Author Topic: Does it make sense to upgrade from a townhouse to a single family?  (Read 529 times)

TheAnonOne

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We currently live in a small townhouse, about 1000 sqft

It costs us 650 for the mortgage + 240 for the association dues.
It cost me 70k 7 years ago, worth 160k now.

There is a house across the street 1400sqft but it costs 330k and probably has a mortgage around 1800 a month. (Taxes are 3600 vs 1400)

I think I could rent my current house for 1300 to 1500 a month and pocket a good $500 a month.

I don't really need more space but I somewhat feel like the association dues are out of control, they were 150 when I bought. Up nearly 100 a month now!

Taxes are higher at the new place, which probably takes some of the dues savings away, not to mention, I have to mow the lawn, and all the other fun single family things.

Single family homes just seem overpriced sometimes.

nereo

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Re: Does it make sense to upgrade from a townhouse to a single family?
« Reply #1 on: February 07, 2019, 03:22:42 PM »
First off, if your mortgage is $650 and HOA is $240 you will not pocket $500/mo if you rent for between $1300-1500.  Why?  operating costs and vacancies. Very rough rule of thumb is that half of your rent will go towards operating costs, meaning even at $1,500/mo your townhouse would likely not cashflow to the tune of -$100 to -$350/mo over the span of several years. Ouch.

Should you move?  Well you said you dont' really need the additional space - so there's that.  The new (potential) home costs >2x what your current home is worth.

Isn't there a third option?  A home more your size with lower/no HOA dues for considerably less?

TheAnonOne

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Re: Does it make sense to upgrade from a townhouse to a single family?
« Reply #2 on: February 07, 2019, 04:30:12 PM »
First off, if your mortgage is $650 and HOA is $240 you will not pocket $500/mo if you rent for between $1300-1500.  Why?  operating costs and vacancies. Very rough rule of thumb is that half of your rent will go towards operating costs, meaning even at $1,500/mo your townhouse would likely not cashflow to the tune of -$100 to -$350/mo over the span of several years. Ouch.

Should you move?  Well you said you dont' really need the additional space - so there's that.  The new (potential) home costs >2x what your current home is worth.

Isn't there a third option?  A home more your size with lower/no HOA dues for considerably less?

I see, I never did consider how much maintenance would be. I assume it would be less than HALF the rent due to HOA dues covering some expenses. (they cover roof/siding/outside shoveling ect)

I think maybe a home around 280k is about as low as my area goes, but the quality for 30-50k drop off is pretty extreme. I am handy and could consider a foreclosure if other things were redeeming about it.

I don't "NEED" the space, but it would be pretty awesome to have more room for my gym, and going from 1 car to 2 car garage is basically a dream come true as far storage goes Ha

SunnyDays

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Re: Does it make sense to upgrade from a townhouse to a single family?
« Reply #3 on: February 07, 2019, 05:03:44 PM »
Don't forget to account for higher utilities in the bigger house.  Also, the hassle of managing tenants and dealing with possible damage they create would make me think hard about this if you're only making a small amount per month.

nereo

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Re: Does it make sense to upgrade from a townhouse to a single family?
« Reply #4 on: February 07, 2019, 05:12:17 PM »
First off, if your mortgage is $650 and HOA is $240 you will not pocket $500/mo if you rent for between $1300-1500.  Why?  operating costs and vacancies. Very rough rule of thumb is that half of your rent will go towards operating costs, meaning even at $1,500/mo your townhouse would likely not cashflow to the tune of -$100 to -$350/mo over the span of several years. Ouch.

Should you move?  Well you said you dont' really need the additional space - so there's that.  The new (potential) home costs >2x what your current home is worth.

Isn't there a third option?  A home more your size with lower/no HOA dues for considerably less?

I see, I never did consider how much maintenance would be. I assume it would be less than HALF the rent due to HOA dues covering some expenses. (they cover roof/siding/outside shoveling ect)


Like I said, it's a rule of thumb, not a hard and fast equation.  Depending on your area and rental demand most landlords assume either 1 or 2 months of vacancy per year.  I How much maintenance your home will need depends on its age and condition, but there will be some, particularly with renters. If the HOA covers the roof and siding that will certainly help, but there's a whole list of things that will need repair and periodic upkeep.

TheAnonOne

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Re: Does it make sense to upgrade from a townhouse to a single family?
« Reply #5 on: February 08, 2019, 08:45:22 AM »
Thanks everyone, this is why I love this group.

This probably isn't the best route then. Might be better to just sell and get the 100k equity out and invest that and/or downpayment it.

Chances are I will stick with my little house for the foreseeable future though.

Uturn

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Re: Does it make sense to upgrade from a townhouse to a single family?
« Reply #6 on: February 08, 2019, 09:28:42 AM »
Why is moving from a townhouse to single family house automatically an upgrade? 

Last year I sold my 2400 sq ft 4 bedroom house and am now in a 1200 sq ft townhouse.  I do miss my garage (which I used as a woodshop), but other than that, the townhouse is definitely the upgrade.  I got rid of a bunch of crap that I don't need and now don't have to deal with.  The smaller place is easier to maintain, but prevents stuff accumulation. 

Bigger is only an upgrade when you NEED bigger. 

Blueberries

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Re: Does it make sense to upgrade from a townhouse to a single family?
« Reply #7 on: February 11, 2019, 11:35:37 AM »
I don't think it makes sense.  I think you would be happy in the short-term and disappointed in the long-term.