com/rate/GA-Decatur-Conservatory-at-Druid-Hills.html
Permalink Bot On Ubuntu 
March 29th, 2007 8:33pm
buy your grandma a nice place out of town. party in hers.
Permalink Send private email strawberry snowflake 
March 29th, 2007 10:54pm
------"*It's hard to imagine a situation where the loss you take is greater than whatever the total you'd pay for renting over the same period unless there is some major decline in housing prices."--------

It's very, very easy if the period of time is short enough and prices fall or don't rise. Remember you will lose all the buying and selling fees (maybe 5-7% or more). Then there is the fact that most of your mortgage payments are going into interest payments for the first few years (that's even if you don't have an interest only mortgage), so you are not actually paying off much of the principal, and thus will find you don't make a profit on the sale (indeed to clear the mortgage you may find you have to put in money out of your own pocket).

Then there is the fact that rents in many areas are at an historic low compared to the value of the property. There are plenty of cases where the rent is less than the interest on the mortgage.

On the other hand, there is the problem that you are likely to splurge the money you save by renting, rather than putting it into a savings account to buy at a more opportune time. And secondly, if your property is worth less, the banks have a bigger problem than you do and may well let you take the mortgage with you to your new house, as well as not having the time to come around chasing you if you just hand in the keys and walk away.

As strawberry snowflake has said, you need Excel to do the calculations; she forgot to mention that you also  need a crystal ball to see the future.
Permalink Send private email Stephen Jones 
March 30th, 2007 10:06am
Incidentally Austin, because of an enlightened pro-builder zoning policy, has exceptionally good value real estate despite being in the midst of a population boom.
Permalink Send private email Stephen Jones 
March 30th, 2007 10:08am

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