http://www.fatwallet.com/forums/topic_view.php?catid=52&threadid=939137&start=20


Date Posted: Jul/16/2009 9:15 PM
Rating: +21

We bought a condo in FL in early 2005 for $190k. 3 months after closing we moved out of state for a much better job. At that point, units in our development were already selling for around $215k so we might have broken even after realtor, taxes, early payment penalty, etc., but being young and non-clairvoyant we decided to rent our condo out for 1 year to chase some profit. Home values in that area had been appreciating 20% or more annually for 3 years running, and many homes had full price offers (or higher) within days of listing so it seemed safe. I know, I know. Save your lectures.

3 months after moving (6 months after initial purchase) our tenant stopped paying rent altogether. Asking prices were up to $275k on comparable units, definitely the top of the bubble in that area in hindsight. We decided to cash out and use our $60k+ profit on a down payment in our new state. Being naive, we signed a sales contract on new construction for $390k before we kicked our deadbeat tenant out of the condo and sold. We figured we could easily sell before the new home closed in 6 months. Oops.

We got the tenant out in early 2006 and listed the condo...and waited. The bottom had fallen out of the market. We dropped our asking price again and again and finally sold the condo months later, 4 days before we had to close on our new home. We broke even on the condo but "lost" our expected down payment for the new home. If we walked away from the new home we would have lost our $40k down payment and supposedly would have faced legal action from the builder for even more. On top of that, we felt it was our obligation to honor our end of the contract, so we took the only financing we could find, 80% 1st that is interest only, and 20% second with a rate of 10.5%.

Now, here we are in 2009 owing $390k on a house that would probably sell for $280k today. We're so far underwater we can't refi (despite having never missed a payment), won't be able to sell for years, and our combined income is considered too high to qualify for modifications. If either of us lost our job we would have to walk away, but until then we are just stewing in it.




Date Posted: Jul/17/2009 10:17 AM
Rating: +6

Bought 3 bedroom 1100 sq ft ranch in minnesota for 190k, 100% home value loan. 5.8% interest
Bought it in June 2007 after graduating college and getting a good job.

Home is now worth 150-160, when compared to similar homes in the same area.

However, I'm working my ass off trying to finish the basement and make it into about 1800 sq ft home.
Then if I can refi fast enough I'll be able to drop a point off my interest.
But best of all I'll hopefully have a home worth my loan amount once again. Of course every dollar I put into it is a lost dollar.


Date Posted: Jul/20/2009 9:40 AM
Rating: +1

The condo vs. SFH discussion typically goes nowhere fast just like the rent vs. buy discussions. Condos and single family houses tend to have a very different appeal to people in different stages in their lives, so it's a bit silly to compare them directly.

For instance, if you are a young single professional or a childless couple and enjoy trendy, cosmopolitan living, condos will probably appeal to you and you'd rather be dead than living in a house, which you associate with suburbia and soccer moms. Likewise, older single nesters and young people alike tend to like condos, since they tend to offer maintenance free lifestyle and you typically don't have to worry about roof replacement, yard work, outside maintenance, etc... If you enjoy highrise living, you can only get it in a condo. If you value socializing and meeting neighbors, condos are often superior to houses. Likewise, condos often offer features that you'll never find with SFH's, such as 24/7 security, concierge services, high end gyms on the premises, spas and even valet services.

On the other hand, if you value privacy, houses will often be superior to condos. If you have a family with kids, you'll probably want to live in a house with a nice backyard, neighborhood kids to play with, good schools nearby, etc... You'll probably care a bit less about easy access to trendy and hip restaurants and a little more about other things. If you are the type that likes to customize your own living space, including the outside, and doesn't want to have others telling you what kind of landscaping to have or when to replace the roof, you'll probably prefer living in a house, which tends to offer much greate autonomy.

The list of differences goes on and on. We've lived in both and can tell you that each one has plenty of advantages and disadvantages. It is just asinine to suggest that one is clearly superior to the other one.