Condo in a major city or House in a minor city?

Question

I'm a single, unattached 25 year old male professional looking to get into some property as a much needed tax break, to build equity, and because I don't believe in renting and throwing away money but definitely feel it's time to move out of the parents' now that I'm 2 years removed from graduate school. I live in Massachusetts where the market has been pretty overvalued, but I have watched it depreciate by $10,000-$30,000 since last spring. Since I'm not quite ready to buy in the suburbs, my choices have come between a small (~600-800 sq ft) 2 br condo (better resale value than 1 br or studio) in a major city (Boston) and a 3 br house in a minor city an hour away from Boston (Worcester). My job is located in-between the 2 cities. I don't anticipate living in either city for more than 5 years, so which is the better choice and should I give strong consideration to a 5/1 ARM with the idea I'm going to sell before I ever have to worry about variable rates? I'm open to any advice.

I forgot to add that I own a car and a bike, and parking can sometimes be an issue in Boston properties.

Answer 1

Single family homes appreciate in value more so than condo's. They up keep and maintenance is more, but then you will probably get more exercise doing the extra maintenance, thus killing two birds with one stone. Single family residences sell a lot faster

Condo's often sell for considerable more, appreciate less, you have to pay condo fees which are non taxable, they often sell slower and if the home owners association is not properly ran you are in trouble.

With the mortgage being equal a 5/1 arm which is a good plan if your plans are to reside in the place for 5 years only. The monthly amount might higher because of the cost.

Everything being equal and my plans were the same I would purchase the house with the 5/1 arm since the loan would be fixed for 5 years.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 2

At 25, do you see yourself hanging out in Boston or Worcester?

Do you know how to do maintenance and are you willing to do yard work?

A condo may be the easier way to get into the housing market and with a 2 bedroom, you could have a roommate who can offset some of the costs. OR do you want someone else (condo assoc) to determine what you can and cannot do in your home. Smoke, have a dog, have overnight guests or roommates....

While you are in there, look at making updates so that the home is more valuable when you do get ready to move on.

Look at your life and see where your friends are and what suits your lifestyle.

Answer 3

Never look at a house as a tax Break.
Would you give me $10,000 to14,000 each year so you
can get a reduction in your taxable income of $2500 $3000 a year? ? That's what the banks tried to scam people with.
Want to spend $10,000 dollars on a real charity and get the full amount deducted. Do so.
ARMs will take your arm. Rates go up !
Bank wins you Lose.
My work has increased significantly because of ARMs.
Be a good adult, save your money be tight , pay down on parents mortgage. When the market adjusts have 21% down and closing (cash) get a 15 yr fixed note and get debt free. It is possible even in Massachusetts

Answer 4

Condos are hot now, but they are flaky and variable --you're right about a two-bedroom being preferable and more marketable.

Single family homes are generally more marketable. I'd go with that an a conventional 30 year fixed rate assumable mortgage, because if you sell it after interest rates go UP, which makes it harder to buy a house, you've got one mortgaged at a below-market rate.

Answer 5

Single family home usually have better appreciation than Condos. Alao there is increased maintenance . But htey usually are more marketable. So go with the SFH in Worcester

Answer 6

I would go with the condo if I were you. You only really need one bedroom, but you'll have an extra for company, you won't have to do yard work or maintain the exterior, and you can always sell it later if your situation changes (if, for example, you find the girl of your dreams and decide it's time for a house).

Answer 7

There is more than money to it. Buy in the minor city, get involved in the local organizations and meet ms. right, worry about where you will live and what investments you'll make afterwards. Or you can live in Boston and meet a snobby witch and have a creepy little family.

Answer 8

If you're are planning to sell in about 5 yrs., I'd go with the condo it will be easier to sell and lower on maintenance.

Answer 9

I'm with URBANCOYOTE.

Interest rates have climbed this year - get a fixed rate 30 yr mortgage or you may wish you had.

The commute might be less trouble from the small city .

Good luck!

;-)

Answer 10

what are you looking for . If you want the whole package then go for an attic in a better district or it may take you much more years to get the rest of your goals.