Poll

kb should:

buy a condo closer to the action in DC
8 (80%)
buy a house further out in DC
2 (20%)

Total Members Voted: 10

Voting closed: September 16, 2016, 09:33:33 AM

Author Topic: Whether to buy a condo or house in the city?  (Read 730 times)

kbmonroe

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Whether to buy a condo or house in the city?
« on: August 17, 2016, 09:28:11 AM »
Hello fellow Mustachians! Long-time Mustachian here, first time poster!

I'm hoping that this wonderful community can share some collective wisdom and help me make a good decision regarding housing, as I'm seriously looking to buy a place in Washington, DC.

Facts and background:
--30 year old renting for the past 6+ years in DC, have several roommates for cheaper rent.
--Current rent is $1060/month in a great neighborhood, but I'm tired of living with five roommates.
--Have a partner, we're looking forward to living together in the near/mid term future; she's a key part of the decision process, but supports my choice. As we are as yet unmarried, the mortgage would be in my name.
--Earn $100k a year, frugal by nature so I sock most of it away, have been saving to build a nest egg, which currently stands at $130k.
--Commute is a 20 minute bike ride to downtown DC.
--Working in international affairs, so my career will always touch DC in some way.
--I know that I want to buy a place in DC (not northern Virginia or Maryland), and I know that what I buy will be rentable/sellable in the future given DC's market.
--Have never owned property before, have just begun to work with a highly recommended real estate agent.
--Am in talks with lenders, have excellent credit, and am being pre-approved for $550k mortgage.
--Regardless of where I end up, I'd get a 30 year fixed mortgage and then pay it off in 15 years or less.

Dilemma:
I'm facing two key decision points; please note that in addition to my partner, I'd have another friend live with us, as well, which expands what I can afford.

1) Deciding between a condo/co-op and single-family house. While a condo/co-op would be attractive and easy to maintain, part of me would love to grab a house and invest sweat equity in it over the years. Part of me is intimidated at the cost/amount of work a proper house would require (but also eager to take that work on). I know that a single-family home in DC will appreciate in value significantly more than a condo/co-op. Condo/co-op fees can be exorbitant, which is intimidating, but there's also far less work to do at home, which allows more free time with friends, traveling, fun stuff, etc.   I love house projects, but at this stage of life, unmarried and no kids, wary of biting off too much house.

2) Deciding on whether to aim for a place "closer to the action" or further from downtown. My partner and I are young, and the idea of being "far" from friends and fun activities is a little isolating. Granted, "far" in DC is a matter of a few miles, but still, closer to the action means a shorter commute, more fun stuff to do, but also much more expensive.


The back and forth:
--I can absolutely see myself prospering in a 900 sq ft 2BR $400,000 condo in a fun part of town, with no maintenance work to speak of, and thus lots of free time for fun. I love to travel, and I have a large friend circle and we cook together lots. It's unlikely I'd want a condo on the outskirts of town. I don't see myself staying in the condo for more than five years.

--I can also see myself thriving in a 2000 sq ft $600,000 house on the outskirts of DC with a quieter neighborhood, a garden, hosting large gatherings. I couldn't afford a house in DC close to the action unless it was a disaster, and my enjoyable albeit demanding job wouldn't allow for me to take on a a major fixer upper, just decent-size projects. I'm wary of idealizing homeownership, but I know that I want to continue to sink roots into DC. If I bought a condo, lived there for five years, tinkered with it, sold it, and then aimed for the bigger house, a) single family house costs in DC would likely increase drastically in that timeframe, and b) since I know I'd like a house in DC eventually, why not just get one now?

So that's my dilemma, wary of making a wrongheaded move, would greatly appreciate the wisdom of the Mustachian crowd!  Thank you!!
« Last Edit: August 17, 2016, 09:56:05 AM by kbmonroe »

CapLimited

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Re: Whether to buy a condo or house in the city?
« Reply #1 on: August 17, 2016, 02:03:45 PM »
I live in a condo in DC, walking distance to Nationals Park, and it has worked out very well for me.  I'm a little older than you, so my needs were a bit different.  Spouse and I are actually planning to age in place here, so my thinking when I bought the place (I was single at the time) was that I needed to live in a place that would suit me well now as well as when I am older and less mobile.  So, for my old-person self, a grocery store, pharmacy, and restaurants very close, easy access to Metro, a handicapped-accessible building, and a unit that was open enough to accommodate mobility impairments.  For my current self, a location close enough to my office that I could walk if the weather isn't too bad, and an easy walk or short metro ride to many entertainment, dining, and cultural options.  I sold my car as soon as I moved in (expensive to keep a car here -- even if my condo had come with a parking place, car insurance would have doubled).  I chose a one-bedroom apartment because I thought that to pay an extra $100,000 for a guest bedroom for relatives who rarely visit didn't make sense.  I could always put them up in a hotel and still save money.  We're not big on entertaining at home -- we usually go out to restaurants with friends, although my building has a party room that we could use if we wanted to host a party.

I had already done the single family home thing (more than once) and although I am a good gardener and built some beautiful gardens at my previous homes, I was just over it.  I didn't want to deal with the constant upkeep in the heat of the summer, and I wasn't keen on shoveling snow in the winter.  I very much appreciate the condo association maintenance crew who do that for us now.  If I ever get the itch to grow things beyond the pots of herbs on my balcony, there are at least two community gardens I know of that I could get involved with.

On the other hand, I have some friends who bought a big, recently renovated row house in Brookland, and they have been very happy there.  They love to host big gatherings, and their little yard looks good.

Some further considerations:

--Children.  If you are planning them, you might want to consider renting while in the city.  The schools here are mostly not great, and I see many of my neighbors who are new parents selling out and heading for the suburbs.

--Travel and overseas living.  It's easy to lock a condo door and travel for a few weeks -- typically more secure than a single family home, since most condo buildings around here are controlled access and have security staff.  And if you ever have the option to do a tour of duty overseas for a year or more, it's easier to just put your stuff in storage and turn your unit over to property management to rent out without worrying whether the gutters will get cleaned and the garden maintained.

--Condo fees.  I have found that you have to watch out for high condo fees.  Interestingly enough, the newer the building is, the lower the fees seem to be, I guess because there are fewer maintenance and operating costs, and to attract new tenants.  Co-op fees do include property taxes, which can be considerable, so you have to subtract those to get fees comparable to condos.  Co-ops sometimes take underlying mortgages for major renovations so as to not hit individual co-op owners with big assessments, but underlying mortgages do increase your monthly cost.

Overall, I don't think you can go wrong either way; you just have to think about what your priorities are.

Guesl982374

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Re: Whether to buy a condo or house in the city?
« Reply #2 on: August 17, 2016, 02:37:10 PM »
My wife and I have lived in apartments and condos for the past 10 years. With the time (and cost) savings we've been able to both get master degrees, enjoying two major cities, and travel the world while building up the 'stache. We also kept our original condo as a rental (was planned when we purchased). We now have a 1 year old in a condo and we both work more than full time and we value the time savings a condo offers. Would we like more space? Sometimes. Do we need more space? No. We ended up in a 1400sq ft condo for 50-75% of the cost of a house with 1,500-2,000 sq ft in New England.

We wouldn't have been able to do any of that if we purchased a fixer-upper or were tied to mowing the lawn, [insert other general maintenance], etc. every week. With that being said, everybody is different and only you can decide what's right for you and your partner.

kbmonroe

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Re: Whether to buy a condo or house in the city?
« Reply #3 on: August 19, 2016, 03:24:12 PM »
Thank you both for these phenomenal replies!  Deeply helpful with crystalizing my thought process. Will update soon.  Welcome additional thoughts and perspectives, as well!

All the best,
kb