Housing advice

[LilyWDW]

Hey all... I just want to gather some advice on what other people would do in my situation. I will also be getting advice from people in my life, I just don't have many to talk to and I need to make a decision by the end of the month.

I am trying to buy a house, which has not been easy to do. The price point I am looking at is VERY competitive (200kish). I actually just lost out on a house this past weekend due to a cash offer for the same amount I offered. Super frustrating because I can't offer more money or offer cash. I know what I can do and that is that. With this market there is NO WAY to know when I may get into a place. It could be next week... it could be next month... it could take 6+ months.

However, my lease in up at the end of March and I have to give 60 days notice, so the end of the month.

I can renew my lease for 12 months at 1325. Doable though my budget will take a hit.

I can renew for 3 or 4 months at 1425. Also doable but things are getting tight.

I can go month to month at 1525. Difficult to swing without hurting my ability to save.

I can try and look for another apartment but honestly when I did they are around the same price point (1200+). But moving into an apartment also means security deposit, first and last months rent, pet deposit, and moving expenses. So is it worth all of those expenses when it would only save me 100 to 200 per month?

I just have no idea what to do. I am feeling down about the house buying and a lot of stress. If I go 12 months then I can't really keep looking atm because I can't afford the buyout AND the costs of closing AND the move. But then I am in the same situation this time next year.

Just.. any advice or suggestions? Or even just anyone dealing with the same thing who want to vent so I don't feel so alone right now...

 

[ronandannette]

Hey all... I just want to gather some advice on what other people would do in my situation. I will also be getting advice from people in my life, I just don't have many to talk to and I need to make a decision by the end of the month.

I am trying to buy a house, which has not been easy to do. The price point I am looking at is VERY competitive (200kish). I actually just lost out on a house this past weekend due to a cash offer for the same amount I offered. Super frustrating because I can't offer more money or offer cash. I know what I can do and that is that. With this market there is NO WAY to know when I may get into a place. It could be next week... it could be next month... it could take 6+ months.

However, my lease in up at the end of March and I have to give 60 days notice, so the end of the month.

I can renew my lease for 12 months at 1325. Doable though my budget will take a hit.

I can renew for 3 or 4 months at 1425. Also doable but things are getting tight.

I can go month to month at 1525. Difficult to swing without hurting my ability to save.

I can try and look for another apartment but honestly when I did they are around the same price point (1200+). But moving into an apartment also means security deposit, first and last months rent, pet deposit, and moving expenses. So is it worth all of those expenses when it would only save me 100 to 200 per month?

I just have no idea what to do. I am feeling down about the house buying and a lot of stress. If I go 12 months then I can't really keep looking atm because I can't afford the buyout AND the costs of closing AND the move. But then I am in the same situation this time next year.

Just.. any advice or suggestions? Or even just anyone dealing with the same thing who want to vent so I don't feel so alone right now...

What is your penalty for breaking the lease? No matter what term you take, you may need to do that in order to get an offer accepted on a house if you need to be as responsive to the buyer's requirements as possible to make the deal. Take whatever number it is and compare it to the extra $200/mo for month-to-month. I think you'll see that stretching the monthly budget is good insurance against having to take a lump-sum hit or potentially losing a house you want.

In the meantime, I'd say 12 months is a total NO, since you clearly intend to be elsewhere sooner than that. Don't sign a new 12 month lease. If it were me, I'd probably go with the 3-month, taking the small rent increase but still having a bit of flexibility.

Good luck - I hope you end up with a lovely home. First-time buying can be very stressful.

 

[barkley]

is there anyone you can talk to that has any 'power' with the rental property to see if there's any flexibility on the terms for continuing on? i ask b/c i live in a super weird housing market-there is a HORRIFIC shortage of rentals so you would think rents would skyrocket across the board and they would be hard nosed BUT b/c of all the covid laws (state and fed) that allowed tenants to not pay rent, some places will negotiate with a good tenant who has paid timely while they are dealing with all the fallout over months and months of unpaid rent. they will send out the standard renewal information but a conversation with the complex manager can sometimes yield a better deal. it doesn't hurt to ask.

 

[Disney.Dreamin.Dee]

Now this may not be possible but if it were I'd go this route...
Rent storage space and move in with a family member or friend and pray that you find a house SOON.

 

[neverlandsky]

I would renew for 6 months March to September 2022. That way if you can’t find anything house wise you can renew for 12 months in September taking you to September 2023. Then you’ll have next February to September 2023 to find a home.

 

[jen7233]

If it were me and I was seriously intending to buy not just browsing, I'd see if that 60 day notice is a solid or if it's flexible. I'd renew my lease for 12 months and work out the details later IF I found a house. Twelve months gives me alot of time not to be impulsive and regret a buy. Details being what I may or may not owe on a lease, see if somehow I could close later, I'd work out later. I'd chalk up the cost of breaking a lease to the expense of house buying, but we only know our own cash cushion. I would not move into another apartment.

 

[tvguy]

Hopefully you have an aggressive Real Estate Agent. That is what made home ownership possible for my daughter Not knowing where you live hard to say. Your housing price point and current rent are very low compared to what is going on here. Not much here below about $360,000 purchase price and a small apartment renting below $2,000

 

[Mackenzie Click-Mickelson]

Only you know your housing market.

Ours has been in a very strong crazy high housing market since 2015 and hasn't slowed down since, it's only gotten worse. We lucked out and built our house when it was a buyer's market in 2014. And for several years it's been the whole under 300K (actually I think it was $250K like 2 years ago) selling super fast, inspections waived, tens of thousands above asking, etc.

I think my advice would depend on how willing you are to stay in a competitive market with likely paying above asking and being ready at a moment's notice. If you can stay in that hunt actively I would do a 3 to 4 month lease extension and eat the costs if you get a home sooner than that (assuming breaking an extension at that point wouldn't make much sense). If you can't see yourself dealing with that and want to hope for a cool down I would do a 12 month but looking into the financial costs of breaking your lease especially because you're very interested in a home. Most often breaking your lease can be cost prohibitive but it really can depend on the contract.

Question, if you take the 3 to 4 month extension what are your options if the time period goes by? Are you able to go month to month after that? Are you able to extend another 3 to 4 months or does it require a new lease at that point?

As for looking for another apartment yeah there's a financial hassle and physical hassle at relocating but you could always take a few days just to see, although you may be at the same position as now trying to figure out how long to do a lease for if you find a new place it may be easier to do say a 6 month lease as opposed to staying with your current place where you didn't mention that being an option.

 

[Travel60]

If you do the one-year, can you sub-lease if you find a house? In a tight market, it might take several months to find a house then another month or so to close.

 

[LilyWDW]

First I want to say thank you ALL for your advice and information.

I will be emailing my apartment to find out what the lease break fee is and what my options would be after the 3 or 4 month lease. Right now I am leaning towards the 3 or 4 month lease. I also am not sure on subleasing, but a bit weary of that because I have heard horror stories. The biggest issue I have with a 12 month lease is that break fee. My budget is already tight and I am concerned with spending more money at the same time I am doing all the down payment stuff and needing to possibly fund some purchases or fixes to the home.

I live in the Indianapolis area and am looking for a house within a 45 minute commute to downtown. Since I am only in the office downtown one day a week, and that is a permanent change, I am willing to drive a bit more that one day. Otherwise I am looking for something in a safe community, minimum 2 bedroom and 1.5 bath (would prefer 2 bath if possible), and under $208k. Also, no BIG projects that have to be done right away (like replacing flooring in the whole house like one place I saw where the tan carpet was black in multiple areas) or BIG purchases (like houses with no kitchen appliances).

I am just still a bit crushed about the house I lost out on this weekend. It literally was because the other person offered cash. I let myself get my hopes up too much and started planning... and I know I shouldn't do that with how the market is. Just sucks.

 

[TwoMisfits]

I would go month-to-month...and did in the past when I was in your shoes. With your lease up in March, you'll be looking at the prime buying seasons of spring and summer and home inventory will be at its highest (giving you the best chance).

If you don't find anything this spring/summer, then you drop back into a longer lease for the fall/winter...

 

[kymom99]

Have you looked at condos? Even though you have to pay condo fees, they can be a hood option

 

[Miffy]

I'd do the 6-month or 12-month lease. The 12-month lease would depend on what the lease-break fees would be. Even if you found a house tomorrow, it could take 2 or 3 months before you'd close.

Really, the best advice above is to move out at the end of your lease, put your things in storage, and stay with family or friends until you find a house. This may not be a possibility for you, but if it is, give it some thought. It would make the move easier for you when you do find a house.

Also, remember that closing costs are steep. I don't know what they are in your area, but loan origination fees, title search, survey, inspection, etc., all add up. If you're buying a $200K house with a 20%-down mortgage, you're looking at probably $50K in cash needed at closing--and that doesn't count your moving expenses. Your mortgage lender has probably gone over all this with you, but if they haven't, have a chat with them.

And, while I'm here, do you have a mortgage lender? You should line this up ASAP if you don't.

The housing market where I am, in upstate NY, is super competitive yet we were able to find a house we could afford. Granted, a lot of amazing circumstances happened that made this possible, but amazing circumstances do happen.

One last piece of advice: do not buy a home without having it inspected first. I realize that in this crazy housing market, there's a lot of that no-inspection stuff going around, but please don't do it. You wouldn't be able to tell just from visiting a property whether it has radon, asbestos, or termite problems, to name a few hugely expensive and necessary things to fix.

You are never going to be able to compete with a buyer who has cash, but there are still houses out there that you can afford and that will work out for you. Stay positive. Good things will come your way!

 

[ThereYouSeeHer]

Consider opting for the longer lease, and try to negotiate any break fees beforehand, if you can. Having a longer lease can take the stress out of house hunting, so that you don't constantly have another lease renewal looming.

By the way, keep your eye on that house you lost this weekend. It may come back on the market! People walk away, even weeks later, for various reasons.

This is such a tough decision, but best wishes with whatever you choose!

 

[Christine]

I'm sure no one will agree with me, but if you don't *have* to buy a house in this current, hot, sellers market, then don't. Me personally, unless I had to, I would not buy in a market like this--would definitely wait until it cools down. I wouldn't want to be pressured into buying the house that am lucky enought to just get and definitely don't want to pay top dollar. I know it's really hard to predict how this market will go, but buying at the top end of a bubble is never good for the buyer.

 

[LuvOrlando]

Can you get into a much smaller apartment as you search for a home? Maybe go much further out than you want to stay to reduce costs? Preferably a place that has garage access or something you can use for storage, or maybe a sublet from someone else? Home owners can be way more lenient with pay as you go than formal facilities, I've known a few people who did the month to month thing successfully short term. My thinking is if you shrink your costs enough you can probably put aside enough extra as a buffer for updates or even to absorb a month or two of having 2 places which would ease the transition. In an area like Indianapolis maybe you can find sublets from students who finish at winter break or students at schools that decided to go remote for the spring. I looked a bit and Air B&B has some for a month at a time.

Our place in Boston area is a rental and there is zero way to break the lease, the contract says even in death so I suppose they sue the estate, so no matter what happens you pay until the contract ends.

 

[spiders]

If you are truly determined to buy a house in the short term then I would personally go month to month. If the only concern about going month to month is that you may not be able to save money then I don’t think that’s a big deal.

I know you’re waiting to hear back from your apartment about the penalty to break the lease but I’m guessing it will be at least one month‘s rent if not more. If you’re saving $300 a month then that would still be 4-5 months worth of savings to break it. It sounds like you really intend to buy a house at the first opportunity so any money you put into savings would quickly be withdrawn to pay your penalty.

You could wait but I would also think you’re going to wait for at least a year and if that’s the case then renew your lease. But housing likely isn’t going to get cheaper in the near future and spring/summer is right around the corner now — that’s prime time selling.

 

[Starport Seven-Five]

Agree with the first reply that you need to find out the fee to break the lease. From there you can run the numbers backwards and see the payoff for each one.

Make sure subleasing is allowed in your lease before going down that route. Many contracts forbid it.

I'm sure no one will agree with me, but if you don't *have* to buy a house in this current, hot, sellers market, then don't. Me personally, unless I had to, I would not buy in a market like this--would definitely wait until it cools down. I wouldn't want to be pressured into buying the house that am lucky enought to just get and definitely don't want to pay top dollar. I know it's really hard to predict how this market will go, but buying at the top end of a bubble is never good for the buyer.

I thought the market was near the end of it's bull run in 2017. We bought anyways. Our house value has increased 25% since then.

It's impossible to predict what the market will do. That is why the experts have predicted 25 of the last 3 recessions.

 

[RangerPooh]

We just went through this in that we were out offered by a few cash offers on homes in our area. In our area homes in the $300-$375k range are snapped up fast often by investors, cash buyers, or those with larger down payments. At the time that we were looking there wasn't much in the $300-$375 range, but $475k-$700+k had plenty. Thankfully we lucked out on a great home at $340k, it just took us crossing our fingers and an aggressive agent.

My suggestion would be to sign for 6 months as you don't know how long it will take to close on a home. I would feel better knowing that I have a confirmed place to live for 6 months than stressing over having to possibly move in two months due to not being approved on a home and no confirmed lease.

 

[Christine]

Agree with the first reply that you need to find out the fee to break the lease. From there you can run the numbers backwards and see the payoff for each one.

Make sure subleasing is allowed in your lease before going down that route. Many contracts forbid it.

I thought the market was near the end of it's bull run in 2017. We bought anyways. Our house value has increased 25% since then.

It's impossible to predict what the market will do. That is why the experts have predicted 25 of the last 3 recessions.

Agree. I know it's hard to predict. I watched the buying fever in 2007, when I personally wanted to move, and I saw my house increase incredibly during that time. That market definitely crashed in most areas and it's taken years for those people who bought at that height to recover. I'm very worried that this market *might* do the same thing. Plus I really dislike being forced to buy "something" because of the fevered competition.