Author Topic: Sell house and buy a condo?  (Read 2400 times)

protostache

  • Pencil Stache
  • ****
  • Posts: 896
Sell house and buy a condo?
« on: July 25, 2015, 10:06:56 AM »
tl;dr: when do the numbers make sense to sell a house and buy a condo?

My wife and I bought a far too large house in the upper midwest last year. We bought big because we saw a lot of different directions in our lives at the time and we wanted the flexibility to make the house what we wanted. Namely, either her dad or my mom might move in with us, or we might have multiple kids that would "require" a large house (this place has a large unfinished basement and two other areas that would just need a door and a closet to become additional bedrooms).

Well, those possibilities have narrowed quite a bit. Her dad isn't going to move in (may be going into assisted living within year or two) and my mom is pretty set on moving to the PNW or Minneapolis to be with family, so we're left with "what if we have a kid". We're trying for our first right now but the way things are going it might not happen for a while or at all.

We keep seeing these listings for condos, all basically the same age and design (the builder must have churned them out in 2001ish). Lots of them are very well kept, open, airy, and still have 3bd/2ba and are ~1300sqft, which is about how much space we use now of our 2500sqft 3bd/3ba clown house.

The numbers on the current house:

  • Bought house for $275k
  • We've spent $27k on repairs (painting in and out, replaced all the flooring, replaced landscaping, replaced a broken window, replaced closet doors)
  • It's going to need a new roof and a new AC compressor within the next five years
  • Realtor WAG (before exterior paint and landscaping): $330k, Zillow Zestimate: $360k

The condos in the complex we keep coming back to in the same bedroom community we live in now are selling for about $160k for the design we want. HOA fee seems to be ~$250/mo. I haven't looked into the HOA's finances yet, but I assume it's fine since the units seem to be selling quickly.

Complications:

  • We can't get a new mortgage until May 2016 at the earliest because the banks won't touch us until they see 2 years of self-employment income.
  • If we sell before March 2016 we'll have to pay capital gains taxes on our rather substantial gains (~$5k of taxes)
  • Once her dad isn't living alone in his house anymore we're going to start slow traveling but would like to keep a home base.

Questions:

  • Does it make sense to exit this house next May and buy something smaller in the same area? Or should we wait until we know if we're going to move to a different area of the country?
  • What drawbacks are there to living in an upper-level condo in an 8-plex? Obviously noise, can't pick our neighbors, etc.

curlyfry

  • 5 O'Clock Shadow
  • *
  • Posts: 60
  • Age: 35
  • Location: Victoria, BC
Re: Sell house and buy a condo?
« Reply #1 on: July 25, 2015, 06:41:10 PM »
I find this interesting as we almost just bought a $550k 1300sq ft house but missed out on the bid.   Then came home to our (rented but available for $330k) 1000 sq foot condo & realized that there were several things about the condo that were nicer than the house - more & bigger windows, bigger entertaining area, more storage in bathroom cupboards, $1000/month cheaper total costs.     So interested to see what you decide!

I like condo living.  We have a murphy bed in our 2nd bedroom & it doubles as an office. We are top floor corner & never hear our neighbours.  But I have some concerns about strata predictability/ future hassles.

I spend a lot of time considering whether a small-fenced-yard/driveway/garage & no strata is worth the extra $1000/month.  Obviously houses appreciate a lot more, but that only counts if you move out of the place.  I like the idea of staying in one place forever if able.

Seems like if you can get $330-360k for your house you will come out quite ahead! - as long as you are okay with staying in the condo.  1300 sq ft is quite a nice sized condo. If you have 1 or 2 kids, could you raise your kids there? I'm assuming since it's 3 bedrooms you could.   

Seems like the biggest thing is it sounds like you are not sure you are going to stay in the area? That seems like the biggest reason to pause.


protostache

  • Pencil Stache
  • ****
  • Posts: 896
Re: Sell house and buy a condo?
« Reply #2 on: July 25, 2015, 07:30:53 PM »
I find this interesting as we almost just bought a $550k 1300sq ft house but missed out on the bid.   Then came home to our (rented but available for $330k) 1000 sq foot condo & realized that there were several things about the condo that were nicer than the house - more & bigger windows, bigger entertaining area, more storage in bathroom cupboards, $1000/month cheaper total costs.     So interested to see what you decide!

I like condo living.  We have a murphy bed in our 2nd bedroom & it doubles as an office. We are top floor corner & never hear our neighbours.  But I have some concerns about strata predictability/ future hassles.

I spend a lot of time considering whether a small-fenced-yard/driveway/garage & no strata is worth the extra $1000/month.  Obviously houses appreciate a lot more, but that only counts if you move out of the place.  I like the idea of staying in one place forever if able.

Seems like if you can get $330-360k for your house you will come out quite ahead! - as long as you are okay with staying in the condo.  1300 sq ft is quite a nice sized condo. If you have 1 or 2 kids, could you raise your kids there? I'm assuming since it's 3 bedrooms you could.   

Seems like the biggest thing is it sounds like you are not sure you are going to stay in the area? That seems like the biggest reason to pause.

I'm glad you like condo living. It seemed like almost everyone was against it when I was searching around before posting. Also, I learned a new word! "Strata" is not something I'd heard used in this context before.

We moved back to the midwest because her parents were sick and we wanted to be within driving distance of my mom. Her mom passed halfway through the drive across the country (wife was there, my mom volunteered to drive with me) and her dad will probably be in assisted living within the next 3-5 years. Once her dad is out of his house we're not really sure what we'll want to do, either move back to the PNW or just stay wherever we are and slow travel for a month or two at a time. It's unlikely we'll stay in this area for 10 years if we don't have a kid. Even if we do, we've discussed moving to a LCOL area much closer to my family.

The layout we're looking at is 3 bedroom with a huge master, a 2nd bedroom next to the master, and a 3rd bedroom / office on the other side of the unit. So there'd be plenty of room to raise a little one for at least 5 years. It would also reduce our housing expense by half, including taxes and HOA fees, which is a huge factor in my mind.

frugaliknowit

  • Handlebar Stache
  • *****
  • Posts: 1662
Re: Sell house and buy a condo?
« Reply #3 on: July 25, 2015, 07:54:01 PM »
I am thinking you and your wife need to take a deep breath and SLOW DOWN!

You just bought a house about a year ago.   That's thousands and thousands in transaction costs, plus you may or may not recover your fix ups...

Whatever you decide, understand real estate is a long term committment.  Whatever you do, plan on staying for at least 10 years.  There is no right or wrong answer.

curlyfry

  • 5 O'Clock Shadow
  • *
  • Posts: 60
  • Age: 35
  • Location: Victoria, BC
Re: Sell house and buy a condo?
« Reply #4 on: July 26, 2015, 12:14:49 AM »
I agree with frugaliknowit - you have both time & options!   

Sorry I forgot that strata was a term just used in Canada to refer to condo boards.  They make me a little nervous because you never know what the future entails with cost & decisions.  But I guess that's the same with everything in life.

Sounds like your decisions come down to less about numbers & more about life-choices. I agree may be better to wait it out a bit before making any decisions. Math would really come down to how much money you would lose if you ended up moving & having to sell the condo (after selling house & buying condo)




protostache

  • Pencil Stache
  • ****
  • Posts: 896
Re: Sell house and buy a condo?
« Reply #5 on: July 26, 2015, 07:14:18 PM »
Thanks folks. You're both right, we (mostly me) need to just take a breather and wait for things to play out a little longer.

curlyfry

  • 5 O'Clock Shadow
  • *
  • Posts: 60
  • Age: 35
  • Location: Victoria, BC
Re: Sell house and buy a condo?
« Reply #6 on: July 26, 2015, 11:41:10 PM »
i can't judge - i'm also doing the house vs condo decision in 2016 but still cant help but calculate the math on an almost daily basis.

it's touch deciding how to value either extra space or extra money...  especially when the future is unpredictable!

DeltaBond

  • Pencil Stache
  • ****
  • Posts: 526
  • Location: U.S.
Re: Sell house and buy a condo?
« Reply #7 on: July 27, 2015, 02:00:52 PM »
Condos are kind of the worse of both worlds when comparing apartments to houses.  For me, if I was so old I couldn't physically or financially take care of my house, even minimally... a condo MIGHT be a consideration depending on the monthly condo fees and what I am expected to fix myself.  Not all condos are alike, but I'd have a really hard time buying one that wasn't in more of an apartment style building.  Condos that are like houses attached in a row can end up just as costly as owning a house.  In my area, condo fees are around $300 monthly when all you get from it is maybe the roof, maybe, and the lawncare.  I think I can cover my lawncare for that much money and not be stiffed with a shared bill for exterior maintenance that doesn't just happen to be covered in the agreement.