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Old 12-10-2008, 04:25 AM   #21
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I did a search on Realtor.com and from what I see you're looking at a $550,000 minimum for a 3/2 home.Assuming you put 20% and get the 4.5% rate that's being hyped,you're looking at $2229.42 per month for a 30 yr fixed plus taxes and insurance.Go to this site Karl's Mortgage Calculator and add the T&I to determine your costs.

Personally,80% of my net worth is attributed to gains in RE.I was fortunate enough to get in early,live below my means and pay off most of what I own.It's the best investment that I ever made,in spite of the recent downturn.

It looks like a great opportunity to get in,but you must weigh the risks.Should you encounter tough times due to a job loss for example,you do have plenty of resources to fall back on,unlike many that bought at the peak of the cycle.

One good thing about RE is the fed has your back.They're going to do everything possible to stop the bleeding.

DON'T FIGHT THE FED!
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Old 12-10-2008, 08:46 PM   #22
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Originally Posted by liveitup View Post
I did a search on Realtor.com and from what I see you're looking at a $550,000 minimum for a 3/2 home.Assuming you put 20% and get the 4.5% rate that's being hyped,you're looking at $2229.42 per month for a 30 yr fixed plus taxes and insurance.Go to this site Karl's Mortgage Calculator and add the T&I to determine your costs.

Personally,80% of my net worth is attributed to gains in RE.I was fortunate enough to get in early,live below my means and pay off most of what I own.It's the best investment that I ever made,in spite of the recent downturn.

It looks like a great opportunity to get in,but you must weigh the risks.Should you encounter tough times due to a job loss for example,you do have plenty of resources to fall back on,unlike many that bought at the peak of the cycle.

One good thing about RE is the fed has your back.They're going to do everything possible to stop the bleeding.

DON'T FIGHT THE FED!
You're not too far off the mark there. We just saw a house today that was 575k with 6k taxes which work out to about 100k down and 3k for mortgage/tax/utilities. Would have loved to buy it on the spot but the specter of a possible job loss is really cooling our enthusiasm.
NYC is in the center of a financial industry meltdown & we'll seeing the effects all over the place....except in the prices of the houses

Most likely, we'll follow the advise of the other posters and closely monitor the market as we try to get a better feel for the stability of our jobs.

This is really tough.
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Old 12-11-2008, 07:35 AM   #23
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I think you're underestimating the cost of your 575k home.

P&I on 475k at 5 pct is about 2.5k a month. Will you get favorable terms with less than 20 pct down?

On a 1,200 sf house, our experience indicates about $200 mo utilities (no a/c either) and that's probably going to get adjusted up by $100 given electric/water/fuel oil costs this year). Then you've got insurance $100-200 month, and you're at your 3k without taxes.

As for taxes, don't know how you're getting off so cheap but another LI town I just looked at showed not only county but town taxes to the tune of about $20k on a similar cost home. But let's say it's $500 monthly.

Maintenance will be a big hit. Again, our small 10 square roof cost 12k for tear off, shingle, and gutters; slate or wood shingle would have been double. And the furnace bubba is due any minute for an annual check up that may go $200. Other costs are similarly cheerful. We figure $500 monthly for maintenance.

So realistically your costs may be nearly 4k a month, not 3.
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Old 12-11-2008, 02:21 PM   #24
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I think you're underestimating the cost of your 575k home.

P&I on 475k at 5 pct is about 2.5k a month. Will you get favorable terms with less than 20 pct down?

On a 1,200 sf house, our experience indicates about $200 mo utilities (no a/c either) and that's probably going to get adjusted up by $100 given electric/water/fuel oil costs this year). Then you've got insurance $100-200 month, and you're at your 3k without taxes.

As for taxes, don't know how you're getting off so cheap but another LI town I just looked at showed not only county but town taxes to the tune of about $20k on a similar cost home. But let's say it's $500 monthly.

Maintenance will be a big hit. Again, our small 10 square roof cost 12k for tear off, shingle, and gutters; slate or wood shingle would have been double. And the furnace bubba is due any minute for an annual check up that may go $200. Other costs are similarly cheerful. We figure $500 monthly for maintenance.

So realistically your costs may be nearly 4k a month, not 3.
Thanks for the the reality check, that's exactly what I needed to hear.
I've skimped on a few details which would change the situation quite a bit. We have on hand 20% downpayment & then there's the bank of Mom & Dad that we can turn to for as much as we need. But the monthly nut seems like it'll be 4k like you said.
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Old 12-11-2008, 03:36 PM   #25
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Salaryman,

Yes, today is a great time to buy. Look at REOs. Here's a link to the largest holder of REO's (Countrywide). 1 Great Neck property sitting at 500k. NEVER hurts to lowball a bank on an REO!

Good luck!

Countrywide Foreclosures / REO Property Listings - New York
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Old 12-11-2008, 03:39 PM   #26
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Salaryman,

Yes, today is a great time to buy. Look at REOs. Here's a link to the largest holder of REO's (Countrywide). 1 Great Neck property sitting at 500k. NEVER hurts to lowball a bank on an REO!

Good luck!

Countrywide Foreclosures / REO Property Listings - New York

Thanks. Any other links for REO, foreclosure for home buyers?

Salaryman
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Old 12-11-2008, 04:01 PM   #27
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Most banks have websites. Google works pretty well.

Fannie and Freddie can not be excluded. Here's thier sites:

Reo Search

HomeSteps, A Freddie Mac Unit: Feature Search
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Old 12-11-2008, 04:33 PM   #28
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Buy House in Great neck, New york Near School - Fizber Real Estate Search. ID: 8454585

My favorite line in the listing: "The owner didn't leave a property description."

Didn't do any maintenance either from the looks of it. The plywood window treatments are especially delightful. (see the "street view" and rotate the picture to find this story book cottage).

Is this property worth 1/2 million dollars? The opportunity cost of that house, at $400k and giving it a likely $1k in costs a month, is $30k annually +/-. Can you rent that cozy cottage for $2.5k a month?

To value that house, I would find similar, in similar condition, and see what it rents for. If you can't pay its way for the rental (plus some out of pocket for the joy of home ownership) then I'd really ask if the market has dropped to reality or not. Or in rough terms, this would be a good buy if the house cost about 15 times its annual rent (or if you got it for that 400k, it would need to rent for about 2.2k to be an ok deal.)

At the asking price of 510k, it would demand a rent of 3.4k to be considered worthwhile.
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Old 12-11-2008, 04:44 PM   #29
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Buy House in Great neck, New york Near School - Fizber Real Estate Search. ID: 8454585

My favorite line in the listing: "The owner didn't leave a property description."

Didn't do any maintenance either from the looks of it. The plywood window treatments are especially delightful. (see the "street view" and rotate the picture to find this story book cottage).

Is this property worth 1/2 million dollars? The opportunity cost of that house, at $400k and giving it a likely $1k in costs a month, is $30k annually +/-. Can you rent that cozy cottage for $2.5k a month?

To value that house, I would find similar, in similar condition, and see what it rents for. If you can't pay its way for the rental (plus some out of pocket for the joy of home ownership) then I'd really ask if the market has dropped to reality or not. Or in rough terms, this would be a good buy if the house cost about 15 times its annual rent (or if you got it for that 400k, it would need to rent for about 2.2k to be an ok deal.)

At the asking price of 510k, it would demand a rent of 3.4k to be considered worthwhile.
I know that it's all about supply and demand, but some of these houses and the prices that they ask for just defies logic :confused:

BofAmerica/old Merrill just announced 35k layoffs...really starting to tick me off. How are we suppose to muster up courage & commit to the biggest investment in our lifetime if the world is crumbling all around us?
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Old 12-11-2008, 06:58 PM   #30
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To value that house, I would find similar, in similar condition, and see what it rents for.
We agree. As I said, it never hurts to low ball the bank.
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Old 12-15-2008, 09:26 PM   #31
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OK, did a bit of recon & what I found was that:

-rent is cheaper than owning currently, but the rentals are limited to mostly apartments so the comparison is not exact
-there are a few foreclosures, but the money needed to bring the foreclosed property upto standards would be equal to what other non-foreclosure homes go for
-homes in the market that we like are still on the high side, like the sellers are hoping still to get last year's high prices or negotiate close to it

The difference between current market price to what I feel is closer to fair price is still substantial. I could try to haggle, but the sellers still think that they can get the prices that they want.

So, we'll continue to watch and wait.... & try to hold onto our respective jobs in the meantime. Hopefully the new year will bring better news on both fronts.

Salaryman
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Old 12-16-2008, 07:16 AM   #32
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.....
NYC is anticipated to lose about 120,000 jobs - I don't think we've seen everything shake out quite yet. And the North Shore of LI is a funny place - people tend to overestimate their house's value longer than many other areas. I think you have some time before pressure comes to bear after the latest bloodbath on Wall Street.
.......
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Randeman, you're so right on about the sellers' attitudes in the area. But hopefully the dire current situation will bring the prices in line with reality.
I wouldn't get too caught up in sellers "attitudes" about their homes in this environment - I don't think strict supply/demand thinking always applies - this economy is causing many (who are able to) to decide to just hunker down financially & sit-tight in their home if it won't sell at/above a certain already reduced price.

Houses are a very emotional "investment" for many.

You don't always know when you are looking at a house for sale if this is a "we have to sell" house or "we'd really like to sell but there's a floor at which we'll just stay" (I'm in the latter)
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Old 12-16-2008, 08:21 AM   #33
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Being familiar with the Long Island market, and also having been involved in LI RE during the end of the last bubble (when the defense industry collapsed on LI) I can attest to the unreasonable beief by homeowners in LI that their house somehow defies the downwqard market forces that affect the rest of the country. I would expect a one year lag between what is happening in CA and what happens in LI. The recent and continuing financial industry meltdown hasn't really hit home yet, and I would expect a softening market for the next year or so. It may not drive prices down too much (I've seen people take houses off the market rather than drop the price) but it will increase the number of houses in inventory.
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Old 12-17-2008, 04:26 AM   #34
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Here is my personal experience with home buying vs. buying rental property. With a home, your mind is fixed on a dream - wouldn't it be nice to have that extra blah, blah, blah. In time, that new house looses all the glitter and you buy up to a better neighborhood. Then, you have a life trauma (divorce, death, loss of job, etc), and you are forced to sell in an awful housing market - and loose money.

With rental property, you slowly pay off the mortgage, rents go up, and you can sell when the time is right - I made most of my money on rental real estate.

The moral of the story is don't put so many eggs in a big house - its an illusion, and it is a money trap. Most of the time you spend sitting on the couch or sleeping in a room with 4 walls. Soon your new house will feel like the one you are living in now... and you will think, "Why am I paying so much money for this?"

Big houses are for people who are already multi-millionaires. Save your money - with 3 kids, you will find a lot better, more rewarding ways to spend your money. Being strapped to a big house can really control your life.
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Old 12-17-2008, 07:34 AM   #35
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Big houses are for people who are already multi-millionaires.
I think this qualifies as a genuine "pearl of wisdom". Simple, but so true.

A general understanding of this might have gone a long way in averting the present real estate crisis.
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Old 12-17-2008, 08:43 AM   #36
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The moral of the story is don't put so many eggs in a big house - its an illusion, and it is a money trap. Most of the time you spend sitting on the couch or sleeping in a room with 4 walls. Soon your new house will feel like the one you are living in now... and you will think, "Why am I paying so much money for this?"
Indeed. When I see nice, big new houses around here I think to myself how nice it would be to have that much space and those amenities.

Then I remember it comes with a $3,000 mortgage for 30 years. Huge utility bills to heat and cool that much square footage. Stiff property taxes and insurance costs. And if you accept the rule of thumb of 1% of value for maintenance each year and add that in, you're talking about being hostage to a high-paying job (and no layoffs) for many, many years -- decades, in fact.

No thanks. My house is older, it's small and it lacks a few features I'd love to have. But it's paid for, and the utility bills, insurance and property taxes are all manageable. It's really hard to FIRE on a relatively middle class (even upper middle class) income with the 800 pound gorilla of massive housing-related expenses on your back.
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Old 12-17-2008, 03:09 PM   #37
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Salaryman - my apologies if this has already been posted, but if you've got 15 minutes to spare watch this clip from 60 Minutes (maybe some good viewing for your wife as well) and it might cool your heels a bit on jumping in to buy a house just yet ...

A Second Mortgage Disaster On The Horizon?, 60 Minutes: New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default - CBS News
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Old 12-18-2008, 12:08 AM   #38
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How could I have forgotten one of the biggest money traps of owning an expensive, big house....FURNITURE! Your old furniture will look shabby inside an expensive house so, just to keep up with the neighbors, you will need to buy expensive new furniture too. And more of it since your house is bigger.

In fact, that goes with everything you own - your cars might look shabby in a new neighborhood, you will need new or extra tools to maintain your yard (maybe a riding lawn mower?). The list is endless. A big house is one big money drain.

It's really tough to play the role of being a successful middle age family and, at the same time, earn enough money for your ER.
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Old 12-18-2008, 11:55 AM   #39
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Salaryman - my apologies if this has already been posted, but if you've got 15 minutes to spare watch this clip from 60 Minutes (maybe some good viewing for your wife as well) and it might cool your heels a bit on jumping in to buy a house just yet ...

A Second Mortgage Disaster On The Horizon?, 60 Minutes: New Wave Of Mortgage Rate Adjustments Could Force More Homeowners To Default - CBS News

More negative doom and gloom is just what this country needs!

What they failed to mention is the massive loan modifications that are in progress.These opportunities did not exist until just recently.Under the latest plan announced,many borrowers will have a chance to modify their loans at historically low rates,with terms up to 40 years.

Comparing the second wave of foreclosures to the first is like comparing an apple to an orange.Just my opinion of course!
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Old 12-18-2008, 03:48 PM   #40
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More negative doom and gloom is just what this country needs!

What they failed to mention is the massive loan modifications that are in progress.These opportunities did not exist until just recently.Under the latest plan announced,many borrowers will have a chance to modify their loans at historically low rates,with terms up to 40 years.

Comparing the second wave of foreclosures to the first is like comparing an apple to an orange.Just my opinion of course!
Seems what the country needed was a smack in the face by reality. ("What? House values aren't supposed to increase by double digit percentages every year? How am I going to get my free money?")

I'm interested in those loan modification programs you mention; got any links? I haven't found anything that has been decided yet.
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