Monday, January 19, 2009

Back to Business

You'd think I hadn't worked since Christmas, what with all the cooking posts and pictures of family. Real Estate slowed to a crawl with the snow storm, and it's often very quiet between Christmas and New Years. But I worked that week, and got a fun new client into a beautiful Riverfront condominium.

I also put a new construction deal together, and the builder was quite generous! The family is moving here from the Philippines, along with her mom, who will take care of the kids while the parents work. Sweet deal! They bought a house just about a block from the kids' school. Grandma can see them walk to and from school while standing in their doorway! (they picked out a beautiful deep blue/green for the exterior, and we picked out all the doors and windows on Saturday!)

Lately, I've been showing around a friend of my daughter's, who is a medical student here in Portland. She's going to buy a house to live in, and rent out rooms to other med students for the next couple of years. If all goes well, the others will pay the mortgage, and she'll pay a very reduced rate, while gaining all the tax credits and appreciation.

We did the same thing for our boys when they went to college. We picked up a five-bedroom house in Eugene, and have rented it for the last four years. Our youngest has one year to go, and I'm hopeful that we can sell it for a decent profit after he graduates. If not, it certainly "pencils," and we can actually keep it as a rental and earn a little something each month. That is, if we can find renters who don't want a kegger every weekend...

So if I were asked who should buy a house in this market, I would suggest to parents of kids in college that it's a smart time to pick up your first rental. (There's a loan called the "kiddie condo loan," that lets the parents co-sign but the kid gets to be on the loan and doesn't have to qualify.) In Portland you can find a decent three-bedroom for less than $250,000, and that should pencil out nicely with current rental rates.

Or to first-time homebuyers, the prices are about as low as they're going to go, as are interest rates. All you need is about 3.5% for a down payment plus closing costs. (This is just a guideline! I'm not a lender, but I can refer you to a great one) The little house above is listed for $325,000. That principal/interest on that loan is probably no more than rent on a nice 2BR apartment.

If you're moving up, consider this. You may have to accept less on your current home than you'd like. Let's say you thought it was worth $400,000, but you have to sell it for 5% less. That's $20K. The house of your dreams is $550,000, but you get to buy it for 5% less. That's $27.5K. You come out ahead by 7.5K by moving up in this market. That goes a long way towards closing costs or moving expenses.

There are so many good reasons to buy in this market!

What a great start to the new year, being so busy! Maybe that'll help me turn off my "holiday appetite!"

1 comment:

Thomas F. Fallon, AIA, NCARB said...

Hi Cary - do you think we should ditch our old house already? :-)

Our friend is a therapist and he did exactly that - bought a house (with help from parents) then rented out the other three bedrooms for 7 years. You can set it up as a loan to your kids (down payment that is) or other structures or you can make it be yours! Lots of flexibility here for your needs. It keeps them from throwing away money on dorms/rentals too and teaches responsibility. Our friend has the house to himself now and it is like a whole new place now that they have full access to places they never did before!

Easy to advertise on Craigslist for that room and other websites too!