After reading all the threads that have come up recently about the depression this country is headed for in the next year, I’m starting to think I’m just pissing my money away by living in apartments, and that I should start thinking about investing in things like property now, before the real crisis hits. I have some CDs (inheritance money) that will mature this year, and I’m considering putting part of that as a down payment on a house, something cheap I can live in until I save up some money from a good job (which I can’t get where I am–I live in the sticks) and can sell the house for a profit and move away, after the financial crisis blows over. Is this a good plan, considering the current/future economic climate? Or would it be better to wait until after the crisis hits?
On this same tangent, I’ve been researching homes, and found out that there are many houses in Pittsburgh available for 15k and under–two bedroom, two story houses at that, and with cheap property taxes ($450/year). This seems like a steal, especially considering that these houses are fairly centrally located and are on a bus line (something I need, as I cannot drive). But are all cheap-ass houses total dumps? I don’t have high standards, or kids to worry about; the only really important thing is that the property is on a bus line. But I’ve always believed that owning a house was prohibitively expensive; it seems unreal that a house would be cheap enough for me to afford. Is a 15k house automatically a slum? And why would it be so cheap?
(Oh yeah and if you read my Denver thread you should know I really don’t want to live in Pittsburgh permanently. It would just be a stopgap measure until I can really make some money and leave for greener pastures.)
Continuity Eror, not sure I can be of help. But I will throw in my .02cents worth anyway, with the likelyhood of getting at least a penny back.
We bought my other halfs grandmothers house for 25k. We got a good deal, but also have had to invest an ungodly amount of money and still have nothing short of a dump. The land it sits on is worth more than the house itself.
Now what type of things did we have to do to a house for 25k.
Vinyl Siding on Exterior
Massive Amounts of Paint on Interior
Well Drilled, just so we could have our own water supply, you didn’t think we
got water for that price did ya?
Remodeling of the Garage, which is now piled up with junk from here to blue
yonder.
Central heat and air, used to use kerosene and window air conditioner
Things that need to be done but ran out of money
Bathroom in need of dire repair, I can’t express that enough
Driveway needs to be paved.
New harwood flooring and linoleum thru out the house
Windows need replacing
Things we have had to replace
Water heater
Stove
Fridge
Now do I think any type of real estate investment is good compared to renting including buying a manufactured home or mobile home? Yes. People beat up mobile homes saying they are the worst investment. I will agree to an extent. Over the years that I rented I fair to say I spent well over 20k with not a penny to show for any of it. I may as well have set a fan in front of an open window with a stack of hundred dollar bills to blow right on out it. You are wasting your money renting, but there are good things about renting. Namely if something goes wrong you just tell the landlord and they take care of it. When you buy you are responsible for all of it. There is nobody to fall back on but you.
I would check the house out closely. In short you get what you pay for! Hope that helps.
Sounds like an old steel/coal company house to me. If they are, beware, beware, beware. They’re poorly constructed and, at this point, ancient.
Our first house was 25k, old mining camp house. We were stupid to buy it but at the time we were so desperate we did it anyway. No insulation and the floors were sinking. One of the main reasons we moved this summer was we couldn’t afford the heating bills in the winter.
I’m not saying that there’s no such thing as a good house for that cheap. It happens. Would I go for it if I were in your shoes, though? No.
First of all, get the comps for the houses near by, and get the test scores for the local schools. Maybe you don’t care about the schools, but the people you are going to sell the house to might. Then, if you are still interested, really interested, get a company you trust to do an inspection. I can’t believe anyone could have afforded to maintain a house worth only $15k. How much money would you put into a car worth four hundred bucks? Paint isn’t cheaper for cheaper houses.
Is the $15K the money you have to spend on the house, or do you plan to put down 20% of that? I’d be very dubious - sure it is cheap, but if you can’t stand to live in it without putting lots more in, you lose. You might find a trusted real estate agent - the commission they’d get on a house that cheap probably isn’t worth lying for, and they might know the gossip.
<Green Acres>The Haney Place???</Green Acres>
Ok, in my opinion, I think you’re missing the point. If you have the money, what you want to do is look for a house, that after the downpayment, the mortage and taxes end up being about the same as what you’re paying in rent. The point isn’t that you take that little amount of money, and buy a house free and clear, and never have to pay another dime. I’m fairly certain that such a house would end up costing you more than you think.
For example, our last apartment rent was about $850 a month for a 2 bedroom apartment. Our house has 3 finished bedrooms, two and a half bath, garage, yard, library…all that jazz, and our mortgage paymets are around $1000 a month. So for $150 more a month we have a much nicer place, it’s ours so we can do what we like, we get credit for the interest we pay each year, and we’re building equity in something that we can benifit from later.
As far as now being a good time to buy, I’m not certain…while the interest rates are still pretty low, I know around my area, the price of houseing has gone up dramatically. That’s great if you’re selling now, but if you buy a house that has an over-inflated price, and the market goes down, you’ll loose money. So try and look at the prices that houses in that area have gone for the last few years, and if they’ve gone up dramatically you might want to be carefull.
$15k house in a major city? Fuck it. Just go buy it. You can’t get a house in the Northeast for ten times that.
Even if it’s a total dump, you can always fix it up and sell it for a lot more.
The thing is, there never really is a “wrong” time to buy a house if it’s a choice between renting and buying. Even if it goes down in value (which they usually don’t long term) you still get something back if you sell it.
If the foundation has started to go, as in the floors are sinking, the house is officially dead. You can cover up the problem, but you can’t fix it. It’d be stupid to buy a house in that condition, therefore, so I think the OP needs to go over this house with a finetooth comb.
buy ammo
As for the 15k house in Pittsburgh, first make sure it’s not a condemned deathtrap. If not, make sure it’s in an improving neighborhood. If it is in Crack Alley, with little hope of any improvement, it’s not worth it.
You’ll definitely have to plan on putting money into it to fix it up.
Replace windows - $10,000
Waterproof basement - $10,000
Renovate kitchen - $5,000-10,000 or more
Refinish bathroom - $5,000 per bathroom
If you can afford it, and if you are in a neighborhood where nice, fixed-up houses are selling for $200,000, then you’ll have made a lot of money AND have a nice place to live. Well, ok, OR have a nice place to live.
However, interest rates are going up. If you want to buy a nice house at an affordable price, it might be better to wait until rising rates bring prices down.
Yeah, waiting might be a good idea. FWIW, US News and World Report just ran an article suggesting the US housing market is overvalued and possibly headed for a collapse.
I’m no expert but don’t you assume its kinda like buying a car? Up to a point getting a low price is a good thing, but after a while the cost of maintenance is more expensive than the savings you’d get. I personally would rather buy a 4k car with no maintenance problems over a 1000 car with tons of them. Same probably goes for housing.
If there is rental demand in your area you can look at a duplex. That way you can afford a place with less maintenance.
You can also live in a trailor park if you’re willing to do so. They depreciate in value and you’d have to pay lot rent but some are nice. An old friend’s mother bought a nice one for $17000, from the inside you couldn’t tell it was a trailor home it was actually nicer than my parents place (my parents make about 120k a year). But as I said you have to worry about depreciation and lot costs.
Failing all that, just get the smallest place possible. Maybe there is some 500 sq. ft place that isn’t bad at all for only $16k. A 500 sq. ft. home for 16k sounds believable, a 2000 sq ft home for 16k probably has a family of homeless people living in the basement.
The friend I referred to earlier bought a house for about 34k and it was a kind of dump (not much worse than my parents place but still dumpy). I can’t imagine what a 15k house would look like.
I read the same thing in Fortune magazine, but I think they are referring to coastal states like Florida, California and the ones in new england. Pennsylvania may not be affected by it.
Interest rates may end up going up high according to a thread I read in GD that I can’t find on the search function for some reason. With the USD devaluing and our trade deficit growing interest rates may rise high. If they hit 11% a 300k house will cost about $2800 a month for a 30 year mortgage, and mortgages will be about 50% higher than they are now.
Buy a house in the midwest. For 200k you can get a 3000+ sq ft house sometimes built in the late 90s. This could be you and who wouldn’t want to live in a town called ‘farmland’? I have been to farmland and they have all the conveniences of a large city. But instead of an ampitheater they have a video store, instead of chinese restaurants they have a supermarket that sells frozen eggrolls, and instead of a public transportation system they have nothing. Aside from that though you wouldn’t know the difference.
Even if it’s a total dump, you can always fix it up and sell it for a lot more.
QUOTE]
There is another problem with this idea that no one has mentioned yet: even if you were to fix up YOUR $15k house, it’s not likely that everyone else in the neighborhood will be doing the same (my guess is that they bought $15k houses because they don’t have much money…not because they were a great “deal”).
Even if you have the nicest place on the block, if you’re surrounded by rat traps, they will drag down the value of your property.
And instead of fresh sushi, they’ve got fishsticks, instead of sailing in the Pacific, they’ve got wading pools.
No, even if I end up living in a broom closet, I’m unlikely to move away from the coast. I’ve never lived as close as this before, but now that I’m here, I can’t imagine wanting to be further away.
