I would buy it, monthly payments will cost more, but it would be an actual asset. Right now i'm renting out my appartment right now and they are basically paying for my appartment for me.
Originally posted by: cpals
Originally posted by: Syringer
I wish I could buy a condo for under $200k
Under $400k would be great even.
Yeah, but how much do you make? I'm only making $36,400 a year.
we're in CA. everything is overpriced here.
Yea, no kidding. That's living in the SF Bay area. We want to move, but it's easier said than done with the whole finding a job thing, moving away from where we've lived our whole lives, leaving family, friends, etc. We'll eventually do it, but coordinating it is hard.
Why do you need to be in a condo for more then 5 years? Cant you just transfer the value of the mortage you've already paid to a new place?
ie. I am thinking of getting a condo here, though I will only be here for another 2.5-3 years.. but I'll be paying $1000 a month towards owning that place, which I can sell when I move, and transfer that value to my new condo/house. Rather then throwing $800 a month to some lazy landlord.
ie. I am thinking of getting a condo here, though I will only be here for another 2.5-3 years.. but I'll be paying $1000 a month towards owning that place, which I can sell when I move, and transfer that value to my new condo/house. Rather then throwing $800 a month to some lazy landlord.
Babbles
Diamond Member
- Jan 4, 2001
- 8,253
- 14
- 81
My buddy down in the Dallas/Fort Worth area bought a condo and it was a pretty awesome choice. I know for sure that is what I am looking for the next time I move. In his case his mortgage is about a third of what we paid in rent in an apartment and he has real property which is obviously better than renting.
I personally think getting a condo is an awesome idea, if later on down the road you can score a house you could choose to sell or even turn around and rent that condo out. Better options than renting, in my opinion.
I personally think getting a condo is an awesome idea, if later on down the road you can score a house you could choose to sell or even turn around and rent that condo out. Better options than renting, in my opinion.
RichieZ
Diamond Member
- Jun 1, 2000
- 6,551
- 40
- 91
i don't find owning a cando to be a viable option, HOA and property tax alone are almost equal to what the went would cost on the place. I suppose I need to consider the effect of deducting the mortgage payments from tax, but still financially it doesn't work out for me
Originally posted by: cpals
Originally posted by: Syringer
I wish I could buy a condo for under $200k
Under $400k would be great even.
Yeah, but how much do you make? I'm only making $36,400 a year.
I meant I wished I could have access to condos that were sub $200k.
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 174
- 106
I'm a CPA.
You sound perhaps young in age. Purchasing this condo may "unnecessarily/unwantedly" tie you down. I.e., you may not be able to move even if a great opportunity arises.
For those of us older with children, its less of a problem. I don't feel I could move until my child gets out of school, goes off to college. Its too disruptive for them.
Financial problems/issues:
1. If you're doing a 30yr mortgage you may not have much, if any, pricipal paydown after only 4 or 5 yrs. I haven't run an amortization table for 30 yrs lately, can't remember. I only purchase real estate with a 15 yr or less mortgage. Otherwise the interest costs kills you over the extended period. Closing costs, if any, will be added to the principal amount as well, making it more difficult to come out ahead.
2. If the interest rates rise over the period you intend to hold, all other things being equal, you will lose money. There is an inverse relationship between interest rates and property values. Similar to bonds. As the rates go up, the amount of principal (selling price of house + closing costs) people can afford goes down. This is because more of their monthly payment goes to interest.
3. Likelyhood of substanial appreciation. The more likely it is to be appreciate the more attractive buying becomes. Conversly, if its value depreciates, you wanna rent. This is tough to forcast. Many elements contribute to which way it will go, so I don't know myself.
4. Insurance in FL. I'm thinking hurricanes etc. Get familiar with this issue. Also another bad hurricane season could also motivate peeps to leave FL, thus depressing r/e prices (item 3 above) or just jack-up insurance costs. I've heard some talk taht in FL the insurance companies will not offer 100% coverage of hurricane damage. If true, can you afford to personally absorb such a loss if that occurs?
5. You will have little to no control over maintenance costs (or association fees). What they may pay now could be different from what you pay next year. One of my relatives has a condo near the beach in FL. They discovered that some structural steel in balconies or whatever had suffered corrosion from salt water. A huge increase in fees to deal with this problem was necessary. In effect, you would absorb that cost for a problem which occured prior to your purchase, yet only discoivered afterwards. These type problems are not covered by issurance.
Other factors non-financial - Are you sure you "like" condo living, and will for some time to come? E.g., You must put up with others' rules. You must put up with "shared walls". That is, your immediately adjacent neighbors. What if they make a bunch of noise and bang on the walls (parties or domestic disputes)?
Unless you know for sure the value will rise substantailly and quickly, you may be stuck with a situation you find you really don't like.
All-in-all a tough call, you must decide for yourself. If it were me, and I wasn't real sure. I'd wait, rent for a year and re-evaluate then. Being a "homeowner" carries with it a lot of responsibilty, often not obvious at first glance.
Fern
mugs
Lifer
- Apr 29, 2003
- 48,920
- 46
- 91
Originally posted by: Syringer
Originally posted by: cpals
Originally posted by: Syringer
I wish I could buy a condo for under $200k
Under $400k would be great even.
Yeah, but how much do you make? I'm only making $36,400 a year.
I meant I wished I could have access to condos that were sub $200k.
You have three options:
1. Move out of California
2. Do what so many other Californians do and get a 40 year mortgage with an interest-only option for the first 10 years
3. Bitch about it incessantly
bob4432
Lifer
- Sep 6, 2003
- 11,726
- 45
- 91
i would look at the trends in your area. i am in phx az and last year houses went up an average of 48.5% and condos went up an average of 50.5%. in '03 my wife and i bought a condo in a good neighborhood for $125K and now it is worth ~$280-300K, so there is some equity nearly built in, and we are paying about the same as we were in a apt including the hoa fees but not including the tax right off, so for us it was a no brainer, just wish i would have bought another one in our complex....
Comparing a how a condo in one area would sell vs. a condo in another area is, at best, difficult. However, it has been my experience (myself, family and friends) that a condominium in a given geographic area is much more difficult to sell than a free-standing home in that same area.
Some thoughts:
Call the local board of realtors and ask for the average listing day statistics comparing home vs. condominium sales in your area.
Ask for is the average appreciation % per year of condominiums vs free-standing homes. Generally speaking, rates of appreciation for condominiums will trail free-standing homes.
Condo association fees are a big unknown. You could buy into a community and just as you get settled, they decide to replace the roofs, while at the same time discover that they haven't been putting enough aside to pay for it. BANG, special assessment to pay for the new roof, pavement, improvements to common areas, etc. And it is a democratic process, so 55% of the people can vote yes and 100% are sharing the cost.
Some thoughts:
Call the local board of realtors and ask for the average listing day statistics comparing home vs. condominium sales in your area.
Ask for is the average appreciation % per year of condominiums vs free-standing homes. Generally speaking, rates of appreciation for condominiums will trail free-standing homes.
Condo association fees are a big unknown. You could buy into a community and just as you get settled, they decide to replace the roofs, while at the same time discover that they haven't been putting enough aside to pay for it. BANG, special assessment to pay for the new roof, pavement, improvements to common areas, etc. And it is a democratic process, so 55% of the people can vote yes and 100% are sharing the cost.
This is a perfect reason to get in touch with the board of realtors. If you are in the Phoenix/Scottsdale area, prices are skyrocketing and will only go higher in the next 5 years.
Yes, our area is very similar (Lee County, FL).... except the prices are already almost peaked and have risen very high. It's hard to say if prices will ever fall.
Thanks Fern for the detailed reply.
Also, at least for now I'm thinking I'll rent and see what the market does. Hopefully it will let the lower income people in to play, because right now from the prices I have seen I cannot even afford most of the condos.
equity > pissing away money on rent
Only exception is if the property value decreases but this is rare.
Only exception is if the property value decreases but this is rare.
I do plan on staying, but after reviewing a few of the condo places around here, I do not think I can even afford a condo. Another guy who is renting currently is in the same position as I am and is looking for a roomate because he can't afford to get the condo by himself.
Sucks really...
Dude what you need to do is buy a 2 or 3 bed room. Rent out two of the rooms and have some other chump pay your mortgage while your stacking your chips for a down payment on another place. Then you move out rent out the entire condo and live in your own place. Now you have two properties one of which is being paid for.
Put your money to work for you.
Paying mortgage > paying rent
I think that's a great idea, but the hard part would be finding the people to rent it out and then also coming up with the money to put towards that. Almost impossible.
Kelemvor
Lifer
- May 23, 2002
- 16,928
- 8
- 81
Renting is basically throwing money away in the trash. At the end you have literally NOTHING to show for it. Buy the condo if you can. It's value will continue to increase which means just by doing nothing you'll be making money. You can use an equity line to get more money to make improvements and such to make it even more valuable. Plus you'll be paying am ortgage so your credit will go up, you can claim the interest on your taxes, etc.
Don't rent unless you really can't afford to buy.
Don't rent unless you really can't afford to buy.
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