Post # 1
So me and DH are thinking about actually buying a home. I have been adamant on the idea that I want my dream house and I will wait until we 1. can afford it 2. Can make the ginourmous down payment. 3. Can get approved for the 1/2 million loan.
Being more realistic though, right now, all we can afford is a condo, or a run-off-the-mill house with lots of DIY projects. A friend of mine bought a sarter home which they never finished, got fed up, sold it and got a ginormous loan on a move-in ready home.
Now, this is my idea. We buy a nice move-in ready condo that we can comfortably afford, and if later on we advance enough in our careers and are able to afford soemthing closer to my dream home, we can either rent it out (in this city you can easily rent condos for double of what you pay on mortgage) or sell it and buy a house. We don’t have kids and don’t plan on having kids in the next 5 years.
Any real estate thoughts? I just need encouragement I guess :p
Post # 3
It depends on where you live. Around me condos are really popular so it’s a good option, there will always be a market to resell it. It sounds like it would work for you since you said you can easily rent it out or sell.
We plan to buy a condo before a house. Typically the advice I’ve seen says as long as you will be there at least 5 years then you will make money off of it. If you only plan to live there a year or two then it’s probably not worth is because you won’t recoup those intial things like closing costs.
Post # 4
@amoret11: I think that’s reasonable. The key is to have a good plan and stick with it.
As long as the condo is well within your means and you can pay it off quite quickly (or are at least making a big dent in the mortgage), then it’ll become an investment (i.e. you can rent it out later).
If you buy a pricey condo and then things go wrong and the market tanks again, it might not be a good idea.
Post # 5
We are under contract for a condo right now. I think a condo can be a great idea! You just want to make sure the structure is good, the boiler is in good condition, and there are some reserves in the condo fund. We looked at condos with monthly fees ranging from 300 to 1,000, so you’ll want to check on that, too.
Even though it’s not a house, it would lock in the price of your “rent” for the future. That was a big deal for us, because rents have been going up so fast. And, since interest rates are rising, there is no better time than now to pull the trigger.
ETA: I would be more inclined to buy a condo that is not in a giant complex. I think those could be more difficult to sell.
Post # 6
My city is currently experiencing a huge condo bubble, so I wouldn’t buy a condo. If your real estate market isn’t experiencing such a bubble and there are no forecasted downturns, then why not build some equity while you save on your dream home? It makes sense to “move up” to your dream home, even if that requires some DIY and house flipping along the way (see the blog Young House Love – they just bought their dream home after many years!).
Post # 7
- Wedding: January 2013 - Harbourfront Grand Hall
@amoret11: The condos in our area are actually crappy apartment complexes that are trying to sell off pieces. I would never buy THOSE but in some areas like PPs have said they make a lot of sense, or when you’re retired and don’t want the upkeep associated with a home.
It sounds like you have a good plan regarding renting it out if the opportunity presents itself to move into and afford your dream home.
Post # 8
@amoret11: If a condo works for you, then why not? We own a condo that we rent out and we make a lot of money off it (the condo is downtown Toronto, and you’re right – you rent it out for a lot more than the mortgage).
If you feel it’s a huge sacrifice because you want what only a house can deliver (i.e. a backyard, no condo fees, privacy, some property, etc.), then I would say wait because you will only end up disappointed that the condo can’t deliver what the house you want can.
I am not an advocate of renting though, so I personally feel it’s a good idea to build equity.
Post # 9
Given your plan, I think as long as you can (1) make an ENORMOUS downpayment on the condo and make your mortgage payments very low and (2) continue to save like fiends while you’re in the condo, it makes complete sense to buy one, especially since you don’t have kids and they’re not in the immediate plans (although a 2 bedroom is a good idea, just in case or for the sake of a guest room).
Also, I’d try to buy in an owner-occupied complex, rather than one full of tennants. They tend to be better maintained, at least in my area.
Post # 10
@amoret11: As a condo owner, keep in mind the following:
Is it cheaper to rent or buy in your area? You may want to rent until you can afford exactly what you want.
**Each condo has their own restrictions on renting. Mine says that 4/5 of the units must be owner-occupied, meaning until my complex hits that ratio, I cannot rent my condo.
Condos come with other restrictions too. In my case, parking, I cannot bbq on my own patio. What you gain is easier maintenance, you lose in privacy/rights.
Maintenance fees are a b&*^h.
Living by yourself or with one other person, you will pay the same amount for heat/hot water and other facilities as a four-person family.
Special assessments. If the majority of condo residents vote on repaving the parking lot and you disagree, you’re responsible for your share of the cost of the project.
While you’re searching for condos, make sure your real estate agent provides you will the by-laws (rules) of the condo. For example, I didn’t know I had to pay a fee upon purchasing or selling the condo (non-refundable). Some agents may be shady and not tell you everything. Ask the agent for the number for the management company and contact them directly – they will tell you about any general issues in the condo in a (hopefully) unbiased way.
That said, I do like my condo – mostly because of the layout, size. If I were buying with a fiance or husband, I probably would prefer a house, especially if we had the cash. I’d probably buy a fixer-upper.
Post # 11
It depends on where you live. Here, in the San Fran area, condos are a hot commodity. We bought 6 month ago, and prices are already $50k above what we paid. So – an excellent buy! If you live someplace where most people live in houses and condos are less desireable, it might not be as good as a buy. How to tell? Look at real estate websites and see what the average days on market for condos vs single family homes is in your area. Look at year over year sale prices as well.
As far as owner vs tenant occupied, most banks wont finance condos in buildings with less than 75% owner occupied. Some want higher than that. So, that may narrow your options depending on the trends where you live.