House buying - which to choose?

[TrevorK]

OK, here goes. I want to buy a house, and my grandmother has offered me her house below market value. She got it appraised by our neighbour (realtor) and told him she was selling it to me. He told her if he was listing it, he'd recommend listing @ 197,500 and he guarenteed 192,500 (City appraisal is 186,000). She told me I can have it for 180,000.

Now, I can take this or a house that's listed on the market (And most likely pay market value) for 150,000-155,000. Houses in this city go for 2000-3000 under list price because of very high demand.

Specs on grandmothers house:
1600sq ft bungalow, double attached garage, rv parking, yard, fireplace, finished basement (With kitchen - could rent out entire basement) 2 houses down from ravine.

Specs on potential 150-155K house (One that I looked at):
1100sq ft bungalow, double detached garage, yard, finished basement (Just bedrooms), normal neighbourhood.

Both are in the same condition maintenance wise. I would assume I'd be moving out of either 10-15 years down the road (As I'd want to raise kids in a different neighbourhood than I can afford now).

I can afford either as I have around 60,000 to put down on the house (And make more than enough to live on my own in either without friends), and I'll be renting out a room or two to friends (Probably get more in rent if I rented out my grandmothers basement since it has a kitchen). I'm not partial to either - both would satisfy me. Both will also be paid off within 10 years (Which means that in interest there shouldn't be more than a 10K difference between the two)

What I'm looking for are logical reasons as to which would be the better deal for me, and make the most sense financially. I ask you - as you have no emotions around the issue, just logic and reason/experience.

Which house should I choose - the one with a smaller mortgage at market value, or the one with a larger mortgage ~8-10% below market value?

[Gonthro]

that should be a no brainer, take your grandma's house, even if you sell it tomorow you could make $10K on it

[QuasarCav]

T3rry is right, you can make an easy profit or live in a better house for less money.

Sell it down the road and have more equity to boot!

[izzoblitzo]

You could rent out the whole basement to a small family and get a lil income each month if you live by yourself or dont need the space.

But collecting rent is so iffy... You gotta have the right attitude, or else it's the hardest thing in the world.:nut:

[roopi]

Buy the second house and tell you Grandma to sell the other house to me.

[benyl]

I want that house!

haha, I would take your grandmother's. Rent out the basement and use that toward the mortgage payment. Pay it down faster. In the end, you will have $30,000 more equity with that one even if they don't go up in value.

[TrevorK]

This is what I needed - I felt this way too, but wanted to make sure I wasn't letting any sort of emotions get in the way...

[Weapon_R]

Buy your grandma's house, make 10k, and sell it and buy the cheaper one... :)

[Strider]

Split your 60k into two, buy both houses (get a relative to apply for the mortgage on the other house if you can't get that much credit)... rent the top and bottom of grandmother's house separately and use the rent to pay the mortgage.

Use your primary income to pay off the mortgage on your own house, and rent out a few rooms to friends if you need some extra cash.

[Gondi Stylez]

take ur grandma's for the reasons listed above!!

[xrayvsn]

Keep it in the family.

A house so close to the ravine, with 500 more sq feet at below market value... So why are we considering another house? You will also know the state of maintenance on your Grandmother's house, which is always good to know.

On the other hand, it can be awkward if there is something major wrong with the place that you find out after the title has been transfered. Its not like you're going to take grandma to small claims court, right? That is a potential risk when doing business with family.

Perhaps you could get an independent realtor to apparise the place, and show you what other houses of similar size have been selling for in the neighborhood. You can try to be a little more objective about it that way, and not get talked into a "good deal" by the neighbor.

[Speed_RaSiR]

Buy Grandma's house, sell it and buy another house.