condo/townhouse or apartment?
I'm young and just starting out in the "adult" world. My parents suggested to me that I get a condo or townhouse instead of throwing away money on rent. Would this be a good choice? I was looking at condos online...are utilities generally NOT included? what is this whole monthly tax payment? what are assessments? Do I still have to pay property taxes even though it's a condo or townhouse? Would someone making $42k a year be able to afford a $144k condo for approx $1200/mo w/ a mortgage at 6% interest for 30 years? Any answers would help. This is all confusing to me! Thanks.
- WallBakerLv 51 decade agoFavorite Answer
The advantage of a condo for you is that it will be cheaper to buy and require little maintenance.
You own the place, all expenses, including utilities, are your problem. Remember that "utilities included" in the rent simply means the rent payment is higher than it would be if utilities were NOT included.
Monthly tax payment is the money set aside for the annual check to the county or city or whoever is the taxing authority. It is usually added to your payment.
Assessments are charges for things that are not part of your condo maintenance fee. If they had to replace the roof, for example.
Can you afford it? Figure out the interest you will pay on the loan for your first year. (Your loan company can give you that). Plug that number into a Turbo Tax or other tax prep package. Include your real estate taxes. Calculate without the interest and taxes and then with. That gives you the tax benefit of owning VS renting.
Take the house payment, deduct what you would pay for rent, deduct the tax benefit difference from above. That is your out of pocket difference and it will tell you if you can afford the place.
For total return, deduct the annual increase in value (projected) and the amount of money that goes to principle. That will give you the total return.
- ellusionaryLv 51 decade ago
Condo is much better investment than renting (paying yourself and all that).
Yes you have to pay all the utilities (gas, oil, water, sewage, what ever) though some places include SOME of these varies from one to another.
The monthly tax is the same you would pay on a house, instead of one big property tax bill at the end of the year (think around 1-2 thousand dollars) you would pay a little each month.
An assessment is finding out what the place is worth.
The 'monthly taxes' are the property tax, and since you own it, you do have to pay it.
$1200 a month is a lot for a 144K condo, the payment should be closer to $900 for JUST the mortgage.
If you could do it or not, is all about your lifestyle and your other bills. If you can afford it, it would be better in the long run. Also now is good time to buy as there are tons of houses on the market so you can haggle for a better price.
Good luck, I hope this helps.
- Weimaraner MomLv 71 decade ago
First of all the reasons for buying vs renting is that at least you are getting something for your money, you are making a long term investment. Should you chose to move in 5 years you'll have the money to do that if you own.
Yes you will be able to afford a condo for $144K making $42K a year, I purchased a $163K townhome (although I did put down over 35%) and at the time was making the same amount of money.
Renting an apartment you could easily be paying $1000 / month for a 2/2, however, for less than that you could be owning a 3/2 home or Condo, my mortgage payment is less than $800.00 per month and I own a 3/3 townhome with a garage. If you own a condo/townhome generally the garbage removal, the pool and other amenities including water are included in your HOA dues, these are paid monthly and you'll want to find out how much they are first before buying. You will be responsible for your own utilities such as gas, electric and cable, as you would be in an apartment, however, if you own you are responsible for your own property taxes which are paid annually not monthly and are tax deductible at the end of the year (if you put enough money down you can have the mortgage company escrow this for you each month so you wont' have to deal with it, they will also pay your annual tax bill).
Any Home Owners Association will take care of the landscaping the exterior of the building, all outside electrical costs, garbage removal, pool care and repair, they will maintain the roof and they will pay to paint the outside of the building along with the parking lot etc all these expenses are factored into your home owners dues each month with a small sum being put aside for capital expenses (roof, painting, parking lot reseal.) you will only be responsible for the interior of your unit along with your HVAC unit.
Basically if you live in an apartment at the end of 5 years you walk away with nothing to show for it; and you run the risk of the rent increasing yearly whereas if you have a fixed rate mortgage you will pretty much stay the same for many years with maybe only a slight variation depending on property tax increases.
I had a 2/2 condo in Florida that went from being valued at $58K to $150K in a span of two years, I sold and walked away with $112K in my pocket (talk about savings) I put a majority of that money into a new Townhome, I never would have had that if I'd rented.
Own your own place, there's nothing like owning your own home vs renting an apartment
- Elliott JLv 41 decade ago
Parents mean well and are generally right; however, not in this case, at least not just yet.
Condo/TH yes, you will have to pay taxes based on the ad valerum rate in your area. That would probably be somewhere 3 grand/yr.
Plus, you will have the added expense of things like roof repair, new waterheater, exterior/interior painting, fixing leaks and a wide array of unexpected repairs or replacements. These are just a few examples, but you must factor in several thousand for these unexpected surprises. THEY ALWAYS HAPPEN!
I recommed because of your age, just starting out and getting your finances started that you RENT for a while ( 1 or 2 years) first before you purchase a place. Besides, your career or love life may take you to a new city! It makes more sense to be flexible at this point. Just for a while.
Don't ever try to outguess the housing market, or interest rate market. You will always have the opportunity to refinance at more favorable rates in the future.
Also, don't get trapped in the fixed thinking that your best financing in a 30yr. fixed.
Sit down with a financial advisor and see if other options make better sense for your goals.
You may be better off on an INTEREST ONLY mortgage. Explore the options.
You may also get your parents to transact a SELL-LEASE BACK optiion for you.
Many creative opportunites these days.
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- BCLv 61 decade ago
Not a simple answer. It used to be "assumed" that buying property was always better than renting. However,.this is no longer true.
So, your first concern should be the economic advantages of owning vs renting. Although rent sounds like wasted money, owning property that loses value over time can be even worse
So, check the property values for the last five years for the condo/townhouses you are considering. Have they increased in value, stayed the same or lost value?
Usually, utiltiies are your responsibility when you own the property, although it depends on how the building is set up. Same for apartments.
- 1 decade ago
From what seen, water and heat are generally included in the condo fees if it is an apartment-style condo, but power is not. If it is a townhouse-style condo, you will usually have to pay all of your utilities yourself.
You do have to pay property tax, but it is usually significantly less than it would be for a house, especially if you are in an apartment-style condo.
- Anonymous1 decade ago
Contact USAA, and ask for some referrals to USAA approved real estate agents in the area(s) where you want to live and they can best explain the specifics of those areas.
Buying is a good option if you plan to stay in your home for at least five years. Less than that, and you risk selling at a loss.
You will pay property tax on any dwelling you own.
- Anonymous4 years ago
- Johnny ALv 51 decade ago
Listen to mom and dad..they are wise in their ways...