Is this a crazy idea?

[wolf_Q]

Ok, details here....I'm 21, live at home with my parents. I'd really like to move out though it's not absolutely necessary at this time. I haven't yet because I have Nebo and it's not easy to find a place to rent with a large dog around here, but especially a place with a fenced yard. He would not be happy without a yard to run in so I wouldn't do that to him.

What I'd really like is my own house. However I really do not make a lot of money at my job. There's a house down the street that is for sale. It's not the best looking outside, the yard needs some serious work but the inside is quite nice...new carpet, paint, etc. Plus for the price it's pretty large, 4 bedrooms, 2 bathrooms, 2 living rooms, laundry room, 2 kitchen areas. It almost has a basement apartment (including outside entrance) except the kitchen downstairs is really nothing more than a tile area with hookups (the upstairs has counter, stove, fridge, etc.)

Anyway, the only way I could afford the monthly payments is if the basement was rented out. I have somebody who would love to rent it from me (my friend Michele who has the dog Cisco) if the payments would end up being low enough. According to an online mortgage calculater it would be roughly $870 a month not including taxes, utilities, etc....which honestly I don't have a clue how much those would run. :o Most apartments are at least $600 though.

I took my friend to look at it and she's really interested in it. If we're going to do it it would have to be soon as her lease where she lives runs out in January I think. It sounds great but it's scary to me to buy something I can only afford with a renter, what if she decides to move out? I can only get a loan for the amount if my parents would co-sign I'm not sure if they would or not. Would I be better off just going back to school and hoping to get a good paying job? Hope I find a rich husband to buy me a house? :p Living in a cardboard box? ;)

[jackie]

Wow, that is a tough one. It sounds like you have a nice situation at home with your parents and if I were you, I would stay put. Owning your own home is a HUGE responsibility. If you are not in a secure well paying job, or are thinking about going back to school, it might turn into a big hassle. Especially if you will have to depend on another person to help you make your payments.

I want to buy my own home too, but until I know where I want to live (I travel a lot), have a stable job and decent savings. And by decent, I mean at least 20 percent deposit on a house.

[DJFyrewolf36]

It depends on a lot of things...

Will the home increase a lot in value? If it is really cheap now, getting a good investment while young is great idea. However, I've learned that depending on other people can really be a bad thing. Also, co-signing with your parents, unless you have a GOOD relationship with them is generally a bad idea, as it can turn into a fight later.

I'm glad you're taking Nebo into concideration while looking for a place. I know so many people who were very desperate to leave the nest and kicked thier dogs to the curb.

Best of luck!

[Uabassoon]

Keep in mind there are so many other expensises then just paying for the house. If you are renting to someone you are also responsible for so many things. Alexa owns her own place and since it's older (built in the 70s) she's had to spend so much money on fixing things. For example plumbing has been a huge issue and it's costing several $1,000 to fix it. Thankfully her parents are able to help her out with that. If you are a landlord and have a problem with the plumbing it is your responsiblity to fix it for your renter. Or if the a/c breaks down or anything like that. Will you be able to afford to pay if things break or stop working?

Not trying to scare you into not buying a house, but just wanting to remind you that there is more to pay for than just the mortgage. If you can afford it buying a house is a great investment, sometimes it's just hard to keep up with your investment.

[grybai]

As rental prices go up and interest prices are low, buying is becoming a more and more popular alternative to renting. I know there are also loans for first time home buyers. The first thing I would do is discuss your thoughts with your parents. If you have a good relationship with them and they are financial secure, they may be willing to help you out with the initial costs and maintence, should you need it.

I might also consider getting a smaller place. Many townhouses and condos allow pets and tend to be a good investment as far as renting later on down the road.

The place I live is kind of a family effort. My parents have helped with most of the initial costs seeing it as a good investment where they will be able to get their money back later down the line. My sister lives with me, and we essentially pay my parents rent. We are also all responsible for maintence and repairs.

Although in fairly decent condition, in the last year I have needed to 1) replace the washer/dryer, 2) replace the garbage disposal, 3) have repairs twice on the a/c unit, 4) replace the water heater 5) fix small plumbing issues, etc, etc. I also have major water damage caused by a plumbing problem in the upstairs bathroom, which hopefully the townhouse asssiation will cover as they are supposed to cover structural damages. The association is also covering a termit problem. The a/c unit will also need to be replaced sometime in the next year. My fridge also needs to be replaced. Now, many of those things are interior things, and if your interior is new, it might be fine.

Also, because of the size of the house, you may want to consider getting more than one roomate. This will help ease the mortgage payments, and should one of the roomates move out, you'll still have some money coming in should you have trouble finding a replacement.

Anyway... you may want to consider renting a house, as another possibility, with or without roommates, as an individual landlord may be more willing to allow a large dog than an apartment.

[micki76]

I’d truly advise you against this Amy. As Laura pointed out there are so many potential expenses, and most of them are big expenses. Now if you weren’t going to be relying on the tenant for part of your mortgage payment, but rather for extra income, that would be different. And with your potential tenant being a friend? Oh, so much can go wrong with that so quickly.

You also have to consider other expenses that might put you in a bind. What if you have a plumbing issue that must be rectified and that same week your car needs to have expensive work done? What would your back up plan be? That's usually the way it works; more than one expense at a time. Just this month we spent $550 on my car and had a leak in our sprinkler that we didn't know about. The water bill was unexpected and painful, let me tell you.

FWIW, I think you should find something you like (or can endure) and go back to school. You can’t go wrong with knowledge; it can only help you in the long run.

Whatever you do, I wish you luck!

[Chica]

You are young and I think you should stay put and go to school and get your degree in whatever you want. Then get a job. My sister did that first. Second, she bought a house because her income could afford it very well. Third, she met someone and they married and bought a bigger house and rented out my sisters house. Anyway your career should come first.

[cyber-sibes]

Owning a home is really a gamble. Unless you can do the maintenance yourself, especially on an older home, you can rack up BIGTIME dollars. Home maintenance also costs you LOTS OF TIME, which you may not be so happy about, especially if you are considering going back to school & working. And renting to a close friend doesn't always go the way you thought it would.
Seems like you & your family have a great relationship, if I were you I'd stay put and follow my dreams -- get that degree, job, and put something away towards a house you REALLY want.;)

[Cookiebaker]

I think you should go for it! Like you pointed out, renting is not much cheaper, and:
1. you have to abide by the rules of the landlord/lady (no pets, no dogs, etc. etc.)
2. rent money is thrown away. Mortgage money gets you equity, and a house in the long run.
3. Apartments tend to be small (at least they are in this area). Many times a single room with a bathroom runs $750 a month.
4. If it doesn't work out and you can't swing it financially, you can always sell it.
5. You can't spruce up an apartment the way you would a house. When we rented, we couldn't hang anything on the walls nor could we paint. Everything was white, white, white.

Just my .02 cents ;)

One more thing, if your roomate moves out, you can always advertise to get someone else. Especially if you allow dogs, I'm sure you would be able to rent it quite easily. :)

[Kfamr]

I don't have much to add because I've never owned a home, so I can't really say either way.


Originally posted by Cookiebaker

One more thing, if your roomate moves out, you can always advertise to get someone else. Especially if you allow dogs, I'm sure you would be able to rent it quite easily. :)

-nudges-

[Logan]

Owning your own home is the BEST thing ever. But I will forewarn you, Amy, that if you could have about 3-6 months, or even more, of payments in the bank, just in case, it would be worth your while. I've never missed a beat when it comes to house payments over the time I have been in home ownership, but there have been some tight times. Any financial advisor worth their weight is going to say that you need at least 3x your income in the bank in case of emergencies. I think that owning rental property would probably double that. I have friends that have had rental property sit empty for months. I know that my husband and I had his home on the market for over 9 months and couldn't sell it. We ended up renting it out after that, for almost a year, then when we put it back up for sale, it sold immediately, but that was many months of paying two house payments with nothing to offset it.

Just don't get yourself in a ditch that you don't have to be in until you're ready. I say all of this assuming that you are not paying rent where you are (with your parents) or that it is minimal. Take a deep breath and figure out where you want to be in one or two years, or even further out than that before you jump on the home ownership bandwagon. You've got lots of time!

Logan

[grybai]

4. If it doesn't work out and you can't swing it financially, you can always sell it.

I would not rely on this as an "out." You are going to lose a lot of money in the first few years, even though eventually it should end up raising enough in value to bring you back the money you've put into it.

[catnapper]

Wow. I can only say this: if you are not being forced out of your home, and you have a good relationship with your parents... stay put and stash money away in a savings account. Then when the day comes that either you A) can't stand to live at home with your parents anymore without wanting to kill them or B) you are able to make a hefty downpayment on a home with a loan NOT cosigned.

Let me tell you the joys of home ownership as experienced by me:
1) leaky basement that backs up with the seasons with poo because the leaves and snow block the sewer and the township's poo end up in MY basement. No, the township is NOT responsible for cleanup nor do they help offset the cost of repair.
2) cracked cement pavement... the township doesn't fix them, we do. Only if we DO start to fix them, the township has a new little law where we have to rip them all up copletely (instead of patching) to the tune of something I don't even want to consider.
3) bathroom with a leak problem between the boards costing an estimated $10,000 to repair. Due to our finacial state right no we'll take our chances and hope nobody is standing in the tub when it falls through the floor.

thats just the biggies. I won't even go into the small things that every home owner has as every day repair and maintence work.

A lot of people toss on a new coat of paint and some cheap carpet to hide the real issues (like leaks and cracked foundations) to make people think the house is really well maintained. Don't fall for it. If you can't afford it on your own, you won't be able to handle any real issues that arise.

Just keeping up with the lawn can kill you. Lawn mowers, weed wackers, trimmers, hedgers, weed killers, etc cost us a small fortune every summer. What kind of shape are the gutters in? It isn't cheap to replace them, but without good gutters, you're going ot have other problems around the house.

I could go on and on. I LOVE my house, but sometimes I would love to have a landlord to hand over the problems to. My neighbor rents next door and their porch litterally collapsed last fall. $8,000 to fix it. The bricks inside the chimney started to come loose -- $3,000 to line the chimney with steel. Their landlord has to pay. Lucky them.

[caseysmom]

Would your folks be willing to be financial partners? I would do that for my kid if it looked like a good investment. We bought our home 9 years ago and it has at least tripled....it is a pain fixing things but here in california the houses appreciate like crazy.

[sandragonfly]

lol.. this question, the whole thread made me nervous too! ..haheeha.

well, I'd say... go for it! only if $870 is true! :eek:.. hey, I'm 21 too so maybe that's impulsive of me saying that..lol.

maybe it's black/white difference from of living in a house and studio (I own a studio alone).. it's always best to have at least 3x - 4x of your income in before you make a big decision. and move in after you're so sure! (that's when your heart is talking..) ;)

well, I'm not gonna read all of overwhelming, awful expenses said above.. :o they every don't happen to everyone, you know? but, obviously, be prepared -- just before, inspect every square, good questionnaires, etc..that'll help a lot.

so...also just remember one important thing, financially failing? god won't create you a mountain that you can't climb! (possibly of parenting financial support? no broken faculities? luck? or winning lottery?) :p

what I'd do, move in if everything looks good or stay put with parents, reaching the goal I had made.. now, go crazy, amy!!! follow your heart and nebo will love it!! :cool: :D

a luck hug for you,
..gina & crayola

[ParNone]

Hi Amy,

I think it's a very good idea to own vs rent, as Cookiebaker pointed, renting is just throwing money. However, you need to approach it very logically. Make sure you're getting a house you can afford. House ownership is not something you should just wing. You need to know what you're getting into. So first step, make out a detailed monthly budget.

Taxes and Insurance (Based on value of house and location this can be quite varied. I pay about $500 a month. Ask your parents what they pay to get somewhat of an estimate. They probably pay more then you would and this is a category that's best to estimate high in, because it'll go up every year.)

Utilities ( I pay about $350/mo in the 3 summer mos for Electric, Gas, Water and Phone and approx $250/mo the rest of the year. Utah may be completely opposite though, since you're dealing with cold vs heat. Again ask your parents to get an estimate).

Transportation (Not sure if you have a car. If you do put down car payment, gas, insurance, licenses, maintenance. If not, put any fees for buses or such).

Does the neighborhood have any yearly community fees? Find out from your parents. Put that down.

Food and essentials. Basically your grocery bill that would include not only food, but cleaning products, toilet paper, toothpaste, etc. I avg about $350 a month.

Dog Things like food, vet bills, etc.

Entertainment Things like Cable TV, Dining, Movies, Outings with Nebo, etc. You may can cut back on things like this, but be realistic, cuz you're not going to want to give up all fun things in your life.

Clothes

Those are just some ideas off the top of my head. You know yourself best, so add any expense you usually incur too. Now figure out your monthly income, including the roommate rent, subtract all the expenses from it. Do you have any money left over? If not, can you swing a cheaper home. Make sure you've figured out the house payment by a 30 year loan too, that'll give you cheaper monthly payments.

If you go the roommate route. Spell out everything up front with the roommate, so there's no misunderstandings and get at least a month's rent up front. Put it aside and don't touch it. So if they move out suddenly that gives you at least a month to find another roommate.

While you're at your parents, save, save, save. When I got a house 15 years ago, I had $15,000 saved from living with my parents and sister. 5000 for down payment. 5000 for new house things, like Refrig, Washer/Dryer, Lawn Equipment, Furniture, etc and 5000 for emergencies.

Also I agree with Micki. Go back to College if you can. That lil' piece of paper means a lot. Silly as it may seem. Since you're great at art and computers. Maybe go for Grahpic Design. My artist friend, Judes, did that and she loved it. You'll have to soldier through English, Math and History, etc. But once you get to the grahpics classes you'll be having a blast.


Par...

[LKPike]

here its common to rent the extra bedrooms too :)

if you wouldnt mind sharing the house with more people, itd be a good way to pay for your house with reasonable prices.

[new mom to a veiled]

Just like anything, there are pro's and con's. You are young, I would go back to school and find a career that you like. Then look at buying. I lived in a condo town home and when I bought my house what an eye opener!!! If you are lucky family & friends will give you furniture, dishes, etc. Don't forget about cutting the grass etc. Owning a home is a huge time investment also. Make sure the home is inspected before purchase for potential problems, ie may need new roof or windows in a year or two. Don't forget about your property taxes, insurance, and general up keep. I do agree that owning is better that renting, however living at home can be a major advantage until you can get some $$ in your pocket. Best of luck on whatever you decide ;)

[beeniesmom]

Originally posted by Chica
You are young and I think you should stay put and go to school and get your degree in whatever you want. Then get a job. My sister did that first. Second, she bought a house because her income could afford it very well. Third, she met someone and they married and bought a bigger house and rented out my sisters house. Anyway your career should come first.

Great advice.
I did the above and it worked for me.

[wolf_Q]

Thanks for the advice everyone. Just for the record I do have close to 15k in the bank so I'd have money or emergencies, repairs, etc. unless it's something extreme.

I have thought about renting out other rooms (have another friend in mind) but I'm paranoid with who as it'd have to be somebody I'd trust with my pets (as in not letting Nebo run out the front door!)

My parents house is like less than a block away I could borrow lawn supplies and such. I'm sure they'd help with some things, but they aren't ones to hand out money easily...they won't help me pay for college at all.

My friend really wants me to do it but she's been paying rent and living away from home for several years, it's not a huge difference to her...plus it wouldn't be her name on the loan anyway.

I'd have to look into what the total cost per month would be. It's not likely I will do it, I think I'm too big of a chicken to jump into a huge thing like this. Just wanted to get some other points of views and opinions. It's not that bad living here, just frustrating as I'd like some independence plus I'd really love to get more pets which they will not allow.