The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: PintSizedMustachian on February 20, 2014, 12:39:59 PM
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I'm trying to decide between two properties & having a difficult time. Here are the basics:
Townhouse- 2 bed, 2.5 bath, built in '08, nice finishes, Hardie board siding, electric heat. Layout doesn't lend itself to a renter, there's no garage, area is more car-dependent (no sidewalk, between two arterials).
Townhouse-style condo- 3 bed, 2 bath, built in '96, dated finishes, may need new windows, vinyl siding, forced air heat. HOA dues of $200/month, a bedroom could be rented for $600/month, garage for gym/car repairs, extremely walkable area, blocks from running trails around a lake.
Both are well-connected by bus, they have similar square-footage, & are safe, residential areas. The townhouse advantages are that it's $30k cheaper with no HOA, so we could safely get a 15 year mortgage. Condo advantages are walkable, close to running trails, garage for car maintenance & gym, extra bedroom for renting, but it's at the very top of our price range when you add in HOA dues.
Advice?
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I guess my advice is really to ask yourself a few questions.
1) How much will the car-dependence cost you? If can bike most places in the condo but will have to drive everywhere in the townhouse, then the savings could be erased.
2) How much do you like doing home improvement stuff? The condo sounds like it will require more time and effort. If you like that stuff, great. If not, prepare to be miserable for many weekends to come...
3) What other expenses are associated with each property? If the condo is ~20 years old, the building may require expensive maintenance that could result in big assessments.
Me personally? I'll take dated and walkable over new and car-bound any day...
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They're both really bus-able, so we really wouldn't need the car. It's just that walking along the arterials in the dark & rain (hello, winter!) sounds unpleasant, whereas the condo is 4 residential streets away from 2 grocery stores.
I'd love the chance to do some home improvement-type stuff. Never done much before besides helping out at my parents' house, but I really want to learn to be more handy & my work schedule (3 12s) is pretty flexible.
We're waiting to get more info about the HOA. If it's not in good shape, we'll definitely walk away from the condo. But I am definitely worried about it potentially needing work soon, which is why the decision is hard! I love the place, but don't want the money hassles.
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The HOA would be a deal-breaker for me. That aside...the townhouse is newer and less expensive, with less foreseen maintenance issues. The condo is older, more expensive, and requires an HOA fee. If you were purchasing a less expensive home that needed some work or just a little TLC, then i'd say go for that. But since you'd already be at the top of your budget with the condo, there would be little room for repair/replacement expenses.
To me, the townhouse is the winner.
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We are definitely open to having a roommate. I've been looking into being a homestay host & that really sounds great. With that extra income, the condo payments would be lower than the townhouse.
I don't care about the dated fixtures. I love the gas stove (much more than our current electric) and everything else works just fine.
We've thought about continuing to look, but the condo area is really expensive. We've looked at what has sold in that area recently & everything has been out of our price range. Home prices are increasing a lot in our area, so I think the chances of finding another property in our price range in this location are very, very slim.
Honestly, I feel like I'm justifying the condo because I love the location when I know that the townhouse is a better deal financially.
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Having to choose, the Townhouse but I would keep looking you didnt really sell me on either
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Thanks all! We're still trying to make a decision, but we're really leaning towards the condo. I really want a garage where we can do cheap car maintenance & a home gym, & I really want to be close to running trails. The neighborhood there is absolutely fantastic, & is within 30 minutes of 3 community colleges/universities that we could get homestay students from. Additionally, the storage space of a garage will allow me to get another freezer & put up shelves so I will finally have space to can & freeze summer produce. Lastly, there's a deck & fenced-in patio at the condo so the pets can have a little room to roam while I enjoy the sun.
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For me, the $200 HOA would be deal breaker. At 5% interest rate, that is the equivalent of an extra $48,000 in cost.
Except that it will never be paid off, and could go up at any time. What exactly are you getting for that $200 / month ?
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For me, the $200 HOA would be deal breaker. At 5% interest rate, that is the equivalent of an extra $48,000 in cost.
Except that it will never be paid off, and could go up at any time. What exactly are you getting for that $200 / month ?
For stuff like HOA, I figure you need to cover it via your SWR. So for 4%, it's an extra 60k.
On the other hand, I'm sure it covers all exterior repairs. If it's a small HOA, it's probably directly offsetting maintenance expenses that would be incurred either way (new roof, insurance, etc.). Might be a wash.
I'm a bit confused as I've always considered a "townhouse" to be a condo.
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We live in an area with fairly high home prices, so this isn't a home that we will retire in. When we do retire, we'll move somewhere with lower prices & COL. We're buying here & now because the rental market is insane, we've screwed ourselves out of affordable rentals by having three pets (bad choice to get a third!), & because the mortgage payment here is cheaper than renting a similar property.
It does cover all exterior repairs, like a new roof, & maintenance of shared areas like the driveways. From what we've seen, townhouses can be stand-alone (so they function like a smaller house with smaller yard), part of a condo association, or a mix of the two. The "real" townhouse we're looking at shares walls & a roof with two other units. So if it needed a new roof, we'd have to split costs with our two neighbors, which is kind of an interesting situation.
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We live in an area with fairly high home prices, so this isn't a home that we will retire in. When we do retire, we'll move somewhere with lower prices & COL. We're buying here & now because the rental market is insane, we've screwed ourselves out of affordable rentals by having three pets (bad choice to get a third!), & because the mortgage payment here is cheaper than renting a similar property.
It does cover all exterior repairs, like a new roof, & maintenance of shared areas like the driveways. From what we've seen, townhouses can be stand-alone (so they function like a smaller house with smaller yard), part of a condo association, or a mix of the two. The "real" townhouse we're looking at shares walls & a roof with two other units. So if it needed a new roof, we'd have to split costs with our two neighbors, which is kind of an interesting situation.
That's basically like being in an HOA with $0 monthly dues, and you get a special assessment whenever repairs need to be made. The downside is: what if your neighbors haven't been setting aside the cash to split the cost of the new roof? Which is why they invented HOAs (contrary to popular belief, it wasn't originally about green lawns and matching paint).
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Yep! That's another downside of the cheaper townhouse, which I forgot to add in my write-up.