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Old 07-01-2008, 10:05 AM   #21
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A price is worth only what one is willing to pay for it, so to chime in with everyone else about the 100k ahead... if it were actually worth the 100k extra you can be damn sure somebody else would have already bought it and tried to turn it over, probably to no avail.

Going with what plex said, large houses are kind of harder to rent and have a lot more overhead. To generate the 1% of sale value, even in the deflated market, many real estate investments need multiple units in the property to be able to find a market for the units. Thus, if your house was a 2-unit, then the $1,500 each a month would make it a little more reasonable.
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Old 07-01-2008, 10:13 AM   #22
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I always wonder how folks can be smart enough to make enough money to afford such places but not understand some basic financial ideas....frankly, OP, was probably purposely vague on the details because he was looking for affirmation rather than information...and you folks are trying to explain stuff to him....so here you go....buy it since that is what you want to do
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Old 07-01-2008, 02:47 PM   #23
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As others have suggested, buying this place as a rental isn't a great idea. Buying it as an upgrade to your current house might be. This depends entirely on where you want to live and how you want to live.
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Old 07-01-2008, 03:18 PM   #24
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I ran your numbers through this program:

Real Estate Valuator Spreadsheet ~ Canadian Housing Price Charts and Real Estate Valuator Blog

and concluded that this is a BAD investment on a cash flow basis. If you think it is a good investment from a lifestyle point of view, that is another matter.
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Old 07-01-2008, 04:13 PM   #25
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Is buying SPY today for 128 a great deal just because my brother bought it for 145 last week? No, thats only a tiny piece of the puzzle.

The market has told told everyone in that neighborhood that those $500K houses they bought werent really worth $500K. They arent even worth $400K right now since the bank couldnt sell the one you are looking at so just because the price went down doesnt mean you have a great bargain.

Im surprised that your friend doesnt buy it for $379K and then let the bank foreclose on his $379K house that he owes $500K on like everyone else seems to be doing.
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Old 07-01-2008, 04:43 PM   #26
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Always hard on the interweb to know who is savvy and should be listened to. Hear me now and smell me later: if Honobob (the biggest negative cash flow, make da big bucks in appreciation cheerleader i know) says don't buy - mmmmmaybe you shouldn't buy. MHO
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Old 07-01-2008, 07:12 PM   #27
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thanks for all of the suggestion. One last, last, last question.... how about at $340 to $350k for an upgrade in housing for me and my family. we sell our current house (21yrs old) and pick up this 3 yrs old house, assuming that i can sell our for close to 300k is it still a good buy?

advantage: almost spanky new house, away from the in law (jk)

disadvantage: worse school but more diverse (meaning more minority); longer commute, higher taxes.
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Old 07-01-2008, 08:06 PM   #28
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I think you know the answer to that question. If you can "steal" the new home what makes you think you can "luck out" on the old one? If you jump on the new house BEFORE selling the old one you could end up with BOTH of them; could you or would you want to carry both of them, and if you do, how long?

Of course this would raise the question of renting the "old" house. Could it be rented at 1% or, if you own free and clear, could at least cover ALL expenses and BREAK EVEN before depreciation? It may work that way. Still IMHO you are heading down a "shaky" financial road - however; you may have talked yourself into the "new" one. Both of these properties have a business aspect AND a psychological aspect you need to consider the business aspect ONLY IMHO.
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Old 07-01-2008, 08:30 PM   #29
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Originally Posted by OAG View Post
I think you know the answer to that question. If you can "steal" the new home what makes you think you can "luck out" on the old one? If you jump on the new house BEFORE selling the old one you could end up with BOTH of them; could you or would you want to carry both of them, and if you do, how long?

Of course this would raise the question of renting the "old" house. Could it be rented at 1% or, if you own free and clear, could at least cover ALL expenses and BREAK EVEN before depreciation? It may work that way. Still IMHO you are heading down a "shaky" financial road - however; you may have talked yourself into the "new" one. Both of these properties have a business aspect AND a psychological aspect you need to consider the business aspect ONLY IMHO.
thanks oag, yes it does seems like i am looking for confirmation than information. yes, i do feel like i am "talking" myself into the deal. who knows the bank might laugh at me and say "get out of my face" or they might say yes to $350k ... i am not sure but i do know that i do not wish to be in the situation of carrying two houses the way thing market today.

i will sit on it and think..

thanks

enuff
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Old 07-02-2008, 12:05 PM   #30
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if Honobob (the biggest negative cash flow, make da big bucks in appreciation cheerleader i know) says don't buy - mmmmmaybe you shouldn't buy. MHO
Hey, I'm not fat, I'm just retaining equity.

But I have to agree with everyone else that there's no equity there to buy and the upside seems limited. Next property!
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Old 07-02-2008, 02:19 PM   #31
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Enuff, you did mention that you can pay cash for the second property. If you have that much cash lying around, you can easily buy 20 slum properties at 20% down and rent them out at $600-$800 a piece, and you can get on the local section 8 housing list to get the government to pay for most of the rent. You'll net maybe $500 per property a year initially, but that's a lot better than -$20,000 a year on one property.
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Old 07-02-2008, 02:27 PM   #32
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If your current house doesn't fit your needs, would you be able to get it to that point with a remodel? Tally up the closing costs if you sell your current house and then figure out if you could make the current house more enjoyable for less.
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Old 07-02-2008, 08:52 PM   #33
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thanks dreamer, the house is located at outside (whitemarsh) of baltimore. i plan to keep it for about 5 years or so. what attract to me was the equity in the house, yes over $100,000.00 in equity. One of the family friends lives about 6 doors down and told me about the property. he paid $560,000.00 for his, the house that i am looking at is smaller and smaller lot.



enuff
Im pretty familiar with that area....B'more has pretty decent values compared to DC and you can actually easily find cash flow positive rentals. I am shocked that the taxes are so high....doesn't sound right. Don't buy.
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Old 07-02-2008, 10:18 PM   #34
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Im pretty familiar with that area....B'more has pretty decent values compared to DC and you can actually easily find cash flow positive rentals. I am shocked that the taxes are so high....doesn't sound right. Don't buy.
jazz4cash, the taxes is high just because the house is base on new houses price, i guess. My personal property only $2600/yr. i too was shock to hear taxes is that high, may be my friend exaggerated.

buns, slumplord is a hard job, section 8 is even harder. i dont have any experience with section 8 and just a little scare since i heard they tend to bring a village to live with them and they tend to have victim mindset which could be a ton of headache.

marq, thanks for the advice and will do as u say, start remodel my old house rather than buy another one. it's cheaper this way.
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