Posted by chie on November 13, 2005 at 09:44:50:
Thanks for your advice, John. I was thinking of the same thing but my siblings think I’m throwing away so much money for my rent. Now I feel better with my decision.
rent vs buy (hyde park/kenwood, chicago) - Posted by chie
Posted by chie on November 12, 2005 at 12:01:58:
Just finished grad school and am considering buying a condo at hyde park/kenwood, chicago. Problem is I have a lot of debt- 16,000 student loan (paying 125/mo) and 15,000 credit card debt (presently o% interest so paying approx 250/mo). I currently rent at 1050/mo. Income: 80,000/yr. Will probably just have enough cash for closing cost. No downpayment. Is it worth buying or waiting a few more years? Any creative financing you can advise?
Re: rent vs buy (hyde park/kenwood, chicago) - Posted by John Corey
Posted by John Corey on November 12, 2005 at 15:04:12:
Chris,
Buying at this stage might not be the best advice.
Something that could be considered is a lease/option deal but even then I question the logic.
You have a good income. Prices are starting to stabilize in some markets and condos are normally the first to be impacted. Hence if you stay as a renter you might not see values rise faster than you can save and earn. If you pay down the debt then your credit will improve. You can save for a down payment.
Now, if you really have to buy now…
Consider getting a roommate so you can improve the cash flow after you buy. Also accept that it might be a long time before you buy if prices go flat. Rates are going up and in some markets (or sub-markets) the number of new condos coming onto the market is hitting appreciation pretty hard.
Look to roll the zero % loan to another one when you can. Continue to pay down the loan you are paying interest on. That will be the best use of your monthly funds. General rule - focus on the debt with the highest interest rate.
The housing craze of the last 5 or so years is not the norm. Hence jumping is not not something everyone has to do just to get started.
Consider buying a rental that cash flows while still renting in Chicago. That can be a better deal economically for people who are in high priced areas but are willing to invest outside the area.
John Corey
Chelsea Private Equity, LLC