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Fuel

jennifer / February 18, 2004 11:21 AM

i'll be renting until i die.

amyc / February 18, 2004 11:23 AM

We rent, for now. But after falling in love with (and nearly buying) a friend's place last month, we've made it our goal this year to save for a down payment on a place of our own. I got the house lust real bad.

Naz / February 18, 2004 11:26 AM

Rent. Due to my sporadic nomadic tendencies, it's going to be a while before I buy a place. It's a strange one - it seems quite a few people I know have just bought or are in the process of buying their first place. The thought never even crossed my mind until I met people who owned their own places. It seems nice to own though. I just haven't found the place I want to settle down at.

emily / February 18, 2004 11:33 AM

We rent our living space, and until we pay off our wedding (word to the wise: elope) we will have to continue to throw our money down the rental tubes.

That $2 million house on the lake in Evanston will just have to wait.

miss ellen / February 18, 2004 11:45 AM

I'm buying a place. I work in real estate, and it just didn't make sense to continue renting with these low mortgage rates. I'd rather invest money in real estate than the stock market, so buying a place serves a few different motives.

But, on the flipside, I don't really consider this settling down. This isn't my dream place, but it is a place I can afford in a perfect location. And, it's a place that I could easily rent in the future, if that need arises. I think people need to realize if you can save up a little cash, it doesn't have to mean you're staying here for the next 15 years...

A few beautiful words: no more security deposits! Just realized that one the other day & I was quite excited :)

Benjy / February 18, 2004 12:34 PM

I'm renting now... but renting a condo my parents have owned for years as an investment. So at least I'm paying off their mortgage rather than some slumlord's and they cut me a bit of a deal on the rent, which is good considering the sticker shock compared to rents in Atlanta, where I lived before moving back to Chicago.

Kenan / February 18, 2004 12:57 PM

If I buy anything, it won't be in Chicago. Too expensive in the city, too damn suburban in the suburbs.

Onid / February 18, 2004 1:04 PM

I was renting until about 2 years ago when I moved back in with the parents to pay off massive debt but now that I have managed to pay it all off (Zero balances, baby!!!!) I am looking to buy a place. I was thinking of renting again because I kind of felt that buying a place is so...final. I had this idea that once I make a decision it is etched in stone and I can go nowhere else but I realized that I could buy a place I like for right now and maybe rent it out later and move somewhere else. While this might not be a profound revelation for anyone else it took me a while to reach it....

Andrew / February 18, 2004 1:47 PM

I own. After living in three apartments in five years and being forced to move on twice due to rent increases, we came to the realization that we were paying more in rent than we would in mortgage payments. After lining up another rental (just in case) we called a realtor and found a place. We love our condo, although we're rapidly outgrowing it and will be looking to move toward the end of the year.

Kenan, it may be expensive to own in the city, but with the interest rates as low as they are right now, buying a place is about the same as renting on a cost-per-month basis. The only thing that should hold many people back, assuming good credit, is the down payment, and even that can be gotten around. Housing may be expensive in the city, but real estate generally appreciates in value (or at least holds steady). It's not like buying a car, where you're out several thousand when you sell it a few years later.

Jake / February 18, 2004 2:01 PM

We owned in Michigan, but we've been renting since we moved to Chicago. There are a lot of good things about renting: if your pipes break, you call your landlord and he deals with it, for example. You're paying for a service when you rent; you're not just throwing your money away like everybody's parents say.

Andrew, you claim that "buying a place is about the same as renting on a cost-per-month basis." Is that true? I can't imagine being able to afford to buy anything near the Paulina brown line stop for what I'm paying in rent unless I were to put about $150,000 down first...

Got any links to any handy mortgage calculators?

Naz / February 18, 2004 2:16 PM

It undoubtedly varies from neighbourhood to neighbourhood, and how long you search for. My friend owns a building (3 apartments) more or less right across from the Empty Bottle which he bought for about 200k.

Same friend and his fiance have condo is Rogers Park for about 100k.

Though once in a while, you luck in on a gem. The same friends recently bought a house right on Wicker Park itself for an amazing deal - the catch? It's a fixer upper but livable for sure, they've already moved in. I can't name the price here but in contrast the place across the street was 1.3 million and I know they bought their house for significantly less than that - I'd venture a third or quarter or so.

I own vicariously through friends...

Cinnamon / February 18, 2004 2:28 PM

Jake, what we pay for our mortgage is about what we would pay to rent the same place in our neighborhood. We paid our mortgage down so that we own 20% and then refinanced which meant that our payments dropped by about $300 a month. Sure, it was tight at first and scary, but I highly recommend it. It's so much less stressful. We're also lucky to live in a newly rehabbed building that had a warranty on most of the large items.

The way we managed to make it work was by getting a place with a 5-15-80 mortgage. Which means that we put down 5% and got two mortgages-- one for 15% and one for 80%. Check out "Mortgages for Dummies" and then call the bank where you have your account. They should be willing to give you an estimate of what you can afford for free and with no strings attached. You might be surprised.

shechemist / February 18, 2004 3:02 PM

I owned in seattle and I rent here. I'm pretty sure once I am back out of school and working again, I'll start looking for a place. well, that is unless my partner-in-crime decides to buy something before I finish school.

When I bought my place in seattle, I never thought of it as being tied down. I was able to sell my house in a week for much much more than I paid for it 2 years before.

dawson / February 18, 2004 3:27 PM

i will buy when i am able to move somewhere where monkeys roam freely like squirrels do here. until that day, i rent.

Jake / February 19, 2004 7:51 AM

Thanks for the tips, folks. Very informative. Any advice with realtors? Are there any online automated things where you type in your criteria and it mails you when places are listed that match?

jmo / February 19, 2004 9:10 AM

Sorry for the long post. But these are things I wish someone had told me when I was in my 20's.

I bought when I was 32 years old. Snapped up a 2 bd/2 bth condo in Southeast Evanston on the Purple line 6 hrs after it went on the market. In 1998, that was $179K. Bought on a 80/10/10...10% down, 80% mortgage, 10% home equity. Then I rented back to my roommate and paid down my home equity loan. We both paid less per month than where we were renting before and had more space.

Five years later, the DH and I have bought a fixer-upper(4 bd/2 bth) in North Park off of the brown line for $8000 LESS than we sold the condo. (SE Evanston went upscale). We got rid of the monthly condo assessment, kept the lovely tax breaks, and are sinking the money we made into the house (equity plus profit). Plus we'll need to raise funds to finish it, probably through a home equity loan. It's a mess right now, but it's ours.

Rent is, well, rent. Straightforward.

Mortgage payments can be close to rent if you buy wisely. PLUS you get to take all mortgage interest OFF your TAXES! Property taxes? Also deductible. Whoo hoo! Tear down walls, put up new light fixtures. Change and rearrange. And build equity. (House parties for everyone!!!)

That first step is SCARY! ("Am I committing?") But once you take it, you get this strange high...can't explain it.

For fun, pick a property you like from the Chicago Tribune Homes/Condos for sale site. (Note: the listed price and what it actually sells for will probably be different--the seller lists higher to negotiate down). Look at past sales in the neighborhood (also Chicago Tribune) to get an idea of actual sale prices.

Use the online service at the Assessor's site to look up the address of the property and its yearly property taxes.

If looking at a condo, don't forget to add the monthly condo assessment to your costs. With condos, you only carry insurance on what is inside your unit (like rentor's insurance) and the association pays for liability insurance building's insurance, water, repairs to the common areas/ext. structure, maintenance of common areas and lawn. With a house, you get Homeowner's insurance on the whole house. You pay all utilities and are responsible for maintenance. But no assessment! :)

Try a few home purchase calculators (they aren't all created equally)...here's one. Plug in the following for a conservative estimate:

- Assume 3-4%/yr for a conservative appreciation rate (it will depend where you buy & the economy)
- 30 year loan (fixed)
- 5.625%
- No discount points
- Other loan costs (bank and gov't fees) $2800 - $3400 (which is bundled into your loan)--it's higher in Chicago than Quicken's estimate.

This should get you started on your research regarding homeownership. Get a buyer's agent and have them show you a few places. It's free and it's fun, even if you don't buy. And you might get bitten by the homeowner bug.

brian / February 19, 2004 10:26 AM

Owning a place might save you money, or help you build equity, it's an investment, ok.

But if you have a house and you don't have a safety net to fall back on if something happens at work, you'll crap your pants. It's scary.

Plus, fixing your own toilet is a pain in the ass; fixing leaks in the basement is a pain in the ass; getting a new roof on your garage is a pain in the ass. Etc.

Having a house is really cool. But it changes things. And you have to be prepared for that.

Plus, the appreciations we've seen in the past few years can't continue forever. Remember that stock market bubble a few years ago? It seems possible for housing now.

future home-owner / February 19, 2004 12:37 PM

"But if you have a house and you don't have a safety net to fall back on if something happens at work, you'll crap your pants. It's scary."


That's silly. The house IS the investment. If you fall on really hard times you sell the house or rent it out and move someplace smaller until you can get back on your feet. Plus the money you save and equity you build on owning your own home will help pay for someone to fix the toilet and the roof. Also since you are paying to fix it and not a landlord then you're more likely to have a quality job vs. the "just patch things up for now" job that most landlords do to their property. Not to mention home ownership is better for neighborhood stability. The dot-com burst is not really similar to the housing market at all actually. Home value is based on the quality of the home and its location. It takes a lot longer for a neighborhood's value to depreciate than for a dot-com bubble to burst. In this day and age it would take a pretty catastrophic event to destroy a neighborhood. Can you see the property values in Lincoln Park going down anytime soon? Didn't think so.

brian / February 19, 2004 4:28 PM

future home-owner:

1. How many people can actually afford real estate in Lincoln Park?

2. Can I see values going down in Lincoln Park? Absolutely. If interest rates were to go up, the value of what people can afford will go down. And if you try to sell your house you might not be able to get what you paid for it. There's no law that says property values automatically increase; it's just happened that way (at an insane rate) for the past 5 years. But like anything else, it will end.

Property bubbles are completely possible - just ask the Japanese or English.

3. I didn't say "Don't do it", I said "Think about it." Because it's totally the thing to do these days, but it might not be for everybody.

Woof / February 19, 2004 4:59 PM

Bought our first home 2 years ago (I am 38) and I really wish I would have done it earlier. But, hey, I finally am a home owner (its a 3 bedroom victorian in Portage Park area) and its good to see those monthly payments go towards something. If you can buy something when you are in your 20's, do it, do it, do it. Buy, hold, then cash out when you get sick of the city (in your 40's). Take all that equity and buy some serious land in MI or WI.

jmo / February 19, 2004 8:21 PM

I know this is going to sound nuts. But I've found, since I've been a homeowner, that I actually like to learn fixing things.

When I got into my first condo and a window broke (in winter), I freaked. "Who do I call? Who do I call?" Called my neighbor. He gave me the number of the window guy.

They actually sell BOOKS on how to fix things in houses. And there are websites. And message boards. And neighbors. And family members.

Learning how to fix a banging radiator for a steam furnace was one of the most satisfying things I have ever done. But, I am a sucker for learning how to put puzzles together. If you want to get a little confidence, join a Habitat for Humanity project for a day. Or, better yet, go on a global build with HFH Global Villages. They hand you a hammer and teach you how to put up a wall.

My rule of buying property has now evolved into this (for the time being...who knows what the next big thing will be). Beat Starbucks into the neighborhood. Buy there before they get there. In the last few years, housing prices following Starbucks around Chicago has been called "the Starbucks effect."

If you have family who will lend you part of the downpayment, invest in a 2-flat. Live in one unit and rent the other. The bank will factor in the one unit as income. Then turn it into an interesting single family home later. Many of the brownstones in Old Town and Lincoln Park evolved this way. Or, get together with 2-3 friends and form a co-op. Buy a 2-3 flat. All live in different units. Have it written into the contract that you can buy each other out if one moves (and then rent that unit.)

I don't feel Lincoln Park has been affordable since the late 70's. I rented there from '91 to '98 because I lucked out and got a strange deal on an apt in a brownstone. Paid $450 when I moved in and was paying $550 when I moved out. They raised the rent to $1050 for the poor person after me.

You want to live with bohemian/artist/musician crowd anyway, though, right? There are still great and affordable cool, interesting, and diverse neighborhoods left in Chicago. Albany Park, North Rogers Park, West Logan, West Ridge (aka West Rogers Park), Portage Park, Roscoe Village, North Center, Jefferson Park. And that's just on the northside. There is still West and South.

Sadly, when a neighborhood skyrockets in price, it loses its uniqueness and diversity. The affordable neighborhoods are often more interesting and fun.

Jeff / February 20, 2004 12:27 AM

jennifer wrote:

i'll be renting until i die.

Shit yeah, I feel that.

I find it helps if you drink a lot and lie to yourself about your chances of winning the lottery.

Jake / February 20, 2004 9:42 AM

This has been a very interesting and informative thread.

(I just wanted to say that.)

Pete / February 20, 2004 11:36 AM

I own, but were it not for the generous mortgage interest tax deduction from Uncle Sam, I'd rather rent. I hate having to be responsible for upkeep. I've got plenty of much more enjoyable ways to waste time and money.

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