Possible scenario, feedback please.

S

samuroo

New member
Currently renting Portisol in Woodbury (with 3rd floor) paying below market ($3,500).  Was recently notified by owner that they may relocate and thus may want to sell the house.  The house has minimal upgrades - granite countertops, and that's about it.  Zero hardscape in backyard and linoleum flooring.  But we're pretty happy here, it suits our two little ones and our dog.  Wasn't planning on buying back in until 3-5 years from now (sold our house in 2008).

If we continue to rent, we'll be paying substantially more for something of equivalent size and location.  At 4+k rent, I'm wondering if I should try to buy the house from the owner with a 80/10/10 program (and on a 15yr loan, if they allow that combo) at a slight discount: under 800k.

If the price drops another 5-6% over the next few years, I think I'll be okay with that.  I'm a little worried about the various global issues currently out there, that if one of them triggers, housing may take another substantial dip, say 10-15%.

Any thoughts or suggestions?
 
Under $800k for the biggest Portisol is actually a good deal right now.

Can't guarantee that will be a good deal later... but we like that model the best and actually looked at the one just below it for mid $700ks.

Does your monthly outlay change that much with the financing your are suggesting?
 
if your only skin in the game is $80K and the monthly costs are about the same as what you are paying rent, then doesnt seem like a bad deal.  if you end up saving money monthly, even better. 
 
Yes, under 800k would be a good deal.  I wouldn't do it if it was priced at market.  That's what would give me the cushion for the potential 5-6% drop.

The monthly outlay on a 30yr would come close to our rent (interest deduction included), but significantly higher on a 15yr, more than equivalent rent, but worth it with the lower interest and accelerated principle payments.  Monthly outlay isn't a major concern, it's more about best use of monies in current environment.  We can afford 5k rent if we wanted to, but that just doesn't make sense to me financially.

And yes, we love the layout.  Ridiculous amounts of attic storage space and the 3rd floor serves as an uber playroom for the kids.
 
One other thing... we know you like the floorplan... do you like the area?

If it's a place you can see yourself living in for the next 5-10 years... and like you said, it's within your affordability range, it seems like an okay place to park your money for a stretch.

I'm not saying you will be able to make a profit if you sell later... but in 10 years... you can probably get your initial 10% down back.
 
Location is part of the problem.  Both our kids are pre-k (I'm fine sending them to Woodbury Elem).  But I really didn't want to settle down into a house until we were closer to high school age and make the decision then, balancing high school (is Irvine High sufficient  :p) with housing options (ie. what the Great Park's gonna come up with).  Ideally, I'd want the option to sell in 5 years without taking a major hit.  But I belong to the "house is an investment" school of thought.  At the same time, if we were "forced" to stay in Woodbury, I don't think I'd complain much.

On a side note, how do I convince the owner of what fair market value is?  Is getting an appraisal reliable?  Do appraisers count distressed sales?
 
samuroo said:
Location is part of the problem.  Both our kids are pre-k (I'm fine sending them to Woodbury Elem).  But I really didn't want to settle down into a house until we were closer to high school age and make the decision then, balancing high school (is Irvine High sufficient  :p) with housing options (ie. what the Great Park's gonna come up with).  Ideally, I'd want the option to sell in 5 years without taking a major hit.  But I belong to the "house is an investment" school of thought.  At the same time, if we were "forced" to stay in Woodbury, I don't think I'd complain much.

On a side note, how do I convince the owner of what fair market value is?  Is getting an appraisal reliable?  Do appraisers count distressed sales?
Click to expand...

1. Do not try to "convince" anyone. Back yourself with facts.

If you like, you can use my spreadsheet that shows all of the closed sales for Irvine, and filter/slice/dice any way you choose.  That's one of the reasons I keep updating it...

2. Since you already have the property picked out, I'd be happy to provide you with any of the forms you'd need at no cost.
If you work directly with each other, both you and the seller would benefit by not paying RE commissions of (~5-6% savings)

3. I suggest contacting Soylent Green if you are considering an 80-10-10 program. I think his company has a pretty attractive option on it.

If you still can't work it out, it's probably not the right deal for you. :)

Good luck in any event.
-IrvineRealtor

edit to add: The excel sheets are now updated through 5/5/12. Buen provecho!
 
A SFR in zip code 92603 will hold the value much better than a house in zip code 92620, if you are worried about future price plunge.

samuroo said:
Currently renting Portisol in Woodbury (with 3rd floor) paying below market ($3,500).  Was recently notified by owner that they may relocate and thus may want to sell the house.  The house has minimal upgrades - granite countertops, and that's about it.  Zero hardscape in backyard and linoleum flooring.  But we're pretty happy here, it suits our two little ones and our dog.  Wasn't planning on buying back in until 3-5 years from now (sold our house in 2008).

If we continue to rent, we'll be paying substantially more for something of equivalent size and location.  At 4+k rent, I'm wondering if I should try to buy the house from the owner with a 80/10/10 program (and on a 15yr loan, if they allow that combo) at a slight discount: under 800k.

If the price drops another 5-6% over the next few years, I think I'll be okay with that.  I'm a little worried about the various global issues currently out there, that if one of them triggers, housing may take another substantial dip, say 10-15%.

Any thoughts or suggestions?
Click to expand...
 
Thanks for the suggestion.  But the only reason I'm considering the purchase is because of the commission free reduction that IR mentioned.  Otherwise there's no way I'm buying now - too much downside risk with practically zero upside.
 
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