Hi All,
I will soon have $80K in net proceeds from sale of my current house and have the following 2 options I'm considering, but could use some input on what might be the best option:
1. I work in Folsom and live in Elk Grove (it's one reason I am selling in Elk Grove and trying to buy in Folsom), which is a 40-minute drive each way for 5 days a week. That's about 1.5 hours a day I can use for other things. Plus living closer to work means I can go home for lunch or tend to my pets or family members more easily, when needed.
2. I recently learned some family members who currently live 10 minutes away may be moving to the mid-west. Since I and other family members may want to stay close to them so that we don't end up in a situation where we only see them once or maybe twice a year, I am reluctant to buy a "forever" house in Folsom, using up all of the $80K net proceeds from sale of my current house and tying me down in Folsom because of the financial commitment. It may also be harder to rent a $400K 4bd/3ba/2k sqft house out (going rate seems to be about $2450+/mo), so if I ever want to leave Folsom (for maybe the mid-west) to be with family, I may find myself stuck and unable to do so.
Becuase of 1 and 2 above, I'm considering the possibility of not renting an apartment (going rate for 2bd/2ba apt off Iron Point is about $1400-1700 depending on the size) since I would not be building equity that way. Instead, I'm considering buying a 2bd/2ba/2car condo in Folsom, living there for at least 1 year, then renting it out for at least $1500/mo (I see this is more do-able with tech workers looking to rent an apartment but want an attached 2-car garage as well, which apts don't usually come with, than renting out a full house for $2450+/mo.
The condo I'm looking at is about $260K, with a rather high HOA of 272, and requires a hefty 20% down payment due to requirement by many lenders. The monthly payment (after adding everything but insurance) comes out to = ~$1500.
So I figure at the very least, I would have a renter paying down the principal and helping me build equity.
But I've learned the reason there's a requisite 20% down on condos whereas with houses you can have a 5% down option is due to some additional risk factors associated with condos.. like lawsuits against the HOA and if the renter vs owner ratio is allowed to become so unbalanced towards renters as to reduce the quality of life for owner-residents and bring values down for all.
This has me wondering if a condo would really be a good idea or not for my purposes explained above. I find the idea attractive and it allows me to have $30K of net proceeds remaining that I can apply towards the down payment on a house in the mid-west should that end up being where I settle. Buying a 400K house in Folsom right now wouldn't leave me with any funds for a down payment to buy a 2nd property in the mid-west.
But I'm concerned about what additional risks come from buying a condo for the purpose/intent I have in mind, and whether I would be better off just renting an apartment and investing that $50K donw payment elsewhere...
I would be very interested in your input on what might be the better way to go in my case (rent an apt/house and invest the $50K down that would be used on a condo purchase in other ways vs buy a condo and later rent it out and build equity while leaving enough funds to put down on a 2nd property in the mid-west).
I do know that many condo communities set limits on owner vs renter ratios to maintain a healthy quality of life.. so I do have a concern that the HOA policy could change at any time and turn the condo into a non-rentable unit.. then I could find myself having to pay 2 mortgages if I end up moving to the mid-west and the condo rental policies change at some point to become more restrictive.
Would it be better to just rent an apartment for now?