I am quite torn on whether to rent or own in the gold coast area or to abandon the gold coast altogether.
Background:
Salary: 250k+
NW: ~1M
Age: mid-30s
Family: DW, DD and me
Properties: 1 condo in Lincoln Park and 1 condo in Michigan - both rented out and cash flow positive
Properties as percentage of total assets: ~35%
Prospective property: 2-3 bd with 2 bath
DW and I really like the gold coast area, but the HOA, taxes and parking fees are giving us a second thought. However, when we looked at the rental market, there is clearly a economic divide between less desirable properties (but fit our basic criteria) in the 2200-2800/month and the more desirable properties that goes for $3500+.
[In terms of purchasing, there is a 3 bd unit in a fairly well known building that is selling for ~500k but has been on the market for a long time; we are ready to make an offer for 400k to start the process. The problem with this unit is that it's got a $1k+ HOA fee, high taxes (7k+ a year) and owners are not permitted to rent out the unit. We like the property and think we can carry the property for a good while even if we have to move sometime down the line. But we are definitely paying through the nose for the privilege of living in that part of the town (close to Hancock building, Magnificent Mile, etc).
I am concerned about several aspect of owing an expensive condo in the city. First, if I were to purchase condo at the offer price (not likely but let's assume for now), my properties to total asset ratio would be close to 50% increasing from 35%, which would expose my total portfolio to a greater risk in the RE sector. Second, if I were to decide to sell the property I do not have the option of getting a tenant in the unit during the sale process, which means I will need to carry the property in the interim period. Third, the HOA+tax+ parking fees (if I decide to have a car) are easily $1500-2000/month which are essentially thrown away and cannot be recovered. This will result in a significant lower/negative NPV on the investment with modest housing price growth down the road. ]**
I realize I can't treat this property like my rentals as I plan to live there for 5 or 10 years and I am paying for the "experience" so the speak. However, I still don't want to get into a situation that will significantly delay my FIRE date because of a bad decision.
What are y'all thoughts on this situation? Should I just abandon the Gold Coast area for now and come back say in 5-10 years when I have more money saved? Any thoughts on the prospective property mentioned above?
** Already made an offer and seller rejected - I suspect the seller is a semi recreational seller (seller has moved out but is paying $1900/month on HOA + taxes)