Need your help..
My condo owner is offering to sell the condo I am currently renting in.
The location is in Bellevue near downtown right near Whole Foods on 8th.
I am currently paying 800 dollars for a 1 bed 1 bath. The condo was built in 1969 and the unit is around 700 sq feet.
The owner obviously would like me to buy the unit (saves him the hassle of listing , fixing up the place, etc) . He offered 190K for the unit and it comes with 1 parking spot(uncovered).
Because I am currently renting the unit, I know the plus and minus or living in this unit (plus: good location. Minus: want eventually own a home, loud upstairs neighbor, no dryer / stove ventation)
For 190K, it seems like a pretty good deal. What do you guys think? I have been waiting for 2 years for the market to correct but only now has it show signs of rapid detoriation. What do you guys think? Wait or buy?
thanks for your help
The location is in Bellevue near downtown right near Whole Foods on 8th.
I am currently paying 800 dollars for a 1 bed 1 bath. The condo was built in 1969 and the unit is around 700 sq feet.
The owner obviously would like me to buy the unit (saves him the hassle of listing , fixing up the place, etc) . He offered 190K for the unit and it comes with 1 parking spot(uncovered).
Because I am currently renting the unit, I know the plus and minus or living in this unit (plus: good location. Minus: want eventually own a home, loud upstairs neighbor, no dryer / stove ventation)
For 190K, it seems like a pretty good deal. What do you guys think? I have been waiting for 2 years for the market to correct but only now has it show signs of rapid detoriation. What do you guys think? Wait or buy?
thanks for your help
Comments
Agreed. You'd be doing him a huge favor by buying. Imagine what he'd have to spend to get it all pretty to put on the market, plus REALTOR (R) commissions, and X-months of mortgage payments between the time you move out and when the new owner closed.
I would also check out the Homeowner's association. Take a look at their budget and the minutes from the past few meetings to see if the HOA has enough money to take care of ongoing, normal maintenance and repairs. If not, then expect an increase in the monthly dues.
Fast forward a couple of years from now: Let's say you decide to live someplace else and either can't sell or would prefer to keep it as a rental. Could you rent the place for enough to cover your monthly PITI + HOA dues?
(PITI = principal, interest, taxes, insurance)
Actually the initial offer was 210K, then his wife became desperate and lowered the price to 190K. I guess they are "motiviated". If I was serious,I would low ball down to 15%-20% max. 30% seems to be an insult dont you guys think? Even with the slow down, Bellevue condos near downtown is still increasing monthly. Near 8th and I405 (near where I live), I dont think I can find a condo for less than 200K. But then again, this is a 1 bed 1 bath.
He actually wants me to stay in the unit till the condo gets sold. Its a double edge sword. 800 a month rent is a steal around this area but at the same time, I would have to worry about moving at the start of every month (he said he will give me 30 days notice). Plus, rents have increased around this area. So i'd expect to be paying around 1000 a month instead of 800.
They have a "european" washer and dryer which uses some techonlogy that does not require a vent out. It really sucks and can't wash anything properly. I use the condo coin laundry washer and dryer instead. However, if i do buy this place. I would defintely need to install a washer and dryer with a vent out (not sure what the cost would be or if its even possible)
I expect my monthly mortgage (assuming I have 20% down) would be around 1300 everything included which is not bad for mortgage. I probably wont be able to cover the entire thing. I expect this condo to be able to rented out for 1000-1100 a month in two years as more employees from Microsoft and Yahoo relocates (disclosure: I am a MSFT employee). But that is just an assumption.
Thanks for all your feed back guys!! i really appreciate it....
If you are thinking it will only rent out in two years for 1000-1100, you are looking at negative cashflow for some time to come. (even if you take 20% off the sales price)
Best case the RE market will grow slightly in the next five years, worst case: see Japan.
If you like the place, and want to live there long term, sounds like an okay deal, but if you are seeing part of it as an investment, would you be interested in some Countrywide stock???
I haven't done the math on this, but are you considering the tax deduction for interest/taxes? Should be around $250 just for the mortgage interest - so it just might cashflow.
When looking at this, don't forget that you're only saving money in tax *after* the standard deduction, assuming that's what you pay now. So, if for example you pay 10K in interest in a year, and you're single and the standard deduction is 5K, then the " tax savings" are 10K-5K=5K deduction. If you're paying 25% tax, that's 25% of 5K = $100 a month. Do *all* the math, and see an accountant for 100 bucks if you're not sure. This stuff will only take 15 minutes to figure out if you know all the details.
Also, 30 year loans are at about 6% right now, which is really good. You'll likely need 20% down payment and a 680+ (ish) FICO for that rate.
Don't lowball by 30% from their offer price. Look at RECENT comps (actual sales), and low-ball from that. Regardless of their offer price, you can offer less. If they're offering 190K, they'll take 180K. If you're happy with 180K, then go for it.
I don't know much about condos, so defer to others on that subject.
Also, my thought half way ("way" used to keep the forum clean) analysis was for if you are going to rent out the condo, in which case there is zero (ZERO) tax savings. (it is just part of your expenses, unless you capitalize the interest and taxes for tax purposes, which is a whole nother topic)
In this case, the standard deduction is a whopping $5350 vs. probably close to $10k in interest to write off. That's $400/month in difference, at 25% tax rate about $100/month in incremental write off. For an $1100 mortgage payment - seems like it could be material.
As to the statement that "the whole tax saving is making the HUGE assumption Congresss does not increase the standard deduction in the next couple of years" - look at history and judge for yourself.
2005 - $5000
2006 - $5150
2007 - $5350
3% a year for three years. I'm not betting congress is going to all of the sudden get overly generous.
In any case, advice on an internet forum is probably worth exactly what you pay for it
If your owner has provided a vent-less dryer the possibility of your venting a dryer id very low. All that moisture has to go somewhere and if you are in a wood framed structure ... dry rot is in your future, not to mention mold. Buildings need to breathe.
Check to see what kind of washer would work, then dry in the common facility.
Before you bite hire a home inspector, the one Realtors HATE. Have that person look at your unit AND the building as a whole. Before that inspector comes see if there is a reserve study for the assn and read assn minutes for the last year.
You will fast outgrow a one bedroom condo. If you are going to buy look for two bedrooms.
Find the condo group on Zillow and check past sales. Look at recent sales and the Zillow price, in some markets Zillow is higher than actual sales.
On a 150K loan, and 2,500 in taxes, the "benifit" from a tax standpoint for home ownership was pretty close to zero after the married filing jointly standard deduction. I guess when throwing in the tax benifit, you need to make sure people promise not to get married... (I had a 5.25%, 30 year fixed, so I was a bit spoiled.)
As to congress staying consistent for the next few years because they have in the last few years is good logic, but not in stone. I understand DJ they have not touched the standard deduction in a while, but they have messed with some other items, like the 179 deduction, Child Tax Credit, and other items in the tax code that have been quite significant.
Just my one cent. (and that is US Dollars, not the more valuable Canandian Dollars..)
First, when figuring the cost of owning a condo you need to look into the current home owners dues, and review the budget and reserves. Dues can easily be a couple hundred dollars a month (and are not tax deductible), and many associations fail to budget properly for long term costs like fixing roofs, resulting in special assessments that can easily run into the thousands of dollars. It's quite possible their "desperate" price cuts may be with knowledge of an upcoming likely assessment.
Second, I'm not sure 30% has any particular use as a starting point, but "not wanting to insult someone" is a horrible way to approach an investment. Would you give these people $20,000 as a gift just because you like them? Probably not, but that's what your talking about in a 20% vs. 30% off bid. This is a buyers market, and becoming more so every day, so set your price aggressively. If you want to add a little value to the place because you wouldn't have to move then fine, but be sure to think about how much that's really worth.
I was going to a work lunch in downtown Bellevue twelve months or so ago and one of my more clean-cut, conservative colleagues said, "I love Bellevue, it's so clean."
I was thinking to myself, "yeah, but it's completely soulless".
My opinion and what I would do? Hell no. Cross one of the bridges and pay a bit more and maybe, actually, meet real people who don't think "mmm let's go buy some garbage at bellevue square" all day.
[Yes, it's judgemental, negative, and generalizing, but.]
This afternoon, I had a chat with a relator that had an open house in another building in the same complex. Ofcourse he was very optimistic about Bellevue and its "growth" potential. The unit he was trying to sell was for a 950 sq feet 2 bed 1 bath condo on the second floor (the building has 3 floors) for $236K. The unit has upgrades (new carpet, removed pop corn ceiling, new pain, and looks generally cleaner than my current unit). My current unit is 687 sq feet, first floor, popcorn ceiling intact.
I found out the entire complex does not support vented dryers and vented kitchen Fans. The realtor also told me there will be an increase in HOA next week by 10 percent. I also checked the comps on zillow and redfin, most units sold in the past 6 months are in the same price 190K range. But I am sure the condition of those units are better.
The area where I am living in is defintely where I want to buy (its close to the highway, bellevue downtown and Microsoft [employer]). If I am not interested in the condo, the owner wants me to stay in the unit whle he has open house which I dont really mind because rent around the area is going to be much higher (I am currently paying 800 a month). For now, I am going to make a 160K informal offer (listing out all the negative features of the condo I dont like) and see what his counter offer is.
Again, thank you very much for all your comments
My sentiment too. I was at Meydenbauer Park (on the lake near downtown Bellevue) this summer on a Saturday around 8pm. The bathroom was very clean but the park was empty. Meanwhile there was a formal party on a yacht anchored in the bay.
Seems to me that places without kids or young people, i.e. the pricier places, are the most soulless. I have kids and there's no way I'd subject them to Seattle schools, bums, crime etc. So the trick for me is to focus on decent places on the Eastside where other kids still are.
I live down the street from you (140th and NE 8th) and I can tell you what I've seen. Condo prices in our complex peaked last fall/spring with a record sale for $325k for 1000sqft 2bed/bath. Since then the highest price anyone can get is $279k (still "subject to inspection"), while the one listed for $299k keeps on getting relisted and has been on the market for what seems like 6 months. We've have a 14% drop in about 9 month. Keep in mind that units were going for the $100's just two years ago!