Financial Savvy Condo or Investor Savvy House?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Clarke_kent
Posts: 1
Joined: Mon Feb 12, 2018 10:43 pm

Financial Savvy Condo or Investor Savvy House?

Post by Clarke_kent » Tue Feb 13, 2018 11:12 am

I will be buying a home this year. And i'm really deciding between a certain house and a condo.

I was approved for over 300k mortgage so both homes are well within the budget.

It's between the house I really like... and a condo. Both of the properties are in the same general neighborhood. But The house(on an oversized lot) is on a more desirable block. Anyone who is familiar with Chicago knows that the feel of a neighborhood can really change by the block (as in, you can be on one block and think it's the most beautiful place then go one block over and you fear for your life). All the homes on this particular block have been built or renovated within the past 10 years, The house im looking at is one of two on the block that have been neglected... The house is going to cost between 90-100k and it needs about 100-110k worth of work(200k all in)... The condo will cost 100-110k but only needs 20-30k worth of work(130k all in).... The condo would be the cheaper option period. Cheaper to buy and cheaper to maintain but will likely not appreciate much (questionable block combined with the fact that condos don't appreciate as much as single family homes).... The house on the other hand would be more expensive to buy, more expensive to keep up. But when I get ready to sell it, it will be worth at least 20% more than what I paid for it. I could probably sell it next year for 230-240 easy (Comps in the area are already selling for over 200k, new homes are selling for close to 400k...with 200k all in, the house is a steal imo).....

With all that being said... I'm planning to leave my job and start a firm within the next 12 months. I have savings to sustain me for about 12 months with no income. If I were to go with the house, that estimate would decline by 20-30%. In both options, I could rent out a bedroom, reducing the monthly cost.

Do i go with the financially smart condo or the investor savvy detached home?

itstoomuch
Posts: 5229
Joined: Mon Dec 15, 2014 12:17 pm
Location: midValley OR

Re: Financial Savvy Condo or Investor Savvy House?

Post by itstoomuch » Tue Feb 13, 2018 1:27 pm

How do the other condos look like?
Are need of repairs too?
What is the HOA?
Is the HOA board congenial or contentious?
YMMV
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

User avatar
Pajamas
Posts: 3704
Joined: Sun Jun 03, 2012 6:32 pm

Re: Financial Savvy Condo or Investor Savvy House?

Post by Pajamas » Tue Feb 13, 2018 1:29 pm

Buying a house to live in that needs as much in renovations as it costs is not an investment, it's a lifestyle.

If you need a place to live, don't confuse fulfilling that need with investing.

Neither option sounds like a savvy course of action considering your plans. You should be looking to minimize living expenses to preserve capital for starting your firm. That probably means renting.

You are also assuming appreciation which may or may not materialize. Even the cost of renovations needed to bring a dwelling to minimal standards of habitability may not be recouped. That is true for either option.

Post Reply