Author Topic: Whether to buy a condo or house in DC  (Read 1881 times)

kbmonroe

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Whether to buy a condo or house in DC
« on: August 21, 2016, 10:51:25 AM »
Hello fellow Mustachians!

I'm hoping that this wonderful community can share some collective wisdom and help me make a good decision regarding housing, as I'm seriously looking to buy a place in Washington, DC.

Facts and background:
--30 year old renting for the past 6+ years in DC, have several roommates for cheaper rent.
--Current rent is $1060/month in a great neighborhood, but I'm tired of living with five roommates.
--Have a partner, we're looking forward to living together in the near/mid term future; she's a key part of the decision process, but supports my choice. As we are as yet unmarried, the mortgage would be in my name.
--Earn $100k a year, frugal by nature so I sock most of it away, have been saving to build a nest egg, which currently stands at $130k.
--Commute is a 20 minute bike ride to downtown DC.
--Working in international affairs, so my career will always touch DC in some way.
--I know that I want to buy a place in DC (not northern Virginia or Maryland), and I know that what I buy will be rentable/sellable in the future given DC's market.
--Have never owned property before, have just begun to work with a highly recommended real estate agent.
--Am in talks with lenders, have excellent credit, and am being pre-approved for $550k mortgage.
--Regardless of where I end up, I'd get a 30 year fixed mortgage and then pay it off in 15 years or less.

Dilemma:
I'm facing two key decision points; please note that in addition to my partner, I'd have another friend live with us, as well, which expands what I can afford.

1) Deciding between a condo/co-op and single-family house. While a condo/co-op would be attractive and easy to maintain, part of me would love to grab a house and invest sweat equity in it over the years. Part of me is intimidated at the cost/amount of work a proper house would require (but also eager to take that work on). I know that a single-family home in DC will appreciate in value significantly more than a condo/co-op. Condo/co-op fees can be exorbitant, which is intimidating, but there's also far less work to do at home, which allows more free time with friends, traveling, fun stuff, etc.   I love house projects, but at this stage of life, unmarried and no kids, wary of biting off too much house.

2) Deciding on whether to aim for a place "closer to the action" or further from downtown. My partner and I are young, and the idea of being "far" from friends and fun activities is a little isolating. Granted, "far" in DC is a matter of a few miles, but still, closer to the action means a shorter commute, more fun stuff to do, but also much more expensive.


The back and forth:
--I can absolutely see myself prospering in a 900 sq ft 2BR $400,000 condo in a fun part of town, with no maintenance work to speak of, and thus lots of free time for fun. I love to travel, and I have a large friend circle and we cook together lots. It's unlikely I'd want a condo on the outskirts of town. I don't see myself staying in the condo for more than five years.

--I can also see myself thriving in a 2000 sq ft $600,000 house on the outskirts of DC with a quieter neighborhood, a garden, hosting large gatherings. I couldn't afford a house in DC close to the action unless it was a disaster, and my enjoyable albeit demanding job wouldn't allow for me to take on a a major fixer upper, just decent-size projects. I'm wary of idealizing homeownership, but I know that I want to continue to sink roots into DC. If I bought a condo, lived there for five years, tinkered with it, sold it, and then aimed for the bigger house, a) single family house costs in DC would likely increase drastically in that timeframe, and b) since I know I'd like a house in DC eventually, why not just get one now?

So that's my dilemma, wary of making a wrongheaded move, would greatly appreciate the wisdom of the Mustachian crowd!  Thank you!!

LorettaLynn

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Re: Whether to buy a condo or house in DC
« Reply #1 on: August 21, 2016, 01:05:06 PM »
I live in VA, rent now, but used to own a condo.  Condo fees = very anti-mustachian. 

waltworks

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Re: Whether to buy a condo or house in DC
« Reply #2 on: August 21, 2016, 01:30:08 PM »
Both are likely bad investments, like most real estate, so your best bet (assuming renting is untenable) would be to buy the cheapest/smallest place you can afford and continue to sock away money in better investments.

Run the NYT rent vs. buy calculator. If you can rent a decent place with your partner for a reasonable amount, that is probably a smarter move, but it'll depend on the exact costs and assumptions you make about the future.

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Enigma

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Re: Whether to buy a condo or house in DC
« Reply #3 on: August 25, 2016, 01:39:56 PM »
Wow…  Okay first and foremost, I live in Pentagon City/Arlington VA and have a few friends that live in DC.  Just like any major city there are safe places and there are dangerous places so you will want to do your homework on where you want to live.

One of my best friends owns a house in NW DC/Bloomingdale and bought the half of a row house (top half/very common) for $699k in early 2014.  His neighbors downstairs paid around $450k for the bottom half.  After one year the bottom neighbors moved out and sold their half for 700k.  Needless to say my friend’s place is now being appraised for over 1million.

So bottom line, the houses in DC have gone up and they have done so quickly.  Recently a couple I know that recently got married bought a house in NE DC.  They even had a house warming party where they invited all the neighbors up and down the street.  Basic house which still cost them around $750k…  However, it is worth noting it wasn’t their first choice.  The first two choices they got pushed out because others offering to buy with cash.  A bank financed loan takes time and comes with the headache of falling through.

I am against HOA fees especially in this area because they rapidly change and without notice.  You may start off with it being 600/month for HOAs only to find out a couple of years later it is 1.2k per month.  Might as well be paying rent…  Personally I think DC is a renter’s market.  It is easier to find a place to rent at 2-3k than to buy something that you owe $700-800k paying over 30 years with interest.

Now with the negativity aside (probably way too much of it)...  If I were to buy a house in the DC area, I was told when presidencies shift that tends to be a good time to look at purchasing.  According to my father housing prices tend to dive sharply when republicans take office (not that I think Trump will win).  Also the winter time is harder for sellers to sell their homes (who wants to move during the winter).  With the market as hot as it is right now I would focus on what uncertainties the Nov Election may bring that could shift the housing market into a little of a uncertainty.  Investors do not like uncertainty after all.  Neither do sellers whom if you are lucky will sell to leave quickly.

Good luck neighbor!
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franklin w. dixon

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Re: Whether to buy a condo or house in DC
« Reply #4 on: August 26, 2016, 10:17:01 PM »
Man, living here is a freaking nightmare.

I dunno how much of my experience will be useful because I understand the desire to live in the District but ultimately couldnt make it work without millions of USA dollarydoos which (1) I don't have and (2) if I did you better believe I wouldn't freakin live here.

I really strongly agree with those that said DC is a renter's market for a couple of reasons. First, you can live all over the place for like 1500-2000/mo. Split between yourself and your partner, you could get a sweet 1br for less than you're paying now. I don't really believe in the DANGEROUS NEIGHBORHOOD paranoia which is like 1 part pearl clutching and six parts Racial Holy War but even if you're terrified of the blecks (Afrikaans accent) you can live all up and down Wisconsin Avenue for <2k. That's a crazy amount of money for a tiny house but that's DC livin' for you and it stacks up favorably against buying because:

1. All the houses cost too damn much! I sorta kinda thought about living in Anacostia but it's way too far from my office (20852). I woulda done it by metro but I have to drive to Baltimore from the office all the time and like hell I'm gonna drive from Anacostia to Rockville 4 times a week or w/e. It would've been cool to live in NW but whoops houses starting $1.2 million ding dang dollars American.

2. Condo fees are just light-your-money-on-fire garbage. IDK what people are even getting for seven hundred freakin dollars a month to live in an apartment tower. Like. A concierge? ? ?? "Might as well be paying rent" is right & as has been pointed out condo associations love nothing more than being like oh whoops we spent all our money on security guards and this man who pushes the buttons in the elevator. Now we actually need critical structural repairs so we're doubling it ha ha eat shit, residents!

3. You gotta be kind of careful about getting a little house if there's a possibility/plan that you'll have kids. Like what I did is rent just long enough to save enough money to buy a 2br house in beautiful MONTGOMERY VILLAGE with all the other poor people & it was ok but then i got 2 babies and me dear old mother in law moved in and I was like "this seems like a small number of bedrooms for 5 people" so we had to get another one. It worked out OK like I rented out our previous house which isn't a bad deal but it only cost 175k. You'll be pretty sad if you try to make that move with a $600,000 house in the District as you upgrade to like, a $2 million house, if you can afford it (you can't! no one can! owned!).

4. You can get such sweet houses (relatively) outside the District for so, so, so much less. Silver Spring? Freakin Wheaton? Even over on the rich people side of the red line they're putting in huge townhouses that are literally steps from Shady Grove & if you're gonna buy a house that costs 700k I'm like... man... this is an easy call. The HOA fees are gonna be annoying by my standards but a far cry from the mountains of cash you'll fork over in a DC condo.

Again idk how much of this is really applicable cause if it's really just the 2 of you in the long term the district is fine, it's fine, you can live there & party with the cool people but for me I'm like well we got 5 people now and I guess my brother's gonna live here soon and maybe my father in law eventually and I'm like "sure am glad I have this stupid MoCo McMansion, here in beautiful Gaithersburg, land of the boring."

rachael talcott

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Re: Whether to buy a condo or house in DC
« Reply #5 on: August 28, 2016, 02:48:00 PM »
I bought a condo in NoVa in 2001 and moved away in 2007, just as the market was tanking.  I held on to it for all these years thinking that the market had to come back up, and it did a little, but nowhere near 05-06 levels.  So I finally just sold it -- closed last week.  Adjusted for inflation, and after selling expenses, the "investment" made me less than 2% annually, and I put a lot of sweat equity into it.  I did make some rent off of it as well, although it still was not a good investment. 

kbmonroe

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Re: Whether to buy a condo or house in DC
« Reply #6 on: August 28, 2016, 08:15:01 PM »
Thank you all so much! Your wisdom is so helpful!

humbleMouse

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Re: Whether to buy a condo or house in DC
« Reply #7 on: August 29, 2016, 01:49:59 PM »
If I was going to buy in a market like DC I would wait until the current housing run up has a substantial dip.  Meanwhile, just rent a nice 1br somewhere with your girlfriend.  This will also help you decide if you can live together and build a healthy dynamic!
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Imustacheyouaquestion

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Re: Whether to buy a condo or house in DC
« Reply #8 on: September 06, 2016, 09:50:28 AM »
I'd go for the small condo in a happening part of town and have your partner move in. Assuming the mortgage plus fees are under $2100, you're still paying roughly the same as you did to rent and enjoying having your own space. Your friends will be nearby and you'll get a better sense of whether you want to own a larger property with more maintenance required over the next few years.

In a few years, if you still want to stay in DC and want to buy a larger place, roll the equity you've built into a downpayment on a larger house in a quieter part of town.

Kevin

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Re: Whether to buy a condo or house in DC
« Reply #9 on: September 13, 2016, 01:29:38 PM »
Whatever you do, don't rely on the metro as your mode of transportation. That is asking for trouble, especially the redline in from Bethesda to downtown. Constant repairs and breakdowns. I've since moved from the area but the overcrowding and frequent breakdowns was enough to push me out of the area.

Oh and the cost of real estate :)

GhostSaver

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Re: Whether to buy a condo or house in DC
« Reply #10 on: September 13, 2016, 01:43:30 PM »
My wife and I bought in Brookland/Woodridge and loved it. I think the re market has caught up to that neighborhood a little bit, but it seemed like a great value for us, and probably still is if you can find the right place.

DuPont condo was never my style, in part because you're paying for the prestige of the location and in part because of condo fees.

Eckington? Trinidad? Over the river in historic Anacostia?

PencilThinStache

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Re: Whether to buy a condo or house in DC
« Reply #11 on: January 13, 2017, 08:27:30 AM »
I know this is an old post, but thought I'd chime in, as the OP never posted their resolution. I bought in NE DC, between Union Market and H St, and it has been absolutely booming. Not that you can really rely upon zestimate but mine has increased from 30k under to 150k over the purchase price in the 2.5 years I've owned it. The key in DC (and probably many other places, but DC is what I know) is to have some understanding of where investment is occurring. Read news articles, press releases, etc... 14th St NW might be a badass neighborhood, but all that development is well priced into the market. There are other areas that you might have better luck getting in before the wave of investment prices you out. L'Enfant/SW Waterfront comes to mind, and Anacostia, too (though I see that's not really an option for you for commuting reasons). My vote would be, if you're still thinking about it, to look in Northeast or Hill East. There's still room to grow in Trinidad and out by RFK..

oldtoyota

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Re: Whether to buy a condo or house in DC
« Reply #12 on: January 13, 2017, 08:41:22 AM »
Whoever said the talk about DC being dangerous is racist and pearl clutching is not quite accurate. The city was very dangerous in the 90s. One time, I hid behind cars to deflect any possible bullets as I entered a club in a now fancy part of town. I was young and dumb and guns didn't scare me much. So "dangerous" is a relative term.

Now? Not so much. Although I did see police congregate around a dead person in a front yard in NE DC. He had crawled there to die after being shot. While waiting for a bus, I saw cops looking in the bushes for a gun someone had dropped...

Anyway, did you end up buying in DC?

I know this post is old, but someone revived it. We're considering a move into the city. A previous poster said housing prices decreased when a Repub takes office, so maybe I'll keep an eye out for that.

What I know is that the house I rented in college is worth over $1M now,  maybe over $2M.

One sad thing is that real estate flippers are buying up houses in places like Petworth and Bloomingdale and 1) driving up prices and 2) getting rid of the architectural details that make a DC house so gorgeous.

When I looked on Zillow, I was sad to see blank white walls, granite countertops, etc. Where is the 100-year-old wood? The wooden floors? All character had been erased. This alone may keep me from moving into town. I wish there was a website that featured homes that haven't been "improved" yet.






oldtoyota

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Re: Whether to buy a condo or house in DC
« Reply #13 on: January 13, 2017, 08:42:55 AM »
PS: Schools. Will you have children one day? If yes, you may have to factor in the cost of private schools and/or traveling across the city to take your kid to a school in another part of town. The lottery is such that you can end up  having to drive a long (for DC long) distance to drop off and pick up kids.

jhess002

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Re: Whether to buy a condo or house in DC
« Reply #14 on: January 13, 2017, 09:19:47 AM »
Condo fees never go down and you are very limited in what you can do to your property in a condo association. But condos have very little maintenance, can offer nice amenities, and are easy to manage as rentals.

Places near metro are much better investments, as they appreciate faster and are more desirable, but you will also usually pay a premium. But that being said, DC has a lot of very reliable bus routes that have multiple bus lines that can get you into downtown just as quickly as metro.   

If you can make your budget work, maybe look into small 2 bedroom row/single family homes with a walk-out basement. This way your friend can rent one bedroom, and you may be able to rent out the basement as an additional bedroom or make it a separate legal unit.  Since you don't have kids/schools to worry about, your money can go further in many of the up and coming areas of DC (e.g. Petworth/Georgia Ave, 16th St Heights, Southwest Waterfront, Stadium Armory, etc).

Good luck!

Megma

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Re: Whether to buy a condo or house in DC
« Reply #15 on: January 26, 2017, 11:45:46 AM »
I'm going to chime in as a former DC property owner, though you've had a lot of good responses.

I bought a condo for a small fortune in a semi-sketchy neighborhood in on the up-swing in NE DC 10 minutes from the metro in 2011. The DC market was coming back from it's low then and now it's crazy. IF you can find a decent deal, it can be an ok option or if you plan to live in the district for the next 10+ years. Otherwise, you could lose your shirt because the market is really high right now.

I was LUCKY, I sold my 1-bedroom condo 2 years later for 175% of I'd bought it for. Again, this was PURE LUCK. When I bought the condo, I was single and had no intention of leaving DC. I'd been living there for 5 years already. 8 months later I met my now fiance and a year after that we decided to move to NC. Things can change quickly.

If you buy something, I hope you have as much luck.
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Mazzinator

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Re: Whether to buy a condo or house in DC
« Reply #16 on: February 01, 2017, 10:14:39 AM »
Any of you guys have opinions on buying vs renting in NoVa area? Military family of 5 with 2 kids in elem.

Thanks!!
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HawkeyeNFO

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Re: Whether to buy a condo or house in DC
« Reply #17 on: March 11, 2017, 03:12:21 AM »
Any of you guys have opinions on buying vs renting in NoVa area? Military family of 5 with 2 kids in elem.

Thanks!!

USN here, also with 3 kids.  If you're gonna be moving again in 3 or 4 years, then rent.  As others have said, DC is a renters' market.  If you plan to be here longer than that, then buying might make sense.  I bought twice in the DC area, but held both properties for long enough (13 years, and 5 years) to make pretty good money after all expenses.  PM me if you want further recommendations.

oldtoyota

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Re: Whether to buy a condo or house in DC
« Reply #18 on: June 27, 2017, 10:16:57 PM »
I bought in a not-fancy part of town, and my house went up by $170K over about 12 years. It didn't go as high as fast as homes in fancier parts, but it's decent enough. Some of that $170K will need to go to some maintenance before we can move. We also spent $$ updating some things, so that takes from the profit as well.