More housing advice needed-opinionated ppl wanted!

[kwynn]

I'm back seeking more advice.

A recap of my last two posts:

Not finding any decent rentals, I looked at a house for 50k. It looked GREAT online, needed so much work in person that was expensive, such as a bathroom remodel to be usable, kitchen remodel, electrical.

I do not have much handyman experience and am a widow. Do not have any handy family members either. I ruled the house out.

Now, WWYD?:

I make $2000/month. My roommate makes $1000. Places within commutable distance from her job are running $900+utilities and are not in great shape. I run a business from home and would like to be able to have clients to my home. Right now, I use coffee shops and Paneras though. I prefer two toilets.

Running the numbers, $900+utilities (on average $300/month) is tight. More than I want to spend and it is at the top of my budget range--doable but tight.

Worse still, we are finding NOTHING in that range. I'm not picky, it needs to have usable bathrooms, appliances, and not be in bad shape, that's all. I'd like for it to be suitable for a client, but that's a pipe dream.

I'm exploring the idea of buying. I truly do wish I could rent, but what do you do when buying is cheaper than renting in your city/area even considering property taxes, insurance, and maintenance?

I have assets, not much income. Most rental properties require me to do first, last, and security, and then because we don't meet the income guidelines, pay the whole year up front. That's like 15k---a downpayment on a home.

I can't undertake a major fixer right now. A minor fixer is okay. Saw a great house today, bad neighborhood. Looking at other possibilities now, all around 100k (so mortgage amount would be 70-80k-ish and $700 a month, with a roommate paying some of that).

Is it even possible to look from out of state, take one trip in, buy, and move in all within 4 months?

Can you get a mortgage with little income but an amount of savings far exceeding the mortgage amount?

Am I in over my head?

I cannot find a month to month lease either and want to avoid two times, alone, within a year if possible.

Thanks, ladies---I don't want to buy, but with rent so high, I can't really save anything every month to put towards an eventual purchase.

[EmilieMadison]

Where do you live that there are NO rentals available in your price range that are livable?
As for what you're finding? Why are utilities $300/month?? Why have you chosen a roommate who's income is the same as the average rent? Have you looked into the possibility of not having a roommate and renting a 1 bedroom or a studio? What would those rent for? Or IMO, find a new roommate.

DO NOT buy a house just because it's cheaper than what you can find for a rental right now, especially one that isn't in a great area. But if you have run the numbers, qualify for a downpayment, closing costs, mortgage+ taxes+ insurance+ utilities (comfortably, not just what they say you can afford) then look for a house that needs minimal work in a good area where you would happily live for 5+ years..

Also remember that many rentals do not allow you to operate a business out of the rental property...so perhaps you need to focus on buying anyway?

[isabel]

I just want to caution you on a home purchase. Make sure you're including the mortgage amount, plus property taxes, homeowner's insurance, hazard insurance, and PMI if applicable. Those monthly costs can add up to a lot and really sneak up on you.

[mfluder]

Sorry, this sounds frustrating. I wish I had something helpful, but all I have is will a landlord take an assets statement instead of all up front? This came up for me once that they would tank a bank account statement instead.

I imagined this is a small town?

ETA: and to answer your actual question, if this were a place I imagined myself staying in for the future I'd look for a house. I'm usually more like the previous posters, more hesitant to buy, but I think you have the financial discipline to handle buying a house. (Before I offend someone, I Rent lol). Good luck!

ETA2: well never mind, I'd definitely take the advice of someone that knows the area!

[Balki.Bartokomous]

I think your expectations are too high. There are very few 2BR/2BA places there - you rarely get 2 bathrooms when you have 2 bedrooms. Have you checked out Greenbriar? It really was not all that bad. I still think you need to check out places a bit further out, like in Irwin or Greensburg. You're going to have to compromise on something.

Having done a similar search a few years ago, I cannot think of anywhere safe out there where you can find a $100K home that doesn't need a ton of work, so I would not buy a home.

[limey]

It's hard to move across the country, buy a house and immediately take possession and fix it up. I think you are basically trying to accomplish a hole in one. I realize you are familiar with the area, but it's still difficult and exhausting.

I think your best bet is to continue to meet clients at Panera and SB and acknowledge that you are going to have to pay more in rent than you want in order to get a nice place. You could accomplish that by pulling from savings to do so or working a 2nd job. I'd go with the former in your situation.

[limey]

Jan 2, 2013 0:33:23 GMT -5 EmilieMadison said:

Why have you chosen a roommate who's income is the same as the average rent? Have you looked into the possibility of not having a roommate and renting a 1 bedroom or a studio? What would those rent for? Or IMO, find a new roommate.

Her roommate would be her sister.

[EmilieMadison]

Jan 2, 2013 0:55:46 GMT -5 limey said:

Jan 2, 2013 0:33:23 GMT -5 EmilieMadison said:

Why have you chosen a roommate who's income is the same as the average rent? Have you looked into the possibility of not having a roommate and renting a 1 bedroom or a studio? What would those rent for? Or IMO, find a new roommate.

Her roommate would be her sister.

Ok. That still doesnt change the income, though, or the fact that she may need to consider not living with her roommate/sister if the sister can't commute very far but can't afford anything.

[limey]

It doesn't change her income situation, true.

But I think there is an emotional component here with being recently widowed and needing family support.

[Balki.Bartokomous]

Kwynn - what does your sister do? If she's only making $1K/month, I'm wondering if it's worth her looking for another job in a different part of town. She should easily be able to make that much money even doing something like waiting tables.

[Deleted]

I'm kind of laughing that buying a house would be cheaper. There's a lot of expenses, many unexpected, that come with home ownership.

[kwynn]

Jan 2, 2013 0:33:23 GMT -5 EmilieMadison said:

Where do you live that there are NO rentals available in your price range that are livable?
As for what you're finding? Why are utilities $300/month?? Why have you chosen a roommate who's income is the same as the average rent? Have you looked into the possibility of not having a roommate and renting a 1 bedroom or a studio? What would those rent for? Or IMO, find a new roommate.

DO NOT buy a house just because it's cheaper than what you can find for a rental right now, especially one that isn't in a great area. But if you have run the numbers, qualify for a downpayment, closing costs, mortgage+ taxes+ insurance+ utilities (comfortably, not just what they say you can afford) then look for a house that needs minimal work in a good area where you would happily live for 5+ years..

Also remember that many rentals do not allow you to operate a business out of the rental property...so perhaps you need to focus on buying anyway?

I wanted to answer some of your questions.

1. Where do you live that there are NO rentals available in your price range that are livable? I will be in Pittsburgh. I am open to anything but I've seen some really, really bad places lately (and I live in a very small apartment now so I promise I'm not picky). The last place we looked was $525/month, had cat urine stains, and the ceiling was falling down in the hallway. Rent has really risen here in the past 4 years or so it seems.

2. Why are utilities $300/month?? Average gas is $86/month according to the local newspaper. $80/month is electricity. Water is $80/month, trash and sewage is like $10/month, and internet is like $50. That's ballparking from what it used to be the last time I rented in like 2007.

3. Why have you chosen a roommate who's income is the same as the average rent? Have you looked into the possibility of not having a roommate and renting a 1 bedroom or a studio? What would those rent for? Or IMO, find a new roommate. I realize her income is not ideal. I'm really stuck here. I don't make much money either---it's my sister and she's the only one I could find to move in with me on short notice. I haven't lived in the area in years. A one bedroom or studio is like $600+ and the utilities would still be high--I live by myself right now and was trying to reduce expenses by getting a roommate.

4. Also remember that many rentals do not allow you to operate a business out of the rental property...so perhaps you need to focus on buying anyway? That's another problem, I know...I just don't know what to do about that. My current landlord does allow it, but many, many do not and I am trying to feel out the situation with each HOA and landlord.

[kwynn]

Jan 2, 2013 1:07:21 GMT -5 Balki.Bartokomous said:

Kwynn - what does your sister do? If she's only making $1K/month, I'm wondering if it's worth her looking for another job in a different part of town. She should easily be able to make that much money even doing something like waiting tables.

I don't want to say too much on here, but she works doing clerical work, minimum wage. She's been there for two years, and prior to that, she was laid off twice due to her workplaces closing (once in 2009, once in 2010). It sucks---she's had a string of bad luck.

[kwynn]

Jan 2, 2013 0:54:37 GMT -5 limey said:

It's hard to move across the country, buy a house and immediately take possession and fix it up. I think you are basically trying to accomplish a hole in one. I realize you are familiar with the area, but it's still difficult and exhausting.

I think your best bet is to continue to meet clients at Panera and SB and acknowledge that you are going to have to pay more in rent than you want in order to get a nice place. You could accomplish that by pulling from savings to do so or working a 2nd job. I'd go with the former in your situation.

It *is* so difficult and exhausting. I am already pulling from our savings now to make ends meet and I can't do that forever. I was hoping to decrease my costs by getting a roommate.

I did decrease my health insurance and cut everything possible from my budget. I just have to figure out a way to make more money, and I feel like I need something more professional than Starbucks or Panera to get there. It's a pipe dream, I know. I work from home, so I don't want to hate where I live.

We also have an apartment full of stuff and I just can't bear right now to part with any of it for emotional reasons, so I need a place that can fit it. It isn't a lot of stuff (it's only a one bedroom), but it is things that are important to me that I really do want to fit in my place.

[kwynn]

Jan 2, 2013 0:49:41 GMT -5 Balki.Bartokomous said:

I think your expectations are too high. There are very few 2BR/2BA places there - you rarely get 2 bathrooms when you have 2 bedrooms. Have you checked out Greenbriar? It really was not all that bad. I still think you need to check out places a bit further out, like in Irwin or Greensburg. You're going to have to compromise on something.

Having done a similar search a few years ago, I cannot think of anywhere safe out there where you can find a $100K home that doesn't need a ton of work, so I would not buy a home.

Where is the Greenbrier? I'm sorry if you told me this---I have looked at SO many places the past week that they all blend together and I don't see them on my spreadsheet.

We are willing to go out to Irwin or Greensburg at this point, although Greensburg would be a long commute for both of us. We liked a townhouse community in Irwin but no vacancies.

[kwynn]

Jan 2, 2013 1:36:37 GMT -5 @otterama said:

I'm kind of laughing that buying a house would be cheaper. There's a lot of expenses, many unexpected, that come with home ownership.

I know---I'm just really struggling. I hate getting the rude treatment when I call a place: "Your income isn't high enough, we don't allow pets, you can't paint, and I'll need a year of rent upfront." Like, I'd like my life to improve a little bit---someday, I'd like to get a dog and not be broke and see a color other than white on the walls.

I already live in an apartment and have for 7 years now total--I guess I wanted to get something with a little outdoor space since I'm at home 24 hours a day, or at least something I can make a little homier.

I just can't afford $800+utilities and then not be able to save to get out of there someday, you know?

[Balki.Bartokomous]

Jan 2, 2013 2:34:17 GMT -5 kwynn said:

Jan 2, 2013 0:49:41 GMT -5 Balki.Bartokomous said:

I think your expectations are too high. There are very few 2BR/2BA places there - you rarely get 2 bathrooms when you have 2 bedrooms. Have you checked out Greenbriar? It really was not all that bad. I still think you need to check out places a bit further out, like in Irwin or Greensburg. You're going to have to compromise on something.

Having done a similar search a few years ago, I cannot think of anywhere safe out there where you can find a $100K home that doesn't need a ton of work, so I would not buy a home.

Where is the Greenbrier? I'm sorry if you told me this---I have looked at SO many places the past week that they all blend together and I don't see them on my spreadsheet.

We are willing to go out to Irwin or Greensburg at this point, although Greensburg would be a long commute for both of us. We liked a townhouse community in Irwin but no vacancies.

Greenbriar Village. It's over in Scott Twp, on the other side of town. I know it's not ideal, but it might be a good back-up.

Have you looked out in Delmont, too?

I'm seeing a ton of places for less than $900. Have you looked at any of these?

www.forrent.com/apartment-community-profile/1000064378.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1000003746.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1034631.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1034698.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1007093.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

[kwynn]

Jan 2, 2013 2:46:23 GMT -5 Balki.Bartokomous said:

Jan 2, 2013 2:34:17 GMT -5 kwynn said:

Where is the Greenbrier? I'm sorry if you told me this---I have looked at SO many places the past week that they all blend together and I don't see them on my spreadsheet.

We are willing to go out to Irwin or Greensburg at this point, although Greensburg would be a long commute for both of us. We liked a townhouse community in Irwin but no vacancies.

Greenbriar Village. It's over in Scott Twp, on the other side of town. I know it's not ideal, but it might be a good back-up.

Have you looked out in Delmont, too?

I'm seeing a ton of places for less than $900. Have you looked at any of these?

www.forrent.com/apartment-community-profile/1000064378.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1000003746.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1034631.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1034698.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

www.forrent.com/apartment-community-profile/1007093.php#-1/-1/0/0/4/1/20/Murrysville,%20PA

Scott Township is over an hour from where my sister works right now. I would be okay with it (it's far from my family), but I don't think she can realistically drive 1 hour to work and 1 hour home every day for the little money she makes.

I have looked out as far as Plum and Murrysville. I think Delmont is beyond there, but I can definitely look.

I didn't like the Villages of Easton because it is only one bathroom. Literally the only thing I wanted in an apartment was two bathrooms (well, 1.5).

I really like Walnut Crossings and that's a safe area, thank you!

Alcoma--I don't know anything about, I will check it out.

LOVE Deauville but I think their 1.5 bathroom places are about $1075. I know their availability is limited too though. But I hear they are nice.

Holiday Park--I LOVE them. Above my price though for any that have 1.5 bathrooms and the one building is far superior to the others, I will say. They're a bit further out but neighborhood is fine and safe. This is one of my backup places, actually---I have a few places that I could possibly go to if nothing turns up for me that I like.

[krystee]

If I am remembering right, don't you have something like $750K saved up? Is it invested in non retirement accounts? If I were in your shoes, I would pull some income from the interest--so if it's invested and you're making 8% a year, take 3% home as income. That would give you another $22k/year before taxes, which would open more housing options, and your money would still be growing.

[kwynn]

Jan 2, 2013 7:02:40 GMT -5 krystee said:

If I am remembering right, don't you have something like $750K saved up? Is it invested in non retirement accounts? If I were in your shoes, I would pull some income from the interest--so if it's invested and you're making 8% a year, take 3% home as income. That would give you another $22k/year before taxes, which would open more housing options, and your money would still be growing.

Yes, about half is in retirement accounts and half is not. I know I could pull out approximately 36k a year without touching principal, but I also have been advised to really try, if at all possible, to avoid taking anything out.

Would you put that extra money towards a nicer place as far as renting or buying? It just kind of saddens me to put so much into rent, especially into places that aren't all that great.

I do have my sister continuing to look at rentals while I'm out of town.

[limey]

> I know I could pull out approximately 36k a year without touching principal, but I also have been advised to really try, if at all possible, to avoid taking anything out.


But, here's the thing - you are at the point where you have done all that you can and you really are close to NEEDING to pull some money out.

I used to be so uptight about spending money, but I've come to realize that sometimes, the best solution for a problem - particularly when you are stressed and overwhelmed - is to use money that you have to help solve a problem.

You have the money. You have a need. You are financially responsible. Allow yourself to pay for and live in a nice place. Think of it as a gift to yourself.

[y4m]

If I were in your situation with $375K cash available, I'd buy a property in cash. Your sister could rent from you...

Is there backstory I'm missing that makes that not make sense?

[krystee]

If you could buy a nice place in a safe neighborhood for a reasonable price, I would buy. But I'd either buy it outright or get something like a five-year mortgage and pay it with the interest from your nest egg.

[kwynn]

Jan 2, 2013 12:30:29 GMT -5 limey said:

> I know I could pull out approximately 36k a year without touching principal, but I also have been advised to really try, if at all possible, to avoid taking anything out.


But, here's the thing - you are at the point where you have done all that you can and you really are close to NEEDING to pull some money out.

I used to be so uptight about spending money, but I've come to realize that sometimes, the best solution for a problem - particularly when you are stressed and overwhelmed - is to use money that you have to help solve a problem.

You have the money. You have a need. You are financially responsible. Allow yourself to pay for and live in a nice place. Think of it as a gift to yourself.

Good point--sometimes you *do* have to throw money at a problem to make it go away. I hate to say that, but it's true.

My only concern is doing it over the long term. Like I can pay for a year or two of increased rent, but I don't want to do that forever. In the long run, I have to do something different and I don't know what that is.

I feel like I can get a much nicer place owning. Rent increases also scare me. If I used 2k a month from my savings, that brings my income up to 4k a month, and that does open up a lot of better choices for me.

Whether to rent or buy is still a factor, I guess. I'd like to actually buy something in the 100k range, putting down 25k or so.

I'm embarrassed to tell my financial advisor I changed my mind, need to access some of my money now on a yearly basis, and by the way, I need 15-25k upfront for a down payment or a year's rent when I told them I wouldn't need any money right now originally.

[kwynn]

Jan 2, 2013 12:32:42 GMT -5 y4m said:

If I were in your situation with $375K cash available, I'd buy a property in cash. Your sister could rent from you...

Is there backstory I'm missing that makes that not make sense?

Mainly, I'm scared. The money is invested for me and has to last a long, long time. It was life insurance money.

Also, with home interest rates being like 3-4% and earning 6-8% on my money, I wasn't sure if using a large chunk of my cash reserves was a good idea or if a mortgage would be the way to go.

My monthly income sucks, while my assets are okay. I have to be so tight and careful on the day to day.

[y4m]

Jan 2, 2013 12:39:58 GMT -5 kwynn said:

Jan 2, 2013 12:32:42 GMT -5 y4m said:

If I were in your situation with $375K cash available, I'd buy a property in cash. Your sister could rent from you...

Is there backstory I'm missing that makes that not make sense?

Mainly, I'm scared. The money is invested for me and has to last a long, long time. It was life insurance money.

Also, with home interest rates being like 3-4% and earning 6-8% on my money, I wasn't sure if using a large chunk of my cash reserves was a good idea or if a mortgage would be the way to go.

My monthly income sucks, while my assets are okay. I have to be so tight and careful on the day to day.

You may be earning 6-8%, but probably not risk-free (if it is risk-free, please share your secret!).

In your situation, I'd buy someplace reasonably priced that I wanted to live (not a fixer upper in a bad neighborhood), either in cash or with enough downpayment to make a short-term mortgage easily affordable on my income. Not a fixer upper. It's also an asset, like your other investments--and one you can live in, and that could possibly provide income from your sister's rent contribution as well.

[Deleted]

Could you purchase a property and not have a roommate? That way your sister's commute would not be a concern? I know it's good to have her for emotional support but it sounds like it may be difficult to find something suitable for both of you.

[Deleted]

In you situation, I would take out $6k a year for rent for the next 2 years. Find something convenient and safe for $1000-$1200 a month. Use $500 a month from that savings and split the difference for rent and utilities with your sister as you best see fit.

At the end of 2 years, decide if you'd like to buy or not.

I would probably continue meeting at Starbucks for now. I don't know what kind of business you run, but that's what I did with wedding professionals and it seemed totally normal.

[steph96]

Can't you include your interest income as income?

[kwynn]

Jan 2, 2013 12:44:51 GMT -5 cuadrado said:

Could you purchase a property and not have a roommate? That way your sister's commute would not be a concern? I know it's good to have her for emotional support but it sounds like it may be difficult to find something suitable for both of you.

Probably not---I don't have a roommate right now and it's really stretching me financially. I do hope she finds a better job someday. I don't really like living alone---I get lonely.