apartment vs. condo
clams casino
person / couple considers buying a home vs apartment living. I agree
with those who would argue buying the same home as one would rent will
most always be lower cost in the long run (assuming one doesn't move for
a good two years). On the other hand, it's likely cheaper to continue
renting a smaller apartment (perhaps 1000 - 1200 ft) vs. jumping into a
2000 ft2+ home just to "save money", considering most will probably not
understand / realize the full / real costs of maintaining a home -
assuming the renter is satisfied with apartment living..
I'd be curious to see a reference comparing a similarly sized rental
apartment vs. condo. I'm guessing most condo owners (outside of perhaps
large cities) will not likely enjoy significant tax advantages (it takes
a lot of interest / property taxes to take advantage of itemizing /
exceeding the standard deduction).
For someone who will not have enough deductions to itemize (a clear
majority of tax payers, especially perhaps < $50K), will there be a
significant savings buying a condo vs. renting the same sized
apartment considering maintenance fees, potential return on investment
for the down payment & equity and the full cost of property taxes &
mortgage interest vs. the eventually return on a typical condo. Or is
the advantage of home ownership primarily due to itemizing which is
obviously more of an advantage for higher income earners?
Tony Sivori
> a good two years). On the other hand, it's likely cheaper to continue
> renting a smaller apartment (perhaps 1000 - 1200 ft) vs. jumping into a
> 2000 ft2+ home just to "save money", considering most will probably not
You consider a 1200 square foot apartment to be "smaller"? I've very
curious about the market and price ranges you're talking about. Where I'm
located, a 700 to 800 square foot two bedroom apartment is typical.
--
Tony Sivori
Logan Shaw
> For someone who will not have enough deductions to itemize (a clear
> majority of tax payers, especially perhaps < $50K), will there be a
> significant savings buying a condo vs. renting the same sized
> apartment considering maintenance fees, potential return on investment
> for the down payment & equity and the full cost of property taxes &
> mortgage interest vs. the eventually return on a typical condo. Or is
> the advantage of home ownership primarily due to itemizing which is
> obviously more of an advantage for higher income earners?
I don't think it's all about the mortgage interest deduction. Sure, that
makes a difference, but there are other factors as well. To me, one of the
biggest factors is that in 5 years, rents will have gone up some, but your
mortgage payment will be the same. Imagine what a difference there will
be in 10 years, 15 years, and especially when the mortgage is paid off.
As others have said, I wouldn't worry about the eventual return. For as
long as you have to worry about financial matters, you are always going
to have to worry about having a place to live. Unless you plan on
downgrading to a smaller place[1], the only thing you're ever going to
do with that equity is put it into your next place you live. So it's
basically never available. It doesn't mean anything except to whoever
inherits it.
As to whether it's worth it, I think it depends on the specifics. It
can be, or it might not be. What are the membership dues for the
condo association? How much are rents going to go up over time in
your area? How good of a price can you negotiate when you buy the
condo? What's your credit like and how high will the interest rate on
the mortgage be? Are the benefits to living in the condo over living
in the apartment (like thicker walls or neighbors not moving in and
out all the time) worth anything to you? To me, that kind of thing
is what it really depends on.
- Logan
[1] Or moving to a cheaper market, or getting a reverse mortgage, or
moving in with your kids when you get old, or marrying someone
who also owns a home and selling one of them.
George Grapman
with a building of 6 or more units can offer to sell the building to his
renters. I think at las half have to accept. Those that accept are
basically condo owners with fees going for general upkeep. Those who
decline remain as renters with the same rights they had before and they
pay rent to the association formed by the owners.
Some states have laws that allow renters to stay on after a building
goes the condo route.
Cindy Hamilton
No only that, but 1000-1200 sq-ft houses are easy to find, at least
around
here (southeast Michigan), so you can compare apples to apples on
housing costs.
I'd never rent. It's like pissing money down a hole and only enriches
the
landlord. In 10 years my house will be paid for, and then we'll see my
costs really drop. Plus, I get virtually complete control over my
environment:
nobody on the other side of the wall listening to us have sex, nobody
to burn
me out because they left the stove on, etc.
Cindy Hamilton
mabbe...@gmail.com
> clams casino wrote:
> > For someone who will not have enough deductions to itemize (a clear
> > majority of tax payers, especially perhaps < $50K), will there be a
> > significant savings buying a condo vs. renting the same sized
> > apartment considering maintenance fees, potential return on investment
> > for the down payment & equity and the full cost of property taxes &
> > the advantage of home ownership primarily due to itemizing which is
> > obviously more of an advantage for higher income earners?
>
> makes a difference, but there are other factors as well. To me, one of the
> be in 10 years, 15 years, and especially when themortgageis paid off.
>
> As others have said, I wouldn't worry about the eventual return. For as
> long as you have to worry about financial matters, you are always going
> to have to worry about having a place to live. Unless you plan on
> downgrading to a smaller place[1], the only thing you're ever going to
> do with that equity is put it into your next place you live. So it's
> basically never available. It doesn't mean anything except to whoever
> inherits it.
>
> As to whether it's worth it, I think it depends on the specifics. It
> can be, or it might not be. What are the membership dues for the
> condo association? How much are rents going to go up over time in
> your area? How good of a price can you negotiate when you buy the
> condo? What's your credit like and how high will the interest rate on
> in the apartment (like thicker walls or neighbors not moving in and
> out all the time) worth anything to you? To me, that kind of thing
> is what it really depends on.
>
> - Logan
>
> moving in with your kids when you get old, or marrying someone
> who also owns a home and selling one of them.
In the long run, you probably want to own a home. Most people, when
they plan for retirement assume they will not have rent or a mortgage.
Lou
"Logan Shaw" <lshaw-...@austin.rr.com> wrote in message
news:47597976$0$28819$4c36...@roadrunner.com...
>
> I don't think it's all about the mortgage interest deduction. Sure, that
> makes a difference, but there are other factors as well. To me, one of
the
> biggest factors is that in 5 years, rents will have gone up some, but your
> mortgage payment will be the same. Imagine what a difference there will
> be in 10 years, 15 years, and especially when the mortgage is paid off.
My last apartment (28 years ago) was a 2 bedroom, 2 bath, in a Cherry Hill,
NJ high rise. I lived there a little over a year, and at the time I left,
the rent was $350/month. I can't find today's price for that apartment, but
other high-rise apartments in that town that look comparable seem to running
around $1,400 - $1,900.
The mortgage payment on my first house came to $550/month - of that about
$160 was for property taxes, $40 went to homeowners insurance, and $80 was
for private mortgage insurance.
I've long since moved away from there, but going by the averages, if I was
still there today, the PMI would be gone and the property taxes would be
somewhere around $500. That would make the monthly payment in the
neighborhood of $810 plus homeowners (don't know how to estimate that, but
my present homeowners is less than $100/month).
In the early years of the mortgage, the tax deduction was big enough to make
the after tax cost of the mortgage less than the monthly rent - if I was
still there the tax deduction wouldn't be a real big deal, but the payment
would still be less than the monthly rent on my old apartment.
> As others have said, I wouldn't worry about the eventual return. For as
> long as you have to worry about financial matters, you are always going
> to have to worry about having a place to live. Unless you plan on
> downgrading to a smaller place[1], the only thing you're ever going to
> do with that equity is put it into your next place you live. So it's
> basically never available. It doesn't mean anything except to whoever
> inherits it.
Not necessarily so - I know (knew really, they've since passed away) several
people who used the equity in their homes to finance medical care/assisted
living toward the end of their lives. I guess that counts as putting the
equity toward the next place you live, but the point is that the equity was
there to use, and it was meaningful to those people.