Stupid to think about buying a home?

[Bcp1984]

So here it is..... my big proposal that I have been thinking about for SOME time now...

With houses nearing the bottoming out point, would it be wise to look at buying a home in the area of the country (GA) that we are certain we want to live in later on down the road? Let me explain..

Currently stationed in Germany, we rent our home here because the governement pays for it. We will not return back to states until at least Feb 2013, if I do not get another overseas assignment, and then its likely it wont want be where we want to be in the states.

We have been saving a considerable amount of cash for a downpayment on a home..

Would it be foolish to even ponder buying a home now that A) we may not live in for years, B) we would have to rent out and have someone maintain, and C) pay taxes and upkeep on in order to get a house in our price range at a considerable discount in the economy?

What we are looking for is nothing extravagant 120,000-140,000 at the most which will buy a modest, new home in th 1600 sqft range.

Should we even be thinking of something like this or am I fantasizing? If you want the numbers (although that wasnt the point of the question)

One income: approx 57K Net (after TSP deductions as well)
Rent: 1350/month (Germany
Debt: car 24k

Bills
Electric: 80/month
Cell phones 180/month
Internet 60/month

Assets:
50K in savings
10.5 in TSP (contribute 20 percent of base pay)

Let me know you see it

Brandon

[SavingAdvice]

Renting out it might be good but make sure the rent will pay for all costs like HOA, property tax mortgage insurance etc.

[maynard]

I personally would not want to deal with the financial burden and general headaches of owning a home from a distance. You rely 100% on others to manage everything. Weather thats a property manager or family member, it would still surley be headaches and a cost involved for a prop manager. Not to mention property taxes.

In my area i personally see a huge surplus in exactly the type of homes you describe. They are almost literally a dime a dozen. I also dont see the middle class growing hugely in the next 2 years, so these homes will continue to be super affordable for at least the next couple years.

With all that in mind, i would personally keep socking away money and keep building up that down payment fund with the intention of buying when you come home to the states.

I see your idea, but i also see it as you gambling several thousand dollars in property taxes and betting you will come out ahead because home prices and interest rates will go up.... and they will. But i really dont think you will come out ahead. I think you would be lucky to break even.

Just my opinion of course. Thank you for serving too!

[krantcents]

So here it is..... my big proposal that I have been thinking about for SOME time now...

With houses nearing the bottoming out point, would it be wise to look at buying a home in the area of the country (GA) that we are certain we want to live in later on down the road? Let me explain..

Currently stationed in Germany, we rent our home here because the governement pays for it. We will not return back to states until at least Feb 2013, if I do not get another overseas assignment, and then its likely it wont want be where we want to be in the states.

We have been saving a considerable amount of cash for a downpayment on a home..

Would it be foolish to even ponder buying a home now that A) we may not live in for years, B) we would have to rent out and have someone maintain, and C) pay taxes and upkeep on in order to get a house in our price range at a considerable discount in the economy?

What we are looking for is nothing extravagant 120,000-140,000 at the most which will buy a modest, new home in th 1600 sqft range.

Should we even be thinking of something like this or am I fantasizing? If you want the numbers (although that wasnt the point of the question)

One income: approx 57K Net (after TSP deductions as well)
Rent: 1350/month (Germany
Debt: car 24k

Bills
Electric: 80/month
Cell phones 180/month
Internet 60/month

Assets:
50K in savings
10.5 in TSP (contribute 20 percent of base pay)

Let me know you see it

Brandon

There is no easy answer. First, you should break even which means the rent should cover everything including the management fee. That is real hard to do, it generally means a higher down payment. Second, where would you buy it? Your situation is vague, unless you pick where you want to live when you get out of the service. If I were you grow your savings which will give more choices when you get out.

[cjscully]

So here it is..... my big proposal that I have been thinking about for SOME time now...

With houses nearing the bottoming out point, would it be wise to look at buying a home in the area of the country (GA) that we are certain we want to live in later on down the road? Let me explain..

Currently stationed in Germany, we rent our home here because the governement pays for it. We will not return back to states until at least Feb 2013, if I do not get another overseas assignment, and then its likely it wont want be where we want to be in the states.

We have been saving a considerable amount of cash for a downpayment on a home..

Would it be foolish to even ponder buying a home now that A) we may not live in for years, B) we would have to rent out and have someone maintain, and C) pay taxes and upkeep on in order to get a house in our price range at a considerable discount in the economy?

What we are looking for is nothing extravagant 120,000-140,000 at the most which will buy a modest, new home in th 1600 sqft range.

Should we even be thinking of something like this or am I fantasizing? If you want the numbers (although that wasnt the point of the question)

One income: approx 57K Net (after TSP deductions as well)
Rent: 1350/month (Germany
Debt: car 24k

Bills
Electric: 80/month
Cell phones 180/month
Internet 60/month

Assets:
50K in savings
10.5 in TSP (contribute 20 percent of base pay)

Let me know you see it

Brandon

I was a long distance landlord once and I don't think I'd do it again in the foreseeable future. There are enough things to deal with when you own a rental property in your own area. If it's in another state or another country you have to have someone you can really trust to manage the property for you and deal with all those things. That can be difficult. A completely trustworthy property manager could make it feasible for you to buy something now (assuming the property would have a positive cash flow after all costs of ownership including debt service are paid). If you don't have one or can't find one, you're better off waiting.

[disneysteve]

With houses nearing the bottoming out point, would it be wise to look at buying a home in the area of the country (GA) that we are certain we want to live in later on down the road?

You shouldn't buy a house based on economic conditions. You should buy a house based on it meeting your long-term needs. Do you want to be an absentee landlord? You are talking about buying a new home but it won't be new anymore when you take possession of it. Would you rather build up savings and buy a new home when you are ready to move in, not one that has been worn down by the renters?

I'd vote no on this deal. JMHO.

[SavingAdvice]

Buying a home to rent there is a lot of up keep and headache, I would wait till your in the states at least.

[TBH]

I also think you should wait. If you're the kind of person who'd want a new home, you will not be happy with a place made shabby by renters.

I think you should just focus on doing your job now and keep saving. Even if the price of houses does go up slightly, the extra time you have to save will hopefully allow you to be able to afford something nice when you're ready to buy.

Trying to time the real estate market is about as difficult for the average person as trying to time the stock market. I sure don't think I'd be able to do it, and I've been reading/thinking/obsessing about financial stuff and real estate for 15+ years.

I agree with DisneySteve. You should buy a home when it's the right time for you, not when it's theoretically the right time in the real estate market.

[abraham.a]

renting is good but , it goes with your luck to , if you have a trusted retailer or found a good one who rents your home and also take care of it , like its own , that could be one of the best investment of your life .

[Bcp1984]

Thanks everyone. I dont think i would have ever actually gone through with it, I guess it was more of a pipe dream than anything. But I wanted to get others opinions on it before i completely ruled myself out. Hopefully in another couple of years we will be able to have about 25K more saved up for a down payments as well, so that will negate housing inflation if there is any, to some degree.

[bjl584]

A house really shouldn't be thought of as an investment. It's a place to live. Buy a house when you are financially ready to do so. Current interest rates, housing prices, or the economy shouldn't matter. When you have at least 20% to put down and are able to pay a 15 yr fixed mortgage, then you can buy.

I wouldn't buy something now just to rent it out to someone else. Wait until you get back to the states, then rent something until you save up enough of a down payment and are able to find something suitable.