So, I had a client who was a little savvier than some & who had a desire to reduce his monthly expenditures significantly. He’s a single guy who has been spending just under $1,000 a month on rent. We’ll call him Joe for the purposes of this blog entry. Joe is a regular guy who doesn’t need or desire anything fancy. He just wanted a place he can lay his head, that’s centrally located in the heart of Atlanta (only 5 minutes to his office), close to the nightlife of Buckhead & Midtown, preferably a gated-community, with reasonable HOA fees.
Joe’s idea was to get a 1 bedroom condo that would be adequate space for himself for the next few years & then he’d either look at renting the place or possibly selling….even if he just broke even or lost a few thousand at that time the economics I’m about to explain would be well worth it to him.
Joe’s goal was to buy a foreclosure condo in Atlanta for straight cash – thereby having NO monthly mortgage payment (nevermind the accrued interest on a loan) & he’d save on the closing costs as there’d be no loan origination fee involved either. All Joe would have to pay for is his monthly HOA’s & the yearly taxes (which will be appealed to have them reduce the tax assessed value to more accurately reflect the current market value following the foreclosure acquisition).
There were a few developments in mind, especially in the Midtown area and leading up to Buckhead. When it came down to it we wanted to keep the HOA’s as low as possible & found a great opportunity in the Collier Green development – only a few minutes from the heart of the city, just northeast of the Atlantic Station area. We were able to acquire a move-in ready 1 bed/1 bath condo with stainless steel appliances in place for just over $30,000.
Let’s break it down….combined HOA & Property taxes = roughly $325/month –even if Joe had done a 30-year mortgage on the property he would have had monthly expenses of roughly $500 for P.I.T.I (Principle, Interest, Tax, Insurance) & HOA’s a month --- roughly HALF of what he was currently paying a month on rent. Buying at that rate would have saved Joe roughly $6,000 a year by purchasing rather than renting.
But….since Joe purchased with cash savings and has no mortgage, he’s saving roughly $675/month…meaning $8,100 in SAVINGS EVERY YEAR by OWNING rather than RENTING.
We’re blessed to have so much in this country that even a single person living in a 1 bedroom/1 bath condo is considered living well below their means, for others…..I’d say it’s just savvy living and positioning yourself to invest elsewhere – whether that’s investing in your retirement fund, purchasing another property, or enjoying a slightly higher quality of life with an extra meal out or trip….with plenty left in the piggy bank.
If you know someone trying to make a similar strategic move in the Atlanta area, please let me know and I’ll be happy to assist. It doesn’t necessarily have to be all the way down to a 30k property & $325/mo expenses, even if you just want to downsize from 350k to 150k –it can be done!
Michael Neville
Real Estate Consultant
Keller Williams Realty Atlanta Midtown
#1 Individual Realtor for KW Atlanta Midtown '09
404-310-8364
www.LiveInAtlantaGA.com (website)
http://activerain.com/blogs/mpneville (blog)
Short Sale Info & Avoiding Foreclosure: www.AtlantaDignifiedSolutions.com
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