House vs Condo/Town home

[BMVeh]

Just a little background...
24 years old college student, work 40+ hours, full time in school. Been working all my life and think its time to buy a small house (2 bedroom )to start off with. Very small budget of 100k. $20k available to put down. I don't party and I am out more than at home.

Dilemma I'm having- Should I buy a house or Town Home.

I can probably get a nice townhouse or condo, pay HOA fee of $350+, not worry about much expect the inside of the home. Itll be newer than a house.

Now a house, might be able to get bigger square footage, probably will be older built than the condo. NO HOA, however...flood insurance ($?), lawn care, trash, water, and other fees like worrying about the roof etc...No rules to really live by like you would have to a condo.

This is going to be in the South Tampa, Fl area. In a couple years I might want to sell and maybe upgrade. So resale is important as well...

I would love to hear from thoughts and suggestion from people who have crossed this path. Thanks!!

[BMW F22]

I've always believed that a single family home is a much better investment than a town house or condo.

[Titanium3er]

I would personally never buy a condo or townhouse, but I was also never in your exact situation. If it were me, I would still go for the single family in your case. The main reason is the market in Florida still has a ways to to toward recovery and owning a single family sometimes gives you more options and a better shot at appreciation. For example, if you decided in a few years to buy a bigger home, you could choose to keep this home and turn it into a rental. Condos and town homes with HOA's don't always make it that simple. You might have to clear it by them or it might be prohibited entirely.

As for flood, homeowners insurance, maintenance, etc. you are correct that they are extra expenses. On the other hand HOA dues and assessment can go up unexpectedly as well, especially in a mismanaged community. Single family you will have more freedom, but an HOA keeps the neighborhood looking clean and desirable for the most part. You can equalize this by finding a nice single family neighborhood that looks like it will remain that way.

Obviously you need to do your homework no matter what you decide - including market analysis, inspections, estimating expenses (worst case scenario). If you can afford the house, that is what I'd choose. Even with all the potential extra costs I still think a single family will provide a better return in the long run.

[KingOfJericho]

The purchase of my condo, which I now rent out, has thus far been the worst investment I've ever made. The problem with condos is that the comps are too easy. It's like real estate communism. They are all treated the same and if the value goes down on one, no appraiser is willing to appraise for a penny higher on another unit. It's partially the laziness of the appraiser but also a reflection of how badly the banks were burned by the 2008 financial crisis. I always argue that the value of property is always the amount someone is willing to pay for it but the banks disagree. It's all recovery value, should you decide not to pay. I could have purchased a Porsche for the unrealized loss I'm currently sitting on.

My HOA, which I am reluctantly the president of, has had to raise monthly CCs by $60 and impose an $1,100 annual assessment due to a complete lack of foresight by earlier boards.

The best advice I have to give is to NEVER buy a condo or townhouse. Get a freestanding home and you will forever thank me.

[SCHMOUPE]

Originally Posted by KingOfJericho

The purchase of my condo, which I now rent out, has thus far been the worst investment I've ever made. The problem with condos is that the comps are too easy. It's like real estate communism. They are all treated the same and if the value goes down on one, no appraiser is willing to appraise for a penny higher on another unit. It's partially the laziness of the appraiser but also a reflection of how badly the banks were burned by the 2008 financial crisis. I always argue that the value of property is always the amount someone is willing to pay for it but the banks disagree. It's all recovery value, should you decide not to pay. I could have purchased a Porsche for the unrealized loss I'm currently sitting on.

My HOA, which I am reluctantly the president of, has had to raise monthly CCs by $60 and impose an $1,100 annual assessment due to a complete lack of foresight by earlier boards.

The best advice I have to give is to NEVER buy a condo or townhouse. Get a freestanding home and you will forever thank me.

This. I was recently in a similar boat where I had the option to purchase apartments for 300k+ (this is for across the water from NYC hence the hefty pricetags) or purchase a single family house for 400+. Note on the condos you have a 800-1000 maintenance/HOA fee which amounts to over 300k extra over a 30 year span. I opted to go with a house and although more expensive upfront, I have the liberty to do as I wish in it. I have yet come across somebody who got locked in a condo/apt situation (buying vs renting) who is 100% happy.

Good luck!

[Hawkeye]

I bought a townhouse first and would not recommend it. The Owners Association can pretty much change any rule they want if they get the board behind the decision. My place recently started making you pay an extra $100 a month to park a vehicle on the street. And since my g/f lives with me now we have to pony up.

There have been a lot of other crap changes as well. I will never live in an association again.

[dreamingat30fps]

I bought a condo while in your similar situation. Worst thing I ever did. Of course that was also at the peak of the market so. I would just wait and save money to buy a better house.

[jwzimm]

I'm going to go against the grain here. I bought my townhouse in 2007 and I think it was a great decision. I did buy at the peak of the market so I have lost value in the house but honestly who hasn't? My HOA is very hands off and the rules are all very reasonable. The rules exist to allow you to control the out of control neighbors, not beat you over the head. I like not having to worry that my neighbor is going to set up a daycare/car repair business and screw up my property value with me having no say over it. I also love not having to worry about keeping the yard up or the roof/driveway/road/whatever else is going to break.

My plan is to hold on to the property for a very long time. It is the ideal rental property (it is a double-master configuration) and I can rent for what the mortgage is right now. In the mean time I am quite happy.

[SaMaster14]

I'm 20 and a junior in undergraduate university.
My parents are paying for school, but I'm currently in an apartment-home with a roommate who is a peer (and good friend) of mine.

After undergrad, I'll be looking to work for 2-3 years before going on to get a JDMBA. As a young adult, I'm definitely looking to continue living in the apartment-home style until I have a solid job after all school is taken care of at which time I will be looking for a house!

Just my outlook as a younger person

[Seminole]

Unless things are really different from what I know, $100k in South Tampa won't get you jack as far as a house goes. The land alone is worth that much.

[JasonCSU]

I didn't expect so many people to have such bad experiences with condos and town homes. I've been in my current town home for about 2 years and so far have not had any issues with the HOA. I guess it really comes down to how it is being managed. My plan is still to eventually move out and rent the town house within a few years.

[PSUSMU]

My opinion: You're 24. Don't buy yet. Rent in a fun area. $100k won't get you anything worth buying. There are many other things you need to factor into the cost. Furnishings, utilities, interior maintenance, etc.
I bought a townhouse at 26 and am very happy with it, except I wish I was closer to the city.

[F32]

People unfortunately place an unrealistic value on the notion of "owning a home." You have to look at it purely from an investment point of view, not an emotional one. At the end of the day, it's only a place to live, thinly veiled as an investment.

I don't know about the real estate market in your area, but if there are homes for $100K, it's likely not good. That $100K asset will do little to nothing for you except save you some money on taxes and shelter you from inflation. Guess what...there are many other investments in different asset classes which will provide the same, plus give you income and/or a greater return. The only issue there is that you can't leverage your $20K to buy $100K worth of other assets as easily as a home.

[stevers314]

I agree with the last two posts. Especially if you plan on uprooting in a couple years.

Renting isn't so bad. At most you are out your deposit if you trash the place. Many people will fill your head with "but but but EQUITY" which sounds nice on the surface. Realize that when it comes time to sell that you are out approx 6% in commission alone. Will you have paid down $6k in principal by then? Will the value go down? Many people think just sitting on a place will let it gain value but the last 10 years have shown that not to be the case.

My advice: rent a townhouse and hold onto your savings. A lot of life changes will be coming your way in the next 5 years.

[f30nynj]

Great advice here! I actually invested in an apt overseas(where my parents live) and I continue to rent here and enjoy life.

Honestly, a buying a house is like a shackle that always keep you chained down to the same place. You will get bored of living in same area/apt. Unless you are the kind of person who is very content with same thing for a long period of time.

Talking about renting it out is a different game, you will be surprised how you are harassed by phone calls of tenants about petty things. Just not my cup of tea.

At 24 you should change jobs, move to LA/NYC/SFO and explore the world. Invest in other asset class like others mentioned.

[Mr Tonka]

Dude, buy a condo/town home. People will ALWAYS want to live in South Tampa and there is no more land to build on down there.

As young as you are, with rates as low as they are, you'll be sitting pretty in 10 years when you buy a new house and rent your condo out for 2.5-3 times what your mortgage is. And due to the demand, you will never be short on potential renters.

I've lived in Tampa for 39 years and own a floor covering business on S. Dale Mabry. When reading advise, keep in mind that the housing market in FL, Tampa specifically, is much different than the rest of the nation. The market here is on the rise, especially in S. Tampa. If you're going to buy, do it now. Rates are low, (likely won't be this low ever again) and prices are still reasonable. As soon as the prices go up enough you'll see a jump in the rates.

And don't sweat any hassles about renting out your place. It's no hassle, get an iron clad lease, make all repairs the tenant's responsibility. I use a commercial lease on our rentals and we rarely get calls. Do you think it's worth 10 hours of your time a year to gain $16,600 in rental income? I spend less time than that with my renters each year. I would estimate, including phone calls and visits to the house i only have 4 hours into it last year. That's about $4k per hour in rental income, I'm sure it's worth my time!

[BMVeh]

Originally Posted by f30nynj

Great advice here! I actually invested in an apt overseas(where my parents live) and I continue to rent here and enjoy life.

Honestly, a buying a house is like a shackle that always keep you chained down to the same place. You will get bored of living in same area/apt. Unless you are the kind of person who is very content with same thing for a long period of time.

Talking about renting it out is a different game, you will be surprised how you are harassed by phone calls of tenants about petty things. Just not my cup of tea.

At 24 you should change jobs, move to LA/NYC/SFO and explore the world. Invest in other asset class like others mentioned.

Ya i would probably rent to like older couple or a family. But you are right about my life changing and I could end up anywhere. Thats why i figure I would just rent it out maybe get another place.

Originally Posted by stevers314

I agree with the last two posts. Especially if you plan on uprooting in a couple years.

Renting isn't so bad. At most you are out your deposit if you trash the place. Many people will fill your head with "but but but EQUITY" which sounds nice on the surface. Realize that when it comes time to sell that you are out approx 6% in commission alone. Will you have paid down $6k in principal by then? Will the value go down? Many people think just sitting on a place will let it gain value but the last 10 years have shown that not to be the case.

My advice: rent a townhouse and hold onto your savings. A lot of life changes will be coming your way in the next 5 years.

See the things with this is...Ive seen it happen to a lot of people that I know. They rent and just end up living there or renting for the rest of their life. And when they do think about buying, its just to damn much to do so.
I couldnt see myself paying rent to somebody and not putting that money towards a home.

Originally Posted by Mr Tonka

Dude, buy a condo/town home. People will ALWAYS want to live in South Tampa and there is no more land to build on down there.

As young as you are, with rates as low as they are, you'll be sitting pretty in 10 years when you buy a new house and rent your condo out for 2.5-3 times what your mortgage is. And due to the demand, you will never be short on potential renters.

I've lived in Tampa for 39 years and own a floor covering business on S. Dale Mabry. When reading advise, keep in mind that the housing market in FL, Tampa specifically, is much different than the rest of the nation. The market here is on the rise, especially in S. Tampa. If you're going to buy, do it now. Rates are low, (likely won't be this low ever again) and prices are still reasonable. As soon as the prices go up enough you'll see a jump in the rates.

And don't sweat any hassles about renting out your place. It's no hassle, get an iron clad lease, make all repairs the tenant's responsibility. I use a commercial lease on our rentals and we rarely get calls. Do you think it's worth 10 hours of your time a year to gain $16,600 in rental income? I spend less time than that with my renters each year. I would estimate, including phone calls and visits to the house i only have 4 hours into it last year. That's about $4k per hour in rental income, I'm sure it's worth my time!

See you know what south tampa is like. EVERYONE wants to live down here cuz of location. I looked at some locations outside of south tampa and I could def get more for my money but feel like a south tampa property would sell alot faster if I ever was to sell.

Originally Posted by F32

People unfortunately place an unrealistic value on the notion of "owning a home." You have to look at it purely from an investment point of view, not an emotional one. At the end of the day, it's only a place to live, thinly veiled as an investment.

I don't know about the real estate market in your area, but if there are homes for $100K, it's likely not good. That $100K asset will do little to nothing for you except save you some money on taxes and shelter you from inflation. Guess what...there are many other investments in different asset classes which will provide the same, plus give you income and/or a greater return. The only issue there is that you can't leverage your $20K to buy $100K worth of other assets as easily as a home.

Originally Posted by Seminole

Unless things are really different from what I know, $100k in South Tampa won't get you jack as far as a house goes. The land alone is worth that much.

Ya the 100k is a bit of a stretch.. but some decent homes can be found down here and made nicer (interior) over the years.

Originally Posted by JasonCSU

I didn't expect so many people to have such bad experiences with condos and town homes. I've been in my current town home for about 2 years and so far have not had any issues with the HOA. I guess it really comes down to how it is being managed. My plan is still to eventually move out and rent the town house within a few years.

Absolutely right. My parents live on Bayshore in the condos, and they pay almost 500 a month and some assessment fees every now and then, not often. But the building is pretty well maintained, but $500 for me is way to much



A lot of really good advice in here. Somethings I am pretty sure of are: I am definitely buying something. Specially before prices go up. I can not see my self wasting money on renting a house/condo. After talking and reading on here seems like what I buy, I will have to sit on for a good bit either me living inside the unit or even renting it out. I dont know where my life can take me specially with school, so I have to option of renting out if I ever do have to leave, in which my parents can assist in watching over it.

Any other advice is appreciated..

[dreamingat30fps]

If you are going to rent it make sure you can rent it for more than your expenses and most importantly make sure you can stand being a landlord. I can't. Out of state landlord would be even worse. Renting out the place sounds like peaches and tits until the shit hits the fan and you can't find a renter and have to keep paying that mortgage. Then you get desperate and rent it out to the first schmuck who shows up and they turn it into a grow house.

[MediaArtist]

Research local rental rates for comparable homes in the neighborhood you're looking in. Craigslist, padmapper, etc. Then take into account 1 month of vacancy, property tax, and maintenance (about 1%-2% of the price of the home per year). If your mortgage payment will be below that by a few hundred dollars, then you can safely use the property as a profitable investment property.

Also, single family homes don't necessarily mean the HOA won't be a hassle. I live in a gated community in OC. Many of the homes have 3-4 car garages. If they find out that your garage is packed full of stuff, and you're parking your car on the street, it's a $250 fine, no questions, no negotiations, pay the bill.

[Wakka]

I own a condo in downtown Tampa, and I am pretty darn happy I did not buy a house. Not having to worry about anything on the building is a dream. Just make sure your condo is in a nice area, you dont want to be living with section 8's and felons.

Just my .02

Cheers,

[Templar]

Originally Posted by dreamingat30fps

If you are going to rent it make sure you can rent it for more than your expenses and most importantly make sure you can stand being a landlord. I can't. Out of state landlord would be even worse. Renting out the place sounds like peaches and tits until the shit hits the fan and you can't find a renter and have to keep paying that mortgage. Then you get desperate and rent it out to the first schmuck who shows up and they turn it into a grow house.

You could always go through a property management company. They will take a cut of course, but it gets rid of the hassle of being a landlord and dealing with the BS of tenants.

[Brunotheboxer]

For me I have to own my own home(s) due to the fact that I own a game bred apbt and I hate people.