COA 4131 1st Edition Lecture 9 Outline of Last Lecture Review for first examOutline of Current Lecture I. Did You KnowII. Renting vs OwningIII. Budget ItemsIV. Median House Prices Current LectureA. Did You Knowa. Most people in the U.S. own their own homei. About 67%ii. Unusual to other places in the world b. 70% of economy is driven by consumersB. Renting vs Owninga. Renti. More people rent for longer before they own ii. Security Deposit1. One months rent-typically2. Given up front 3. At end of lease, if in good condition, you will get this money backa. If something gets broken or problems, document these things so you can prove things later iii. Lease1. Contract a. Rights and obligations on both sides as renter and seller iv. Sublease1. Someone else can rent from you, rather than from renter2. During the summer?v. Tenant rights1. Things aren’t what you think2. Tenant has to give habitable conditiona. Proper plumbing, running water C. Budget itemsa. Housingi. 32% of expensesii. Biggest chunkiii. Can add 5% from utilities b. Transportation i. Second biggest chunk c. Rentingi. Pro’s1. Pool, services2. Landlord takes care of problemsa. Mobility i. Month to month leaseii. 9-month leaseiii. Year long leaseiv. You can move around 3. Communitya. People are close so feel more safeii. Con’s1. Not building worth, simplifying paying it and that’s it2. If property goes up in value, you don’t benefit3. If prices go up, nothing you an do about it 4. Mostly no garage- storage is lacking 5. Laundry hookup may or may not be in unit a. Laundry mats d. Buying i. Attributes1. If you buy something, you build equity 2. Pride in ownership 3. Fixed mortgage a. Pay so much a month and this price will stay that way for years 4. Laying down roots in communitya. Once you own, you can stay5. Build credit ii. Con’s1. How much controla. Have rules and regulationsi. Paint colors 2. Down paymenta. Typically 20%b. Has gone up- used to be 10%3. If something goes wrong, you have to fix it a. Can be expensivei. Roof issues 4. Home Owner Association fee’sa. Can get really expensivei. Usually once a year feeii. Pays for maintenanceiii. Pool cleaning iv. Entrance maintenance e. What do you like?i. Styleii. Location f. What can you afford?i. If you don’t know how long you are going to be there1. If there 3 years or less, rent instead of buying g. Formulasi. 25-40% of your take home pay1. 40% is for very expensive placesa. L.A., Beverly Hills, NYCii. Typically 32%iii. Depends on circumstances, career, and other expenses 1. Do you want to travel, vacations, ectD. Median House Pricesa. Tallahasseei. 156,000b. Miami/Ft. Lauderdale/Miami Beachi. 206,000c. Cheapest prices are in Midwest d. More expensive in North East U.S.e. Windows cost more than wallsi. Lots of windows in house is a good signii. Natural light f. Floor plansi. Lines in closet means upper cabinets or shelvesii. Vaulted means vaulted ceilings1. Typical new house is 9 ft ceilings2. Older houses have 8ft ceilings iii. Upstairs smaller ceilings than downstairs 1. downstairs 8 ft2. upstairs 9
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