Camper or house - need advice

[ButterflyBreath]

Hi everyone and Happy Holidays.

I need some advice. I am weary of moving around so much and my goal for sometime in 2014 is to either buy a house, or buy a camper and live on some land my dad has. Whatever I decided to do I want to stay there for awhile because I move around so much and it’s exhausting. Obviously not a problem if I buy a house, but living in a camper can be cramped and I’ve lived in small places all my life an am itching for some room. The appeal to camper living though, is that assuming in can pay cash for a camper, I can save up money to buy land/house later. And, of course it’s simple living!

So here are my options as I see it:

Camper – buy a camper and put on my dad’s land. He already has a well for water, electric , and sewer, however these things will need to be worked on to get where I can use them. I can expand my space buy making outdoor living spaces so I won’t feel so cramped. So my only expenses will be whatever it takes to get the well working again, and then utilities once I move up there. His land is not where I really want to be, but it's not far so I can drive everywhere I guess.

House option 1 – buy a small house just for me to live in, so it will be small but the mortgage will be affordable on my income.

House option 2 – buy a 3 bedroom house and rent out a room or two and split utilities so that it’s more affordable. I won’t be able to get as nice a house because I can only borrow so much on my income but maybe I can fix it up.

The problem with buying a house is that It’s all new to me and I’m having to learn all the terminology and the process, etc. It makes me a little nervous because I work in home health and don’t always have the same hours. However I’ve always been able to pay rent, so this makes me think I could pay for a house.

Any suggestions on what would make the most sense? Ok, a little more background info. I’m a first time homebuyer. I only have $2000 to work with (either to buy a camper or for down payment or to lower my debt to help with the process). I have good credit.

Whenever I think about buying a house, I wonder if it’s a good time to, and I do believe we are in a collapse and that maybe it’s not a good idea to buy a house. Campers are mobile. However it would be nice to just finally have a place of my own.

Thoughts?

[SteveinMN]

Hi, ButterflyBreath. Merry Christmas!

Big question; the answer is not so simple. Some questions I don't recall seeing answered in your post:

- A camper could be an undesirable dwelling someplace where there is extreme cold or heat and it could push you to think of safer shelter if you live in hurricane/tornado country. I'm guessing Tennesee does not see the extremes other parts of the U.S. do, but still...

- What are your ultimate goals for this property? Do you foresee moving away from the area anytime soon (for work, romance, whatever)? Building equity as part of a financial portfolio?

Beyond those bigger questions, I see some things which make me think it's not a good time for you to consider your own place -- camper or house.

First, if you really meant you have only $2,000 to work with (not $20,000), buying a house is out of the question. Closing on the house could cost that much, nevermind what you would spend on immediate repairs, tools you will need but don't have now, etc.

Second, if you do go for your dad's property, have you budgeted for the additional fuel and maintenance your car will need because of the greater miles? If you're smart, you'll add that right into the cost of living wherever. Around here, when the housing bubble burst, houses in the far-flung suburbs sat unsold for a long time because people finally did the math and figuring out that, at $4 a gallon for gasoline, commuting 50 or 60 miles roundtrip five days a week was going to cost them a lot of the money they thought they were saving by living out in the boonies.

The primary rule of real estate is location, location, location. If you have plans to move on from this property sooner than later or hope for appreciation as part of your portfolio, a small one-bedroom house in a popular location likely will do better in resale than a three-bedroom house away from where people want to be or work. So ... what else can you tell us?

[Tammy]

Rent a house for a year to see if you like it?

[ButterflyBreath]

Tammy, I’m 38 and I’ve been renting since I was 17… It’s such a waste of money. It’s time to do something that makes more sense.

SteveinMN:

Chattanooga winters aren’t too bad. I have heard though, that campers are not well insulated and hard to heat. Maybe I can wrap it in plastic lol. The camper idea was a way to have a place to live (technically) and not have to pay rent so I can save up money to buy a house or land later, when I have more saved up. Also, I could take the camper with me, so as long as I take care of it and even make improvements I won’t be losing money. Later it can be used as a guest quarters, storage, or rent out if someone else needs it. The one thing Chattanooga does experience is tornadoes, which would obviously be a problem. There is an old basement on the property though, and it’s set into the ground so I could always move to that area if there’s a tornado warning. However my camper would be blown to smithereens!

The property I would be staying on is my dad’s old property, and he has planted many valuable trees and such on it. They need to sell the land at some point, but I can see that he’s very attached to it. So long term plans might include buying that land to keep it in the family or buying other land. Living on it first in a camper might give me an idea of whether or not I can deal with being there longterm. It’s where I grew up, but as an adult I look at things like location very differently than I did as a kid.

I have also had dreams of building a tiny house on wheels. I am a nomad at heart, so this idea would suit me well, but as I get older I crave space because I’ve never had it. It has been hard to reconcile the nomad and the weary gal who wants to have a permanent home.

About the money, I’m just not very good about saving up and being a nomad I have a hard time thinking or worrying about the future. I work, but it has just been somewhere between part and full time for the past year because I can’t seem to find a home health agency that can staff me full time. So I’m working on getting more stable financially. I will say that I’ve talked to a mortgage company… they checked my credit and income history and since I only want to buy something $60,000 or less they said it’s probably doable as a first time homebuyer (Some rural FHA loans are financed 100% and I could use the $2,000 to lower my debt or do home improvements). I would just need to buy something that does not have a major fix in the foreseeable future. Of course you never know though.

Actually, living on my dad’s property would be ok regarding the extra fuel and miles because right now I live on a mountain and have to drive up and down all the time (I am renting a room in a friend’s log cabin on a small farm). I already have a 45 minute drive to work as it is. It would be less if I lived at dads! Living there would be nice to see if the property grows on me. It’s 8 acres!

[Teacher Terry]

Also there may be some first time buyer programs in your state. We have two here. One will triple your down payment up to a max of $15,000 and one they give you a 20,000 loan to fix the house & then it is forgiven if you live in it for 5 years. My kids will be buying this Spring even though they only have 2,000 to put down. With the low interest rates & our low taxes their total payment on a 100,000 home will only be 700/month so they figure it is time to lock in a fixed rate they can afford on only one salary. I would definitely see what your state has to offer.

[Dhiana]

While the idea of paying to own a home vs. paying rent seems like a good idea when you run the numbers, reality gets in the way.

Having a good job within reasonable commuting distance for the entire life of that mortgage gets smaller and smaller as time moves on. No job is secure anymore and I really believe flexibility will become the key for finding and keeping a job. Getting tied down to a home which you can barely afford to purchase at this time will greatly reduce your flexibility.

Many friends have purchased homes and had to then rent them out to follow/obtain a job elsewhere and not a single one was able to rent it out at a high enough rate to cover the mortgage plus homeowner's fees, etc.

From the information you've provided, I do agree with Steve, you just don't have enough saved up to make this a good idea at this time.

[Tanglefoot]

I was going to recommend a tiny house on wheels even before I got to your second post. That's what I have planned.

I do love spending small periods of time in campers but they're usually not very well suited for long-term habitation. Insulation is lacking, as you mentioned, the systems don't always work very well for winter/frequent use, and the appliances could stand to be more efficient and effective. The build-quality of RVs is often pretty marginal.

I've been a homeowner for about 8 years and I'm looking forward to selling, building a portable tiny house and renting space on my sister's property. The financials of home ownership often aren't better than renting. Most of the house payment is interest for the first portion of the loan duration, and there's a lot of extra expense, commitment and responsibility. Home value often doesn't keep ahead of inflation. Although renting might seem wasteful, it can be pretty liberating in comparison to ownership.

I currently live with others and it seems to get more difficult with time, especially for an eccentric independent like myself. I'm really looking forward to my own, completely-personalized tiny space.

I love the advantages of a self-built, tiny house on wheels. The framing and insulation are comparable to a house, it's a blank canvas and can be designed and constructed any number of ways with any number of materials, and it is just such a creation of freedom in design, financial/resource independence and mobility.

I've been enjoying planning my build: a minimalistic, off-grid mobile shanty of about 8x16 feet of salvaged/reclaimed materials, a full-length loft, large amounts of glass on the South and East, high-reflectance roofing, a small 12v solar-battery electrical system (~100W of PV, single deep-cycle battery), minimal, gravity-fed plumbing, a solar shower, humanure composting toilet, a marine solid-fuel heater (basically a tiny woodstove), a homemade solar oven, portable alcohol stove, 12v compressor cooler as a fridge...

[Teacher Terry]

Also you can roll the closing costs into the loan so you do not need that much $ to close. Sometimes too your realtor can negotiate that the seller pays part of all of your closing costs. If you are only looking to borrow $60,000 your payment should be pretty low. You just want to make sure that the house you buy does not need a ton of repairs because that could sink your financial boat. If you ever had to rent it to cover costs with a mortgage that small it would seem to be doable. If you were taking out a big mortgage then renting it would not cover your costs.

[Blackdog Lin]

I have to agree with the naysayers on a house purchase. You say you're "not very good about saving up". In your price range I would think you'd be at the very least buying an older home, and even one that appears to be in great condition.....

.....well, I am reminded of our situation in 1980, with our structurally sound (but ugly fixer-upper) first house, with affordable payments, that we moved into in September, on Christmas Day the sewer line collapsed. And it turned out that the sewer line went for hundreds of feet through our backyard before it hit the city's lines. And it HAD to be fixed, so we had to find the $1000.00 to get it done. Thank goodness as denizens of a very small town and with a reputation as "good kids", we were able to get a little credit forbearance from some tradesmen, and we ate beans and rice for months to get them paid off.

But it taught me a valuable lesson. I am a firm believer in home-ownership, but only if you are able to budget and/or have emergency funds for home repair. "Cause something ALWAYS goes broke and needs fixed when you're a homeowner.

[ButterflyBreath]

Blackdog Lin, I was hoping that by having a mortgage and putting my money into something tangible it would help me save by putting equity in something.

It sounds like the concensus is that I should hold off on buying until I have more saved up. I just want to make sure that if I spend the $2,000 I do have it's a good decision.