Author Topic: New here, WWYD, own a condo looking to buy a house  (Read 1355 times)

lliang_chi

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New here, WWYD, own a condo looking to buy a house
« on: October 10, 2013, 03:59:53 PM »
Hi, I'm new here and I wanted to poll you folks on WWYD.

  • The current condo: 2bd/2ba, 15yr mortgage @ 3%, the monthly payments are like $2025 (mortgage, taxes). The condo is a great location. Close to downtown Chicago, near public transportation, suburban commuter train, highway, lots of stores (grocery, Target, etc) all very accessible. Heck even the schools are pretty decent. It really would be a great rental. So absolutely no regret buying it.
  • We're looking to buy a house as our family expands. We have a son that will be 2 yr old in Feb. Looking to add a sibling in the next year. My current goal is to find a modest house, maybe 1600-1900 sqft, for about $350K. We right now have enough for a down payment in the bank.
  • Said 2 y.o. son is in day care (both hubby and I work) that pretty much costs the same as a 2nd mortgage. I know when we move out of the city center, our child care costs should drop by half.

So I'm at a cross-roads of whether we should rent our condo or sell it. And also what order to do things.
  • I think the condo would make a very attractive rental and could likely get enough to cover monthly mortgage+taxes payments and probably a little extra a month.
  • But the cost of paying the equivalent of THREE mortgages (condo, house and daycare costs) makes me ill
  • Buy house first, pay "three mortgages" until I can find a renter or sell?
  • Sell condo first, then looking/hope to find a house, or rent a house until we're ready to buy? I think I could get at least what I paid for my condo, I doubt I can get that much more, but hey I could be wrong
  • The condo rules (I'm a board member) stipulates that only X% of units can be under rental at a time. There's room right now for 1 rental



Thanks,
LC

KingCoin

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Re: New here, WWYD, own a condo looking to buy a house
« Reply #1 on: October 11, 2013, 08:12:49 AM »
For how much do you think you can sell the condo? Whether it's $200k or $400k makes a substantial difference in the decision making process. I suspect that the condo fees will make it a less than attractive rental. If the restriction on rental comes into play, it could be a financial calamity that costs you 10s of thousands of dollars (being forced to eat the mortgage until you sell it, or fire-saling the property).

How much liquidity do you have? If your renter decides to stop paying and it takes 4-5 months to evict, renovate, and place a new tenant, can you take a $10,000 hit after you pay the down payment for another house?

I'm guessing your best course of action is to sell the condo and rent month to month in the neighborhood you're interested in. This would give you a lot of flexibility (both temporally and financially) as well as give you a chance to "audition" a new neighborhood.