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| Wednesday, October 12, 2005 |
| Renting vrs. Buying - Done Both and here's why |
The first apartment I rented was a 3.5 bedroom 1 bath first floor flat in Milwaukee, WI with two friends. It was senior year and we were excited to finally be out of the dorms and into our own place. Luckily heat was included and with the absurdly low monthly rent of $400 split three ways finances were not an issue. That first apartment really spoiled me.
Once I graduated from college I moved back home to Boston and luckily Mom had not turned my bedroom into a fantasy grandchild nursery as she had threatened (that came a few years later - thanks Sis!) After 6 months of living at home I figured out I really needed a plan. I was not making a lot of money and since I had gone to college out of state I was not really close to old high school friends anymore. Affording an apartment on my own was not feasible and rooming with strangers did not really appeal. So I did something really stupid (or really smart) - I purchased a condo at an FDIC auction. It was a small two bedroom one bath unit within easy walking distance of two subway stations. It cost $25,767 (auction remember) and because of my low salary I qualified for a no money down FDIC 30 year mortgage at 8%. I spent $800 replacing the old brown shag carpeting, painting the walls, and steam cleaning the bath and kitchen. When I moved in two doors in the building had eviction notices tacked on them and the first floor front unit was selling homemade Brazilian hooch out of their window (cars would pull up onto the sidewalk like the window was a drive-thru. I lived in that condo for five years.
In the summer of 2001 I was finally making a nice amount of money and while the condo building and neighborhood had come a long way, I was ready for a bigger place and more importantly an off-street parking spot for my car (the only downside of the neighborhood revitalization was how scarce the on-street parking spots became). I could not afford to buy a new place since I did not have cash for a down payment and was unwilling to sell or remove equity from my condo to trade up so I moved out, rented out my condo and rented an apartment myself. I lived in the apartment for 4 years while I saved money to buy a house.
To save money, I had roommates in the apartment. One roommate was a nightmare but the other two were ok. I did a lot of traveling those years for work so living in an apartment was great. I did not have to worry about lawn care or shoveling. It was nice to know that if something broke it was the landlord that had to pay to fix it and not me. But the only way all of this was justifiable to me was with the roommate and frankly as the years passed and being now in my 30's I really wanted to own a home. I managed to save $80,000 during those four years of renting. About a year and a half ago I purchased my house and used that $80,000 as a down payment (a little more than 20% down).
So here I am the owner of my house and my condo. Owning can be more expensive than renting, but for me there is something about being able to call something "mine" that is deeply satisfying. Renting was convenient, but owning is the route I have chosen. |
| posted by Boston Gal @ 1:54 PM *
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| 5 Comments: |
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80k in 4 years...awesome! Now I know why your boston condo mortgage is so teeny...good job on snagging it and being creative and open. "Brazilian hooch" cracked me up.
I'm starting to think of downsizing but staying in the area...possibly...Lynn?
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Wowza! How on earth did you save $80K in four years?!?
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The FDIC is a federal agency which insures banks. When a home is foreclosed because a home owner can no longer pay the mortgage the bank takes the home. Sometimes, the bank then turns the home over to the FDIC to liquidate.
HUD is just one of many federal agencies that could be auctioning off a home. If you are interested in finding foreclosed auctions in your area I suggest you spend some time on multiple federal websites to look for inventory.
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where do you go to find local fdic auctions? I'm totally lost on this subject and I live in California, so this would be a great help especially with the way subprime mortgages have gone.
And yes, 80K in 4 years can be done. I've saved a little more than 50K in 3 years. Just don't get a place all by yourself...you have to share the rent somehow with roommates. Might not be right for you, but you just gotta suffer to reap the rewards.
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80k in 4 years...awesome! Now I know why your boston condo mortgage is so teeny...good job on snagging it and being creative and open. "Brazilian hooch" cracked me up.
I'm starting to think of downsizing but staying in the area...possibly...Lynn?