Take out a loan for 2 bdrm condo or pay cash for studio?

Discussion in 'The Okie Corral' started by poodleshooter1, Feb 21, 2010.

  1. poodleshooter1

    poodleshooter1

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    I looked at a studio condo a few weeks ago that the bank had dropped from 40K to 25K in the last two months, once this week.

    It's about 400 squre feet, has a kitchen and a shower, and is in a nice part of town that typically has high real estate prices. The same condo sold for 55K in 2005.

    I could buy this condo with cash outright, and being a single guy it ain't terrible. It would be nice to not have a mortgage or rent payment.

    Alternatively, I could buy a nice two bedroom condo for 80K with just under 1,000 square feet. This one is remodeled and doens't need any real work. Just down the street from option 1 above. I would have to take out a loan for this one.

    Which would you pick? The goal is to stop throwing money away on rent and start building wealth.
     
  2. harleyfx69

    harleyfx69

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    what i would look at is if you want to live there for the rest of your life,

    and would you really be happy with 400 square feet ?

    that is tiny, i live in a small apartment and have more than that

    also what would your resale potential be a few years down the road, and take this time to save your money to get a place you do want to live in for the rest of your life,

    saving a mortgage is always a good thing if you can help it IMO, but there are tax breaks and what not for having a mortgage,

    also could you get the price down any on the 80k place ?
     

  3. silentpoet

    silentpoet

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    I would say not having a mortgage is the wise thing.
     
  4. JR45

    JR45

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    Resale value...............Go with the two bedroom!
     
  5. Ordell Robbie

    Ordell Robbie Giant Member

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    Get the big one and pay it off quick and hang on to it.It'll be a good rental property to have down the road.(Make sure you can sublet I guess.)
     
  6. nursetim

    nursetim

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    How about buy the studio, use it as collateral for the 2br down the street, rent out the studio for a fair price and give yourself positive cash flow. Just an idea.
     
  7. poodleshooter1

    poodleshooter1

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    Hmmm.....
     
  8. poodleshooter1

    poodleshooter1

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    I figure I could rent the extra room out to a hot girl for $450 a month and cut my montly mortgate payment to almost nothing. I would rather not do this unless I fell on hard times though. I like my privacy.
     
  9. community

    community Member

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    go with the 2 bedroom condo. think resale value in the future. I bet the condo will have a better resale value than the 400 sf studio.
     
  10. marlinfan

    marlinfan

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    Pay cash until you have cash to buy the bigger pad. You should be able to save a TON of money with no rent/mortgage payments.
     
  11. 22GlockTx

    22GlockTx

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    +1. My wife and I purchased a 3 bedroom 1 bath house. It was about 1200sq ft when we first got married. We sold it right before this housing bubble popped. It took a few months to sell. The realtor told us it was due to only having one bathroom. Most people want 3 bedrooms and 2 baths. And it takes time to find the right person to buy your property.

    I would go with the bigger property. You may be willing to live in 400 sq ft. But most people would not. Even though your single now, doesnt mean you always will be single. Your spouse in the future will not live in 400 sq ft with you. That means either you will rent the property, or sell it. Renting gets old as you will find nothing but losers for renters that are interested in that studio apartment.

    Just because you CAN buy something and pay for it now, doesnt necessarily mean you SHOULD. You have to look at the property as something you will be happy with, and something you will be able to sell in the future. Otherwise your will just hang on to it for the rest of your life and at that point it really isnt an investment.
     
  12. shavedape

    shavedape

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    You may not have rent but with a condo you will have monthly maintenance fees, which can be a serious chunk of change. This would be on top of the usual utilities. And don't forget property taxes which isn't rent, but still has to be paid. It all adds up.
     
  13. Kozel

    Kozel

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    Why would anybody in the right mind buy ether one now days?

    Didn’t you hear? Cabin in the woods with 360 degree line of fire is what you buy now days! Seriously!
     
  14. happy seal

    happy seal

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    Your gonna need a gun room or a fly tying room. An extra room for at least hobbies is nice to have. A spare bedroom for company or parents! :dunno:
     
  15. shavedape

    shavedape

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    :rofl: Oh man, you're in for a serious world of hurt if you do that. Hot usually equals bucket-loads of crazy drama. $450 a month won't be worth the headaches, trust me on this. (sorry ladies, don't hate)
     
  16. CAcop

    CAcop

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    I would have to say 2 bedrooms is where it's at unless you are very young with no plans to get serious let alone marry someone for the next 5-10 years. I really don't think this real estate market is going to get it's stuff together for quite a few years. Be willing to stick with what you got for at least 5 years, maybe closer to 10.

    The only thing positive about the smaller place is the no mortgage thing but you will still have expenses with it and it will be harder to sell. Studios go last around here.
     
  17. tbhracing

    tbhracing Senior Member

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    TOTALLY. And you can have an office or guest room or extra storage. And a small mortgage like that is no biggie.

    Get the 2 bedroom.

    PS- I would NOT rent a room out to NO ONE. I hate having room mates, they are a PITA and then you have to lock up your firearms. Also, I like being able to bring a date home and having a good time with loud music and some Tq shots. And I dont need someone else getting in the way and/or judging me.
     
    Last edited: Feb 21, 2010
  18. John Galt

    John Galt Anti-Federalist

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    Figure how much your mortgage payments would be on the 2 Bdrm, put that money in the bank each month and pay cash for the studio. Don't pay interest if you don't have to. You can always rent out the studio later.
     
  19. RichJ

    RichJ

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    If you have $25K to buy the condo with, then use the $25k as a down payment on the $80K 2BR. Here's why:

    1.) *Banks will give you a free bj when you put down 20%. 20% is the magic number for morgage loans and you get a lower interest rate plus knock offs on closing fees and a bunch of other incentives.

    2.) When you put down 20% on a property, you don't have to pay mortgage insurance and that will keep your payments lower and save you a bunch of money.

    3.) you get hella tax breaks when you have a mortgage, and you get to deduct the interest you pay. You won't get it all back, but you can reclaim some of it.

    4.) You will only have to finance 55K. A 30 year fixed at a 5.7% interest rate on 55K will give you a monthly payment of only $320!!! I'll bet you anything that's a lot less than you are renting for right now. Current rates are probably in the low 5's or high 4's right now so your payment will probably be even lower than that.

    *25K is 31% of 80K and the bank will not only give you a free bj, you'll leave with a coupon book for free bj's for a whole year .
     
  20. the iceman

    the iceman Proud Veteran CLM

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    Hot wimmens ususally have boyfriends or live with friends, not rent studios.