Need short-term housing. Buy a condo?

I’m probably moving to the Dallas-Fort Worth area within a few months and intend to buy a house there. However, my wife and I are slow real estate shoppers, we looked at 46 houses over 8 monthsbefore we settled on our current one. My first plan was to rent a house near the office, then spend a year or so looking for a place to buy, but I’m starting to wonder about that. I hate living in rented property-you still have to take care of the lawn and garden, and pay insurance, but if something breaks you have to wait for the landlord to send someone to fix it or attempt his own half-assed repair. Not to mention worrying about accidentally damaging a wall or window that belongs to someone else. Of course, there is also the deeply ingrained aversion to ‘throwing money away’ on rent, which I realize is not always the case, but it was a item of dogma in my upbringing.

So, what about taking out a mortgage on a condo? They are somewhat cheaper than a house, the maintenance is taken care of, and we would be building at least some equity. I figure that between the savings from the slightly lower monthly payment and the modest equity we’ll get once we sell the current home, we’ll have a nice 20% down payment in a year’s time, once we finally settle on a house to buy. Real estate prices aren’t likely to move much in a year, so we would probably get out more or less what we put in. Or, if rental rates have increased dramatically (unlikely), we could keep the condo and rent it.

Where’s the giant flashing neon flaw in this plan? I know it’s in there somewhere.

ISTM the big flaw here is that you build very little equity during the first year in a mortgage. Most of your expenses will go to interest, taxes, assessments, insurance, and general home maintenance (remember you have to repair/maintain the inside of your unit). And don’t forget the costs of buying and then selling (lawyer, inspector, realtor etc).

The only way I could see this making sense is if you wanted the place as a rental. Otherwise just rent an apartment, or take all the money you would have lost in the sale and hire a nice guy to come do the lawns for you.

What about the closing costs you’ll have to pay twice (when you buy and when you sell)? There’s thousands of dollars right there that you won’t recoup. You’d be better off renting an apartment, or renting in a condo development, for a year, and saving the rest of your money. And while there’s always the old adage about “throwing money away,” either way, you’re going to be out thousands of dollars a month after a year with nothing to show for or.

I don’t know anything about the D-FW area, but I have three friends right now who are in totally shitty situations because they can’t sell their damn condos. One is paying two mortgages (house & condo), the other lives in his mom’s basement while he waits to recover financially from the drawn-out sale of his condo (in Austin, no less!), and the third is desperately outgrowing his condo but can’t move because he’s upside-down on his mortgage AND none of the condos in his development are selling, so it’s not even worth it to try.

Also, you say you don’t want to worry about breaking other people’s walls and windows…but if your intent is to save money and move out quickly, then you’d better keep all of the walls and windows in tip-top shape, otherwise you’ll be fixing the place up in order to sell it.

Unless you’re sure the condo will sell when you’re ready to move, or you’ll be able to charge enough rent when you’re done (AND deal with having a rental property on your hands)…it just seems like a scary idea to me.

Closing costs (both when you buy and when you sell), interest, property taxes, homeowners insurance and condo association fees.

There’s a good chance that these will cost more than a year’s rent, and that’s not including the risks of real estate prices dropping, not being able to sell it, and something expensive going wrong that you have to pay to fix (e.g. a pipe bursts in the wall).

Rent.

I just don’t think that “short-term” and “buy” work all that well together, for the reasons mentioned above. There’s nothing wrong with renting for a year while you get things figured out. And you can rent a condo (so, no lawn maintenance). And if something breaks and the landlord is being a shithead, you can fix it yourself and deduct it from the rent (this is the practical but perhaps not technically legal solution).

Renting looks better and better. Thanks.

Yeah, the key concept is that closing costs, mortgage interest, taxes, insurance and upkeep is also money just being ‘thrown away’. So the question is which way you’re going to ‘throw away’ your money in order to have somewhere to live.

Just bite the bullet and buy a house. DFW is not real condo market. And housing $ per square foot, is pretty reasonable compared to the rest of the country. Also the market was pretty well insulated from the recent housing value decline.

While most of the mortgage cost early on does go to interest and property taxes vs. equity, you are ignoring the fact that these items are deductible for tax purposes while rental payments are not (assuming that you itemize) But most people with a mortgage are eligible to itemize their deductions.

Get a realtor and commit to spend 3 whole days with him/her. Given them your price range and be very vocal about your likes and dislikes on all of the houses you look at, even if you know the house is non-starter when you pull up in the driveway. This helps the realtor know what your looking for (what you like and don’t like). This is a buyer’s market, you should be able to find something you can live in long term within 3 days of looking.