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April 8, 2008
Goob Buy
I was planning on entering the market for a 1 Bedroom condo at the end of the year when my lease expired. I planned to have ~30K in the bank by the end of the year for closing costs and downpayment. My budget is about 350K. Location wise my first choice is East Williams but I've also been looking at Bed Sty, Green Point, Bkln Hgts and Clinton Hill. Looking for places online and going to open houses has sort of become a hobby so I went to go see a place yesterday in East Willamsburg about 3 blocks north of the L's Grahm stop . I didn't really intend on making an offer but the broker was making some compelling arguments. They offered to cover my rent for the rest of the year, and chip in for part of the closing costs. The place is listed at 370, but he is willing to come down to 340. The place is on the 3rd floor and 639sqft. The rub is I only have 10K in the bank right now so I would have to finance more than I would like. It seems like a good deal, I was just wondering what other people thought about it.
Thanks in advance.
Comments
At $340 you are still paying over $500/sq ft which I think is too high.
You need to figure in taxes and common charges as well, as well as legal fees that must be payed at closing- I do not think you are in any position to buy this with only 10K on hand.
Posted by: Karka at April 8, 2008 11:02 AM
Prices will only come down - wait until you have the down payment, time is on your side. In a year you will probably be able to buy in an even better location. wburg real estate is falling fast.
Posted by: guest at April 8, 2008 11:10 AM
The common charges are $140, tax is $14 (abated for 14 years). I was content to wait a year or so to see where the prices go. This place *seemed* like a good deal, though I wasn't completely sure if $532/sq ft is reasobable for this area in this market. I saw 4 buildings in development in a 2 block radius when I went to check the place out. Looks like there will be new places coming onto the market around the time I'm ready to buy.
Thanks
Posted by: bocci at April 8, 2008 11:28 AM
sounds like you have already talked yourself into this deal and are now trying to justify it.
Will the banks even finance this deal? With only 10K in assets for closing costs and down payment? It sounds like you are in for a surprise when you call up the bank, I would start there before even considering this.
Posted by: guest at April 8, 2008 11:57 AM
Actually its the other way around. I talked myself into trying to make it work and now I'm looking for a solid reasons to hold off. Which I'm getting.
Thanks,
Mboso
Posted by: bocci at April 8, 2008 12:23 PM
If it's a new construction then I would suggest you wait. There is so much going up in the area that surely the prices will go down and you'll have PLENTY of opportunity to buy in the future.
Posted by: guest at April 8, 2008 12:24 PM
Actually its the other way around. I talked myself into trying to make it work and now I'm looking for a solid reasons to hold off. Which I'm getting.
Thanks,
Mboso
Here's a solid reason to hold off....YOU DON'T HAVE ENOUGH CASH SAVED!!!
10,000 - is not going to get you anything. You have a down payemnt and closing costs. At your price point you need at least $35K and that is you being able to put down 5%.
Wait and save.
Posted by: guest at April 8, 2008 12:52 PM
Even if you can find 100% financing at 6% (nearly impossible currently) you're still looking at ~2k a month before ANY other expenses.
You can do it but you're crusin for a brusin....if you make it, you'll be house poor at best.
They don't call it the hidden cost of home ownership for nothing...
Posted by: moreteasir at April 8, 2008 1:23 PM
I would also think about waiting for a least a few more months. Living in this area makes you realize just how many new projects are finishing up - and many of the previously completed buildings have not even sold out.
Also, have you tried this site: http://hotpads.com/main.htm ? Hotpads lets you do a rent vs. buy comparison for specific properties and neighborhoods - could be that there is an even better deal in the area, esp. if you do decide to wait a few months.
Posted by: guest at April 8, 2008 3:12 PM
I qualified for an FHA loan with 97% financing at 5.5%. But I agree with moreteasir. I *could* in theory do it but I would be over-extending myself. I don't want to finance near 100% then be eating stewed tomatoes out of a can. I already told the broker I'm passing.
Thanks for the tip 3:12, I'll check it out.
Posted by: bocci at April 8, 2008 4:17 PM
My really good friend is looking at 1 bedrooms in the $500K range in the same neighborhood. I saw about 10 or 11 with her. Those were all closer to $700psf. Depends on the amenities I guess. I think that $500 psf is terrific. I haven't seen lower than that for a condo in a decent area, especially not for a 1 bedroom.
Finished buildings (not pre-construction) in Williamsburg have very little inventory (i'd say zero) on the low end of the market.
I bought in williamsburg west of the bqe in 2006, and love it. also, 2 units re-sold in our place recently for really good profits.
good luck either way.
Posted by: guest at April 8, 2008 4:52 PM
buying a house with $10K in the bank? i can't believe we have a credit crunch.
Posted by: guest at April 8, 2008 8:22 PM
8:22, I was just as surprised as you are.
Posted by: bocci at April 9, 2008 8:59 AM
^^^ and that's how the whole sub-prime mortgage mess started.
Posted by: guest at April 9, 2008 10:35 AM
I would say hold on also, but if they are really going to pay your next 8 months rent, that should save you more than 10K, which translates into 20K in the bank ... I find it telling that they are willing to do this, it allows them to claim a higher sales price. I'm curious how much the rental subsidy would add up to and also how much of the closing costs they would cover?
There is a lot more inventory coming down the pipeline, but how much are you now paying in rent?
The NYTimes has a great calculator to help with the rent vs. buy:
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html
you can customize it ... if you haven't seen this I suggest playing around with it!
Posted by: WillBklyn at April 9, 2008 2:09 PM
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