Author Topic: Considering condo purchase need opinions  (Read 1485 times)

dragonwalker

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Considering condo purchase need opinions
« on: January 26, 2021, 11:46:10 PM »
I知 a 32M currently renting a room in the Los Angeles area for $575 per month. My landlord is selling the home in 4 months and I will have to move. Coincidentally my work is relocating to another part of town in about the same amount of time.

Renting another room in the new area of Santa Clarita, CA will be anywhere from $800-$1000 with similar conditions finding a very modest place.

I am looking at buying a condo in Santa Clarita. I found a 2 bedroom and 2 bath unit just on the market for $315K. I visited on the first day it was on the market and like it. I spent some time in the area with my mother as well and I liked it as well although I'm not to familiar with the area. On that same day I am told by the listing agent it received 4 offers and its status on least on Zillow shows contingent. $315K is the same estimate as Zillow but it痴 a hot market. HOA every month is $370. My plan was to live in one room and rent the other for $800-$1000. I am confident this rental range is about right based on what I see similar listings for rooms going for. 

From work I have a very generous mortgage program that lets me get a mortgage at about 1% ARM but tied into our cost of funds + a small margin. My calculated PI, property tax, HOA, insurance with 20% down was going to be about $1612/ month. Now I知 only a single income making about $62K per year with no debt or other expenses. I知 aware there are other expenses like utilities, maintenance, and unforeseen expenses.

I have about $40K cash, 429K (200K as the result of unrealized capital gains) in index funds and individual stocks, 196K in 401K/IRA. The idea would be that I would take about $30K of my cash plus sell off $40K of my $145K stock in Apple to cover the down, closing costs for the home.
I just want some people to tell me if I知 doing the right thing here? Yes of course technically I can continue renting some small room and perhaps it would be better financially but my view on this is that it痴 fulfilling a need I have to find a place to live and diversify my investments a bit away from equities. Ironically, I have wanted to find a way to sell some of Apple because it has just been so successful these past 6 years.       

The real estate market though in the Los Angeles area seems to be on fire though and who knows I might be buying at some critical peak. Units of the same size in the same complex have sold in the previous year have sold as low as $275K. I知 considering going up to $320K with an initial offer of $316K.

I would be a first time home buyer but I have been as far as escrow previously but never went through with the deal 6 years ago. I want peoples thoughts on this if it makes sense financially. Keeping in mind I am willing to sacrifice the fact that potentially I知 missing out on a greater gain in the market so long as it doesn稚 mean I知 making a dramatic mistake here.

Basically, am I missing something completely or not considering something critical to my decision making? I have been doing my best homework on home/condo ownership reading a book, reading online and watching videos out there.
« Last Edit: January 26, 2021, 11:50:27 PM by dragonwalker »

MilesTeg

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Re: Considering condo purchase need opinions
« Reply #1 on: January 27, 2021, 12:08:26 AM »
I知 a 32M currently renting a room in the Los Angeles area for $575 per month. My landlord is selling the home in 4 months and I will have to move. Coincidentally my work is relocating to another part of town in about the same amount of time.

Renting another room in the new area of Santa Clarita, CA will be anywhere from $800-$1000 with similar conditions finding a very modest place.

I am looking at buying a condo in Santa Clarita. I found a 2 bedroom and 2 bath unit just on the market for $315K. I visited on the first day it was on the market and like it. I spent some time in the area with my mother as well and I liked it as well although I'm not to familiar with the area. On that same day I am told by the listing agent it received 4 offers and its status on least on Zillow shows contingent. $315K is the same estimate as Zillow but it痴 a hot market. HOA every month is $370. My plan was to live in one room and rent the other for $800-$1000. I am confident this rental range is about right based on what I see similar listings for rooms going for. 

From work I have a very generous mortgage program that lets me get a mortgage at about 1% ARM but tied into our cost of funds + a small margin. My calculated PI, property tax, HOA, insurance with 20% down was going to be about $1612/ month. Now I知 only a single income making about $62K per year with no debt or other expenses. I知 aware there are other expenses like utilities, maintenance, and unforeseen expenses.

I have about $40K cash, 429K (200K as the result of unrealized capital gains) in index funds and individual stocks, 196K in 401K/IRA. The idea would be that I would take about $30K of my cash plus sell off $40K of my $145K stock in Apple to cover the down, closing costs for the home.
I just want some people to tell me if I知 doing the right thing here? Yes of course technically I can continue renting some small room and perhaps it would be better financially but my view on this is that it痴 fulfilling a need I have to find a place to live and diversify my investments a bit away from equities. Ironically, I have wanted to find a way to sell some of Apple because it has just been so successful these past 6 years.       

The real estate market though in the Los Angeles area seems to be on fire though and who knows I might be buying at some critical peak. Units of the same size in the same complex have sold in the previous year have sold as low as $275K. I知 considering going up to $320K with an initial offer of $316K.

I would be a first time home buyer but I have been as far as escrow previously but never went through with the deal 6 years ago. I want peoples thoughts on this if it makes sense financially. Keeping in mind I am willing to sacrifice the fact that potentially I知 missing out on a greater gain in the market so long as it doesn稚 mean I知 making a dramatic mistake here.

Basically, am I missing something completely or not considering something critical to my decision making? I have been doing my best homework on home/condo ownership reading a book, reading online and watching videos out there.

That HOA would be an absolute deal breaker for me, but ymmv.

This would be a bad time to get an ARM if this is a long term purchase. The only way it can adjust is UP! ARMs are for when you think interest rates will go down in the future or you aren't planning to own past the locked rate period.

You likely won't have a choice on escrow. Most lenders won't allow you to not have it.

BikeFanatic

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Re: Considering condo purchase need opinions
« Reply #2 on: January 27, 2021, 01:34:59 AM »
I second that the HOA is very high, Does it include property taxes, or a pool? I do like that it has two bathrooms then your roomate can have her own room and bathroom.

K_in_the_kitchen

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Re: Considering condo purchase need opinions
« Reply #3 on: January 27, 2021, 10:37:25 AM »
That's a huge HOA fee -- how much more mortgage could that $370 get you if you found a small house to buy instead?  Another thing to consider is the the HOA fee is forever and will only go up.

Would you willingly pay $370 per month for whatever benefits the HOA offers if you had to choose each part separately?  We bought a condo 25 years ago (young) and the HOA fee was low for our area because we didn't have a pool, play ground, dog area, etc.  The fee covered the front landscaping maintenance, the water, sewer, and trash, and the insurance on the parts of the building considered "common", so not our interior walls or anything in the walls like pumping or electrical.  While were still owned the condo there was one assessment (additional to the monthly fee) because the decision was made to change the garage doors to rollups to make them harder to break into.  We were responsible for our own property taxes.

I just checked and current HOA on our old unit is $335, and at this point I don't see how it can be worth it.  Our share of the landscaping was two tiny areas right outside our front door, and the small strip of parkway in front of the unit -- we wouldn't pay someone for that job.  When we moved out we found homeowners insurance to be not quite double what we paid for renters insurance.  Our current house is only 1/2 mile from that condo (1/4 mile as the crow flies), so I would assume the rates are similar to what we pay now, so that part of the HOA fee is worth maybe $50 per month.  Same utility company, base rates for a single family home run about $80 per month plus actual water usage which adds little, and the rates aren't exactly the same multiple units, but let's say this would run $100 per month for a wasteful single user in a SFH.  Even padding the numbers a bit, that HOA fee is more than double what someone would pay for the same services in a comparably priced SFH in the same area.  Even if the HOA fee includes a pool, you have to consider whether you would choose to have and maintain a pool.

Now, to be fair, at some point the association may need to paint the exterior of the units, repair and replace roofing, fix cracked sidewalks, etc.  But there's no guarantee they'll have the money to do these things based on the HOA fees they collect, so they may do an assessment anyway.

When talking to my own kids about housing, I typically advise against getting locked into fees they have no control over, like HOA fees, mobile home space rent, etc.  You end up paying for things you don't value and get stuck with a lot of rules to follow.  We had to get permission to have rain gutters installed over the patio so we wouldn't get dumped on trying to enter our own home, and had to sue their approved vendor.  Even though a few neighbors had sunrooms built onto the back of their units, the HOA management had made the decision that no one else could do that.  After we got a dog larger than the usual little dogs in the complex, that HOA management made an arbitrary rule to forbid dogs over 30# in the future, meaning we got grandfathered in but in the future other residents wouldn't be allowed larger dogs.  Friends who lived in a master planned community with an HOA enjoyed the pool amenity, but had rules against any vehicles being parked on the street overnight, rules about paint colors and window coverings, and all manner of things intended to keep property values up -- they weren't even allowed a clothesline in their own backyard.  Eventually they decided they really liked having a pool, so they bought a house with a pool in a non HOA area, and dumped all the other rules.

jamesbond007

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Re: Considering condo purchase need opinions
« Reply #4 on: January 27, 2021, 10:53:15 AM »
That HOA, although very high, is inline with SoCal standards. In fact, I have seen worse. But again $370 is too high for me no matter where I live. Now if they cover expenses like water and sewer, cable (If you are currently paying for one), HO insurance would be slightly lower becuase roof is covered, etc., then you could deduct those costs from HOA and figure out your net HOA would be much lower. But deduct only those expenses that you'd normally spend anyway. Then figure out if it is worth.

cool7hand

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Re: Considering condo purchase need opinions
« Reply #5 on: January 27, 2021, 01:05:12 PM »
How old is the development? A lot of condo developments start having huge expenses after 20 years: paving, roofing, windows, garage doors, and landscaping. That high HOA fee suggests this has already begun.

Jon Bon

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Re: Considering condo purchase need opinions
« Reply #6 on: January 27, 2021, 01:05:23 PM »
2 words, Special Assessment.

I really REALLY don't like letting other being be in charge of the maintenance of my home, and being on the hook for the maintenance of other peoples homes.

HOA's are all too often horribly managed. If 100k worth of work roof must be done, but there is only 25k in the kitty, guess who pays the remaining 75k?

Sounds like you are a young single person? You have tons of options, rent another room, buy a duplex and live in half. Buy a small house and rent a room to a buddy, etc etc. You don't have a dog that MUST have a yard, you don't have kids that MUST be in a premium school district. You can afford to be flexible, others cannot. Use that to your advantage, I am not sure buying a condo is the way to go. It might be, but I would look around first. I know many of my friends bought condos in their late 20's. I don't think any of them were particularly happy with them 5 years later.

Sounds like your financial picture is pretty good, does 450k get you a decent house?




dragonwalker

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Re: Considering condo purchase need opinions
« Reply #7 on: January 27, 2021, 04:35:25 PM »
Hey thanks for the replies. Looks like a lot of people are questioning the HOA. Yes it's a pain point but as was mentioned $370 is in line with just about any other condo complex in the entire area. Maybe slightly above average. It does cover water, sewage, tennis court, pool, spa, rec room. Believe me it's far more than I would pay for any of the benefits or services I would get on my own. In theory it covers the roof as well when it comes time to replace it but that is if reserves are there. The complex is old being built in 1969 so I'm aware there is an increased possibility of additional special assessments.

The problem with SFH or duplexes is price. I did look at a nearby duplex. Keep in mind half of a duplex which is 2 bedrooms, 2 bath at about the same size is minimum $500K and the one I visited was in poor condition and not remodeled. Similar size single family homes are going for $560K.

My pre-approval isn't completely in yet but regardless I wouldn't feel to comfortable with PI going above $1000/month which puts the loan somewhere around $300K and frankly I don't think I would qualify for that on my income. Even if I was approved for that I'd have to put down anywhere from  $200-260K. This is basically enough to get me in a poor condition duplex built in the early 80s with still a $58/month HOA. The SFH at about $560K though doesn't have any HOA and is in nice move in condition.

Also consider with a higher cost home my property tax goes up as well. Now ofcourse the cost of HOA per month would still be more but so would the increased cost of utilities. Without an HOA I can borrow about another $100K if the online calculators are right but that seems to leave me nowhere now with a loan of $350K and had I put 20% down that's a sales price in the low 400s which means a very nice condo (but not because again it would have an HOA) or perhaps the worst, oldest, smallest, homes in south central LA which are going for about that lol.   

Telecaster

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Re: Considering condo purchase need opinions
« Reply #8 on: January 27, 2021, 04:46:32 PM »
The property has a maintence guy.   Talk to the maintenance guy and ask him how things are going.  He'll either say 1) things are great, management is on top of stuff 2) we handle things as budget allows or 3) things aren't being taken care of.

You want 1) and can live with 2).  You do not want 3) at all.  As @Jon Bon mentioned, you do not want a special assessment.  That's a sign the HOA is badly managed.  If you can find them, it is worth talking to the HOA board.  You are basically going into business with them if you buy, so you are well within your rights to quiz them how things are going. 


mozar

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Re: Considering condo purchase need opinions
« Reply #9 on: January 27, 2021, 05:06:19 PM »
My concern is that you are new to the area. Common sense advice is to wait a year before you buy.

dragonwalker

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Re: Considering condo purchase need opinions
« Reply #10 on: January 27, 2021, 06:28:39 PM »
Yes I am new to the area but just to put in perspective the area is about 15 miles north of me so it isn't that far and I know my biggest daily pain point would be driving so unless there was something terrible about the area I know I would be happier to be closer. My visit there and my coworkers and friends in the area don't seem to have any complaints and the location seems better than where I live now so there is a high probability I will not have an issue with the area so it comes down to timing and price. 

lhamo

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Re: Considering condo purchase need opinions
« Reply #11 on: January 27, 2021, 11:03:11 PM »
Never put an offer on a condo, co-op or townhouse where you share liability for the overall upkeep of the complex (which is paid for through the HOA or management fees, a significant portion of which should be going to the reserve fund) without a thorough review of the complex financials AND at least 1-2 years of board meeting minutes. You will avoid a world of pain by having a clear view into both the finances and the decision making processes (or lack thereof) of the board. Cray cray behavior should be easy to spot. Run if you see it.

jim555

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Re: Considering condo purchase need opinions
« Reply #12 on: January 28, 2021, 12:48:17 AM »
My condo the fees are in the ballpark with your numbers.  It includes heat, water, sewer, landscaping, snow removal, repairs.  Make sure you know the property tax exactly.  Once in a while you will probably get a special assessment for a special purpose.  We had a gas line problem that was very expensive, but a one time event.

Jon Bon

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Re: Considering condo purchase need opinions
« Reply #13 on: January 28, 2021, 10:05:30 AM »
Never put an offer on a condo, co-op or townhouse where you share liability for the overall upkeep of the complex (which is paid for through the HOA or management fees, a significant portion of which should be going to the reserve fund) without a thorough review of the complex financials AND at least 1-2 years of board meeting minutes. You will avoid a world of pain by having a clear view into both the finances and the decision making processes (or lack thereof) of the board. Cray cray behavior should be easy to spot. Run if you see it.

Wise words

dragonwalker

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Re: Considering condo purchase need opinions
« Reply #14 on: January 28, 2021, 07:02:40 PM »
Never put an offer on a condo, co-op or townhouse where you share liability for the overall upkeep of the complex (which is paid for through the HOA or management fees, a significant portion of which should be going to the reserve fund) without a thorough review of the complex financials AND at least 1-2 years of board meeting minutes. You will avoid a world of pain by having a clear view into both the finances and the decision making processes (or lack thereof) of the board. Cray cray behavior should be easy to spot. Run if you see it.

In theory this makes sense but in the red hot market the limiting factor is time. At what point exactly do I request and do this review? Probably at the point after I make an offer because one can not wait to receive this information and analyze before the unit is long gone. The other issue as well is what is the level of expertise needed to review these financials? I wouldn't know if the HOAs financials are in good shape. Would you? How are such documents reviewed if you are not an accountant?

lhamo

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Re: Considering condo purchase need opinions
« Reply #15 on: January 28, 2021, 11:22:34 PM »
It isn't that hard.

Is there a reserve study? Red flag if there isn't.

How large is the reserve and how much does it average out to per unit? Are hoa fees contributing enough to pay for likely upcoming maintenance?

What do the board minutes tell you about how repairs and needed maintenance are being handled? Are there constant fights about getting needed work done?

We bought into a co-op building in NYC where half the owners had been there forever and didn't want to or couldn't afford the maintainence the building needed. A new roof, new windows and brick pointing were all pending. We knew there would be an assessment of $10-20k shortly after we moved in. We had to force that through by having the new owners take over the board. It was necessary to protect our investment (the co-op had already paid for 2 years of repair to top floor units that had water damage). But it got pretty ugly.

Don't buy into shared ownership unless you know what you are getting into. Our investment turned out fine but only because we understood what needed to be done both practically and financially.

dragonwalker

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Re: Considering condo purchase need opinions
« Reply #16 on: January 29, 2021, 12:05:17 AM »
It isn't that hard.

Is there a reserve study? Red flag if there isn't.

How large is the reserve and how much does it average out to per unit? Are hoa fees contributing enough to pay for likely upcoming maintenance?

What do the board minutes tell you about how repairs and needed maintenance are being handled? Are there constant fights about getting needed work done?

We bought into a co-op building in NYC where half the owners had been there forever and didn't want to or couldn't afford the maintainence the building needed. A new roof, new windows and brick pointing were all pending. We knew there would be an assessment of $10-20k shortly after we moved in. We had to force that through by having the new owners take over the board. It was necessary to protect our investment (the co-op had already paid for 2 years of repair to top floor units that had water damage). But it got pretty ugly.

Don't buy into shared ownership unless you know what you are getting into. Our investment turned out fine but only because we understood what needed to be done both practically and financially.

I get what you are saying and if I choose to make any offers and once it's accepted I will make an effort to get this information which should shine some light on the HOAs finances. I'm not sure how much information I will be able to get before I can commit or understand but I guess I can ask some people on here :)

Dicey

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Re: Considering condo purchase need opinions
« Reply #17 on: January 29, 2021, 08:11:53 AM »
I agree with lhamo. The skyrocketing cost of insurance, due to CA's penchant for disaster, and the age of the complex  will always put upward pressure on the HOA fee.

If you add just the amount of the HOA fee to the rent you're paying now, you're in the range of what a shared rental will cost in the new location. Paying $1k/month means you're out $12k per year for housing.  It's guaranteed that the condo is apt to cost you well beyond that, especially with the possibility of Special Assessments.

Condos are cheaper because they're less desirable. They will appreciate less than SFH's because of this. If you really want an eye opening exercise, use the Sales History function in Zillow or Redfin to track how similar units have performed over time. The Santa Clarita area got hit hard very during the Great Recession, especially the condos.

Never buy a condo unless you're willing to be on the HOA Board. Having an insider's view is essential to protecting your investment.

I owned, lived in, and served on the Board of two condos in NorCal. Our three SoCal SFH rentals are part of the same expensive, uber-controlling HOA, so I have some experience on this topic. In your case, in the current situation, with your income, I would give this a hard pass. Rent for at least another year.


dragonwalker

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Re: Considering condo purchase need opinions
« Reply #18 on: January 29, 2021, 08:56:14 AM »
I agree with lhamo. The skyrocketing cost of insurance, due to CA's penchant for disaster, and the age of the complex  will always put upward pressure on the HOA fee.

If you add just the amount of the HOA fee to the rent you're paying now, you're in the range of what a shared rental will cost in the new location. Paying $1k/month means you're out $12k per year for housing.  It's guaranteed that the condo is apt to cost you well beyond that, especially with the possibility of Special Assessments.

Condos are cheaper because they're less desirable. They will appreciate less than SFH's because of this. If you really want an eye opening exercise, use the Sales History function in Zillow or Redfin to track how similar units have performed over time. The Santa Clarita area got hit hard very during the Great Recession, especially the condos.

Never buy a condo unless you're willing to be on the HOA Board. Having an insider's view is essential to protecting your investment.

I owned, lived in, and served on the Board of two condos in NorCal. Our three SoCal SFH rentals are part of the same expensive, uber-controlling HOA, so I have some experience on this topic. In your case, in the current situation, with your income, I would give this a hard pass. Rent for at least another year.

Yes I was planning to be active in the HOA board as much as I can at least going to any public meetings and being involved. The problem with any "better" than a condo is the price and really at this point I need dual income to really make that income which is not expected to be soon. I have looked at the previous sales history of this location and units within the past year have sold as low as $275,000 but substantially less remodeled. Even so I'm aware the price has substantially increased. I'm going to see what is out there but keep an eye towards the value I'm getting.

@Dicey  I'm curious given my situation would there have been any point in the last 10 years or so would you think a purchase of a condo would have been the right situation for me or do you think that market conditions just don't justify it this entire time?
« Last Edit: January 29, 2021, 09:04:26 AM by dragonwalker »

lhamo

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Re: Considering condo purchase need opinions
« Reply #19 on: January 29, 2021, 08:59:31 AM »
Sorry -- I guess I should have said never put a non-contingent offer on this kind of property.  Just make a satisfactory review of the financials one of your contingencies.

Oh, and be specfic that you want to see at least the last two years of financial statements (so you can compare for trends), last reserve study, and 1-2 years of board meeting notes.  If they can't or won't provide those in a timely way that is also a red flag.

Also I understand the pressures of buying in a tight market.  But a poorly run or underfunded condo, etc. is going to be one of the first things to lose value in a turndown.  And if you end up with people who are foreclosed on or stop paying HOAs because it doesn't seem worth it the whole building can spiral down in value really quickly.   Being sure the financials and the structure are solid enough to weather a downturn is really important, especially if you don't have cash to ride out a rough economic patch.   Things are so crazy right now with both the economy and housing prices it feels a bit like the bubble of 2006-07. I am actually looking at buying my next property, but I can deal with it if I spend 500-600k and it drops 25-50% in value because I will be paying cash and holding it for 15-20 years.  You are in a very different situation so  I think it is wise to be more prudent.
« Last Edit: January 29, 2021, 09:07:33 AM by lhamo »

dragonwalker

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Re: Considering condo purchase need opinions
« Reply #20 on: January 29, 2021, 09:05:03 AM »
Sorry -- I guess I should have said never put a non-contingent offer on this kind of property.  Just make a satisfactory review of the financials one of your contingencies.

Oh, and be specfic that you want to see at least the last two years of financial statements (so you can compare for trends), last reserve study, and 1-2 years of board meeting notes.  If they can't or won't provide those in a timely way that is also a red flag.

Thank you yes I will definitely do that for any offer of mine accepted. 

Dicey

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Re: Considering condo purchase need opinions
« Reply #21 on: January 29, 2021, 10:35:10 AM »
I agree with lhamo. The skyrocketing cost of insurance, due to CA's penchant for disaster, and the age of the complex  will always put upward pressure on the HOA fee.

If you add just the amount of the HOA fee to the rent you're paying now, you're in the range of what a shared rental will cost in the new location. Paying $1k/month means you're out $12k per year for housing.  It's guaranteed that the condo is apt to cost you well beyond that, especially with the possibility of Special Assessments.

Condos are cheaper because they're less desirable. They will appreciate less than SFH's because of this. If you really want an eye opening exercise, use the Sales History function in Zillow or Redfin to track how similar units have performed over time. The Santa Clarita area got hit hard very during the Great Recession, especially the condos.

Never buy a condo unless you're willing to be on the HOA Board. Having an insider's view is essential to protecting your investment.

I owned, lived in, and served on the Board of two condos in NorCal. Our three SoCal SFH rentals are part of the same expensive, uber-controlling HOA, so I have some experience on this topic. In your case, in the current situation, with your income, I would give this a hard pass. Rent for at least another year.

Yes I was planning to be active in the HOA board as much as I can at least going to any public meetings and being involved. The problem with any "better" than a condo is the price and really at this point I need dual income to really make that income which is not expected to be soon. I have looked at the previous sales history of this location and units within the past year have sold as low as $275,000 but substantially less remodeled. Even so I'm aware the price has substantially increased. I'm going to see what is out there but keep an eye towards the value I'm getting.

@Dicey  I'm curious given my situation would there have been any point in the last 10 years or so would you think a purchase of a condo would have been the right situation for me or do you think that market conditions just don't justify it this entire time?
There's a saying that you make money when you buy and when you sell. Buffet says something about being bold when others are afraid (wild-ass paraphrase there). I have bought and sold many properties. The standout performerss are the ones I/we bought in down markets.

This summary is bit of a guesstimate because I don't have time to look up the exact numbers.

First condo, paid $120k on a short sale in 1996. Seller was being transferred during a weak market. Sold it 4.5 years later for $255k. This one was small (2+1) and old, but killer location, location, location.

Next, a townhouse. Paid full market price of $390k in 2001. Put it on the market in 2011 for $529, got $600k, because the market was just starting to heat up, post recession. I also put more money into fixing that one, so more work, more time, and comparatively less return on my investment. A SFH in the same time frame would have more than doubled, but it suited my needs well. It was quite large (4+2.5) and in a prime spot in the development (end unit on a huge greenbelt).

Rental #1 - New build. Paid market price ($301k) in 2003 and it's barely kept up with inflation.

Rental #2 Resale in the same community. Bought in 2015 for $259k in a down market in the same area and it need work. It smelled of sewage and the bathroom linoleum was lifted and peeling around the toilet. No one wanted it, but we figured it was only a failed wax seal, and we were going to replace the flooring anyway. It has appreciated quite nicely. It's now our best cash flowing property.

Rental #3, also bought in 2015, was insanely overdecorated by very proud owners (there were 50 cuckoo clocks in the Great Room, and that's just the beginning of the list), who overpriced it in a falling market. It sat on the market for a year. It's the biggest and fanciest of the three. Paid $335k, which was $100k less than their original asking price.

These properties are in a 5,000 home community. Our goal then was to own five properties in the development. We've been looking ever since, and have plenty of cash reserves to do so, but we haven't found anything that makes sense, so we're impatiently waiting. And constantly scanning the market, of course.

Our current home was purchased on a short sale in 2012. The market was just starting to heat up. We had to outbid a dozen other buyers. Paid $928k. Now worth at least $1.6M.

Lessons: Buy in a down market.
Buy cosmetically ugly properties and fix them ourself.
Buy what buyers want, so when it's time to sell, there's plenty of interest.
In short, timing is everything.

Hope this helps. It is not a complete list, just the most relevant properties.

MissPeach

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Re: Considering condo purchase need opinions
« Reply #22 on: February 02, 2021, 01:57:32 PM »
That HOA doesn't sound out of line for CA. The price of that unit sounded reasonable for CA pricing (I don't know that area). I can't believe you were able to rent in LA for that little! The people I've met paying that are sharing a room.

Before buying into a HOA I would want to know what might need to be done, if there is any deferred maintenance, and what is in reserves. In my area there is a huge price different and it's too high to jump from condo to fixer upper house ($300-400K+).

For insurance on a condo you will probably be able to get a condo policy. It's more than renter's insurance but about half of homeowner's. You will also want to have on your policy gap coverage in case the HOA's insurance isn't sufficient. It's cheap coverage and was recommended to me often as a CYA.

With rates what they are I would recommend getting a fixed loan (no ARM). Also you can get a lower rate on condos usually by putting 25% down instead of 20.

I did what you recently did since CA rents are going up like crazy and I wanted to be able to lock in my housing costs. I'm not in a position to move to a cheaper area. Since you sound younger and less tied down you'll have to figure out if it's worth the expenses.