Author Topic: Big House vs Townhouse  (Read 3468 times)

genghis

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Big House vs Townhouse
« on: March 15, 2016, 07:59:15 PM »
I posted here before and I appreciated the great feedback that I received. Last time I wrote, I was considering moving to San Francisco. I changed my mind and decided to move to a small town in Illinois. I need to buy a house ( I already put the numbers in a spreadsheet to compare rent vs buy; buy wins). I My background:
Married, wife in school (online), two kids ( boy 20 months old, and girlf 4 months old)
Income: Low six figure, stable job, good job security
Option A:
Single family, 4 beds, 4 baths, 2500sqft, two cars garage, finished basement, built in 1988
Commute by car: 3.6m
Commute by bike: 3.9m
Price: 187k

Option B:
Townhouse, 3beds, 1.5 baths, 1581 sqft, built in 1979, no garage, small basement
Commute by car: 2.9m
Commute by bike: 2.9m
Price: 89.9k

Both houses are in a good school district.

I calculated that I would save approximately 10k every year by choosing the townhouse instead of the single family. I am leaning toward the single family house. The extra bedroom would be nice so I can have an office/guest room. I think I will be able to work from home sometimes. Also, my parents would have a place to stay with me. They will only visit once a year at most for 30 days; I can book a hotel for them instead (my parents live outside of USA and donít speak English). I would definitely have more privacy in the single family. My wife stays homes with the kids. Over the winter, we stay inside the house quite a bit and the kids would appreciate the extra space. Moreover, the single family house is very nice and probably a bargain, in my opinion.
On the other hand, option B looks appealing for a fast path to FIRE. 10k extra in my budge would boost my saving rates. It would be easier to clean the place and there is a park just around the corner for the kids. I consider myself frugal (no cable, $10 cellphone plan, cheap car, rarely dining outÖ) I am willing living few years or more in a low cost of living country, what would make FIRE easier. To be specific, 250k would be enough to live comfortable. I could retire in five years if I choose option B. Also, I am not even counting that my wife will be working in two years.

If I chose option B, I always can buy another house and have the townhouse as a rental property. If I chose option A, I could live there for a long time and donít worry about moving.

seattlecyclone

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Re: Big House vs Townhouse
« Reply #1 on: March 15, 2016, 08:07:17 PM »
I'd probably go with the townhome. A park around the corner sounds like a great amenity. Less interior space means less maintenance and cleaning, and the townhome form factor means less yard work as well. 1.5 bathrooms sounds about perfect as long as you don't have four people all on work/school schedules who need to shower at about the same time. If you're FIREd by the time your kids feel the need to shower daily, this won't be a problem...and the townhome will help make this a reality.

As to the question of houseguests, buying a "guest" bedroom almost never makes financial sense. You can pay for a lot of nights at a hotel with the $10k/year you're not spending on a house that's too big for your daily life. If the hotel bill gives you or your parents pause, you could have your kids share a room when the grandparents are visiting. Kids, even of different genders, have shared bedrooms at many points throughout history and society somehow continued to function.

tobitonic

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Re: Big House vs Townhouse
« Reply #2 on: March 15, 2016, 08:27:29 PM »
You can afford either house based on your income. However, since our life setup is very similar to yours, I'm going to put in my two cents:

Our family setup is like yours (family of 4, SAHM, etc) except we plan to have 2 more kids. Our house is like your B except we paid it off in 3 years. We're also in Illinois.

My take? I love waking up every day and knowing the house is ours. And the size works well for us; we don't plan on moving for a long, long time.

I'd stick with B, although it sounds like you really want A. A small house is one of the best deterrents to lifestyle inflation.

lhamo

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Re: Big House vs Townhouse
« Reply #3 on: March 15, 2016, 08:33:27 PM »
For me, given the fact that your parents visit from overseas for up to a month a year and do not speak English, and the fact that you already have a robust income that will likely increase over time (and will also be supplemented by your DW going back to work in a relatively short time), and the fact that housing is so cheap in your area, I would go with the larger house.

trashmanz

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Re: Big House vs Townhouse
« Reply #4 on: March 15, 2016, 08:40:08 PM »
Isn't there an HOA on the townhouse?  I thought typically there is some sort of fee paid to the community. 

I'm probably jaded, but I'd go for option A because 189K would barely buy a motorhome here in my area.  Also it may be possible to rent out a room in the future as well. 


seattlecyclone

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Re: Big House vs Townhouse
« Reply #5 on: March 15, 2016, 09:11:06 PM »
I'll add some more context and experience to my previous response. I grew up in a family of five. From about age 12-18, we lived in a house similar to your Option A (4 bedroom, 3 bathroom, 2600 finished square feet plus unfinished basement). This house was definitely larger than we needed. We had two whole rooms that we only used on special occasions! What a waste!

The house we lived in before that was closer in size to your Option B (4 bedroom, 1.5 bathroom, 1750 square feet) but it was a detached house instead of a townhome. At least from my perspective as an elementary-aged kid, it was the perfect size: not too large, not too small. The main reasons we moved out of that house were to get into a better school district and a shorter commute for my dad's job at the time.

Another Reader

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Re: Big House vs Townhouse
« Reply #6 on: March 15, 2016, 09:41:31 PM »
How about Option C, a smaller house, 4 bedrooms and two baths, all on one level so elderly parents can visit comfortably, maybe 1,800-1,900 square feet, with a garage?  Should be priced in between the large house and the townhouse. 

Townhouses have no privacy and no way to separate yourself from neighbors whose daily lives may conflict with yours.  HOA's often prohibit long term guests, so check the rules before you sign.  You can put kids in the back yard of a house with minimal supervision.  Not so with a public park.

And finally, what does your wife want?

Urchina

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Re: Big House vs Townhouse
« Reply #7 on: March 15, 2016, 09:55:54 PM »
How about Option C, a smaller house, 4 bedrooms and two baths, all on one level so elderly parents can visit comfortably, maybe 1,800-1,900 square feet, with a garage?  Should be priced in between the large house and the townhouse. 

Townhouses have no privacy and no way to separate yourself from neighbors whose daily lives may conflict with yours.  HOA's often prohibit long term guests, so check the rules before you sign.  You can put kids in the back yard of a house with minimal supervision.  Not so with a public park.

And finally, what does your wife want?

+1. We currently live in a 1600 square foot home with an attached two-car garage, 4 bedrooms, and no attic or basement (go, California!) and it's plenty big. We have a whole massive bedroom we rarely use. (2 adults, 2 kids, 3 cats, relatives who visit 5x/year for about a week at a time).

Plus, in the midwest, it's going to be way more expensive to heat and cool a larger house. Smaller houses are more efficient. If you want a stand-alone house, get a 3 bedroom plus den with a good yard in a reasonable school district, with a floor plan that allows you to fully utilize all the spaces every day (for us that means very small bedrooms and a generous kitchen/central area with a moderate-sized library/media rooms that can be closed off from the rest of the house for TV / movie watching, etc.

The 4-bedroom house you're describing sounds enormous.

mandy_2002

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Re: Big House vs Townhouse
« Reply #8 on: March 15, 2016, 11:10:54 PM »
HOA: if there is one, and you're trying to compare apples and oranges, figure out the value this additional cost adds to the cost of the house. Without knowing rates, I estimated an increase of ~$15,000 for a 15 year and $20,000 for a 30 year mortgage from each $100/month. It's still not apples and apples, but it does even them up a little.

I know way too many people that have garages but aren't able to put their cars in them because of the stuff that takes over when you have room for it. If the townhouse has off street parking, that would be my choice.

genghis

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Re: Big House vs Townhouse
« Reply #9 on: March 16, 2016, 08:12:20 PM »
Thank you all for the replies.

Townhouse's HOA is $75. Anyway, I decided that I will not choose the townhouse. The lack of privacy and freedom is not worth it. For instance, we sometimes line-dry clothes. This is not possible in the townhouse.

 I will try to find an option C. If I can't find it, I will probably make an offer for option A (170k).

dcozad999

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Re: Big House vs Townhouse
« Reply #10 on: March 17, 2016, 03:07:27 PM »
As a current owner of a townhouse, I would recommend the standalone. 

The HOA can be raised at any time. Mine went from $60 to $100 within a 6 year period. There are so many other reasons I wish I'd never bought the place and we are currently making the necessary changes to sell it (at a loss after living there for 10 years).

Consider me jaded though.

Fuzz

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Re: Big House vs Townhouse
« Reply #11 on: March 17, 2016, 03:35:36 PM »
Glad to hear that you're going with the home. HOAs can be a nightmare. Imagine being forced to go out for dinner with people you don't like; watch them order apps; and then split the check evenly. That's more fun than an HOA.

mm1970

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Re: Big House vs Townhouse
« Reply #12 on: March 17, 2016, 04:51:10 PM »
I would also look for a smaller single family.

With the townhouse, I would worry about lack of garage (in the winter), lack of outdoor space (yeah, there's a park, but when your kid is 3, you just want to let them go out to the fenced back yard), neighbors and noise (which I still get in my single family home).

But that Single family *is* kind of big. I'd still choose it over the townhouse, probably.