buying a condo?

I found a really nice condo in a great area here in central florida. It's a 2/2 with a 2 car garage. It's close to a supermarket, highway, work, and in an area that will not lose it's property value any time soon. With the money I put down my mortgage payment over 15 years would be ~$500, with a 30 year it'd be ~$300. Of course I would need to add-in HOA, but I feel that it would be a great first time home and if I ever want to move into a house I can just rent it out and easily make money off of it, especially due to the location, school zone, etc. They were built in 2000, gated neighborhood, and everything else stated above. It'd be great for the girlfriend and I who I plan to ask and marry me here in a month or so...

What do you GRMers think? Any advice? I'd also have a roommate in the 2nd bedroom to help with expenses.

Good: It's a great time to be a first time home buyer.

Bad: You're young, don't know where you're going to land after college, etc. Also - Condos are notoriously unfriendly to car guys.

Good: I've just learned that my job at Honda is secure. They finally came to an agreement about keeping the express guys, and if I need to I will become a full service tech once I graduate. It's not what I want to do but until I can find a job that is degree related, it'll do. Also parents + 4 car garage live less than 3 miles away from this place. Wouldn't be a big deal to drive there to detail, wash, work on cars.

I would most likely turn the garage into a lounge/bar for when friends come over and the other half for the T/A to rest.

Ask for financial statements from the Home Owners Association. What you want to find out is if there are any reserve funds in the HOA and what expenses they typically see and if the HOA is financially solvent.

In my state, there is a required Owners Disclosure Statement. This statement typically discloses problems that have happened to the house. In a condo, ask for a disclosure statement from the HOA as well. As an example, this will show if there are foundation issues or temite issues that have affected neighboring units (not just your unit.) Since it is a condo, you are responsible for a portion of all the exterior walls, not just your walls.

Also ask who maintains the roads/driveways leading to and around the condo. If owned by HOA are there funds being set aside for maintainance of these roads. It aint cheap.

Thank you JRW. Luckily my mom's boss/friend/ex-gfs mom also owns a unit in the same building that she rents out. I'm going to give her a call today and find out all that info from her.

Get a copy of the written Condo By-Laws well in advance in order to read the written rules.

Find out if there is a contract with a property management firm and get those details as well. What you are looking for is if those rates have limits as to how high they can be raised.

Also find out what the owner occupany rate is. Are most units owned by absent owners who rent them out (and care less about the neighborhood?)

I was once treasurer of my 10 unit condo group. We were/are pretty unique since we are 100% self managed. We make our own decisions and hire our own contractors.

DirtyBird222 wrote: Bad: Girlfriend thinks it's a step in the direction of marriage, engagement. Thinks getting a roommate is a sign of pushing those things back. Why don't some women understand finances?

Keep the renter on a one year lease, that way, if she wants to move in, you can make it happen. That, or at $300/month mortgage, rent one room, and if she wants to move forward, just rent the second room and buy a new place.

How much are you putting down as a percentage of the total price? $300-$500/month mortgage is really low for most areas. While that sounds good, at your age, you might not want all your cash tied up in real-estate (possibly higher returns on other investments, other big costs - wedding, kids, etc).

Pretty much I'd be putting down over 1/3 of the price of the place. While we have discussed the M word, children are not planned for the near future. Her family is all about weddings, the money for that is already taken care of....

People say it's the time to buy, other people say nay. I see this as an opportunity to have my own place and eventually something to make a profit on, whether it be through renting or selling. At this stage in my life a condo will work perfectly for me especially due to it's location. Close to family, resources, highway, etc.

I'm 23 and still at home with the parents and it's very agitating, especially after being on my own from 18-21. Yes we have lots of land, big garage, etc. but I need my privacy, more space, and if I want the A/C at 72 it can be at 72. I really feel it's the time to be on my own, I can't afford a home in this area, which is why I'm going the way of a condo.

I understand the risk involved and I'm willing to take it. If I can get someone to move in and charge them the mortgage payment for rent for at least a year, I should be set...hopefully lol

I've always been an advocate of home ownership, and I made money on the house I bought in 2000 and sold in 2005. However, the house I bought in 2006, and now currently live in, is under water. But by only about 4%--I just talked to my realtor, and the house he bought in 2005 is now valued at about 30% less than what he paid.

If you have any doubt that you want to move within the next five or so years, don't buy. This market is just too unpredictable. Instead, rent a house from a good landlord. Take your time finding one. And save as much as you can for when you do buy a house.

If you're only 23, you'll find your house needs will change, maybe drastically, over the next five or ten years. In a strong economy, you'd be doing the best thing to buy, then sell and move. But now, I think it's best to wait.

Kramer wrote: If you're only 23, you'll find your house needs will change, maybe drastically, over the next five or ten years. In a strong economy, you'd be doing the best thing to buy, then sell and move. But now, I think it's best to wait.

Agreed. My biggest hesitation if I'm in your shoes is that I get offered my dream job right out of college, in San Diego. If you're just starting your career and don't have family or relationship ties to your current area, then having flexibility on location right out of school will help.

What is the rent on similar units? If your mortgage+condo fees would easily be covered by rent, and you still have some cash on hand for a second move (should the "dream job in another state" appear), then it is a good time to buy. You just want to make sure you are liquid enough to move should the need arise. You don't want to take a loss on the condo - and that will happen if you have to sell within 5 years or so (even at a slightly higher sale price, you would lose closing costs from the initial purchase, maintenance, condo fees, and agent fees on the sale). Although home ownership can be an investment, it usually isn't a very good one on a pure cash basis (yeah, you can make money, blah blah, by the time maintenance and all the other crap is factored in, most don't make much no their primary residences).

If you have no interest in owning a rental, or don't have the cash to make a second move, you will seriously want to consider renting a similar unit.

CrackMonkey wrote: What is the rent on similar units? If your mortgage+condo fees would easily be covered by rent, and you still have some cash on hand for a second move (should the "dream job in another state" appear), then it is a good time to buy. You just want to make sure you are liquid enough to move should the need arise.... If you have no interest in owning a rental, or don't have the cash to make a second move, you will seriously want to consider renting a similar unit.

I agree. Good words of wisdom. Is it possible to put a little less than 1/3 down, perhaps only 20%, saving a little cash? Shouldn't increase the payment that much.

There's one other aspect of condo or townhome ownership you need to consider. Unlike a single family residence the performance figures of the condo and the percentage of homeowners to renters affect whether you can get a loan to purchase the unit and also affects whether one day your potential buyer can get a loan. These figures also affect your interest rate and your downpayment.

In effect this cuts down your potential market for resale and affects the value of the unit.

Condo and townhome sales, values and loan availability is the first to go in any kind of downturn market. But even in the best of times condo financing isn't always available and many projects aren't eligible for financing.

So while home ownership is admirable, condo ownership is not to be entered into lightly.

Thank you for the info guys. Very very helpful.

Rent on a similar unit is around $1000-1100 a month. Like I said, due to it's location, school zoning, etc.

what are the taxes. i know mine are almost 500 a month.

Like carguy mentioned...the percentage of rentals vs. total units affect financing possibilities. To alleviate this, many associations will limit the percentage of rental units (the one I have expericne with hat to maintain a 75% owner occupancy rate).

So...check with the condo association before you assume that it can be rented out.

Also, condos don't typically appreciate at the same rates as detached homes.

However, I just don't see how a person can go wrong buying in this market. If you are sure you can keep it for a few years, I'd do it.

Condos are a good bridge between apartment life and full-on home ownership, in my opinion.

Clem

I like the idea of ownership.

Regarding 15 and 30 year fixed mortgages......i was always told to get a 30 year mortgage and pay it like a 15 year. if you ever have problems, you can fall back to the lower payment.

I like the idea of houses too.

pete240z wrote: Regarding 15 and 30 year fixed mortgages......i was always told to get a 30 year mortgage and pay it like a 15 year. if you ever have problems, you can fall back to the lower payment.

Wouldn't the interest rate be significantly higher, though?

No the rate wouldn't be significantly higher. The rate on a 15 year, although it once was about 1/2% lower than a 30 year loan, has become only about a 1/4% lower most of the time.

Most people do get a 30 year loan instead of a 15 with the intention of paying extra. I don't know if they actually do it.

Interesting tidbit. If you take out a 30 year loan and pay one extra principle and interest payment a year whether you pay it a little each month or one lump sum once a year when you get your bonus will cut your 30 year loan into a 21 year loan + a month or 2.

And those bi-weekly loans - don't pay anyone anything to set them up. Your lender will do it for free and give your account instant credit for your payment whereas the 3rd party companies don't pay your lender when they get your money. They hold it and use it.

A bi-weekly loan isn't simply dividing the payment in half and letting you make 2 smaller payments, the basic premise behind them is, drum roll please, making one extra payment a year to cut your 30 year loand down to 21 years. Ta dum!

You will end up having 3 payments a month twice a year which gives you the equivalent of 13 payments a year instead of 12. It's a simple as that.

carguy123 wrote: Most people do get a 30 year loan instead of a 15 with the intention of paying extra. I don't know if they actually do it.

That's pretty much what I did. I was working for a guy who told me to make double payments if I could. Seemed crazy at the time, but a couple years of that and I knocked the mortgage way down. And I was still saving like mad, even with a car project...it's insane how much money just sorta piles up when you're single and living below your means. I never made big money, either...it's just what you do with it.

Now my brother, on the other hand...he got f'n screwed with his condo. There were 105 or so units in his development, and ALL the owners agreed to sell because maintenance was getting out of hand, as they were older units. So it's really the land they were selling.

Well when a prospective buyer asked the city to do an inspection of the place, they found that the parking garage structures were cracking. Since the residences were built above those, the city decided to condemn the place. Kicked all of the people out - and they still had to pay their mortgages as well as maintenance fees, because that's where the insurance is (for liability). The people who want to buy the land are now just waiting for everyone to default in one way or another.

So for about 8 months, my brother has been paying his condo fee and mortgage there, as well as rent for the place they live now. You can rest assured there's a whole lotta legal mdness going on there.

EDIT: Oh...but if I could do it all over, I would have bought a house instead - no question about it. If your job is secure, pass on the condo. Things are low now, and they will most likely stay low for quite a while or even go lower, but if you're in a house, a nice place you enjoy where you can do what YOU want, I think you wouldn't worry too much about the value.

I don't see how these could dip any lower. Like I said great location, zoned for brand new schools right down the street in between million dollar neighborhoods. Talked to the ex's mom briefly before I could ask any questiosn she told me she paid $200k for her unit only a year ago. She said the home owners wasn't bad, didn't ask about taxes, said she'd have exact numbers for me ASAP. Already got the extra room filled if I do buy, a friend of mine committed, lived with him before, never had any problems, like a brother to me anyways.

Houses are still way to expensive in this area. I def could not afford a house right now...well a house that is decent and in a decent hood. I'm going to sit down and talk it over with the rents, my mother seems to like the idea, dad would prolly love it as well as I am just a pain in his ass.

At a $500 or $300 a month payment, I'd think it's likely a very good investment. If nothing else, you rent it out to a family and make a little money that way.

Now, make sure you can do that. Read over that HOA agreement/covenant/etc. Many times, you absolutely cannot do this. As well you will often times find you cannot do a whole lot of what you want to do. Read it well, read it again, read it with a friend, etc.

Not sure about your state and this location, but in some areas a bankrupt HOA leaves you holding the financial bag, and you being evicted when the building is auctioned off. Make sure you understand the laws regarding HOA's in your area, and that you understand the health and well being of this particular HOA.

I'm glad you feel secure in your job. Personally, I think that's delusional. No job is particularly secure these days, and most certainly not with a car company. Not even Honda. But, I wouldn't let that all by itself stop you. Not at those low prices.

Your girlfriend is right. Looking for a roommate is a step away from commitment and mariage and such. Be realistic with yourself and her here.

Well I was promised security lmao. I was even asked if I could still work weekends if I find a better job after I graduate.

Getting a copy of HOA agreement today, sending it to my brother--the lawyer.

The g/f - she's never been an advocate of me living with my friends, she thinks I'll turn back into the crazy party animal that I once was when she first met me. I had a red Trans Am and turned into Frank the Tank Jr.

LOL.

I don't see the problem with roommates. If they aren't ready to commit, they still need reasonable housing. But, I'm a guy.

Heck, if the units rent for $1000 and you're mortgage is only $300, your roommate should be covering the whole payment each month and you're living for "free". I have a good friend who does this (she's lived in her place for ages, so the mortgage is VERY low relative to what people pay for the condos now). The extra cash from somebody else paying her mortgage lets her do a lot of fun stuff (lots of international travel, lots of trips to baseball games in other cities, etc).

Just food for thought, I've done hundreds of condo loans. Everyone was excited going in but only one person was anxious to get out. They all had so many problems with the HOA and project limitations plus the absolute HELL they had selling them that they all swore they'd never do it again.

The one? Died before he needed to sell.

I'll repeat something I said in my first post, Condo's and townhomes are the first properties to have value problems. Let me add they are also the toughest to sell because they are the toughest to buy.

And if you do decide to do it and maybe rent it out, your rental could the one that puts the whole project over the line of the necessary percentage of owner occupied units and then no one can get good financing.

Good financing for a condo project is relative. You won't get the same rate and terms as you would if you were to buy a real home.

Run!

And DO NOT put 1/3rd down, put the minimum down so you'll lose the least when you go to sell - cause you will lose. The race doesn't always go to the swift nor the battle to the strong, but that's the way to place your bets.