Author Topic: Advice Wanted: Is buying a condo a bit more than I can do?  (Read 1218 times)

Irish

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Advice Wanted: Is buying a condo a bit more than I can do?
« on: December 06, 2016, 05:24:06 PM »
Hi all,

I must say I am very happy to have found this site and forum. I have a lot of personal finance issues to take care of, and this seems to be the right medicine.

Last night I was trying to budget $50,000 for next year, and realized that I was living really close to the edge and not saving. As someone who is single, with manageable student loans, this is kind of embarrassing. I was a bit lucky this year, with my parents (I'm 24) willing to loan me a car and pay for insurance and repairs, and keep me on their health insurance. We agreed that this upcoming year I was on my own, and I realize how lucky I had it. I've been hoping to become financially independent of them as soon as possible, probably out of pride, but also out of a desire to be more accountable for myself.

I live in an area with a HCOL, the lower end of a 1 BR/BA apartment in the area is about $1200/mo. (+ $100-$200 for utilities depending on the place). I'm also going to have to move from where I currently living, and will have to eat about $75 mo. of moving costs and paying for two leases briefly. So in total, lets say $1350/mo, if I'm lucky. I also have to buy a car (at most $2000, with $2400/yr. worst case insurance), plus healthcare (still waiting for details on cost from employer, but I've budgeted $2400/yr. so far). The car facilitates a social life and a nutso work schedule around here, so that's a luxury I'm keeping. Accounting for everything else, I'm saving a grand total of...$173.42/yr. if I assume overtime pay. Ouch.

I toyed with the idea of giving up the car, and it could be done, but I'd probably be miserable with the way I'd be living, and I don't see any sense to that.

The other idea I had was to buy a cheap condo (<$100k). I have enough saved for a 20% down payment, I have good credit, and could afford the payments and the HOA costs solo ($500-750/mo.). This would not be ideal, but I'd save money pretty early on (breakeven 3 years according to http://www.realtor.com/mortgage/tools/rent-or-buy-calculator/.

However, there's one or two options within the 100k range that are 2 BRs, and as much as I don't want to, I could get a roommate. I'd be able to charge cheap rent relative to the market and still make a very quick profit (breakeven within 2 yr, saves $8k in 2 yr., I'm guessing on taxes though).

I guess the big question I have right now, is with the Case-Shiller Housing Index still pretty high and climbing quick, am I going to eat a 30% drop in price after I buy, so to speak? I know most of housing price gains are just inflation, but throwing away $30 k if I go no roommate would hurt.

I'm so new to this, so thanks for any advice and prior experiences you can provide.

J Boogie

  • Handlebar Stache
  • *****
  • Posts: 1466
Re: Advice Wanted: Is buying a condo a bit more than I can do?
« Reply #1 on: December 07, 2016, 09:38:28 AM »
I actually think condos are a great, relatively inexpensive place to live.  Standard advice: people tell you to buy a 3 bedroom house because it'll appreciate better than a condo.  These people are the ones who think of a home as an investment.  Homes are not investments.  Here's a good link.  http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/

If you find a place with a good association a condo can be perfect.  If 750/mo is the high end for monthly payment on a 2 brdrm condo, and 1200/mo is the lower end on an apartment, I'd go with the condo.

Sounds like you make over 50 grand a year, so I'd say go for it if you're planning on living there for at least a few years.


Rubic

  • Handlebar Stache
  • *****
  • Posts: 1102
Re: Advice Wanted: Is buying a condo a bit more than I can do?
« Reply #2 on: December 07, 2016, 01:55:34 PM »
However, there's one or two options within the 100k range that are 2 BRs, and as much as I don't want to, I could get a roommate. I'd be able to charge cheap rent relative to the market and still make a very quick profit (breakeven within 2 yr, saves $8k in 2 yr., I'm guessing on taxes though).

Get a roommate.  If you live near a university, get a grad or postdoc student.
Or a foreign student who won't do anything to jeopardize their visa status.

A 2 bedroom condo is usually easier to sell later.