OT: Buying a house vs condo

[Doteman]

Was about to place a bid on home in Jamesburg but after looking at mortgage/taxes etc I was wondering if a condo in the New Brunswick area would make more sense for a few years as it's just me and my wife and if kids come in the next couple years then make the move to a single family home. I was thinking I could save a lot of money going the condo route for a few years then go for the house a few years from now. The savings could be considerate and would allow us to save more in the next 2-4 years. The downside is trying to sell the condo a few years from now and if the values of condos could remain stagnant or decline during that time. Any thoughts?

 

[Scarlet_Scourge]

Good: You save a ton in taxes and mortgage and repairs to the outside. Don't have to worry about mowing the lawn, raking leaves or shoveling snow, besides around your car.

Bad: The resell value will never be what a house is most of the time. You have to pay a maintenance fee every month. Less space than a house and some rules to follow.

 

[gef21]

Was about to place a bid on home in Jamesburg but after looking at mortgage/taxes etc I was wondering if a condo in the New Brunswick area would make more sense for a few years as it's just me and my wife and if kids come in the next couple years then make the move to a single family home. I was thinking I could save a lot of money going the condo route for a few years then go for the house a few years from now. The savings could be considerate and would allow us to save more in the next 2-4 years. The downside is trying to sell the condo a few years from now and if the values of condos could remain stagnant or decline during that time. Any thoughts?

Out of college i bought a condo, did some work, and kept it for 4 years. After 4 years I sold it when I purchased a home. Buying the condo was a great decision for me in the beginning. Less work, not very expensive. I sold it for a decent profit. You could also keep the condo, and rent it out, when you want to buy a house.

 

[anvilofstars]

Why not just rent if it's 2-4 years? It's not like you would pay off more than a little bit and that would be offset by the losses on the sale of the house (6% commission) and taxes.

If you are asking from a purely financial perspective, but the long term house today. Rates are low and you won't lose closing costs twice.

 

[RU-05]

Definitely take condo maintenance fee's into account. Those could negate any property tax savings.

Also consider lack of freedom, you are at the whim of the condo association.

Personally I'd never buy a condo.

 

[Doteman]

I'm renting now but it's not in a great area, wanted to possibly build up some equity and get out of the ghetto. Buying the house we want today is doable but if we have a kid we would basically have just enough to live without much else, which scares the hell out of me. I'm talking not even enough to put money away for college or have any discretionary income.

 

[RU-05]

I'm renting now but it's not in a great area, wanted to possibly build up some equity and get out of the ghetto. Buying the house we want today is doable but if we have a kid we would basically have just enough to live without much else, which scares the hell out of me. I'm talking not even enough to put money away for college or have any discretionary income.

Sounds like what the recession was built on.

When do you expect to have kids? and do you expect any job advancement, ie more $$$ prior to that?

 

[anvilofstars]

Considering the short stay, you would be better off renting than trying to build equity. Closing costs are somewhere in the range of 6-15K (title insurance for lender and yourself,home insurance, lawyer, inspection, appraisal fee, etc) . HOA fees will be 1-3K a year. Selling cost is 6% of house price. I just don't see how you would break even on the condo unless prices are rising quickly.

 

[dollarbill]

Rent. The reality of New Jersey's finances will continue to hurt the housing market. You will be able to buy cheaper in three years. You may not even want to live here at that point. Good luck. $$$$

 

[Knight Shift]

I'm renting now but it's not in a great area, wanted to possibly build up some equity and get out of the ghetto. Buying the house we want today is doable but if we have a kid we would basically have just enough to live without much else, which scares the hell out of me. I'm talking not even enough to put money away for college or have any discretionary income.

Don't but a house then. You will be trapped. Do this exercise for the condo you are looking at. Determine your monthly payment (mortgage, taxes, insurance and association fees). Determine the current rent for your condo/similar model. More often than not, there is a premium of at least a couple of hundred dollars, and this will grow with time. That way, if the market to sell is bad, you can rent and cover your expenses and make money. Being a landlord can have challenges, but it has been a good way for us to supplemental income and build equity in properties, which will help us tremendously in retirement--or if we need to, we can sell a rental home to pay for college for one of the kids--it is like a savings plan.

Even once you have a kid and they are still infants/toddlers, being in a condo can be much more convenient and easy than being in a house. No yardwork, less to keep clean, less to worry about.

Perhaps one in between strategy is to buy a smaller house now, and use the same thinking as above for the condo, or look at a house that you could potentially do an addition down the road to make your dream house.

Above all, don't saddle yourself with mortgage and house expenses to be "living large."

 

[Doteman]

We are both state employees, with pay similar to being a teacher, maybe just a bit more. We haven't had a contract in place for 2 years so no raises/steps. We most likely won't have a new contract for almost 2 years as they are waiting for Christie to leave before doing it. A promotion is possible for both of us in next year or so but no guarantees.

 

[Knight Shift]

We are both state employees, with pay similar to being a teacher, maybe just a bit more. We haven't had a contract in place for 2 years so no raises/steps. We most likely won't have a new contract for almost 2 years as they are waiting for Christie to leave before doing it. A promotion is possible for both of us in next year or so but no guarantees.

That is really unfortunate. Christie is a cancer, and can't wait until he is gone. What a disappointment. Hope things work out on raises and promotions for you and your wife.

 

[mdk01]

Few other points to consider:

Mortgage rates are currently very low. They might be higher when you look to move from the condo to the house.

Realtor commission on the sale of the condo. If you only live there for a few years, it might negate any appreciation in the condo's value.

Neighbors. With a condo they're not across the street or next door, they're on the other side of a wall. That can be good or bad.

 

[ScarletDrew]

Our family has lived in a condo for years. We bought it before the housing boom of the mid-late 2000's, so it has increased in value nicely. You couldn't beat the convenience: low taxes, no lawn to mow, leaves to rake, or snow to shovel. The roof and furnace were replaced recently, and the cost was covered by our common charges (no sudden hit to our budget). Common charges include oil heat, a pool, club house, tennis court, bball court, baseball field, a pond, and playgrounds for the kids. If you don't mind not having a backyard of your own, it's a nice way to go.

HOWEVER...

...while what we pay in taxes and common charges is equal to what most owners of single-family homes pay in property taxes alone, such charges can be pretty steep in some communities, so you have to factor that into any prospective payment. Sometimes, first-time condo buyers fail to learn the common charges until closing, and that can lead to buyer's remorse.

What was mentioned about rules above cannot be emphasized enough. Some communities are too strict, and you'll feel like an unwelcome guest; others are too lax and people take advantage. Some communities enforce rules inconsistently, depending upon which offenders are friendly with which members of your governing board; sadly, things are not always fair. Learn as much as you can about condo rules before buying, and make sure you'll find them bearable. A quick tour of the community (or visit to an open board meeting) can give you some clues.

Finally, neighbors are more important in a condo community since you'll be living so close together. We've had great neighbors, so I'm biased toward condo living. If my neighbors were trashy noisy slobs, or complainers who reported me to the board every time my son left his bike out on the porch, I'm sure my feelings would be different.

I hope you find this info helpful! Best wishes!

 

[RU85inFla]

Rent and wait for the bubble. It's coming.

 

[RUinPAC10land]

My wife and I really loved my current town (known to have one of the best school systems in southern CA). We moved there even before we had children. At the time, a townhouse was the only thing we can afford. We lived there for four years and then had two babies. One day, a realtor sent a letter about client who was interested in our townhouse. It turns out that it was a family from mainland China. They payed full cash and closed escrow in a short period of time. We also made a pretty good profit which allowed us to buy a house in the same town.

Bottom line: If you're going to buy a condo, just make sure it's in a good location and if it is, you should do fine. (BTW, lock your mortgage rates quickly because they are supposed to go up after the election.)

 

[Knight Shift]

Was about to place a bid on home in Jamesburg but after looking at mortgage/taxes etc I was wondering if a condo in the New Brunswick area would make more sense for a few years as it's just me and my wife and if kids come in the next couple years then make the move to a single family home. I was thinking I could save a lot of money going the condo route for a few years then go for the house a few years from now. The savings could be considerate and would allow us to save more in the next 2-4 years. The downside is trying to sell the condo a few years from now and if the values of condos could remain stagnant or decline during that time. Any thoughts?

One other thought--you said New Brunswick area. Things may have changed since we last lived there 20 years ago, but always thought North Brunswick was a solid choice. There are the Hovnanian condos off of Cozzens Lane and the nicer, more expensive ones in Hidden Lake. That is a great area, and was popular because of the close drive to the Jersey Ave train station.

 

[wheezer]

My friend owned a house then switched to a condo, then back to a house

He had what appeared to be a good sized condo, but he said it felt like living in a college dorm after a while, being previously used to a larger space.

 

[Doteman]

We can lock in 3.5pct right now, which is one of the main reasons I might buy now. Might do the house and wait on kids for a year or two. We will have enough to live comfortably and still go out/vacation. The cost of daycare/diapers/formula/pediatrician scares me but we can wait and see about raises/promotions but not long as she is in her 30s already.

 

[RUJohnny99]

When I first got married, we bought a condo in a desirable area. When kids came, we moved up to a house in a mediocre school district. When the kids were 4, we moved to a house in a great school district. This is the process I usually recommend for people interested in buying real estate

 

[PRH_RU]

Rule # 1, leave the NE cut taxes by 50%

My 3,000 sqft house with .3 acres I paid 370k and 3k in annual taxes.

Oh and I get the same salary I got in NJ.

 

[Scarlet_Scourge]

The better the schools = higher the resale value. But also the higher taxes.

I live in a condo, my maintenance fees are not cheap but even when add to my taxes, it is still about $5,000 less a year than house would be.

 

[jmc11201]

If you don't plan on being in a place for five years, you are better off renting when you factor in transaction costs. You may or may not make a few bucks buying a condo, but you may also lose a few bucks...I would avoid the aggravation and simply rent. You should be able to save money and if interest rates go up while you are renting, housing prices probably flatline or trend lower and you don't really lose much at all...particularly if you have more cash for a larger downpayment.

 

[RUich]

You may well be able to find a nice apartment that could give you a similar amount of living space as a condo since it looks like you are pretty sure on finding a home within the next few years. Either way, you will be dealing with neighbors literally on the other side of the walls.
I would take those years to sock away as much money as you can so the larger down payment will mitigate some of the mortgage costs. It will also give you more time to study the trends in different places you would consider living.

 

[Crazed_RU]

We can lock in 3.5pct right now, which is one of the main reasons I might buy now. Might do the house and wait on kids for a year or two. We will have enough to live comfortably and still go out/vacation. The cost of daycare/diapers/formula/pediatrician scares me but we can wait and see about raises/promotions but not long as she is in her 30s already.

LOL. It's funny seeing myself 18 years ago in your comments. Funny thing is I used to fret about the cost of diapers and formula, and I would give anything to have those expenses now vs. the cost that teenagers bring. Think 3rd car, car insurance, dance classes, lacrosse equipment, graphite baseball bats, then it becomes college and weddings. You'll never have as few expenses as you do now but so what. If you wait until you are "finically secure" to have kids, you'll never have them. Get moving, but go on some vacations and enjoy yourself before they come.

 

[RUfinal4]

I would suggest a townhouse with a garage and maybe a basement. if you are set on avoiding the single family house right now.

With a condo you may get only 1 assigned parking spot where your wife and friends will need to fend for guest spots that may fill up quickly. Many condos also have limited livable space when you only have 2 beds and 2 baths in around 900 to 1000 sq ft. With a 1200+ ft town house you get 2 or more floors which makes entertaining easier. You may be able to get a garage and driveway which gives you 2 or more parking spots to use. Some have basements which makes it even better fro entertaining / storage. With a town house you are likely to get a backyard area where you can have a true bbq grill. State and town laws prevent gas or charcoal grills in many condos because of balconies above the grill area.

Plus if looking to re-sell in 3-10 years the garage will eliminate the issue of parking for perspective buyers. many buyers also don't want to have to worry about someone living on top of them where the water leaks they have become your problem too. If in the upper unit you need to deal with stairs and downstairs neighbors if your schedules are different from theirs and walk around on hardwood floors very early or very late.

 

[rubaseball78]

Was about to place a bid on home in Jamesburg but after looking at mortgage/taxes etc I was wondering if a condo in the New Brunswick area would make more sense for a few years as it's just me and my wife and if kids come in the next couple years then make the move to a single family home. I was thinking I could save a lot of money going the condo route for a few years then go for the house a few years from now. The savings could be considerate and would allow us to save more in the next 2-4 years. The downside is trying to sell the condo a few years from now and if the values of condos could remain stagnant or decline during that time. Any thoughts?

We opted to go for the townhouse. Bought one that has 3600 sq ft of living area with 3 bedrooms so it is the size of a house plus a 4th BR in the basement. Both girls have their their own rooms. Opted for this route because we also had home at the beach and so condo route freed up having to take care of the outside of our primary home. There was also enough grass area around our home for the girls to play outside.

 

[NotInRHouse]

I bought a condo a little over 3 years ago and it has appreciated nicely. Mostly because it's in Jersey City and walking distance to the PATH.

I agree with the exercise of running the numbers between mortgage/property taxes/HOA and if that comes to more than renting, can you do without the extra money. Also considering the depletion of your savings. Be sure you are putting 20% down or it will raise your rate.

I think condos will appreciate as much as homes in much of NJ, maybe even more so somewhere like Hudson County or in a suburb with great schools and great location. New Brunswick has RU, train access, and J&J. It is more immune to market forces than a lot of other towns.

 

[NotInRHouse]

Also, I am not sure why some are predicting a bubble. There are some areas of NJ that have barely recovered from the recession and NJ has a big foreclosure backlog- maybe the biggest in the country.

NJ is a tale of two states in this regard. If you list something in Jersey City or Hoboken you will get multiple offers over asking within a day. If you go to Sussex or Cape May you would think it's still 2008-9 price wise.

 

[RUfinal4]

Also be aware for buying / selling a condo / townhouse you need to be aware that they are cookie cutter. In your community there may be anywhere from 3-10 identical units for sale. Just say the avg price is 250k. You may see only a 10k difference from a basic standard unit that needs a little refreshing vs a standard move in unit vs a redone state of the art unit (235k-265k). In most cases the only advantage to updating a unit is a faster sale but not much in price increases which means buying a 240k unit and investing 10k for upgrades.

I know of a community in Monmouth Cty where 900 sq ft condos sell between 200-220k. 1 owner who had redone his bathroom and kitchen decided to list for 239k before reducing to 234k. they ended up pulling the listing because of lack of buyer attention. In this case the updated unit probably would have sold for about 219.9k where non-updated units go for 200-205k. if buying it may be better to get yourself a functional unit with older appliances and non-updated kitchen then do the work after moving in to make it the way you like it.

 

[Knight Shift]

Not knowing the price range the OP is looking in, just pulled up some smaller houses for sale in Jamesburg, and you can get quite a few homes under $300K. Would much rather go for something like this:
http://www.zillow.com/homedetails/15-Pergola-Ave-Jamesburg-NJ-08831/55545874_zpid/
than a condo like this:
http://www.zillow.com/homedetails/164-Nathan-Dr-North-Brunswick-NJ-08902/39109411_zpid/

If you are looking for a house right now, you don't have to buy the house you want in the future right now.

 

[RBS05]

You seem to be very worried about finances even before buying a place, and you think you'll have trouble making ends meet once you buy a house and a kid shows up. My advice would be to keep renting, finding a better location if possible, save as much as you can in the interim and protect yourself from an early heart attack. Don't depend on a dream buyer from China to take you out of your problem.

 

[Steveriknight]

You should rent. Buying in NJ would be a mistake for you in your situation. Unless you were buying in a hot market like JC/Hoboken, you will lose money if your plan would be to sell it in the near term. The value will increase less than the cost you will pay to get into and out of that house/condo. Mortgages have bowtie amortization schedules so you won't gain much equity at all in the first few years, payments will be primarily interest... so not much different than rent.

 

[FanuSanu52]

Why not just rent if it's 2-4 years? It's not like you would pay off more than a little bit and that would be offset by the losses on the sale of the house (6% commission) and taxes.

If you are asking from a purely financial perspective, but the long term house today. Rates are low and you won't lose closing costs twice.

I agree. Another thing to think of: If you're about to have kids, you won't want to be scrambling to buy a new place, move, etc. Better to have the space to grow into, imo (and life doesn't always let you be prepared and a step ahead).

A house is more expense, but you get so much more in value, lifestyle, independence. Worth it completely, imo, but some like lower cost and less hassle of a condo.

 

[DJYoshi]

if your end goal is 2-4 years, then RENT. The last thing you want to do is be tied into a condo or home that you can't sell and need to sell in order to move.
IF you can get into a pre-construction deal for a condo/townhouse, then it might not be bad at all... but again you'll be dealing with barely making a dent in the primary and being stuck in the MUST HAVE TO SELL in order to buy phase of life.

If your end goal is a house, now is a great time before rates creep up towards the 4's and prices return to their normal everyday WAY TOO HIGH to buy which they're already creeping up to.
ie: Basking Ridge area. 1 developer quoted X in 2013.
The same developer in the same area for the same work quote 1.10 X in 2016.

 

[Doteman]

Thanks folks!

 

[FanuSanu52]

if your end goal is 2-4 years, then RENT. The last thing you want to do is be tied into a condo or home that you can't sell and need to sell in order to move.
IF you can get into a pre-construction deal for a condo/townhouse, then it might not be bad at all... but again you'll be dealing with barely making a dent in the primary and being stuck in the MUST HAVE TO SELL in order to buy phase of life.

If your end goal is a house, now is a great time before rates creep up towards the 4's and prices return to their normal everyday WAY TOO HIGH to buy which they're already creeping up to.
ie: Basking Ridge area. 1 developer quoted X in 2013.
The same developer in the same area for the same work quote 1.10 X in 2016.

You articulated my point better than I did.

I find the idea of wife getting pregnant with first child coupled with the potential nightmare of having to unload a condo just to be able to move, then actually have to move (with a pregnant wife who can't do much to help), stressful just to think about. Then you have to deal with the added expenses and responsibilities of house and child all at once. Moving and having a child are among the most stressful things a person can experience, put them together ... yikes.

If OP was thinking kids in a decade+, maybe, but sounds like it's more a matter of a couple years.

Anyway, good luck OP! Post photos of the little chimps when they come along :stuck_out_tongue_winking_eye:

 

[fearson05]

There are many great options available. If you have good credit, look into the 203k loan options and find a decent house in a good neighborhood, with good schools, and get necessary updates made immediately using the 203k funds. Then continue to perform work yourself to increase the value of the house. I bought a house in March using a 203k loan and after the initial repairs were made, we have a 17% increase in value over the full mortgage value.

This is in Cherry Hill, Camden County, my mortgage is based on a value of $204K (purchase of 180K plus 24K of 203k funds) and the house was recently appraised for $240K due to the upgrades made. (We have put in an additional 3-5K out of pocket for interior upgrades as well.)

To do this you have to find the right property at the right price, and the market is still looking good for buyers with this mentality.

If going for a condo, as stated before, make sure it is in the right area that is established or on it's way to being there. Two of my friends bought a row home (townhome with no HOA) along the Delaware River in Gloucester City 10 years ago thinking it would be a great investment due to the riverfront restoration plans the city was working on. 10 years later, the city never followed through with that plan and they have lost value in the property.

With so many variables to consider, everyone is going to have a different opinion on what's the best course of action.

 

[iReC89]

If you are happy at your state jobs and see yourself there for a while I would keep an eye out for a small 3br. If you are handy, the best values might be in older homes in nice neighborhoods that need to be updated. We would have bought the condo we first rented but it wasn't available. We were able to stay in a very small house for 8 years and it worked out better then if we had purchased the condo. Daycare is expensive. I'm glad we weren't stretched too thin before school started.

Use your tax software and throw in numbers for property tax and mortgage interest for last year and see how deductions would have impacted you for each option vs renting.

 

[mikebal9]

When I was in a similar position , I bought a condo that I knew I'd only be in for about 2 years .
I kept it and I now rent it out at a nice profit. My tenants aye my mortgage, association fees, and taxes and I'm left with about $400 extra every month to offset those daycare and diaper bills. Being a landlord and be a nuisance at times, but if you can handle some small repairs, the bigger issues in a condo are small.
Just be sure the association allows you to rent your unit.