Condo purchases/homeownership/etc - Page 2

Sounds like a great investment. Fundamentals are called fundamentals for a reason. If you can't make the mortgage payment by renting it out after putting 25% down... and the outlook for near future gains is marginal at best... that is a bad idea. Renting is hardly throwing money away; you get shelter for your expense. What do you think of the interest you pay to the bank? Isn't that just as wasted? Why get caught in a 30 year debt, right near the peak of all time price to rent ratio, when you'll be stretched and can't pay the mortgage with someone else's rent? Look at the overall historic returns of housing... it is hardly better than 5% and sometimes figured to be nearer to 4. A mortgage is a forced savings plan for people who can't invest on their own.

Have at it then. It's *always* a great time to buy! Support your local realtor, etc, etc.

Age 21 is WAY too young to be in big city real estate, esp. if you have no other assets. Do you have a job with a 401K? Max out your pre-tax 401K contributions and you'll save on taxes.

There is no reason to get hung up about a mortgage deduction unless you're making well over $100K per year. Tax phobia leads people to make lots of bad decisions which cost them more in the end.

Rent is not the only way to waste money. Cars, food, booze, entertainment, clothes, etc.

Real estate is over.

I don't understand something. Does Chicago has some realy lenient homeownership laws?
"Money paid in interest is tax deductible" it is only deductible if it's your primary residence my friend. If you are renting your property and deducting interest from your taxes the IRS will call you.

Probably a good idea but I wouldn't consider it a deal breaker.


Both may become issues...especially starting a new job. If there is any advice I can give you it is that the first thing you should do is to get a hold of a mortgage broker (not banker) and get pre-approved (not pre-qualified) for the loan you want ASAP. This person will walk you through all of the steps you need to take. For more info about credit/mortgages you can look here or do an online search or PM me if you have specific questions.


It's a buyers' market everywhere including Chicago. No one can predict what will happen in the future but the Chicago area in general and especially upper-scale locations like the GC and Oak Park (where I'm at) are very solid. You should be able to get a great deal if you don't rush it. Keep looking for those diamonds in the rough that have been on the market for a long time. People here were used to getting 20% annual returns and priced their properties accordingly...well it just isn't so anymore and now they've been paying double mortgages for 6 mos+ and just want to get out.

Besides getting pre-qualified, I might suggest finding a self-service or flat-fee broker if you are doing most of the legwork yourself (finding your own property). Or at the very least, negotiate with a Buyers Agent a set fee or commission in a range of under 2%. Some I'm sure will do it for as little as 1% if you call around. You might look into here or here (no affiliation). Let me know if you can't find someone and I might be able to help you out. Best of luck.

Yes, please PM me any time.

Just to clarify though, when I say get a buyer's agent, what I mean is don't call to see a place and end up using the seller's agent. I'd call a discount broker or if that doesn't work out, Re/Max (because those agents are independent and can negotiate without interference from their sponsoring brokers). Basically you want to say something like this "I'll be buying a property but I'm using the internet (or whatever) to find it myself. I might need you for a couple (5 or 10 or however many) showings but that's all I need. My lawyer and I will handle the rest. I want to save as much commission as possible and was wondering what you would charge?" I'd throw a number out like $2,000 or something (which is pretty damn good for 5 or 10 showings). 1% or 2% is saving you money too (the buyers end of the deal will generally be 2-3%). So if you can get an agent to do it for say $2,000 on a $250K property (@3% is $7.5K buyer side) you will save $5.5K (that you will walk out of the closing with).

And this is important make sure to let your lender know you will be doing this because some will not let you walk out of closing with the money but will make you apply it towards your down payment.

The key is that you have to do the legwork yourself and stick to the 5 or 10 showings or whatever you agree upon with the agent you're dealing with. You can still call the listing agent and have her show you the property but you need to tell her "I'm working with an agent already and they can't make it today" or whatever and 80% of the time you'll get to see the property.

I'm kind of writing this fast and am probably not too clear so I'll do a quick recap. On a RE transaction if the commission is 6% (and in our market it is 5-6%) the Seller pays his Broker 6% when the house is sold. The Selling Broker then gives 1/2 of that to the Buyer's Broker (3%) for finding a Buyer. You want to keep as much as that 3% for yourself (because you're doing all the legwork). In a typical Broker/Agent relationship the Buyer Agent will receive 1/2 of the 3% from the sponsoring Buyer Broker who keeps the other 1/2 of the 3%. That's why it's important to go to a broker or agent who does not have to split the 3% with a sponsoring party/broker (like Re/Max or a discount/independent where the agents pay a set office fee every month and get to keep the full 3%).

When you hire your agent (and it would probably be a good idea to pay them 1/2 or full upfront) you are essentially negotiating a set fee or rate in return for the Buyer Agent's (aka cooperating) commission (as listed in the MLS). The person you hire will be able to tell you what it is (as offered in the MLS) when you are choosing your property. So you will know that if you buy Property A you will get 2.5% back or if you buy Property B you will get 3% back and so on. Essentially what will happen is at closing the title company will take the funds and disburse the 6% to the appropriate parties and you will get a check for whatever the cooperating commission is. It is also referred to as a Buyer's rebate (and again, I strongly suggest giving your lender a heads up about this).

I hope this is making sense because I gotta run. I'm out of town for the weekend but will probably check in later today.

The obligatory fine print: Real estate commissions are negotiable and any numbers or percentages have been used for illustrative purposes only. I am not a lawyer and take no responsibility for comments made in this post and recommend anyone purchasing real estate to seek advice from a qualified attorney.

I talked recently with a mortgage broker friend.
He tells me that the subprime market has all but dryed up.

You hear constant talk about the back end collapse of the real estate market, i.e. bad subprime loans, but you don't hear much talk about the front end, what effect these type of loans have had in driving the market in the first place. Without them, I suspect, the chance of the market rising rapidly anytime soon is probably not that great.

It's that type of loan that has made junk real estate like a basement apartment with little light and bars on the windows viable as a commodity.It probably would have been a good flipper. Now, I think you could low ball it without the fear of insulting the owners. If they don't like the offer, they're only going to say ,"No".


All "Location, location, location" really means is, "Pontenial, potential, potential."

What was yesterday's potential may not exist today.