Nick Answers Reddit
Do I keep the condo or buy the townhouse?
My partner and I have an interesting scenario currently. We are currently one year into a 25yr mortgage on a Condo. Condo bought at 318k. We make 148,000 combined and no debt other than mortgage. However, we are both building our savings currently and don’t have 20 grand we’re willing to throw to a down payment right now.
My parents approached me with the idea that they may buy my sister a condo (she is neurodivergent and high functioning, and this is to give her a good shot at life). I think this is a great idea and takes a lot of stress off of me. They would be looking at the 300 range and would pay cash.
The idea ranged to the possibility of them buying our condo for 318, and then providing my partner and i with a down payment of 15k for the townhouse.
Townhomes in our area that we would consider are around 480, 1600sqft and enough bedrooms for us to stay there for 10 years.
For context we are 23 yrs old.
Here are our concerns:
we would lose the investment of the condo, as our original idea was to live in the condo for 4-5 years and then buy a townhouse, keeping the condo as a rental.
this idea is that this is all on the basis that rates will go down, and our monthly bills will be somewhat equal to us living in a townhouse (fingers crossed 3 ish %).
the opposite side of that is in 4-5 years house prices could increase, and a townhome that is 480,000 could then be 580,000 and we would have missed out on an opportunity.
this is a deal that we may only get once and may regret it down the line.
Here are the positives:
move to a townhouse sooner (also start paying the mortgage off sooner) and it would be large enough for us to be there for significant time
private sale so no realtor fees
make equal or profit on the condo with assistance from parents on down payment for townhouse.
My parents buy a condo that is solid and the risk for them is less
we will have significant buying power due to no time restraint or pressure of conditions of sale on purchase.
Another consideration is my father buy the condo outright, not charge us rent to help us get our down payment going.
For context, partner and I have been together 7 years, are very happy and our relationship with the parents is strong. My parents received inheritance so that’s the pressure to buy property.
We are waiting for a response on our mortgage advisor to see if this is even possible *** but wanted to throw the idea to reddit
Thanks for your time and your help, it’s greatly appreciated!
Nick Answers Reddit
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Nick’s Response:
Deciding between retaining your condo or upgrading to a townhouse is a significant decision that hinges on various factors, including investment potential, market trends, and personal lifestyle needs. Let’s explore the key considerations:
Investment Potential of Your Condo
Your initial plan to convert the condo into a rental property after a few years is a common strategy for building equity and generating passive income. However, it’s essential to assess the current rental market in your area to determine the viability of this approach. Factors such as rental demand, potential rental income, and associated costs (e.g., maintenance, property management, taxes) should be carefully evaluated.
Market Trends and Property Appreciation
Real estate markets are inherently unpredictable. While it’s possible that townhouse prices may increase in the next 4-5 years, they could also stabilize or even decline. Researching historical data on property appreciation in your area can provide some insight, but it’s important to remember that past performance doesn’t guarantee future results.
Interest Rates and Financing
Interest rates play a crucial role in determining your monthly mortgage payments. While current rates may be higher than the 3% you hope for, they could decrease in the future. However, predicting interest rate movements is challenging. Consulting with a financial advisor or mortgage specialist can help you understand the potential impact of interest rate fluctuations on your finances.
Lifestyle Considerations
Upgrading to a townhouse offers more space and may better suit your long-term plans, especially if you intend to start a family or require additional room. Consider how the move aligns with your lifestyle goals and whether the benefits of increased space outweigh the financial implications.
Family Support and Unique Opportunities
The offer from your parents to purchase your condo and assist with the down payment for a townhouse is a generous opportunity that may not present itself again. This support could accelerate your move to a more suitable living arrangement and potentially provide financial advantages.
Conclusion
Balancing the potential benefits of upgrading to a townhouse against the investment prospects of retaining your condo requires careful consideration. Assess your financial situation, market conditions, and personal goals to make an informed decision. Consulting with real estate and financial professionals can provide personalized advice tailored to your circumstances.
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