Should I buy this condo?

[pj.mask]

I wouldn’t because chances are you will move again in 5-6 years (if you plan to have kids). Not many moms are happy (or stay happy) raising kids with no yard and so much stairs (and less playmates or other services). If y’all don’t want kids, ask her opinion and weigh it 10-25% based on your relationship. The rest is up to your personal preferences. Outdoor space is nice when someone else sweeps it and keeps it clean. If you go out only on the weekends be prepared to clean before you use it almost every week.

 

[haha]

Also, the location is actually slightly worse than where I live right now. It's only 8 blocks from my current condo (1 mile exactly), but in a totally different neighborhood. The area is still 'gentrifying'. It is not a horrible area, but definitely not as desirable as where I live now. It is close to the train and the lake still, which are big pluses for me.

I basically would be giving up my more desirable location now for more space and a nicer condo. I realized that the type of condo I want in my current location would be $500-$600k. It's kind of crazy that an 8 block radius can have that much of an impact on values, but that's city living for you.


So the compromise for me to purchase in the gentrifying neighborhood.......

Or do I stay ka-put.....

I hope you mean stay put, and not stay kaput.

In any case, buying in a gentrifying neighborhood has opportunity and also risk, and the risks may be beyond market risk. 5 years ago I moved about the same distance that you are describing, 8 blocks, into a completely different social environment. That was at the bottom of the mortgage caused real estate crash.Since then, my condo has almost tripled in Redfin estimates, and the sales in my building are always fast and much higher priced than I would have expected But for long time I heard plenty of police sirens, and there were a few murders within 3 blocks or so. There were very few heterosexual couples in the building, and few single women either. Since then a group of townhouses next door are mostly populated by young families, some students, and an apparently dedicated AirBnB operation. The units in my building are likely too small for an American idea of where to raise children, but the whole scene is much less worrisome to people who are not used to crap neighborhoods. In fact, I think in most eyes it has effectively merged with the formerly more expensive adjacent neighborhoods. In my eyes, if a place has bones, good micro-location for big demand well paying jobs, and is in a very rapidly improving city economy, to avoid what is called gentrification the push back has to be more hostile and effective than it usually is.

So a case can be made for whatever you are attracted to, of the situations you have mentioned.

Must say, Chicago is different enough from Seattle to make me wonder about how well these ideas might fit you situation..

Ha

 

[bobandsherry]

Wow! Two totally incorrect statements within just 8 words.

Mortgages and CCs have their place, and are valuable to those who want to use them. Just because you don't like them doesn't make them bad.

+1!!!!

 

[copyright1997reloaded]

Currently dating but my SO and I have no plans to move -in together in the near future, although I would be open to it but not for another 1.5-2 years.

Are you sure you aren't "nesting"?

 

[aja8888]

Real estate is all about location, location, location. Personally, I would stay where you are.

Reinforcing this message above. At 29, I would be staying put and saving for the future if (and when) your life changes. Moving to a less desirable area for another bedroom is not wise.

 

[IMATERP]

I'd stay put! I've been in that position in the Washington, D.C. Area.

Bank the 18k in your 401k prior to doing anything else. Wait and see what direction you and your partner take.

I

 

[Gill]

Sounds like you are committed. If so, I'm unsure why you're now seeking advice or input: the decision has already been made.

Exactly what I was thinking. Not the time to be thinking about it once you are under contract.
Gill

 

[CountryGal]

I would consider the advice on the true costs of moving to a new location and the amount of time you would need to stay to make much profit. 10 years is what I have heard before committing to a house/condo. 3 years from now you might have a spouse and new direction for where you want to live/work.

 

[Brat]

There are times when it is better the devil you know than the devil you don't know. You know the condition of the condo that you are in right now (common elements, reserves, maintenance needs), you don't know the other building as intimately. Stay put. Sell if get married.

One advantage of a one bedroom is that you don't buy as much stuff, that alone will save you money. If you marry much of the furnishings you have now won't go into the marital home. There is more than the cash flow to consider.

 

[pb4uski]

I would go with the new digs. It will improve your quality of life, a 2/2 will be more marketable if you later decide to sell and from what you wrote it sounds like neighborhood has better appreciation potential. All this assumes that you plan to stay there 5 years or more.

Have you considered keeping your current 1/1 as a rental unit?

 

[Persn]

You had me at 900 sq ft private rooftop deck, but gentrifying neighborhood is another plus, as the earlier you buy in the better your appreciation is likely to be. I’m no expert, but in my experience, once a neighborhood in Chicago gets identified as up and coming it doesn’t turn back.

 

[brucethebroker]

"The new place is desirable because it gives me more room and is more realistic for a long term residence."

You are tying up a lot of money and taking on serious debt for "more room" and the possiblity of a future long term residence. (Any chance you might move in the next few years: new job, transfer, marriage?)

Take the emotion out of it ("new place-more room"). Housing is just shelter. Obviously, a nicer place is, well, "nice". But you don't NEED it. It is a "want"

Run the numbers and look how much better off you would be 5 and 10 years out if you just stay put and continue to invest the difference. I am sure you are familiar with compound interest-but the concept explodes upward the more you invest in the early years. When you are 50-something, miserable at your career, and wanting to RE, will you look back and wish you had saved more when it was possible, like now? Most likely, yes.

(Also, if you are a fan of Mr. Money Mustache, what advice do you think he would give? I think you know.)

BTW, I might be inclined to think differently if you were getting a terrific deal on the new place (like the repo you now own). But a great deal was never part of your discussion.

Congrats on the great financial decisions you have made so far. BtB

 

[Bestwifeever]

Uptown has been gentrifying for a while. Have you been looking for a two bedroom or did this particular opportunity sort of appear and intrigue you? If the latter, keep looking?

A young friend has a two/two and from day one has rented out the second bedroom and bath, even after his girlfriend moved in . So that's a possibility.

 

[Bamaman]

The wife got bored 2 years ago, and started looking for large foreclosures. We ended up with 5 bedrooms and 5 full baths for 25% below appraised value. And houses on our street go up to 10,500 square feet.

Have you searched if there are any area foreclosures in decent shape?

 

[Scuba]

Real estate is all about location, location, location. Personally, I would stay where you are.

+1 - if your current condo is in a much better location, it has better appreciation potential. Also how would you feel if you bought the new place and the area didn’t fully “gentrify”? Some friends of ours had that happen and ended up selling the place at a loss just to get out.

 

[daylatedollarshort]

If you plan to get married and have kids eventually, I would stay put and save up for a house in a good school district.

 

[donheff]

All I hear is this is my dream place from a kid who can afford it and has years of growth ahead. You have to live your life on the way to FIRE. Go for it.

 

[seabourne]

Uptown is a good place to be investing over all, and the location is about 2 blocks from a newly renovated ($200M) train station, but there are certainly some rough spots. The other part of where his current neighborhood is is Wriglyville is very close to Wrigly Field and is probably a great place to have rental property, as it's very popular for post-college people to rent when they are young and bar hopping every night, then leave when they buy a home or grow up a bit. regardless, it sounds like you're in the position with options, and the market isn't so hot that you must buy now, and you're not in a position where you have to move to more space quickly (new wife, new child arriving, etc) so no reason to rush into a decision of this magnitude without being sure it's right for you.

 

[Milton]

All I hear is this is my dream place from a kid who can afford it and has years of growth ahead. You have to live your life on the way to FIRE. Go for it.

+1

 

[pb4uski]

+2, and consider keeping the 1/1 as an investment property and leasing it if the rent exceeds the PITI and HOA fees so it will be cash flow positive.

 

[4legsgood]

If you're looking for some financial justification, I did quite well with my first 2 bedroom house by occasionally renting out the second bedroom (to temp people usually interns). Just did it when I felt like it, and just for people who needed a place to stay for about 3 months. Looking back on it, it added up to a good chunk of change.

Now I'd think about airbnb if the 2 bdrm condo allowed it, both for the money and the fun of it. Be super choosy and only rent it out a few weekends a year. Maybe it could be a fun way to meet people from around the world without ever leaving home, and get paid to do it.

Or think about how to make your current place serve you better. Better shelving, more compact appliances, etc.

In general I think 2 bdrm/2 bath has more upside potential (suits more people), as long as there's also parking (at least one spot, but fantastic if 2).

 

[haha]

You can find any advice you want in this thread, which may mean something about the utility of internet advice, or not.

In any case, do what you want and back it up with your favorite posted opinion right here.

A general observation is that blue chip neighborhoods are more price stable, but when the buy fever is going gentrifying neighborhoods really catch on fire. For an example, look up in Tacoma WA a waterfront neighborhood where an area that recently was toxic waste and smelters etc is the hottest residential neighborhood over the last few years. People who are getting priced out of Seattle what still want urban cool have roughly doubled prices in an amazenly short period. However, no way was this outcome guaranteed.

Ha

 

[Sunset]

The benefit of getting advice here, is the diverse nature of the advice. It will allow OP to consider things/options that would otherwise never occur.

Occasionally, they are real gems !!

 

[younginvestor2013]

Thanks everybody for the input. I decided to pass on the opportunity, and plan to stay at my current place and continue to save moola. Hoping that this year, I can save about $25k+$2800 employer match.

My goal is that in 10 years I can be close to FI, such that any income I earn would supplement my investment returns. I decided this goal outweighed the goal to have a bigger and nicer place.

 

[Cayman]

Thumbs up. Sounds like you've thought this through and made the best choice for yourself.