Rent vs. Buy

[Anonymous]

Thanks for the info on termites, that makes me feel somewhat better about what I may find out. As for emotional connection, a little, that’s another reason I’m asking for input. I think the depreciation is the big issue as well and I don’t want to be stuck with all that depreciation myself. For now, I will wait for the home inspector/structural engineer to take a look at it before I will make a decision. My siblings say they want to try to sell it “as is” in this market, I don’t think we can sell it “as is” in this market without a deep discount which makes me think maybe I should buy it. I have to pay rent anyway. I seem to keep thinking in circles. I really do thank you for your input. When I get more information I will have a clearer idea which direction to go. I have to check into the Prop 13 tax basis transfer too. See if there might be a potential property tax savings if I buy. I have been reading (and learning) from this forum for some time now and believe me when I say I can’t believe I’m even thinking about buying. I guess I’m just waiting for someone to tell me I’m crazy.

[NotCranky]

You are not crazy. You just need some time to work it out.These thing are very complex and you are making it into a good learning experience with appropriate doses of caution. Nobody in your shoes could do better.

[NotCranky]

You are not crazy. You just need some time to work it out.These thing are very complex and you are making it into a good learning experience with appropriate doses of caution. Nobody in your shoes could do better.

[NotCranky]

You are not crazy. You just need some time to work it out.These thing are very complex and you are making it into a good learning experience with appropriate doses of caution. Nobody in your shoes could do better.

[NotCranky]

You are not crazy. You just need some time to work it out.These thing are very complex and you are making it into a good learning experience with appropriate doses of caution. Nobody in your shoes could do better.

[NotCranky]

You are not crazy. You just need some time to work it out.These thing are very complex and you are making it into a good learning experience with appropriate doses of caution. Nobody in your shoes could do better.

[4plexowner]

DGH – a buyer (you included) won’t be able to obtain a good mortgage without a termite certificate – selling the property ‘as is’ most likely means you are dealing with an investor who is going to expect a significant discount for the ‘as is’ condition – at a minimum you are raising a red flag that the property has issues

much better IMO to get a good termite inspection, address any issues found and obtain the termite certificate before putting the property on the market – since most buyers are going to need this cert anyway you should have it in hand

the termite inspector is going to poke at all the exterior wood (trim, window sills, fascia, etc) with a blunt tipped metal rod – if he finds any soft or mushy wood he is going to call this out on his report and he is going to look even closer at the area in question – you can do this inspection as well and fix anything you find – really bad wood should be replaced but you can repair a lot of damage with wood filler – wood filler is an acceptable repair so you aren’t hiding anything from the inspector

the inspector is also going to go into the attic and under the house if it is accessible – he will be looking for damaged wood and signs of termites – he will also call out any water damaged wood he finds

if the property hasn’t been tented in several years I would assume that tenting will be required – in socal it is better to assume that you DO have termites than that you don’t because it is quite likely that you do whether you realize it or not – fortunately for us the local termites don’t eat much and we can stay on top of them

anyway, enough on the termite issue – get the inspection so you know where you stand

~

seems like the cleanest thing to do is sell the house and let everyone share the results now – there are too many ways for hard feelings to arise in the future if you keep the house – let’s look at two extremes:

1. you keep the house and house values drop to zero in 2008 – now your siblings feel bad because you are stuck with a worthless asset and they got away clean – you feel put upon because you knowingly bailed out your siblings but you weren’t expecting the bailout to be quite this large

2. you keep the house and the Paulsen/Bush/Hillary Plan somehow causes housing prices to double in 2008 – now your siblings are jealous and might even decide that you tricked them into selling the property at a lowball price

think long and hard about keeping the house – you will know these people for the rest of your life

[4plexowner]

DGH – a buyer (you included) won’t be able to obtain a good mortgage without a termite certificate – selling the property ‘as is’ most likely means you are dealing with an investor who is going to expect a significant discount for the ‘as is’ condition – at a minimum you are raising a red flag that the property has issues

much better IMO to get a good termite inspection, address any issues found and obtain the termite certificate before putting the property on the market – since most buyers are going to need this cert anyway you should have it in hand

the termite inspector is going to poke at all the exterior wood (trim, window sills, fascia, etc) with a blunt tipped metal rod – if he finds any soft or mushy wood he is going to call this out on his report and he is going to look even closer at the area in question – you can do this inspection as well and fix anything you find – really bad wood should be replaced but you can repair a lot of damage with wood filler – wood filler is an acceptable repair so you aren’t hiding anything from the inspector

the inspector is also going to go into the attic and under the house if it is accessible – he will be looking for damaged wood and signs of termites – he will also call out any water damaged wood he finds

if the property hasn’t been tented in several years I would assume that tenting will be required – in socal it is better to assume that you DO have termites than that you don’t because it is quite likely that you do whether you realize it or not – fortunately for us the local termites don’t eat much and we can stay on top of them

anyway, enough on the termite issue – get the inspection so you know where you stand

~

seems like the cleanest thing to do is sell the house and let everyone share the results now – there are too many ways for hard feelings to arise in the future if you keep the house – let’s look at two extremes:

1. you keep the house and house values drop to zero in 2008 – now your siblings feel bad because you are stuck with a worthless asset and they got away clean – you feel put upon because you knowingly bailed out your siblings but you weren’t expecting the bailout to be quite this large

2. you keep the house and the Paulsen/Bush/Hillary Plan somehow causes housing prices to double in 2008 – now your siblings are jealous and might even decide that you tricked them into selling the property at a lowball price

think long and hard about keeping the house – you will know these people for the rest of your life

[4plexowner]

DGH – a buyer (you included) won’t be able to obtain a good mortgage without a termite certificate – selling the property ‘as is’ most likely means you are dealing with an investor who is going to expect a significant discount for the ‘as is’ condition – at a minimum you are raising a red flag that the property has issues

much better IMO to get a good termite inspection, address any issues found and obtain the termite certificate before putting the property on the market – since most buyers are going to need this cert anyway you should have it in hand

the termite inspector is going to poke at all the exterior wood (trim, window sills, fascia, etc) with a blunt tipped metal rod – if he finds any soft or mushy wood he is going to call this out on his report and he is going to look even closer at the area in question – you can do this inspection as well and fix anything you find – really bad wood should be replaced but you can repair a lot of damage with wood filler – wood filler is an acceptable repair so you aren’t hiding anything from the inspector

the inspector is also going to go into the attic and under the house if it is accessible – he will be looking for damaged wood and signs of termites – he will also call out any water damaged wood he finds

if the property hasn’t been tented in several years I would assume that tenting will be required – in socal it is better to assume that you DO have termites than that you don’t because it is quite likely that you do whether you realize it or not – fortunately for us the local termites don’t eat much and we can stay on top of them

anyway, enough on the termite issue – get the inspection so you know where you stand

~

seems like the cleanest thing to do is sell the house and let everyone share the results now – there are too many ways for hard feelings to arise in the future if you keep the house – let’s look at two extremes:

1. you keep the house and house values drop to zero in 2008 – now your siblings feel bad because you are stuck with a worthless asset and they got away clean – you feel put upon because you knowingly bailed out your siblings but you weren’t expecting the bailout to be quite this large

2. you keep the house and the Paulsen/Bush/Hillary Plan somehow causes housing prices to double in 2008 – now your siblings are jealous and might even decide that you tricked them into selling the property at a lowball price

think long and hard about keeping the house – you will know these people for the rest of your life

[4plexowner]

DGH – a buyer (you included) won’t be able to obtain a good mortgage without a termite certificate – selling the property ‘as is’ most likely means you are dealing with an investor who is going to expect a significant discount for the ‘as is’ condition – at a minimum you are raising a red flag that the property has issues

much better IMO to get a good termite inspection, address any issues found and obtain the termite certificate before putting the property on the market – since most buyers are going to need this cert anyway you should have it in hand

the termite inspector is going to poke at all the exterior wood (trim, window sills, fascia, etc) with a blunt tipped metal rod – if he finds any soft or mushy wood he is going to call this out on his report and he is going to look even closer at the area in question – you can do this inspection as well and fix anything you find – really bad wood should be replaced but you can repair a lot of damage with wood filler – wood filler is an acceptable repair so you aren’t hiding anything from the inspector

the inspector is also going to go into the attic and under the house if it is accessible – he will be looking for damaged wood and signs of termites – he will also call out any water damaged wood he finds

if the property hasn’t been tented in several years I would assume that tenting will be required – in socal it is better to assume that you DO have termites than that you don’t because it is quite likely that you do whether you realize it or not – fortunately for us the local termites don’t eat much and we can stay on top of them

anyway, enough on the termite issue – get the inspection so you know where you stand

~

seems like the cleanest thing to do is sell the house and let everyone share the results now – there are too many ways for hard feelings to arise in the future if you keep the house – let’s look at two extremes:

1. you keep the house and house values drop to zero in 2008 – now your siblings feel bad because you are stuck with a worthless asset and they got away clean – you feel put upon because you knowingly bailed out your siblings but you weren’t expecting the bailout to be quite this large

2. you keep the house and the Paulsen/Bush/Hillary Plan somehow causes housing prices to double in 2008 – now your siblings are jealous and might even decide that you tricked them into selling the property at a lowball price

think long and hard about keeping the house – you will know these people for the rest of your life

[4plexowner]

DGH – a buyer (you included) won’t be able to obtain a good mortgage without a termite certificate – selling the property ‘as is’ most likely means you are dealing with an investor who is going to expect a significant discount for the ‘as is’ condition – at a minimum you are raising a red flag that the property has issues

much better IMO to get a good termite inspection, address any issues found and obtain the termite certificate before putting the property on the market – since most buyers are going to need this cert anyway you should have it in hand

the termite inspector is going to poke at all the exterior wood (trim, window sills, fascia, etc) with a blunt tipped metal rod – if he finds any soft or mushy wood he is going to call this out on his report and he is going to look even closer at the area in question – you can do this inspection as well and fix anything you find – really bad wood should be replaced but you can repair a lot of damage with wood filler – wood filler is an acceptable repair so you aren’t hiding anything from the inspector

the inspector is also going to go into the attic and under the house if it is accessible – he will be looking for damaged wood and signs of termites – he will also call out any water damaged wood he finds

if the property hasn’t been tented in several years I would assume that tenting will be required – in socal it is better to assume that you DO have termites than that you don’t because it is quite likely that you do whether you realize it or not – fortunately for us the local termites don’t eat much and we can stay on top of them

anyway, enough on the termite issue – get the inspection so you know where you stand

~

seems like the cleanest thing to do is sell the house and let everyone share the results now – there are too many ways for hard feelings to arise in the future if you keep the house – let’s look at two extremes:

1. you keep the house and house values drop to zero in 2008 – now your siblings feel bad because you are stuck with a worthless asset and they got away clean – you feel put upon because you knowingly bailed out your siblings but you weren’t expecting the bailout to be quite this large

2. you keep the house and the Paulsen/Bush/Hillary Plan somehow causes housing prices to double in 2008 – now your siblings are jealous and might even decide that you tricked them into selling the property at a lowball price

think long and hard about keeping the house – you will know these people for the rest of your life

[4plexowner]

Rustico – to adress your questions – I was taken aback by your comment “monthly principal pay-down is significant, starting at payment one” since that isn’t my perception at all – I guess it is all relative

Here are some numbers on a $475K mortgage – 30 yr fixed at 7% – monthly payment $3160 – $389 principle and $2770 interest – at the end of 10 years the principle portion of the payment reaches $777 per month

I don’t consider $389/mo ‘significant’ when talking about a $500K asset or in comparison to the $2770/mo interest payment so I have always ignored the principle paydown when doing cashflow analysis – this may be a weakness in my analysis – on the other hand, very few loans these days are conventonal fixed-rate so principle paydown is rarely even talked about – I have a 10/20 IO loan on my property so I’m not paying down principle at all until 10 years after the loan originated

[4plexowner]

Rustico – to adress your questions – I was taken aback by your comment “monthly principal pay-down is significant, starting at payment one” since that isn’t my perception at all – I guess it is all relative

Here are some numbers on a $475K mortgage – 30 yr fixed at 7% – monthly payment $3160 – $389 principle and $2770 interest – at the end of 10 years the principle portion of the payment reaches $777 per month

I don’t consider $389/mo ‘significant’ when talking about a $500K asset or in comparison to the $2770/mo interest payment so I have always ignored the principle paydown when doing cashflow analysis – this may be a weakness in my analysis – on the other hand, very few loans these days are conventonal fixed-rate so principle paydown is rarely even talked about – I have a 10/20 IO loan on my property so I’m not paying down principle at all until 10 years after the loan originated

[4plexowner]

Rustico – to adress your questions – I was taken aback by your comment “monthly principal pay-down is significant, starting at payment one” since that isn’t my perception at all – I guess it is all relative

Here are some numbers on a $475K mortgage – 30 yr fixed at 7% – monthly payment $3160 – $389 principle and $2770 interest – at the end of 10 years the principle portion of the payment reaches $777 per month

I don’t consider $389/mo ‘significant’ when talking about a $500K asset or in comparison to the $2770/mo interest payment so I have always ignored the principle paydown when doing cashflow analysis – this may be a weakness in my analysis – on the other hand, very few loans these days are conventonal fixed-rate so principle paydown is rarely even talked about – I have a 10/20 IO loan on my property so I’m not paying down principle at all until 10 years after the loan originated

[4plexowner]

Rustico – to adress your questions – I was taken aback by your comment “monthly principal pay-down is significant, starting at payment one” since that isn’t my perception at all – I guess it is all relative

Here are some numbers on a $475K mortgage – 30 yr fixed at 7% – monthly payment $3160 – $389 principle and $2770 interest – at the end of 10 years the principle portion of the payment reaches $777 per month

I don’t consider $389/mo ‘significant’ when talking about a $500K asset or in comparison to the $2770/mo interest payment so I have always ignored the principle paydown when doing cashflow analysis – this may be a weakness in my analysis – on the other hand, very few loans these days are conventonal fixed-rate so principle paydown is rarely even talked about – I have a 10/20 IO loan on my property so I’m not paying down principle at all until 10 years after the loan originated

[Author]

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