Very new Mustachian here. I've been searching the forums for info, and seeing a lot of hate on condos, and it seems fairly reasonable.
But are there situations where buying a condo is a smart, "mustachian" choice?
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Story time : I purchased a house three years ago. I thought I got a great deal. (Close enough to bike to work, near public transit, near downtown, beautiful neighborhood)
However, it was 120 years old, and it had a lot of maintenance needs. We ended up having to sink $22k into it last year (new water heater, new furnace, new insulation, new roof, two dozen small things, etc.). Half went onto a personal loan. Half on a credit card.... (Danger zone -- Emergency! I know. I know. Trust me, I know).
It's burned me. Fixing smaller house stuff I feel pretty comfortable with, but having major things hanging over my head (like when water was leaking into the house from our shot roof, in multiple rooms) was incredibly terrifying and stressful -- we're finally selling that house and renting somewhere, and not having to worry about major repairs is a godsend. I feel like I can finally breathe for the first time in years.
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Now, we're looking at condos. Compared to the house, it's about 90 years newer, larger, nicer, in better condition, and in a better school district. Additionally, the wife approval factor is much higher.
As far as I can tell, it's also much cheaper. My admittedly-inexperienced inner mustachian is getting excited by these numbers:
- Old Drafty Victorian House (3bed, 1200sqft) : ~$1400-1600/month (mortgage, taxes, loans for major repairs). 15yr, 10% down mortgage
- Our temporary in-between-places apartment : (2bed, 600sqft) : $850/month. Free heat.
- Potential New Condo (3bed, 1400sqft) : ~$900/month (mortgage, taxes, and HOA fees included) - 15 year fixed, 20% down (no PMI?)
Gas and electric should both be cheaper in the condo, although I can't quantify that directly.
Once the mortgage is paid off, condo drops to about $400/month (prop taxes + HOA fees only).
Our current apartment is cheap because it's small and way at the edge of town - almost no transit :(
To rent a place comparable to the condo would cost $1200/month today (probably $1500/month or more in 15 years, when our condo mortgage would be paid off).
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I see a lot of downsides to condos. But I think most of them might not apply to me :
- People seem concerned about relocating for jobs. I would *love* to do this, but I've never been able to. Despite my best attempts to do so, I've never landed a job out-of-market, but have landed multiple solid job offers here in the last five years. I'm not willing to leave without a job lined up, so the chances of us ever actually leaving this market are very low. (Family and friends also live here, which is convenient).
- People seem concerned about wanting to own *land* or property. I hate managing land. I don't ever want to mow grass, plant gardens, shovel snow. I don't disparage anyone who likes these things, but this is a source of stress for me, not pleasure. I consider it a huge plus to not need to stress about it.
- People seem concerned about needs changing. My needs are probably set. I'm already married, already have a child on the way. Additionally, we shouldn't ever outgrow this place -- the condo is basically house-sized already (3bed, 2.5ba. 1500sqft. A basement also exists that appears like it could easily be finished which would add lots of extra sqfts of living space).
- People seem concerned about bad neighbors and crazy HOAs. I also am concerned about this - I have zero experience with condos. But it can't always be terrible, right? Why does anyone buy condos, if these HOAs are all terrible?
- People seem concerned about forever paying HOA fees, on top of property taxes. This is totally true, but I think it might be an OK compromise. Comparable standalone homes are $20k - 40k more expensive than this condo is, and the HOA fees are only about $200-$250/month. It would take 13 years of HOA fees to become higher than the extra cost would be for a single family home -- not to mention the extra mortgage interest we'd pay, and any potential major repairs that would need to be made in that time.
- People seem worried about not being able to sell or rent condos easily. It's a very illiquid asset. I am also worried about this. The chance of us wanting to rent the place is very low, but I could see us needing to sell if something terrible happened. I don't have a workaround for it -- probably my biggest fear.
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Wise, experienced Mustachians, is there something I'm missing? Is there some trick or gotcha I have not uncovered? Logically, this seems like a potentially solid decision financially. And I love the idea of getting apartment-like levels of no-stress, but not having to worry about the rising home / rent costs. I love the idea of owning an apartment, but paying only 1/3rd "rent" for it (once the mortgage is gone).
However, conventional wisdom (including some of the posts I'm reading here) state that condos are a generally all-around bad idea. I'm trying to figure out what I'm missing that makes this such a bad idea.