Should I buy an apartment/condo?

[2lipslegit]

So Im a sophomore at UM right now, considering buying an apartment this summer. ATM, Im renting a house with two roommates for 2300 a month including water. So split three ways we each pay (or should I say our parents pay) 766 plus around 50 bucks for the electric bill monthly.

My parents have said that if I wanted to buy something of my own they would be willing to give me that rent money instead as it wouldnt be costing them anything extra, and I could put it towards a mortgage.

Right now I have 25k saved up that I could put down and then take a loan for the rest. With my parents paying approx 800 a month that would mean Id have about 44k towards paying the spot off by the time I graduate, plus whatever money I make that I can throw on top, maybe a couple hundred a month.

I know there are going to be additional costs of owning something, but I dont know how great they're gonna be. I also know that buying property somewhat ties you down, but prices are low right now and if I can get a great deal I feel theres kind of a limit to how much of a burden that could become.

I just turned 20 this month, I know Im young and a "kid" in many people's eyes but I think this might be a great opportunity to start building some actual wealth to my name. If I do end up doing this, it will mean cutting my expenses - no sport bike next year, no trading my SS for a marauder, less eating out etc. - because I want to pay as much of the mortgage off as quickly as possible, but I've always talked about grinding and stacking, so why not do it?

 

[doublejs07]

What's your budget for the condo?

Also, how are you going to pay the mortgage? Home ownership comes with GREAT responsibility. You can't rely on the maintenance crew to fix broken/damaged things...everything comes out of your pocket.  Things add up.  You can quickly spend a couple thousand dollars to fix things like plumbing, replacing appliances, etc...these were all things that when I rented, the apartment maintenance crew took care of b/c it was covered in the price of my rent.  Ownership is a totally different game...rewarding, but costly. 

Honestly, I say keep renting until you have a secure job and you don't have to worry about things like cutting expenses just to make ends meet.

 

[2lipslegit]

Its not like I have to cut expenses to make ends meet, but I wouldnt be spending as much, just because Id want to pay off as much as possible.

I get 400 a month for food, so thats covered.

800 towards the mortgage from my parents.

And I work 30-40 hours a week min. wage, which is basically just extra money Ive got coming in, covers my expenses and then some. I know Id be putting some of this towards the mortgage too.

I was thinking around the 100k range for the condo, not really sure though. I honestly havent given this a huge amount of thought yet because it just came up a couple days ago. I wouldnt be buying anything til summer so I'd have a lot of time to research the parts of South Miami close to UM and find out where I can get the most bang for my buck.

 

[runningfishy]

Originally Posted by 2LipsLegit

So Im a sophomore at UM right now, considering buying an apartment this summer. ATM, Im renting a house with two roommates for 2300 a month including water. So split three ways we each pay (or should I say our parents pay) 766 plus around 50 bucks for the electric bill monthly.

My parents have said that if I wanted to buy something of my own they would be willing to give me that rent money instead as it wouldnt be costing them anything extra, and I could put it towards a mortgage.

Right now I have 25k saved up that I could put down and then take a loan for the rest. With my parents paying approx 800 a month that would mean Id have about 44k towards paying the spot off by the time I graduate, plus whatever money I make that I can throw on top, maybe a couple hundred a month.

I know there are going to be additional costs of owning something, but I dont know how great they're gonna be. I also know that buying property somewhat ties you down, but prices are low right now and if I can get a great deal I feel theres kind of a limit to how much of a burden that could become.

I just turned 20 this month, I know Im young and a "kid" in many people's eyes but I think this might be a great opportunity to start building some actual wealth to my name. If I do end up doing this, it will mean cutting my expenses - no sport bike next year, no trading my SS for a marauder, less eating out etc. - because I want to pay as much of the mortgage off as quickly as possible, but I've always talked about grinding and stacking, so why not do it?

  You need to be more specific, do research on comparables and be realistic.  You in essence are tying yourself down.  What if you wanted to change college?  What if you had a job offerring else where?  You need flexibility right now.  Talk w/ your parents.  And yes, you are 20 and you are still young.  No matter how you cut it, you haven't been through enough, nor do you have the experience.  Pay your dues, talk to your parents, be realistic, and go from there.

A lot of condos in certain areas are pretty affordable, but you need to do the math.  Chances are, there will be a lot of expenses you have missed.  THese include repairs, insurance, HOA fees/maintenance fees, etc etc.Ultimately, you'll need to QUALIFY for the LOAN.  What type of history do you have w/ credit, and do you gross!!

 

[doublejs07]

Originally Posted by 2LipsLegit

Its not like I have to cut expenses to make ends meet, but I wouldnt be spending as much, just because Id want to pay off as much as possible.

I get 400 a month for food, so thats covered.

800 towards the mortgage from my parents.

And I work 30-40 hours a week min. wage, which is basically just extra money Ive got coming in, covers my expenses and then some. I know Id be putting some of this towards the mortgage too.

I was thinking around the 100k range for the condo, not really sure though. I honestly havent given this a huge amount of thought yet because it just came up a couple days ago. I wouldnt be buying anything til summer so I'd have a lot of time to research the parts of South Miami close to UM and find out where I can get the most bang for my buck.

I dunno, man....

If I was in your shoes, I'd honestly wait until I had something more than a minimum wage job before settling on a condo to buy.  Yea, it sounds like your folks have you covered, but I wouldn't be in such a rush to buy.  The housing market will always be up and down.  I'm sure you'll be in a much better place financially within the next 3-5 years w. your degree, so maybe you should re-assess then.  If your parents aren't pressuring you to move, then I just think you should stick it out in the apartment for the time being.  Within my first year or two of home-ownership, I probably had 10k in expenses that I had to come out of pocket for...like I said before, it's a big responsibility that you are in charge of as far as repairs and other things. 

 

[chungsta]

Yes because it is the best time to lock in on mortgage rate.

No if u believe if the world is on its way into a toilet.

 

[navarretr]

25k saved up

I'm jelly

 

[21 world b free 21]

No. you won't make up your closing costs unless you stay there for 5+ years and in 2 years you will have no idea where you will end up. Also, you probably don't make enough money for the interest deduction to matter

 

[Fong$tarr]

HOA can be a pain depending on the place. People always forget to factor that in.

Depending on where you live, it can be done especially when you have help from your parents. Normally getting into mortgages always depend on what kind of stable job you have and what kind of lifestyle you live. Normally you always have to cut back on something to help have money for other things. I would only not commit to something like this if you are trying to travel or do other leisure things first. Getting a place is when you have done all those things first and some. Plus getting a condo doesn't mean you can and will get your money back when you sell it. It's just not as reliable as a house is.

 

[mangudai954]

Originally Posted by DoubleJs07

Originally Posted by 2LipsLegit

Its not like I have to cut expenses to make ends meet, but I wouldnt be spending as much, just because Id want to pay off as much as possible.

I get 400 a month for food, so thats covered.

800 towards the mortgage from my parents.

And I work 30-40 hours a week min. wage, which is basically just extra money Ive got coming in, covers my expenses and then some. I know Id be putting some of this towards the mortgage too.

I was thinking around the 100k range for the condo, not really sure though. I honestly havent given this a huge amount of thought yet because it just came up a couple days ago. I wouldnt be buying anything til summer so I'd have a lot of time to research the parts of South Miami close to UM and find out where I can get the most bang for my buck.

I dunno, man....

If I was in your shoes, I'd honestly wait until I had something more than a minimum wage job before settling on a condo to buy.  Yea, it sounds like your folks have you covered, but I wouldn't be in such a rush to buy.  The housing market will always be up and down.  I'm sure you'll be in a much better place financially within the next 3-5 years w. your degree, so maybe you should re-assess then.  If your parents aren't pressuring you to move, then I just think you should stick it out in the apartment for the time being.  Within my first year or two of home-ownership, I probably had 10k in expenses that I had to come out of pocket for...like I said before, it's a big responsibility that you are in charge of as far as repairs and other things. 

 

[blckmagc88]

I really don't think it matters if he's "tied down" or not. College towns are the easiest to rents apartments in. no apartment ever stays empty around a major college.

 

[runningfishy]

Originally Posted by blckmagc88

I really don't think it matters if he's "tied down" or not. College towns are the easiest to rents apartments in. no apartment ever stays empty around a major college.

And PRICE will reflect this already!!!!!!!!!!!


  

 

[mojodmonky1]

Originally Posted by RunningFishy

Originally Posted by blckmagc88

I really don't think it matters if he's "tied down" or not. College towns are the easiest to rents apartments in. no apartment ever stays empty around a major college.

And PRICE will reflect this already!!!!!!!!!!!


  

i think what he means is that even if OP ends up moving elsewhere, the condo wont necesarily be a sunk cost because he should be able to find a renter that will help offset his monthly mortgage payments.

like DoubleJs07 said... being a homeowner is a huge pain in the butt (and expensive too).  I've been in my place for almost about 18 months now and I still have half a dozen home improvement projects that I need to take care of that will cost me upwards of $5K easy.  Not looking forward to it.

  

 

[kramer]

25k at 20

my goal was 10k at the end of hs but I didnt quite make it

 

[runningfishy]

Originally Posted by Mojodmonky1

Originally Posted by RunningFishy

Originally Posted by blckmagc88

I really don't think it matters if he's "tied down" or not. College towns are the easiest to rents apartments in. no apartment ever stays empty around a major college.

And PRICE will reflect this already!!!!!!!!!!!


  

i think what he means is that even if OP ends up moving elsewhere, the condo wont necesarily be a sunk cost because he should be able to find a renter that will help offset his monthly mortgage payments.

like DoubleJs07 said... being a homeowner is a huge pain in the butt (and expensive too).  I've been in my place for almost about 18 months now and I still have half a dozen home improvement projects that I need to take care of that will cost me upwards of $5K easy.  Not looking forward to it.

  

I understand.  No one buys property w/ the intent on it being a 'sunk' cost.  A condo is very different from a house, but I agree w/ the idea that it being a rental income property, since it's near the school.

 

[Fong$tarr]

Plus you know students will mess up the condo/apartment for sure. I am sure you'll bank money from rent but like Mojodmonky1 said, being a homeowner is a job in itself. You always have to find contractors to fix things here and there and you even have to be that guy that is responsible in getting your money just in case people don't pay their rent on time. I know a lady that rents her house and she had to evict and take a family to court for not paying their rent for 4 months. Anyways, just some things you might go through.

 

[reener]

props to OP for saving 25k at 20

 

[joe billionaire]

Originally Posted by reener

props to OP for saving 25k at 20

this...

 

[timcity2000]

what's the housing market like there?

in other words, what are the chances that the home you buy will maintain its current value or even appreciate?

 

[2lipslegit]

Dont have time to write a full reply right now, but I appreciate everyones input.

Keep in mind that right now my parents are essentially throwing 800 out the window to give me a place to sleep. If I copped the apartment, theyd be putting that towards my mortgage, so Id essentially be profiting 800 a month off of that.

If I need to move after graduation (which is definitely a possibility, one that is also a concern of mine) Ill have personally put maybe 30k into the place, while there'll be a total of near 50k paid towards owning it. I could maybe sell it for less than I paid and still come out positive. I'd also be building my credit for the future.

Alternatively, I could rent it out and put the money towards the mortgage. Im not too keen on this to be honest, but the majority of the kids at UM have parents that are definitely paid and throw out rent money and deposits like its nothing, so I guess its a possibility.

Im almost certain that I would qualify for a loan, should I need someone to cosign, my dad would probably be willing to and that would guarantee a loan.

 

[crcballer55]

Originally Posted by 2LipsLegit

Dont have time to write a full reply right now, but I appreciate everyones input.

Keep in mind that right now my parents are essentially throwing 800 out the window to give me a place to sleep. If I copped the apartment, theyd be putting that towards my mortgage, so Id essentially be profiting 800 a month off of that.

If I need to move after graduation (which is definitely a possibility, one that is also a concern of mine) Ill have personally put maybe 30k into the place, while there'll be a total of near 50k paid towards owning it. I could maybe sell it for less than I paid and still come out positive. I'd also be building my credit for the future.

Alternatively, I could rent it out and put the money towards the mortgage. Im not too keen on this to be honest, but the majority of the kids at UM have parents that are definitely paid and throw out rent money and deposits like its nothing, so I guess its a possibility.

Im almost certain that I would qualify for a loan, should I need someone to cosign, my dad would probably be willing to and that would guarantee a loan.

You're asking for trouble if that's the thinking.  It might sound good in theory, but there are too many negative variables to consider moving forward with it.  Number one, and most obvious in this scenario is that you're depending on roommates to help pay for part of the rent/mortgage.  If they choose not to pay, what happens then?  It's going to be a pain to throw them out and you will have a negative his on your credit at the least.  If it gets really bad, you'll end up foreclosing and be out your down payment plus have a foreclosure on your credit for the next 10 years.

This is also in Miami.  As bad as the housing market has been hit, it's still projected to get worse before it gets better.  Continue to save up, "throw money away" on rent, and put the savings towards a house you really want when you're willing to settle down.  Lastly, you're failing to factor in HOA's and property taxes into the payments as well as property maintenance.  Right now, you're not building any equity but you're also not taking any liability should the apartment flood or a major appliance breaks.

Hold tight and be patient.  The low prices on real estate and the interest rates aren't going anywhere any time soon IMO.  Before you buy, worry about paying off your student loans.  Then you'll have a guaranteed return and can save up the amount your were paying and put it towards a house later.

 

[nocomment6]

Honestly I've considered this many times and it just doesn't make sense to buy, rent and invest the rest. Mortgage ain't cheap, plus upkeep. If you invest it well, then you'll have enough to buy a condo a lot earlier then if you would get a loan and pay it off.

 

[pharelfor3]

if they playing it, get the apt. It can only help if you decide to sell it

 

[2lipslegit]

Originally Posted by crcballer55

Originally Posted by 2LipsLegit

Dont have time to write a full reply right now, but I appreciate everyones input.

Keep in mind that right now my parents are essentially throwing 800 out the window to give me a place to sleep. If I copped the apartment, theyd be putting that towards my mortgage, so Id essentially be profiting 800 a month off of that.

If I need to move after graduation (which is definitely a possibility, one that is also a concern of mine) Ill have personally put maybe 30k into the place, while there'll be a total of near 50k paid towards owning it. I could maybe sell it for less than I paid and still come out positive. I'd also be building my credit for the future.

Alternatively, I could rent it out and put the money towards the mortgage. Im not too keen on this to be honest, but the majority of the kids at UM have parents that are definitely paid and throw out rent money and deposits like its nothing, so I guess its a possibility.

Im almost certain that I would qualify for a loan, should I need someone to cosign, my dad would probably be willing to and that would guarantee a loan.

You're asking for trouble if that's the thinking.  It might sound good in theory, but there are too many negative variables to consider moving forward with it.  Number one, and most obvious in this scenario is that you're depending on roommates to help pay for part of the rent/mortgage.  If they choose not to pay, what happens then?  It's going to be a pain to throw them out and you will have a negative his on your credit at the least.  If it gets really bad, you'll end up foreclosing and be out your down payment plus have a foreclosure on your credit for the next 10 years.

This is also in Miami.  As bad as the housing market has been hit, it's still projected to get worse before it gets better.  Continue to save up, "throw money away" on rent, and put the savings towards a house you really want when you're willing to settle down.  Lastly, you're failing to factor in HOA's and property taxes into the payments as well as property maintenance.  Right now, you're not building any equity but you're also not taking any liability should the apartment flood or a major appliance breaks.

Hold tight and be patient.  The low prices on real estate and the interest rates aren't going anywhere any time soon IMO.  Before you buy, worry about paying off your student loans.  Then you'll have a guaranteed return and can save up the amount your were paying and put it towards a house later.

No, Im not depending on roommates to pay anything. It would just be me living in the apartment/condo. Should I end up in one with an extra bedroom I might consider renting it to one of my friends that I'm living with this year.

I dont see what you're getting at, if anything, about it being in Miami. Do you mean that the housing prices here, specifically, will continue to fall?

Also I don't have any student loans. My grades in high school got me a full ride so I'm only paying for books.

 

[odog24]

My neighbor is a real estate agent and when his daughter went off to college they did the same thing.

her parents bought it under their name and their daughter would live in it plus a couple roomates

by the time your done with school you will have a nice ivestment property and since its near a school you rarely have to worry about finding tenants.
it sounds like your parents are well off so they can probably afford to take the slim risk that exists.