Source
r/personalfinance•
bedake

Should I buy a condo?

Housing

Hi all, so I am 36, and have about a 100k net worth. 60k is in a HYSA. I make 132k annually with potential bonuses i don't really want to factor in since they may or may not come.

I just returned from a bit of travel and am staying with family now, while looking for an apartment. I live in the Denver metropolitan area that is kind of an expensive housing market. The neighborhood I'm looking to live in and rent is around 1700 for a decent 1br apartment.

I just noticed that there is a 2BR1B condo available for sale in the neighborhood for 369,000. The condo has a $265 monthly HOA. Zillow tells me if i put 20% down my expected monthly cost would be about $2390.

I've never owned before and I'm somewhat scared about owning a condo since many caution against it. I also am terrified with the way the labor market has been with layoffs lately. Having a second bedroom would be cool for the potential of getting a roommate if i needed it, or even renting the place out if i lost my job and had to move out. I guess my question is, if this makes sense or not?

The building was built in 1986 and is in like a condo community, not exactly fancy, no garage or anything but it is quiet and close to nature which i really value. Also not in a walkable neighborhood by any means which kind of sucks as well.

Thanks all for any advice or musings.

Posted May 9, 2023, 7:58 PM UTC · edited

210
brakeled​•

I live in Denver. All markets and neighborhoods are localized, you should call and talk to a realtor soon and then determine if you want to go through with buying and find a lender. The place you’re looking at will likely be gone by the time you’re approved to buy but it doesn’t hurt to get in the market now.

You can probably comfortably afford this specific condo. I wouldn’t go above $3k/mo including HOA fees. Good luck.

3
bedakeOP​•

Thank you for the advice, i didn't really realize it takes that long to get approved

1
BrowsingForLaughs​•

The approval process is weird, they can give you pre-approval very quickly if your numbers and credit are good.

1
pierre_x10​•

https://www.nerdwallet.com/mortgages/how-much-house-can-i-afford/calculate-affordability

I'm not sure what you consider good things or bad things, but "caution against" owning a condo isn't so much the issue as much as the tradeoffs they would entail. There are certain aspects to like, certain aspects to not like. https://www.nerdwallet.com/article/mortgages/condo-vs-house

I would suggest figuring how much you would actually like to spend per month towards housing. If you prefer something like the 1700 rent, then renting is probably the way to go. If you are comfortable with paying something like 2300 per month and eating into your savings for the down payment, then sure consider buying instead.

I would note however, that out of all of your financial decisions throughout your life, choosing to buy a home will probably rank among one of the most important. Make sure you put a lot of thought into what you really prioritize in a home, and don't go rushing into things just because of vague notions like renting bad, equity good, etc.

3
bedakeOP​•

Thank you for the insight. According to the calculator, i should be able to afford a home up to around 530k... But to be quite honest i don't feel comfortable spending that much per month on a mortgage, and would rather have extra money to keep throwing into a investment accounts and emergency funds. Maybe I'm being a bit too conservative but it's terrifying to imagine being laid off with a 3k mortgage.

I think your cautionary words tho have made me feel a bit more okay about if this opportunity falls through.

1
pierre_x10​•

A suggestion that can probably kill 2 birds with one stone: see how it feels to spend 3k on housing as you rent for another year. So assuming your rent comes out to 1700 per month, commit to setting aside an additional 1300 each month in that HYSA, that can serve as part of your future down payment. If you find it pretty restrictive, then it's a good sign to set your sights on a lower price point, but if it feels like something you can maintain longterm, it will likely help with your feeling more confident that it would be something you can afford.

One other thing I would suggest would be to check out this sub's wiki flowchart, to make sure you are covering your other financial goals, such as saving for retirement.

1
Regular-Chemistry884​•

I've always thought those calculators are inaccurate and go way too high. Trust your intuition. Also, as a homeowner, it's overrated. It's a really expensive chain around my neck with a $25,000 new roof and all the f-ing yard work. who needs it!? I miss the days of calling the landlord to do things... sigh. The equity is only nice when you sell, until then it just means higher taxes with the same size salary.

1
MasterTip1132​•

I know someone who lives in that exact condos by the fed center. If you're ok driving everywhere and don't need a SFH/yard I would do it in a heartbeat. If you still want to live an urban lifestyle don't do it.

The condo was high 200s 3 years ago.

1
bedakeOP​•

Thank you for your response. I'm definitely past wanting an urban life. I've come to realize I'm far happier spending my free time outside and in nature as much as possible with the occasional trips into the city for culture rather than the opposite. Something like boulder or golden would be even better where you can have both AND a walkable community haha but I don't think i can afford those places. A yard would be great too, but i can live without one as long as there's great natural lighting and proximity to open space.

Driving everywhere does suck but that seems unavoidable in denver if you want to be 15 mins from trails but can't afford golden or boulder, unless I'm missing a hidden gem lol

2
MasterTip1132​•

Why not rent in those condos for 1.8k for a month and see if you like it? Housing market MIGHT cool off like you said so I doubt those condos are going to go for 400 k any time soon.

1