Im looking to move inside the loop in the near future, and just wanted your opinion on renting an apartment vs. buying a condo or townhouse. Also, what are some areas i should be looking at, i heard midtown/montrose are is nice. Are there any similar threads like this that would be helpful?
There have been threads before debating renting vs buying. I'm in the pro-buying group. But if you don't plan to be there at least 5 yrs then renting might be the better way. And of course, inside the loop it'll be cheaper to rent than buy.
why a time limit? its inside the loop, i am pretty sure it will maintain its value no matter how long you stay there, if you have the capital, buy...when you decide to move sell or even rent out but if your going to buy, look for an apartment or townhouse in which the area/building is "in demand" assuring you that you wont have a problem selling
If you can buy, then buy, If your looking for a townhouse and not a house I suggest looking east of downtown a few blocks away from MMP/Toyota Center/GRB because compared to Midtown it is undervalued. Looking for a house move just a little past the Heights around the TC Jester 610 area deals can still be had. Unless you got some serious jack forget River Oaks/Oak Estates/West U/Southside Place/Bellaire/Southampton/South Gate/Heights/Montrose etc. etc. Good Luck
When moving to College Station for school my parents bought a townhouse for me. I spent a lot of time fixing it up (paint, laminate wood, etc...), the property value has soared, and specifically the ability to get a roommate to help with payments/bills was always there. Thats a huge plus if you use it to your advantage. Its basically having someone else help make payments on the house you are working to own. If you can play the game I say buy. Why make rent payments when you can be making payments to own!
The time limit makes sense because buying a house costs money. You have closing costs. You have moving costs. You have costs to fix up the house, etc. You have commissions for when you sell. You don't get a return on investment for that until after 5-7 years. If you plan to only live there for a year and put out $5000 in fees and costs and more when you sell, how does that make any sense whether or not the land holds value.
If you have the money, buy. I don't know Houston, but I made my money back with an apartment in DC over three years, enough to upgrade to a new apartment in New York (moving in today!). The mortgage might be more than rent, but i can deduct almost all of it so it works out pretty well even in the short term. I don't have that much stuff, so moving costs for me are low.
Always BUY! The tax breaks & the investment value alone have made buying worthwhile! Buying is KINDA like a 401k. A portion of your monthly payment is going to something you can get back. Renting is PAYING for the land lord's 401k. He gets all the value/tax breaks & you've got *NOTHING* to show for your dollar.
It's a toss up, I would say with certain they will continue to go up in value but also I can say with certain that finding a deal is going to be a lot harder in Midtown.
I think that you should do what provides you with the lowest total cost of housing over the time you intend to reside in your chosen area. The whole argument about "renting is giving away money to the landlord" has some merit but keep in mind that unless you're paying in cash, you're going to be renting money and you'll be giving money to your lender instead as well as giving away money for real estate taxes and insurance premiums to your insurer and giving away money for maintaince, etc. There are costs to renting. You don't build equity and as they say you're giving money away to the landlord. But there are also costs to buying that don't exist when you rent including interest, insurance, real estate taxes, maintainence, etc. The best thing is to do what costs less.
http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/WhyRentToGetRicher.aspx Check out this compelling MSN article arguing for renting over buying. No matter what, if you decide to buy, absolutely do not buy a house any more expensive than is necessary. You will tie up money and put yourself at risk for losing more in the future.
One thing he forgets to mention... leverage. If I have $10k I can buy $10k of stocks or a $100k house. If my stocks go up the 7% he mentions I now have a $700 profit. If my house goes up the 3% mentions then I now have $3000 profit. Funny how that works.
Through margin buying you could certainly buy more than $10k worth of stocks with only $10k in cash. But leverage works both ways. It increases gains and losses. As far as profiting from your own house goes, you don't really profit until you sell and retire or move someplace cheaper. Otherwise the profits are useless. And if houses only went up 3%, factoring in costs of ownership, it's hard to see how you would profit over renting in most cases. You'll pay more than 3% on interest alone not to mention other costs of ownership. If the house increased by 3% your interest alone for the year would be more like $5400 (assuming a simple 6% on the other $90k you'd need to borrow) so you'd be a net loss of $2400 vs $700 profit on the stock.
Why are you counting interest? That's counting the cost of housing twice then. You act as if you put $10k in stocks then you don't need to pay rent for an apartment. If I buy a $100k house with $10k down, then my monthly mortgage (which includes the interest) is ~$540. Add another $250 for property tax, etc. and you have a monthly PITI of $800. That is equivalent to what you would pay for rent for a lot smaller place. So you take your $10k and buy stocks. After a year you have no equity and $10,700 in stocks. I take my $10k and buy a house. After a year I have $1100 in equity. I have $5400 in interest and $3000 in property taxes that I can deduct from my income tax. That's about another $2800 in savings. Plus my property has gone up $3000. So as I see it I made $6900 dollars. So... I have to mow my lawn and fix my toilet and incur a few other household costs. Let's say that even takes $2000. Seems like I'm still ahead.
What do yall think of the appreciation of townhomes inside the loop (specifically Midtown and Near East End/Warehouse District)? With all the new townhomes popping up year after year, doesnt it hinder the appreciation of existing townhomes, since many people rather buy a new townhome than an old, used one? And it doesn't seem that the new townhome developments is slowing down anytime soon.
This is not my area of expertise at all, but I would think that the development of more townhomes in Midtown would actually help appreciate the value of one you buy right now. Midtown is surrounded by some low income areas, especially where the townhouses are being built. As builders continue to purchase the low-income housing and rebuild townhomes on the properties, it will continue to make the housing values go up, as the neighborhood becomes more "affluent" Of course, housing markets will also affect the value, but I would say the more development, the more desirable it is to live in that area. Real estate people would know more than I do, though
Also, another question for you Harris County Homeowners. Could you tell me a good estimate of what insurance/property taxes will cost annually? (I know it's hard on insurance as it is based on the value of your property, but I believe property taxes are a set percentage) My wife and I are finally moving back to HTown and are looking to buy a home in Harris County (basically inner loop or right outside of it) and I want to figure this in when figuring out what we can afford. Most mortgage calculators that I have found do not factor this cost in, rendering them almost useless. thanks in advance!
For townhomes in the Midtown area, I'd say just don't buy them because they are a blight on the community. But, if you're going to do it anyway, my recommendation would be to favor townhomes that are well-constructed and built to last long-term. There are a lot of builders coming in to the area, and some are throwing up crap to take advantage of the market. The poorly constructed areas will depreciate more quickly, obviously, but will imo have a reghettoization effect as those blocks go to lower income people as delapidation sets in. I live in the 3rd Ward, and I've been paying roughly 2% in taxes and another 2% in HISD taxes. I believe the HISD taxes are supposed to disappear/go down, so there's a little uncertainty there.