cannot wait anymore, buying a condo now instead of a house at 4S Ranch, and wait to buy a bigger house later?

[JWM in SD]

“She followed my advice. We sold the house. We saved a hundred grand (and more). She now respects me even more. She has bragged to her parents and friends, “My husband is really smart. We sold our house before the market crashed.”

My investment banker friend had the same experience.”

This is more or less the same experience I had as well only I didn’t have a house to sell but rather 20% down in cash to lose if we bought. Now my wife laughs at people who still don’t understand what’s going on because we so much free cash flow that I spend half my free time figuring out what to do with it. Yet 6 mos to a year ago she and I were at odds. Extreme odds.

Most of the time I follow her lead and go with the flow …until I think I need to interject on “our” behalf (us as a couple). She will respect you more for doing so.

[beanmaestro]

You might be able to buy yourself some time and money at the same time, by taking a different approach. Show your wife the Case-Shiller numbers, and the ARM reset schedule. Notice how the price drop tends to accelerate in the fall, and this coincides with the ARM resets. So it looks pretty darn likely that prices will drop 7-10% by the end of the year, and there’s a whole lot more sellers than buyers right now.

Use this reasoning to make offers 10-15% below asking price. Tell your wife you’re offering tomorrow’s price today. If the offer is accepted, you take a lot of the financial sting out of the downside, and your wife is very happy you bought the condo AND saved $40k. If the offer is rejected, low-ball someone else a few weeks later. Time is on your side.

I’m speaking from a bit of experience here… We’ve used this approach a couple times, and the second time almost got a very nice house at an $70k discount. A “greater fool” swept in and paid 99% of list price the week before our seller was closing in Seattle. That was December, and prices are down another 5% since, while we’ve got $25k more in the down payment fund now.

[PadreBrian]

OP, have her wait just a few more months. Have her read our thread on Dubya’s announcement this morning. He is recommending to congress that people that walk way from their houses next year be forgive their tax forgiven debit. Basically that was the only thing keeping people underwater from foreclosing.

She will only have to wait just a few months more.

[stockstradr]

wantobuy– are you sure you’re comparing apples to apples? You can rent a house in RB for $2200 a month.

I agree and I’ll go you one better. We rented a 3BR 2BTH 1300 sq ft condo in a nice area of RB for $1550/month. That place had room for a family with a kid, and lets yah save even more money to buy a house five years from now, at bargain prices.

Yes the rents have moved up, but you can still rent that kind of condo for about $1700, if you shop around.

[NateK]

Where are you gonna get the 100% financing…I thought with the credit crunch. That door was shut. I thought no one on Wall Street wants to even touch those loans.

[CBad]

Marriage is a compromise. If both of you don’t agree on buying now I don’t see why you should. A compromise is having both of you agree that you do indeed want to buy, but you buy when it makes sense. Your wife should accept the compromise of having the plan to buy in X amount of years and not be childish about having it right now. (By the way, this is coming from a woman.)

If you must buy now, I don’t agree with the logic of buying the condo if you’re going to buy the house a couple of years later anyway. You’ll lose money on the condo; I think that’s obvious. You won’t make money on the condo if you rent it and will probably be cash negative on it. What makes you think you’ll still qualify to buy the house at that point? Even if you qualify, will it be comfortable being responsible for both properties especially if the condo is vacant? If you’re planning on children, will your wife continue to work? Are you basing all of these financial decisions on a two-income family with no children?

[sdduuuude]

The question you should ask yourself is – “Am I willing to spend $38,000 to teach my wife to listen to me next time?”

Or, is this the time to let her know that bad financial decisions are not an acceptable part of your marriage, regarless of any crying, whining, pouting, or other kind of pressure. And that crying whining, pouting, and pressuring isn’t the way to get what she wants.

The other guy’s point about “if she makes the money, then make her buy the condo” is also valid. Maybe tell her when she can put her own $38K down-payment on the place, you’ll buy it.

[sdcellar]

stockstradr– I was going to go myself one better, but I figured there was somebody out there that actually had real-life numbers for condo rents in RB. Better to hear from you than for me to guess or spend the time doing the proper research. Thanks!

So wantobuy, using the $1700 figure, you’d be losing another six grand a year on top of the depreciation. Sign me up!

[surveyor]

wanttobuy:

My return on equity calculations for your RB condo is returning a -23% a year, which in real estate is VERY bad. That is about 30% below what I can usually get in other places. This is also assuming a $2100 rent, which in truth may be lower.

So if you are thinking to use your RB condo as an investment, just realize that it is returning you -23% a year and a $350/mo. negative cash flow.

[gn]

wantobuy,

Here’s an idea:

Buy the condo now. 3 years later, buy the SFH in 4S with a 30 yr fixed mortgage.

By then, since you’ll be upside-down with your condo, walk away from the condo (let the lender foreclose). Since you have a 30 yr fixed on your SFH, the mortgage payment won’t go up on you, even if you have bad credit.

The bad credit you get from the foreclosure will affect your credit card loans & car loans. But assuming you don’t owe much on these, it won’t be too bad. The loan that you use to buy the condo is a non-recourse loan, so the lender will not be able to go after you.

All things considered, it’s a small price to pay to keep your wife happy.

Of course, the lender will be the big loser. But that’s the risk inherent in the mortgage business. Lenders understand this risk, if they lose money, they can’t blame anyone else.

[LostCat]

Rents are going up in SD. So it could end up saving you money over the next couple of years. That is if you say it is a net sum move for you.

If you have the flow and can stay in the house/condo long enough, the price decline now will not mean much to you other than maybe a few grand that you could have saved by purchasing it for a few thousand less.

Inflation is going to spring up all over the place with the Feds lower rates. That inflation will likely cover any down side to a possible price reduction.

Really, it doesn’t matter. it just money that isn’t even yours. The bank owns it until you re-fi or pay it off.

[sdsundevil]

OK, this seems like a made up post since it’s such a bad financial move. Sorry if that seems offensive.

First off, don’t forget about HOA dues on the condo. Condos almost always have higher dues than homes. Secondly, don’t forget about having to pay commission when you sell the condo on top of the likely loss in value it will sustain during the next few years.

Renting is far away the best move at this time. Next fall, the market should be teeming with foreclosures and close out specials from home-builders. Remember that home-builders have already made their money in a lot of these developments and can afford to give away houses just to be done and move on. I believe 4S ranch is a prime candidate for this type of activity as it has been under development for a few years.

As for mello-roos, they suck, but they also pay for infrastructure etc. that wouldn’t be there otherwise. 4S has a number of parks, nice wide streets, etc. Not saying I want to shell out for all of that, but it’s not like the money isn’t used by everyone.

Finally, if you do decide to buy a condo, I would go around low-balling the heck out of people trying to find the person who just wants out. Believe me, as the market worsens this fall (which is a virtual certainty) some people are going to push the panic button. As a buyer, now is the time to take advantage of that. Sellers had the upper hand for the past 10 years, and now the shoe’s on the other foot.

[JWM in SD]

“Rents are going up in SD. So it could end up saving you money over the next couple of years. That is if you say it is a net sum move for you.

If you have the flow and can stay in the house/condo long enough, the price decline now will not mean much to you other than maybe a few grand that you could have saved by purchasing it for a few thousand less.

Inflation is going to spring up all over the place with the Feds lower rates. That inflation will likely cover any down side to a possible price reduction.

Really, it doesn’t matter. it just money that isn’t even yours. The bank owns it until you re-fi or pay it off.”

aHAHAHAHAHHA…..AHAHAHAHHAH

I really hope that this is tongue in cheek advice.

[ibjames]

Agree to buy a house, that is your part of the deal, agreeing.

She has to agree also, but agree to buy a house when it makes sense. I had the same problem with my wife. We made a deal, we buy a house, when foreclosures and inventory are at regular levels again, or close to normal levels. Or when we can buy a house that is comparable to the house we rent currently at around the same cost monthly.

Otherwise, the “I want a house” argument holds no water. Ask her why she wants it. She wants to customize it? Paint the walls, buy some plants, make it your home. It’ll cost much less in the long run. We painted our rental (inside) and have plants, etc. Get over the stigma of renting as a bad thing, before things got out of wack, owning a house was a good idea. Things are different, and the smart ones are renting, not buying. Emphasize that other people are owning, but it’s costing them a lot of money to have that right. While you may not be able to say you own, you are saving money by doing it. Being able to put in new windows or change your own leaky faucet is worth how much? There has to be some rationality, otherwise you are just like the other lemmings following the ones in front of you off of the cliff. Sales people LOVE people that think with their hearts. How many house showings have you went to where the realtor talked about nothing except how you can build memories, and family, etc. etc. Pulling every heart string possible.

Separate your heart from your brain when making decisions like this. Kind of like thinking with your big head instead of the little head when on a date. Thinking with your heart or your little head will get you in trouble, even though for a short while you will be happy.

In the end, if you want to buy in an area that has certain schools etc, rent there. Kids don’t mind if the walls are owned by their family, they just want a place to sleep at night. You can find a place to rent that will fit all the criteria of what you want to buy. If one day buying comes down to that price range, do it. Until then, wait it out and enjoy your life.

Like Abe Lincoln said, “good things come to those who wait”

With the money you save, send your kids to a nice college or take an awesome vacation, hell, buy a huge hot tub or something. The amount you could lose is not small

[Raybyrnes]

“Sorry SD Realtor, but I’m entitled to my opinion just as much as you are to yours. He doesn’t have to take any of my advice if he doesn’t want to.

But seriously, what is she going to do if he says no? Really, what? Divorce him? Maybe, but not likely.

You may not like the tone I take, but someone in that relationship has to take the responsibility for making sound decisions based on logic as opposed to emotion and obviously it’s not his wife.”

Classic JWM. Advocating that the man get a divorce. God didn’t I hear you crying about that some time ago.

HAHAHAHA

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