Buy a GTR or a House?
 

Kinda a weird question, but thats where Im at. I got a pretty good job, but have only been there for about 3 months and its going well. Im not in love with it, but pay is good, sooo.....
The house is a foreclosure with a few unknowns. But its dirt cheap at $126k. Pretty large, 4 bedroom, 2.5 bath that needs a little cosmetic work. Some new flooring and paint and things of that nature.
So, I love cars and have always wanted that serious premier sports car, but realize that at my age, 27, perhaps I should be thinking of the future. But man the present is too fun to think far ahead.
So, what would you do?

If you've only had your job for 3 months I wouldn't buy anything right now.

Buy the house. People keep calling it a down market for houses. I say houses are on the best sale in years. When the market rebounds you will sell it for a nice profit plus recoup money you would have thrown away to a landlord.

As nice as a GTR is you wont ever sell it for a profit.

^ That too

Get the house! You won't regret it....

House!

That's the best advice by far! There are huge inventories on the market for distressed houses that won't go away this year or next for that matter at least till the job market improves; there would always be a GTR available when the time is right. I would build at least a year of emergency funds before thinking about buying anything, especially this early into your new job. You wouldn't want any bad surprise in the event of unforeseen job loss (not wishing this on you at all but good to plan for it)

house

This cant be a serious question. As said, considering you have only been working for 3 months I would hold off on both. Give yourself some time to get job security, you never know if you're going to be laid off since you're the new guy and be stuck in huge payments on what you buy. Keep working, save up money so you have a cushion and buy a house. Houses hold more value than a car and in the long run you could actually make profit if you choose to sell it.

:iagree::iagree::iagree::iagree::iagree::iagree::i agree:

Hmm great advice and I find this especially helpful for myself. How long after getting a new job should you wait before buying a house (which will be my first major purchase)? How much would be a year's worth of emergency funds? My situation is a little different though. You and Steve already know this, but I'm gonna be finishing school in May and hopefully will land a nice engineering job right afterwards. House is definitely the first major purchase, no questions about it. I live with my parents and they have emergency funds saved up, plus their own incomes. I will probably be paying for the house by myself with both my parents incomes being saved up for emergency funds. Appreciate the advice :tup:

Also planning to buy a GT-R after a couple years on the job and after having settled into the house :tup:

I say wait until you have a years worth of essential living expenses saved. So enough to cover 12 months worth of rent, car payment, insurance, food expense, and other necessities.

6 months is the minimum recommended safety net, but in this environment 12 months gives you more of a buffer.

In your case, just focus on saving for a down payment since your parents have the other expenses covered.

Yeah that's kind of what I was planning on. Should I pay off the car first or just use that money for the down payment of house? I was also thinking about transferring the car to my name after I get full time work and I can get a loan. This way I can start building up my credit since I will be the main person on the loan. I have a better credit score than both my parents right now, but am lacking in credit history.

:iagree: Plus I don't think you'll be able to get a home loan with just 3 months on the job. Home loan requirements are pretty strict now. Just save up your money for now.

Yeah that's the plan for me at least. My family was actually trying to buy a house last summer, but the loan was rejected a month before we were supposed to move in. This was a brand new house that we saw get built throughout the whole process. The reason we didn't get the loan was because the combined salary was too low. The loan we get in the future would have me and both my parents on it. They have the credit history and with my added salary we should be ok.

My best recommendation is to go with at least 12 months of living expenses. The best advice I can give you is to live like a college student for the next 5 years after your graduation. In that timeframe your income will double and easily triple, you will get more out of your dollar (less charges, no children, no mortgage...) If you get used to leaving not just beneath but way beneath your means anything extra should easily go towards retirement, IRA/mutual funds accounts, stock brokerage accounts, emergency funds, and other investment activities. Automation is your friend.

Don't rush to buy a house for the sake of buying one; my personal rule for the mortgage is that it should be less than 28% of your biweekly paycheck and always count your income not that your spouse/GF/parents. Don't listen to real estate sales people, they have the worst financial ethic, (trust me I know a few and the kind of interests they are paying on their own home) Living way under your means gives you piece of mind and ensures you to save for what's more important long term all the while giving you rooms for personal trips all over the world ;)

Well it depends, are interests earned on your own investment > than the ones you are paying on your car? Do you have credit cards debt?

Pay off credit card debt first given the typical high interest then move down the ladder with the highest interest debts. At the end of the day things are easier when you ensure that your inflows are always higher than your outflows; credit card companies, banks are NOT your friends, keep that in mind and don't hesitate to tell them to get lost when they offer you lines of credit you don't need.

Outside of the Z, I live a pretty conservative lifestyle (spending wise) compared to most college kids and I don't see that changing really, it's just how I am. Obviously I'd have to find out where I will be working and what my salary will before I decide. If we were to get the same house we were aiming for last year (or at least similar price), the mortagage is only a few hundred more per month than what my parents are paying for rent. That's what really annoys them most and why they want to buy a house ASAP. They can afford one, but just couldn't get approved for the loan.

No credit card debt now and never will be, I'm smart enough to keep it that way. Car payments are very low ($185/month) and interest isn't too bad either. Don't know what those will be like if I get it under my name though. Just want to know if I should have the car completely paid off by the time I apply for a home loan or if that money would be better spent towards the house's down payment. Only have $10k left on my car loan.

If you are trying to build credit, having a payment history helps. To be realistic, you won't have built enough credit a year or even 1.5 year away from now for banks to give you a loan on your own. Car loan won't be a negative if debt/asset ratio is low. Applying for a credit card with low limit now would be a good start and paying it monthly would help establish credit history. For a loan, banks don't only rely on your actual credit score, your FICO score often takes highest precedence in their decision. I'll give you all the beans when I talk to you/see you. I'm out baller ;)

Thanks bro, appreciate it! Repped for all the help, you to Steve. :tiphat:

I've Been in my career for 11 yrs on and still haven't bought a house. Of course the first 7 were overseas and another one deployed (Iraq). I wanted to buy here but decided against. I planned on staying just 2 yrs it looks like it will be 2.5 yrs and my next station only a year. Then I want to go overseas again ( Europe, figures crossed). My problem is I don't stick around long enough to build equity.

In this economic downturn we are in, only in a very few places such as D.C. do you see some homes actually appreciating and that is mostly in the city itself. With all the foreclosures on the market and those set to go into foreclosure, combined with the fact banks are not lending to anyone but to those with the best credit, for many it may not be a good time to purchase a home. If I were going to purchase anything in real estate it would be a duplex or condo to rent out. More and more are forced to rent today which for a lot of folks isn't a bad thing. My rule of thumb, "If it isn't bringing cash flow in, it's sending cash out". Couple of books worth looking at, "Rich Dad, Poor Dad" and "The Millionaire Next Door".

having a credit card isn't a bad thing, its actually GOOD to have one one your credit report.. I have a "really good" credit score. and part of that is due to a credit card..

but as everyone has said. Buying a house is an investment. ESPECIALLY in todays market. here in ND, sadly it's a sellers market... so prices are high, like big city prices. and my city has 30k people... lol
with that said, 250k now will net positive returns in a few years.
this is mostly true, however, home values and land values are still going up, it just happens that in a lot of areas people aren't buying because they can't get the loans.. so people are selling cheaper then what their homes are "worth" which is an awesome thing IF you are a buyer

ok, I know you won't be around, but buy, and then rent to a family who works in your "company" then you can build equity, and still own a home, and eventually = profit

A house is the smart answer. You already have a 370Z so it's not like you don't have a nice car, and you don't own a house so get the house.

Maybe later on you can get a used 2009 GT-R for cheap. An $80,000+ GT-R is just not worth it unless you are filthy rich. And if you can get a house for a little more than the car, the house is a much better choice. And like it was pointed out you could sell the house a lot easier without losing a lot of money than a used GT-R. And hopefully make a profit when the housing market bounces back up (lets just hope it does and fast...)

My first thought is too hold off on any purchase until you are comfortable in your job. Once you are settled, BUY THE HOUSE! Now is a great time to buy a home. You can always buy the car when you are settled and feel you can afford it.

well the thing of it is, it's not like he is going out to spend big money and splurging on unneccessary things while only being on the job for 3 months. He is getting a home. If he doesn't buy it he has to pay rent, so the not buying anything because he is only on the job for 3 months mentality isn't really valid. On a GT-R? Yes it is--big time. Like was said, now is a great time to buy! In 6 months or a year the prices and interest rates go go much higher. (hope they do I need my equity to go up!)

Sounds nice and all, but damn who actualy makes that much to keep their mortgage under 28% of their BIMONTHY income! (That's what you meant right? Never heard of getting paid twice a week unless... lol) Hell, if you can keep your mortgage with tax and insurance under your BIMONTHY pay check you are doing good!!!

Screw the house. You don't need something that big. I'm assuming you are single. Get a GT-R and a 1 bedroom condo (with a garage) instead.

Haha the young guys say this, and the old guys say get the house. EPIC :bowrofl:

TJ, being on the job for only 3 months, should there be any layoffs or downsizing, there is no guarantee that the OP would retain his job (Not wishing this, but it happened to many in this current environment). I always laugh when people make the argument to "buy NOW, buy NOW, the interest rates will go up in 6 months", the same was said a few months ago; the same was said a year ago, the same was said 2 years ago, fact is the current interest rates are even lower :icon17: Why should one risk losing emergency funds, retirement savings for the sake of saving up on interests?
My mortgage is under 28% of my biweekly income. By biweekly, I meant being paid every other friday (26 times a year) TJ :bowrofl: It's nothing out of the ordinary when one keeps outflows low and automates saving early on - my brother-in-law has his house paid off in Fairfax and he is 33. My community has a lot of Ravens players and many neighbors have the "keeping up with the Joneses/Kardashians" mentality, $200,000 worth of cars in the driveway, no furniture in the house :icon17:

I have credit cards. What I meant was that I pay them off every month so I don't build up any debt :tup:

Ballin like a boss :tup:

Don't hold your breath, it ain't coming back for a long while.

I second that thought Jon. I always laugh when I hear that things are getting better soon. There are huge inventories of distressed properties that have yet to be processed and to be added to the market (further reducing housing pricing, no one is buying because of job crisis). Those properties combined with the robo-signing issues of the largest lenders plus other government actions will hinder prompt recovery...cheers! this is the new normal for a long time :tiphat:

:iagree:

I'm paid biweekly as well - it's not uncommon. Did you mean the monthly payment should be less than 28% of the biweekly check or the biweekly payment?

As for emergency funds, a (very) rough rule of thumb I've read says expect about one month of job search per $10k of annual salary, so I would want a little over that in funds - of course, this varies with your job market and experience, field, etc.

Hey wilson, for the most part, financial planners and real estate advisors (who don't know crap about finance!) would advise to keep mortgage cost less than 28% of your monthly gross income (Your monthly earnings - monthly taxes). I say keep it under 28% of your biweekly income is even better for it gives you extra to sock away and you don't have to rely on GF/fiancee/wife earnings. Many real estate agents will try to push you to go up to 50% under the "because you can afford it" argument.

Just like m4amustang1, zcarman and I pointed out earlier, the general rule of thumb used to be to have 6 months of living expenses (rent, mortgage, bills, insurance ....) socked away but in this environment, having 1 years gives you extra peace of mind. :tiphat:

Im not overly concerned about the 3 month thing. The idea of buying a house, was to get into the market while it is cheap and build some equity. From the house standpoint, I was looking to fix the little things that this house needs and build about $40-$50k in equity in 2 years. Perhaps a little optomistic, but I would like to think its realistic. I would then use that money to put towards the purchase of another income property.
On the other hand, buying a GTR would be awesome. Not that much more money then my Z, if you were to consider having to pay for the Z and the mortgage, versus just a GTR that is. I dont pay rent right now and wouldnt have to for a long time. I could save money while owning a GTR and use that to place a larger downpayment on a house in the future.

OR just get the GTR and live in it. :tup: