Conference back40::soapbox

    
    I remember this from 20 years ago, and all I can say is how glad I
    am that I struggled awhile to own what I live in.  No matter how
    humble, this is the only way to live, in my opinion.
    
    The value of houses is in the location.  You can fix anything else.
    Concentrate on that - is it good, will it stay good.
    
    It's not now an interest rate low (like a year or 6 months back),
    but don't let it wory you.  You can fix that, too.
    
    The most important room in a house is the kitchen.
    
    Check out the sewerage system, the heating plant, the bathrooms, too.
    
      Good luck !  Remember that if you "wait till you can really afford
     it", time passes by for a long time.
    
      bb

    I disagree. I reckon if you can`t afford it,don`t do it. 
    
    I`ve seen too many people having their lifes made a nightmare from hell
    `cos they can`t keep up with their mortgage repayments,or `cos of
    negative equity etc.
    
    Take me for example - I rent my 2nd room in my 2 bedroom apartment to a
    friend of mine which means my mortgage is effectively 60 quid a month.
    Mainly `cos I save 10,000 pounds to start with,reducing the monthly
    repayments.
    
    Pretty good,eh?
    
    

    re: Note 403.0 by TROOA::TRP109::Chris
    
    > My problem is that I don't make enough to afford a place by myself so
    > I will have to get a house with a basement apartment and count on the 
    > rent to help with the mortgage.
    
    This is your first mistake.
    
    Irregardless of everything else (excellent location, style, condition)
    if you can't afford it, don't do it.  You may not be able to get
    a mortgage based on "rental income".  Often times folks don't consider
    this, unless you can document that the person has been there for a
    long time and is not going to move out once you move it.
    And what if the person is a dingdong?  You're in Canada, but here, it's
    quite easy for some jerk to decide they ain't gonna pay rent anymore
    and hold up in your house so you can't get a new tenent.  After about
    1 year of legal manuvering, they get physically removed from the 
    premises, and you're up over yer arse in debt.
    
    ... now, what if the person falls down the stairs...?
    
    There's a difference between struggling, and asking for trouble.
    It's a judgment call, but you'll have to deal with the outcome
    (literally.  What if I moved in and am hard of hearing and work 3rd
    shift and have my tv turned UP REAL LOUD at 3am?)  "Hey... they pay the
    rent".  Then I loose my job... "hey Chris... times are tough... can
    you spot me a month or 8?  I'll pay ya back... trust me...".
    
    MadMike 
    A lucky landlord at the moment.                           

>    Irregardless of everything else (excellent location, style, condition)

irregardless?!  Blech!

Chris.

    i'm getting my booleans in twist  8^{
    
    ric

    Lenders will discount the value by 20-30% if they count it at all as
    this is the conservative likelihood of a vacancy.  If you must count on
    the rental to help pay the mortgage, I would think twice as it is
    risky.  The one and only rental property I had ran about 80% occupancy. 
    The 20% was enough to mean the difference between meeting the tax
    payments and providing for repairs versus having to kick some in.  Best
    of luck in any event.  Being a property owner has it's rewards.  
    
    Brian

    Move to the big city, get an apartment with a view and forget
    single home ownership. It's a pain....IMO.
    
    ...Tom

    What will you and Nancy do?

    Whatever Nancy wants, Nancy gets!!!
    
    ...Tom

    She's a lucky woman, yes she is.

    Try posting your note in TALLIS::REAL_ESTATE.

    RE: .0
    
    I say go for it.  If it helps turn the cycle of renting into owning, its
    a good plan.  At some point you'll have some equity in the property
    which you could even use to purchase a different/better home.  You
    could even keep the property and rent out both the upstairs and
    downstairs.  Whatever you think about the situation, it's not forever.  
    Chances are in a few years, you'll be able to make a change of your
    choice--including selling the propertey and buying a different single
    family home or booting out the renter and remodeling the downstairs
    for additional space for yourself.

    Don't worry about renting.  If you take some reasonable precautions
    in screening your tenants, you can generally avoid any major hassles.
    Do check on local ordinances/laws regarding renting.  Most cities
    have something like a "Landlord-Tenant Relations Office" or "Fair
    Housing Office" that will be happy to provide you with a free copy
    of applicable regulations/restrictions.  Often they are written from
    the viewpoint of the tenant, but that's okay you can figure it out.
    Just keep good records, be honest, and don't discriminate.  Even then
    their may be exceptions in your situation.  At least
    here in the States, many localities even have exceptions for 
    discrimination laws for owner-occupied properties with less than
    four units.  For example, here in Colorado Springs with the situation
    you described you could refuse to rent to someone because of sex or
    religion.  Normally, a huge no-no that will put you in jail and get
    you sued out of existence.
    

    RE: .2

>I disagree. I reckon if you can`t afford it,don`t do it. 

In general, if you can't afford it the mortgage company won't lend you
_their_ money.  Run the numbers.  If you think you can, and the mortgager
says you can, then listen to youself not to others.  Are there risks
associated with owning vs. renting?  Sure.  But you take risks everyday,
driving to work, eating food at a restaurant, living, etc.  Millions and
millions of people own homes without problems.   Millions of people own
rental properties because the benefits outweigh the problems.


RE: .3
    
>  This is your first mistake.
>   
>Irregardless of everything else (excellent location, style, condition)
>if you can't afford it, don't do it.  You may not be able to get
>a mortgage based on "rental income". 

At least in the US, most mortgagers will credit 75% of the "current
documented" rental income towards your income.  Not a problem, even for
FHA and VA loans.  All you need to do is provide them with a copy of the
lease showing the monthly/annual payment amount.


RE: .3

>...but here, it's
>quite easy for some jerk to decide they ain't gonna pay rent anymore
>and hold up in your house so you can't get a new tenent.  After about
>1 year of legal manuvering, they get physically removed from the 
>premises, and you're up over yer arse in debt.

Again check *your* local ordinances.  In some circumstances/locals it can take
a while to evict people.  In others you can move them out within a week
or two.  Here your best protection is to do your homework up front and
don't rent to a deadbeat.  Do credit checks, check employment and previous
housing references.  Also, collect as large of a security deposit as you
can up front to help defray these potential misfortunes.  Don't let them
move _anything_, not even a gum wrapper, into the place until they have 
paid you one full month's rent and the full security desposit in cash or
the equivalent.


RE: .3

>... now, what if the person falls down the stairs...?

Simply buy appropriate insurance for your situation.  See your insurance
agent.


Good luck,
Dave    

    
    Go for it.  I did.  Just make sure YOU know how to start the weed-eater
    and lawnmower first.

    	Can't afford the larger mortgage?  Then make more money!
    
    	
    
    
    	Half -  :^)
    
    
    
    	How much rent could you get for the apartment yuou plan to
    	occupy?
    
    	Perhaps you could occupy the smaller apartment and rent out the
    	larger one until your financial situation improves...
    
    	Maybe you CAN make more money after all!

Actually in this house, the basement apartment is much nicer than the 
upstairs - totally newly renovated, lots of light, and 5 new appliances. The 
house is very near one of the University of Toronto campuses and two 
hospitals so I figure there will always be students or nurses/hospital staff 
looking in the area.  I have seen about 20 houses and this apartment is far 
superior to any of the others, so I don't really think I'd have to carry the 
rent myself for too many months.  I will have enough in the bank after making 
my downpayment to pay the entire mortgage if I have to for 3-4 months, but it 
still makes me nervous.  However, I have been in and out of my Dad's house a 
few times now and as I near my 33rd birthday the time is long past for 
leaving "the nest".  I've lived at home since returning from Australia 4 
years ago so I could save up the down payment.  The interest rates are pretty 
low (just under 9% for a 6 month variable) and the house prices are very low. 
I figure it's kind of a now or never deal.  I *could* afford a condo or 
townhome without needing the extra rent, but you may recall I have a rather 
big dog that I luv lots, and although my Dad is begging me to leave Taz with 
him, I can't stand the thought. I was actually hoping to wait until the fall 
before I buy because the interest rates are supposed to fall some more, but 
this house is one of the best I've seen.  The provincial government just 
called an election for the beginning of June - maybe the rates will come down 
after that, but who knows? Oh well... my Dad is going to co-sign on the 
mortgage with me, and he will see the house for the first time tonight, so 
this might all be a bit premature.   I'd love to put in a "lowball" offer 
with a 90 day close and "test the water" so to say.

    
    Watch out for...
    
    
    ...Old cast iron plumbing...especially in the TO area...can cost you a
    bundle if you have to replace all your lines with copper in order to
    obtain enough water pressure to take a shower.
    
    ...Water stains on the basement walls...sometimes difficult to detect
    if the owner has repainted.  This is a sign of flooding in the
    basement.  Look in the furnace area.
    
    ...Age of the furnace.  I know many homes in TO are heated with
    OIL...check the tanks for age and exterior corrosion.
    
    
    ...Check out the zoning for the area.  Last thing you want to do is
    purchase a home, and find out that they have rezoned the area for 12
    unit low rentals...this can really drop the property value once there built.
    
    
    Rod

    careful of those students, Chris.  I was a good renter, compared to
    many, but I would avoid them if possible.  Ever seen Animal House? 
    Pacific Heights?  
    
    Smell the water coming out of the taps.  This is something home
    inspectors often don't do.  It could be a sign of poor pipes.  
    
    Try CMHC.  only need 5% down.  Avoid dipping into your RRSP's if you
    have any.  You don't necessarily want to mortgage your
    future/retirement.  Don't forget about all the closing costs.  $1k for
    lawyer, $.2k for home inspector, $.1k moving truck costs... 

Yeah but Doug... If you use the 5% down option, your mortgage rate will be 
higher AND the bank charges 2.5% of your mortgage as mortgage insurance.    
Also, I wonder what to do about the RRSP situation - if you are a first time 
buyer, you can take $20,000 out of your RRSP to use as a down payment 
without any penalty, as long as you pay it back within 15 years, starting in 
1997.  It's actually a double bonus, because what you can do is, for 
example, put the $20K into an RRSP one day, get the tax credit for it, and 
then withdraw it a day later (at my bank - some banks require that the money 
stays in the RRSP for 90 days) and use it for your down payment.  I'm not 
going to go the whole $20K route, but I was planning on doing that with $10K 
- that will be a nice little recovery on next years taxes, AND it will only 
be $667.00 a year that has to be paid back.  You can still put more than 
that into the RRSP and the extra will be treated as a regular contribution.
That's another trade off I wonder about - which is better, to pay down your 
mortgage once a year if you have the extra money, or do put it into an RRSP? 
I'm not ready for all these adult decisions!

    My advice, buy what you can afford. Dont bite off more then you can
    chew. I know they are building big huge homes now that are great if you
    can afford them. I also know people that have those homes that can't
    afford to do theys they used to do like go to dinner, movies or other
    fun activities cause they have to save every penny to pay for the
    mortgage. It is called not sleeping nites. 
    
    Best of luck:-)
    
    Lynne

    My recomendations are:
    
    -Make sure it is a house.:)
    
    -Remember that the only thing that works in a house is its owner.:)
    
    -Have a number of old re-run tapes of 'Green Acers'. 
    
    -And if you happen to mow your lawn and find a pick up truck. Give me a
    call. I lost one sometime ago.;)
    
    

My stomach hurts.....

	Well, I made my first offer yesterday and have received a
	sign-back.  I think I'll be able to get this place in the
	next few days and my emotions are going haywire. I'm very
	excited about owning my own place and spend a lot of time
	dreaming of colour schemes and furniture.  However, I'm
	also very anxious about all the details involved AND the 
	fact that I don't know much about how the mechanics of how
	a house works (besides the basics - I even went out and bought
	my own vacuum cleaner already!) The vendor has agreed to my
	closing date (Sept 15) which was a nice surprise, since the
	listing requested a 30 day close, AND the interest rates fell
	another .5% yesterday (8.5% for a 1 year closed mortgage).
	Our provincial election takes place the first week of June and
	I think the economy should start to improve after our 
	pathetic government is gone.... so I do believe that now is
	a good time to take the plunge

					.....  but it still scares me!

    
      When they come to the part of the closing when they read out loud,
     "And you agree that over the next xxx years to pay a total of yyy
     thousands of dollars - sign here," don't listen, or you'll have a
     gut-check.  Think about some pleasant past experience, like, say,
     gum surgery.
    
      bb

	Well.... the deal is signed and as of Sept 15th, I will own
	my first first house... wish me luck!

    Do you ever plan on having a second first house?

    
    Heartiest Congratulations!
    
    I bought my own first house alone just over a year ago and I haven't
    rued it yet...well, except for when I couldn't get the weedeater
    started 8^).

>>       Do you ever plan on having a second first house?

	Ha Ha!   I had no idea what you were talking about until I went
	back and read what I had written....OwhatagoofamI?  Between the
	overtime at work, being hired as one of the outsourced
	contractors (I am now a full-time employee with OAO- good to
	have benefits again) and all this house stuff....my brain is
	fried! 

	Think I'll head home and watch the Leafs *hopefully* take a
	3-0 series lead..

    Well done Chris,
    
    On the house
    
    The benifits
    
    And if the loafs don't make it 3 in a row
    
    
    
    
    
    
    
    
    
    watch your language :>)

    >the 3 year closed is 7.99-should I lock in? 
    
     I don't know how the Canadians work things, but it seems that the US
    rates are going to head down slightly. New housing starts and sales are
    down, and the economy is slowing, so at least it's unlikely that the
    Fed will raise rates to prevent inflation. They may have to lower rates
    to forestall a recession.

    > but it seems that the US rates are going to head down slightly. New
    > housing starts and sales are down, and the economy is slowing, so at
    > least it's unlikely that the Fed will raise rates to prevent inflation.
    > They may have to lower rates to forestall a recession.
    
    hard to call- th economy is slowing in some measures but not in others-
    raw input prices jumped 2.4% last month indicating shortages of supply
    indicating some capacity limitations, which is inflationary in the
    short run, until new investment brings more supply online.  I consider
    it certainly unlikely that rates will be lowered any time soon, given
    the weakness of the dollar.  We may not see any rises real soon, but
    within six months, I wouldn't be surprised at all.
    
    DougO

    It's kind of funny reading this note now...  I have been in the house
    almost a year and so far things are going well.  Course, my savings are
    almost non-existent and I can't believe how much work I have to do on
    the weekends... but it feels good to own something and know that it was
    the right decision.  I had a sliding glass door installed in one of the
    bedrooms overlooking the backyard, and have a beautiful new deck which
    I plan to stain this weekend.  I have dug out a huge garden and filled
    it with perrenials and wildflower seeds.  Taz and Myrtle keep me
    company and my tenant is great.  I also have friends visiting all the
    time, which is great - so far, I've had company from Shirley (hi Deb!),
    Kanata (hi Glenn!!), NH ( hi Jack!!!), Australia, LA, and am expecting
    a friend from Colorado Springs this August.  Kind of glad I got the
    guestroom decorated).  Now... if I could just do something about my
    bathroom - still yucky!

    
    Hi, Chris!  Kiss Myrtle for me, and tell Taz "Tummy Time!"
    
    8^)