Why I Decided Not to Buy a Condo... Yet
Sometime in 2007, I got the idea that the RE market would crash, and began planning to take advantage of the cheap real estate that would result. When I started this blog, last year, I went public with my personal goal of owning a condo. My reason for living cheap in Chicago was so I could squirrel away a hefty down-payment.
I looked at mortgage calculators, read blogs and articles, signed up for Dreamtown.com, and created an Excel sheet for tracking prices in my favorite buildings. I read a series of articles written by Mr. Mike McNamara about buying real estate in Chicago. I talked to relatives, friends, and my mentors about what they thought about EVERYTHING: owning, selling, financing, renovating, moving... and on and on. During these discussions, my parents told me they'd come to 3 conclusions after many, many, many different real estate experiences. They feel:
As I was mulling these thoughts, I was also continuing my real estate research. I looked into city programs that gave help to first-time buyers, found the TaxSmart Mortgage program, and met with a participating bank to discuss it. The bank was not enthused about my job-hopping history. Really, I needed to spend another year at my current job to make my income look reliable. No problem! I was at LEAST another year away from condo shopping. The bank also informed me that I needed to complete pre-purchase counseling to qualify for TaxSmart.
I received the counseling free of charge through Neighborhood Housing Services of Chicago, Inc. (I recommend the classes taught by Ms. Bathsheba Wyatt-Draper. In 2008, she was at the Central location on Milwaukee.) During the program, I came to understand what I could safely afford. We're talking a studio here, not a 2-bedroom. It took a lot of wind out of my sails.
The final straw was when I read several articles like those on Patrick.net and Erica.biz about things like price-to-rent ratios, and I discovered it's still cheaper to rent than to own in my area of Chicago. Not only that, but with unemployment rising dramatically in Chicago, no condo building is safe from dramatically increasing assessments as owners lose their jobs and default.
Now, feeling educated, and understanding the risks of ownership, I've decided not to purchase a condo right away. Since speaking with my parents, I received a promotion at work, and feel that my company will keep me if they are able; so, once the recovery starts, there's very little chance my sister would ever take over my property. I'm waiting to buy until:
What do you think? Hoping to buy soon? Sure the recovery is underway?
I looked at mortgage calculators, read blogs and articles, signed up for Dreamtown.com, and created an Excel sheet for tracking prices in my favorite buildings. I read a series of articles written by Mr. Mike McNamara about buying real estate in Chicago. I talked to relatives, friends, and my mentors about what they thought about EVERYTHING: owning, selling, financing, renovating, moving... and on and on. During these discussions, my parents told me they'd come to 3 conclusions after many, many, many different real estate experiences. They feel:
- Being a landlord is more stress than the money is worth. Don't do it.
- House flipping is better than landlording, but they wouldn't recommend it.
- Renovations are a lot of work, and you might not break even; consider carefully.
As I was mulling these thoughts, I was also continuing my real estate research. I looked into city programs that gave help to first-time buyers, found the TaxSmart Mortgage program, and met with a participating bank to discuss it. The bank was not enthused about my job-hopping history. Really, I needed to spend another year at my current job to make my income look reliable. No problem! I was at LEAST another year away from condo shopping. The bank also informed me that I needed to complete pre-purchase counseling to qualify for TaxSmart.
I received the counseling free of charge through Neighborhood Housing Services of Chicago, Inc. (I recommend the classes taught by Ms. Bathsheba Wyatt-Draper. In 2008, she was at the Central location on Milwaukee.) During the program, I came to understand what I could safely afford. We're talking a studio here, not a 2-bedroom. It took a lot of wind out of my sails.
The final straw was when I read several articles like those on Patrick.net and Erica.biz about things like price-to-rent ratios, and I discovered it's still cheaper to rent than to own in my area of Chicago. Not only that, but with unemployment rising dramatically in Chicago, no condo building is safe from dramatically increasing assessments as owners lose their jobs and default.
Now, feeling educated, and understanding the risks of ownership, I've decided not to purchase a condo right away. Since speaking with my parents, I received a promotion at work, and feel that my company will keep me if they are able; so, once the recovery starts, there's very little chance my sister would ever take over my property. I'm waiting to buy until:
- Prices for one-bedrooms fall into my range.
- Purchasing is comparatively priced against renting in my neighborhood.
- Unemployment stops rising, so I can feel secure about my job, and know assessments will be stable.
What do you think? Hoping to buy soon? Sure the recovery is underway?
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