Hey everybody, I'm in college and going on next year I was looking for a place that had a garage to keep all of my tools. Well, I got to thinking, its so hard to find an apartment that has everything that i want maybe i should just buy a house. Some benifits are that my monthy payments arent just dissapearing, they are going twards the house, i would be able to get one with a heated garage, and everything else i want (within reason). And when i graduate i can sell the house and get hopefully some of my money back, or just stay living there. I realize all of the upkeep like mowing and shoveling etc. Its something i would be willing to do as a trade off.

Would it really be a good idea to buy a house? I know you have to pay property tax at the end of the year, but what are some other unforseen expenses (besides like the water heater going out). And is it possible to get a monthly payment around like $700 bucks a month (for a smaller house). I know there are people in mankato who are doing this, then sell them, and at the end of their college career they sell them and make money on the deal.

What are the thoughs on this?

 

i say if you can buy and afford it, do it. i am in college now, but i am hampered by precollege bills when i worked and by medical expenses.

when you buy a house, its usually an investment, but just watch for things, you don't want to get your self into something that needs the roof replaced, foundation repaired and other major repairs.

around my parts you can get a nice house for 700 a month, but where your at, who knows, i know where my mom lives in west palm beach you can't get nothing worth the darn for 700 month.

 

$700/month will carry about $115,000 in mortgage at 6% on 30-years amortization.
To that, you add property taxes, heat, electricity, water, sewer as your fixed expenses.

This is the absolute minimum to budget, not counting maintenance/repair/updates.

If that sounds do-able for you, then, yes, home ownership is almost always the single best investment anyone can make. And like most investments, the earlier the better.

But, that's almost always. Real estate is a local investment. Are property values going up or down in your area? And just because one type is going up doesn't mean they all are - changing demographics may, for example, be driving up the value of condos while monster-home prices fall as aging boomers downsize. Read the paper, follow the real estate lisings for a few months. A real estate professional's advice can be a good thing IF it's someone you trust - remember, they only make a buck if houses sell, so according to them it ALWAYS a good time to buy.

If the local market looks good and the finances look do-able, then, yes, owning a home is an excellent investment. As you pay down the mortgage, the value of the place goes up. You win on both ends. As a student, if on top of that you rent out a room or two, then someone else is paying the mortgage interest for you and every penny you put in stays in your pocket.

Not to mention the possiblities it opens up later. Once you gather some equity, it can be put to work for you some day - for example to buy another property like a rental unit or a cottage.

Real estate and a beater vehicle is a much smarter use of money than a flashy new car.

OK, there's the maintenance, but to a handy guy, that should be a plus, not a minus. Lots of opportunities to learn all about handyman stuff. AND, the right kind of girl is going to like this. Stable guy, handy man, established - the kind of girl you want to make a life with will swoon over this stuff. The ones that will pass you by 'cause you didn't waste your money on a sexy car are only good for a weekend.

Downsides? You can't just pick up and move like if you're a renter. You've got responsibilities. And then there's the school thing - maybe it's too much on top of a homework load?

 

Peter94, that sounds like a good idea. If you find a house in your budget go for it…it will pay for itself in a long run.

 

Yeah, If you can buy then do it, BUT do not max yourelf out to get it. If you can make the paymets and still be able to live then go for it.

 

I have seen so many first time home buyers turn "house poor" because they didnt do more research and bought spontaneously instead of smartly.

Just be careful what house you invest in.

 

What he said. The bank will try to tell you can borrow the moon. Don't fall into that. Know your limits before hand and live within your means. If you do that, buying a house is probably best thing you can do. As was mentioned earlier, at your age room-mates are not a bad idea and that can ease your burden tremendously.

I waited until I was 31 to buy a house. I wish desperately I had it to do over again (along with a few other things )

Good Luck,

Dan

 

If you pay rent, you can not deduct it on your taxes. If you buy a house and are paying the same $700, then for the first few years you are paying about $600 a month in interest. So $600x12 = $7200 a year income you do not have to pay Federal taxes on or basically save you about $1800 a year vs. renting.

Many cities/counties allow you a homestead exemption that lowers your taxes.

With a garage you can also run a small repair business or fix up cars and sell them.

The ideal thing is to buy a small house, with a garage, that has a lower level that can be separated from the main level, that you can rent out for something really cheap. You put in a separate bathroom and pay for all the utilities. There are a lot of people that will pay $300 a month for something basic.

Being it is your house, you can discriminate and only pick a tenant that will cause you the least amount of trouble. Say, a grandmother looking after a single grandchild or a retired couple that needs cheap digs or a retired couple that just needs a place to park the RV when not on the road. They rent the apartment, but, never live there. They just park the RV.

> Would it really be a good idea to buy a house?

Yes, I bought mine at 21 yoa because I didn't want to see my mother and grandmother in an apartment complex and went in on 3rds buying it. Buying a house is always a better investment then renting if you buy at the same price of a good apartment. Very rarely does property not increase in value.

 

That is so true. I know a teacher that makes $30,000 and they were given a pre-qualify for $450,000. I told them to NOT do it as they would NEVER be able to make the payments. They did not believe me about this so we did an ammerazation (sp?) schedule as well as a budget. They bought a house for $130,000 and thank me often.

Another thing to watch out for is the 5/1 arm. They are good for some people, but if you want to be in there for an extended period of time they are bad. Also, you are at the whim of the APR.

 

the popular thing to do in my college town was rent a house with a garage.

LOTS of housing in college towns are in need of repairs (college kids are not the best tennants

 

If you can swing it and live, buy a house. That way your not throwing money down the tube on rent, and you'll have something to show for that money (eventually!). I am 22 and currently still live at home, even after college, and am saving up to put a fairly large down payment on a house. Living at home still has it's negatives, but the situation isn't that bad, so I'm just trying to hang onto it and save up as much as I can, instead of putting money into rent, and saving a lot less.

 

Working with a local Realtor can help BUT. Beware that many will try to get you into a house then steal it from you when you want to move away in a few years. They try the old "what do you owe" on it routine since you are looking for a quick sale. Once you put it up for sale they buy it or someone else does after a tipoff from them. Then they put it on the market for a fair value and pick up big profit and all of your equity.

 

Your idea can work well . I know a guy that had 2 kids getting ready for college , one kid 18 and the other one 15, He bought a house and leased it to 3 other students and their rent paid everything including his share. After 5 or 6 years of leasing when his kids are finished he sells the house for a nice profit and hasnt paid a dime of rent the 6 years his kids were in school,,,,,,,,He charged each stident 425 bucks a month.,

 

Okay, now heres the monkey wrench in the plan. I am currently living with my GF in our apartment. So now we have to figure out a way that we will make equal payments, and if anything would happen to our relationship we would get out of everything equally. So do i put the house in my name, her name, my parents name, her parents name, or my name and her name. Also does anyone know how this will effect the dependency tax wise? Will me buying a house and putting it in my name/her name/our name change that status? Like will i loose health insurance from my parents, and they loose tax benifits? Or doesnt any of that matter?

 

Oh if your plan is to set up house keeping thats another story. Most people finish school before such a large purchase. You should capitalize on the need for housing and rent to other students if you want to keep the cost down.My kid has a leased apartment with 3 other students and each pays about 425 a month everything included.