how can we afford this?

Question

my wife and i are both 30. we own a condo just outside boston that we owe about 237,000 on. it apraised at 300,000. we rent out a room for 600 a month to help cover our $1605/month mortgage payment and $330 a month condo fees. we have pretty decent credit and manageble cc debt with 0 or low intrest. after al our bills with save about 1400 a month.
we found a 2family house that wed like to buy and start afamily in. we'd like to buy it with 0 down. it has a 4bd apt to rent out which i think we could rent for 2200-2400 a month and has a basement to put another studio or 1bed apt in to also rent out or have her mom stay when we have or first baby. it also has some extra parking we could probably rent out too for another 200 a month.
id like to keep our condo and rent it out but i dont think i could rent it out for as much as it costs us i think i could get 1800 at the most. which is $150 short .

i guess im looking for some advice on whether or not it is possible for us.

Answer 1

Try making some minor upgrades to the condo, adding some extra nice things to it to increase rental price. If you can make it just a little bit more comfortable than it is now, you can make that extra money easy.

Install a really nice bath or something that you dont find everywhere else.

Answer 2

wow you sound like you are stretching yourself thin! I'd say the best bet would be sell the condo for 280k or so, take the profit, and put it into a down payment and fixing up the basement to rent. That way you only have one 'building' to worry about. How scary would it be if you could find no one to rent it.......you are stuck with that payment plus your house! YIKES! Talk about stress! What if they don't mow the lawn, or are very noisy and you get complaints? What if they trash the place? It's doubtful for that much rent money, but you never know! Be careful and always keep stress to a minimum! But it's great you're thinking it through!

Answer 3

I'm actually going through something very similar myself and what I've figured out is that it finally comes down to the numbers. You got to sit down and crunch the numbers, expenses vs. income, cash flow, etc. Numbers don't lie. If it's possible then it's possible, if it isn't then it simply isn't.

You are putting a lot of faith into being able to rent out rooms, but have you thought of the negative consequences? What if you get a deadbeat that misses the rent and won't leave and forces you to go through an eviction process? What about somebody who changes the quality of your life?

Is there a big reason for you to go under so much debt? As for me I have a side consulting business that I use to bring in extra cash for the property I'm thinking of buying and so I shouldn't have too much trouble. You always have to think of the negatives as well as positives and having multiple, reliable sources of income helps.

Answer 4

I would say don't do it. I've seen this Sooooo much, my friend. Situations change so fast in this world, circumstances change, and you, after making this move may find yourself quickly in a Very Bad Place™. What if you lose your job or get hurt, or your wife, God forbid. I would say, keep what you've got, because the place you're looking at buying sounds like you're going to depend on 100% occupancy to be able to just afford it. 1400.00 savings each month will work MUCH harder for you if you invest it in the stock market, bonds, CD's, etc, and eventually, when you can do it in cash, you can move it into real estate; that is the safest way to do it. You MUST insulate yourself from change before you MAKE a change happen...Does that make sense? You would be exposing yourself too much with this, In my opinion.

I'm no financial expert, my friend, but what I am is a mortgage servicing specialist, and I've seen great ideas like this go so very bad... Like I said, situations change so fast, and stuff like this...like you're looking at doing can shatter lives. The strain of trying to quickly sell to get out of debt, the spectre of foreclosure if something happens...these are not fun things to deal with.

Answer 5

what you should do is buy a home that you can afford and not one that you "THINK YOU CAN RENT OUT" some of the rooms. Why would you want that many strangers living so near you anyways? Keep the condo, rent it out, and buy a family home of your own... you will be much happier without the added stress of someone defaulting on what is essentially your mortgage and your credit.

Answer 6

Reduce your costs and start putting away for retirement. You will thank me later. Any roof over your head is good enough.
:-)~

Answer 7

Geez...move to a less expensive city!