Buying A Home
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Is Condo a good investment?
Hi All,
My Hubby and I just placed an offer to Condo in one of town in NJ. Since we were thinking to start family later on maybe in the next 2 yrs and we thought that we can save more money to buy our real house if we live in Condo. Now I am doubting myself if Condo is really a good investment. Should I cancel my offer and start to look at single house?
TIA 
Re: Is Condo a good investment?
I guess it really depends on you personally. Could you live in the condo for a few years with a baby? Is there space for you to be able to do that? If not, will you have the money saved in less than 2 year to be able to move from the condo to a SFH? What if you can't sell the condo in 2 years?
In our area, mid-Missouri, condos are very uncommon and not a very good investment unless you plan to stay for a long time or use it as a rental property. I would assume in NJ they are more common and might be a better investment.
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Our new to be Condo is 2 bedrooms so, I think we have enough space with one baby
But if my mother in law came to visit, we won't have enough space **sigh..
Well.. our realtor mentioned it to us that in the past 4 years, he saw a lot of people buy Condo instead of Single House in NJ. But I wonder if what would happen in the next 5 years
Personally I want to live in SFH or townhouse but my hubby keep on telling me that we can get any SFH that we want it by staying on budget and lives on Condo. Now I am really confused on what i should do to on top of that we placed the offer 2 days ago and I just heard that the Seller accepted it
I have always heard the rule of thumb was that you have to live somewhere at least 5 years for buying to be worth it. Not sure of the truth of that statement, but I think that two years seems like a very short time to recoup an investment.
Where I am, condos are a terrible investment and relatively rare. The only condos which are in demand are in a senior community-type deal. But I know that is not the case in many markets. I don't know specifically about NJ though. What does your realtor say?
A house or a condo is NOT an investment. It is a place to live.
You should consider the time needed to recover your buying and selling costs - and do not plan on coming out ahead for at least 7-10 years.
Given that all markets are local --this can vary considerably by location.
In most areas a single family home holds it's value better than a condo.
Have you eveluated your finances and determined what is affordable? (Not more than 30-35% in a HCOL area for mortgage+Insurance+ taxes+utilities+HOA --- less if you have alot other debt)
Thanks all. It does not occur to me that we have to think about the selling and buying cost and the duration to live is a big deal. Thanks you so much for the insight.
Well.. based on our finances we agreed to put 40% for the down payment and we will be able to pay off our mortgage in the next 5 yrs if we live on new Condo with our current lifestyle (before the baby arrives). But I have no idea with the expenses that will come if we have the SFM since most of SFM that we looked needs some upgrade.
We bought a condo first- it was a bad idea. Had we continued renting for another year and bought a sfh we would have saved a lot of time, money, and effort. The condo market can be much more volitile then sfh and another problem is a 2 bedroom is a much smaller market for resale.
We just moved out of Jersey (Princeton area) into PA (Newtown area, but both still work in NJ). Not sure what part you're in, but unless you're very close to NYC and near a NJT station, I don't think a condo would be a good investment because of the issues with school districts and property taxes in NJ.
Prior to buying our new house, we lived in a condo that the owners were renting out. They owned the place for 20 years and if they sold it, they would get about what they paid for it. They really don't make much on it all after they pay the taxes and association fees and it's probably more of a headache than it's worth.
In my area they cannot give condos away. During the boom they were overbuilt and overpriced. There are a lot of half-finished condo projects and conversions around here.
There was an uproar last year because a high-rise condo development that was selling 500-sf condos for $300K (and the prices went into the low millions) auctioned off their remaining condos for a fraction of that.
If you want one and it works for your lifestyle, go for it. I don't think it's wise as an investment and I wouldn't count on being able to unload it easily or without taking a loss when you go to sell.
For reference, we don't live in a highly populated city like NYC or LA where buying condos or apartments is the norm for most families. You can get a 3,000+ sf upscale single family home in the suburbs for $300K so it wasn't the best area to build condos in the first place.
Regardless of whether you're buying a condo or SFH, I'm not sure you'll come out ahead financially if you plan to sell in two years. Can you rent a cheaper place? If you rent for a couple of years while you save for a SFH, it could make things much easier for you when you're ready to buy that SFH.
Another thing to consider is whether or not you could buy a condo and live there for 2 years, then rent it out when you're ready to buy a SFH. Approach this option cautiously. You would need to make sure that you buy a condo that allows renting (not all do ... some have HOA's that restrict renting). Also, research what rentals are going for in the area to see if you could charge enough in rent to cover your costs. You should thoroughly research what being a landlord entails and consider carefully if this is something you would want to do. And, depending on what kind of financing you would plan to get for the SFH, you may not be able to count potential rental income on the condo to qualify for the mortgage on the SFH. For example, with an FHA loan, you can't count rental income to qualify for a mortgage unless you have 2 years of rental income history, so if you wanted an FHA loan on the SFH, you would need to be able to qualify to carry both mortgages (the condo and SFH) without rental income.
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The decision come after a long discussion between the condo and a nearby (15 mins away) townhome community, where we almost purchase a 13 yrs old 3 bd with basement townhome.
Since I work in NYC and husband work in South Jersey, we were looking for a mid way location where commute is still reasonable for both of us. I took train to NYC and husband is driving to work.
The townhome and the condo got relatively same price, the condo is a bit cheaper and got lower tax. We finally decide on the condo because of the location and the developer got a good history (so far no half done community). There are concerns with security because it is very close to the station, but after researching and looking at the area, we decided that the area is actually safe.
As far as the resale value, we are betting it on the location and the developer reputation. So hopefully that pays off.
But the decision I think is influenced a lot by location, your lifestyle and how long you decide to stay on the location. For us, the condo seems to be a better option (not necessarily saying it is a better investment, but definitely fit our lifestyle better).
This. We really wanted to buy a house last year, but could only afford a smaller house than we really need if we're going to stay in it long term. We then thought about moving up to a 2 bedroom apartment in our same complex, but that would've been an extra $150 a month. So, instead, we've been living in a 1 bedroom apartment while budgeting like we live in a 2 bedroom, but putting that extra $150/month away in an account just to be used for our closing costs this year. It's not a lot ($1800), but that's an extra almost $2000 that we won't have worry about in a few months when it's time to close.
Lurker here. I just wanted to let you know that we sold our 3br townhouse in NJ last July, after a year on the market. We had to bring a ton of money to the table, but had no choice, because our family of 4 quickly outgrew it (I bought it before I was married or had kids, 9 years ago). My SIL currently has her 2br townhouse on the market. If they sell it, they will need to bring 60k+ to the table at closing. She just wants to get out, because most of the condo/townhouse developments around here are no longer accepting FHA loans, which cuts out a lot of potential buyers. Theirs is the last one still accepting FHA.
If I knew then what I know now, I would never consider a condo. Especially with interest rates so low now. I would either rent and continue to save, or just buy a SFH now that you plan to stay in long term. Good luck!