Sell our condo to buy a new house, or keep it and use as rental?

[MarieIG]

In your shoes, I would start looking at used houses in your price range and desired location. Figure out what amenities are critical, how much yard you want, and whether or not you want an HOA. Go to open homes in areas that appeal to you. Note prices and what you like and dislike about the properties.

Shop around for an agent that is knowledgeable but not pushy and explain that you are looking at both new and used houses. It may take some time to find what you want and you will buy when you find what you want. That person should be able to select properties for you to see based on your criteria.

Meanwhile, start doing any fixes to your condo that you think will help it sell faster and for a higher price. That means lower cost things like updating fixtures and maybe a fresh coat of neutral paint. Not a complete remodel.

Get a couple of recommendations for lenders and get prequalified for a mortgage by a couple. You may not go that route, but you will know how much you qualify for and what the costs would be. Any good agent will want to know you are financially capable of buying before they invest a lot of time with you.

Once you have done all that, you will feel comfortable making the best decision for you, given your desires, your finances, and what your existing home will bring in the market in a reasonable selling time.

+1 This even includes looking at relatively new "used" homes in the neighborhood you like.

 

[Karloff]

This is probably a lie, what is really happening is the builder is too lazy which is too bad as your property taxes will possibly be higher than they should be. In general a 3 bedroom house is taxed higher than 2 bedroom all things being considered, and able to be sold for more to most people.

Actually, the house would remain a 3/2.5 even if I were able to implement my idea. If you count the "flex room" that would serve as my office downstairs, you could even call this property a 4/2.5. My idea basically involves bringing down two walls, removing closet space, and making the second bedroom a really large room, even bigger than the master bedroom, which is perfect for what I intend to do with it (2 Home Theater, audiophile's dream type of room). The third bedroom would remain identical in size. All we would loose is closet space, but the house has plenty of that. Taxes would be about the same to what we currently pay, but the house would be much bigger.

I will ask again about this and see if I can discuss it with the project manager or even use it as a negotiating tool. It really makes no sense to build an extra two walls that we would end up bringing down anyway.

 

[Karloff]

+1 This even includes looking at relatively new "used" homes in the neighborhood you like.

We did look at existing homes. In short, I found nothing that was even remotely like what we had in mind and needed.

A few important notes to keep in mind:

- The South FL area makes no sense when it comes to prices. Everything is overpriced to begin with, and most existing homes we looked at were actually about $30 to $50K HIGHER in price. And none of them were appealing to us. My wife liked a couple, but I hated them. Just plain old FL "shoe-box" type properties. Precisely what I do *not* want. The new construction is a little bit on the "cookie cutter" side, but they are elegant and modern and tasteful. I also do like the 2-story lay-out. In the extreme case of flooding (a possibility in Florida), I can see us moving the important stuff upstairs, if needed.

- In addition to being higher in price, additional work would be required in the case of most existing homes. For example, removing/covering pools we do not need and will never use, new appliances, new impact windows, etc.

- Even those existing homes with brand new impact windows that we looked at will always, in the end, be retro-fits. Impact windows installed from the ground-up are always better. I can not stress the importance of a hurricane-proof home in our area. New homes are supposed to be built up to the latest hurricane code and all come with impact glass throughout. They are also much more energy efficient because of this fact.

- Insurance is about half the cost in a new property, due to the above. About $3K/year for the new construction vs. $7K/year for older homes that are not as hurricane-ready. Huge difference in yearly cost right there. Electric will also be about 30% as much, more than likely.

- The new construction gives me the option to make the home a "smart" home, and comes pre-wired with CAT 6 ethernet throughout the entire property. For the type of job I do and the type of connectivity I need in my home, this is a big plus.

- The garage comes pre-wired for an electric car charger.

- There is a warranty for most items. From 10 years for structural items to 1-year for materials, etc.

- The community is gated. HOA's are $220/month (vs. $650 now for the condo), but this includes a beautiful gym (which is a must for my wife and would cost $60 to $75/month by itself elsewhere), lawn service, a resort type pool (ok, this I could not care less about), and other amenities we can actually benefit from (unlike the beach in our existing condo, which we honestly never use). I am not the type of person who enjoys mowing the lawn (does anybody?), so having somebody do this for us once a week is a plus.

Yes, many folks we asked did mention that defects were found, but in all cases the developer took care of them. I am sure the headaches will be there one way or the other, but I feel that a new construction has more pros than cons in our particular case.

 

[Sunset]

Actually, the house would remain a 3/2.5 even if I were able to implement my idea. If you count the "flex room" that would serve as my office downstairs, you could even call this property a 4/2.5. My idea basically involves bringing down two walls, removing closet space, and making the second bedroom a really large room, even bigger than the master bedroom, which is perfect for what I intend to do with it (2 Home Theater, audiophile's dream type of room). The third bedroom would remain identical in size. All we would loose is closet space, but the house has plenty of that. Taxes would be about the same to what we currently pay, but the house would be much bigger.

I will ask again about this and see if I can discuss it with the project manager or even use it as a negotiating tool. It really makes no sense to build an extra two walls that we would end up bringing down anyway.

Especially when you realize it means fixing or replacing the floor where the walls used to be, and fixing the ceiling for the same reason.

 

[ShokWaveRider]

Karloff, would you mind sharing the new development? It is probably on the Pulte homes site anyway. Is it: Parkview at Hillcrest? Pulte used to build a great home here in North Easy Florida, but they do a cheaper stick option up here now. Make sure the homes are concrete block.

 

[Aerides]

It really makes no sense to build an extra two walls that we would end up bringing down anyway.

Any changes would mean adding months to your finish date. For one, they'd have to re-permit for your property, as walls drive the blueprint for electric and other things. A change to the walls means a change to a lot.

I wanted an enclosed patio on a home that was only just started, was told nope. The home still took 6 months longer than expected lol (s fla). As far as liability from storm damage, you have none until you close - ie, get insured and move in. Of course, if there are delays then the builder has no liability either.

But like everyone here, sell, don't even think about renting - this condo does not sound like a good property to try with given you have no experience. Sell to preserve value, put a deposit on the new place, and then bridge whatever gap there is between selling the condo and moving to the new place with a short term rental when the time comes.

 

[Karloff]

Karloff, would you mind sharing the new development? It is probably on the Pulte homes site anyway. Is it: Parkview at Hillcrest? Pulte used to build a great home here in North Easy Florida, but they do a cheaper stick option up here now. Make sure the homes are concrete block.

No problem. It is indeed the Parkview at Hillcrest. Homes are all concrete block. I do not think they have a choice in that sense, due to hurricane code. If you have more info on this, I would love to hear your thoughts.

 

[pb4uski]

This is what I would do... or perhaps put it on the market a month before your move-in dateand hope that it doesn't sell too quick.

wait, put $100K down, then mortgage about $400K, then move from one property to the other at our own pace, THEN, once we are finally moved in, we sell the condo and pay the mortgage off

 

[omni550]

Karloff,

Several decades ago, I was seriously looking at buying a new construction home being built by Pulte in Michigan. Like you, I had thoughts of improving on their design to tailor it to my wants. Back then, I wanted to install better quality windows, and change something in the bath and kitchen (nothing major, but I don't recall the details).

FWIW, Pulte would not deviate one iota from their plan.

I deplore 'waste' (it's a personal value). Seeing something being built while knowing that I would just turn around and rip it out (although brand new and perfectly functional) and replace with something different just rubs me the wrong way to my core.

So I bought a 'used home' instead.

omni

 

[ShokWaveRider]

No problem. It is indeed the Parkview at Hillcrest. Homes are all concrete block. I do not think they have a choice in that sense, due to hurricane code. If you have more info on this, I would love to hear your thoughts.

Not really more info. Pulte builds for Dell Webb in Pointe Vedre, FL. (55+). When they first started the development ~2008 they were all concrete block. But as time went on, I presume to reduce the price they changed to stick. We went looking to see what it is like, the older homes are now coming up for sale and a selling point is they are CB construction. In fact the resales are lower than the new ones and better built. That is just our particular experience in this particular situation.

You can find the development on the Dell Webb web site. They are still building.

 

[brett]

If you are not happy with the condo why would you think that renters would be?

You might be letting yourself in for a string of renters.

I would keep the condo until your home is ready. Take your time moving, then sell it. You have 10 year old condo. Who knows, assessments may kick for repairs over the next few years. If you have issues with the condo board what makes you think these issues/concerns will disappear after you move out?

Renting your condo will no doubt reduce it's subsequent sale price. My guess is that now, or when you move, will be the ideal time to dump it and move on.

 

[ivinsfan]

This is what I would do... or perhaps put it on the market a month before your move-in dateand hope that it doesn't sell too quick.

What about market risk on the condo or not knowing exactly how much you will clear from the sale to defray the cost of the new home? I know it's a pain, but I vote for putting it on the market as soon as they sign paper on the new home..from the OP's description of his condo there's more downside then upside in holding for a year or longer.

 

[Karloff]

Thank you all for the feedback. A friend of mine who is a contractor and can essentially do pretty much anything from electrical to construction to carpentry to roofs, etc., is going with me for another look at the property today. I trust him, and will essentially ask him "is this worth it?". His expertise and opinion will play a role as well.

In regards to the condo, the building is actually 40+ years old. It is rock-solid. During the 2017 hurricane we never lost power, never lost internet and the damage (to the outside only) was minimal at worst. I was impressed with this and to this day still think "would a house... ANY house... be safer than this huge concrete block where I do not have to worry about a roof?" (then again... hearing the upstairs neighbors noise is unbearable sometimes). I do know what a hurricane "feels" like in the condo, but I do not know what it will be like in any new house, concrete block or not. So I am inclined to go with one that comes pre-built up to the latest code and with impact glass everywhere. (we spent about $25K to retro-fit our condo with impact windows back in the day, and I do not wish to go through that hassle again).

One important detail: Both the new development and the condo have underground electrical wiring. So chances of loosing power during a hurricane are significantly reduced. Most old FL homes will *not* enjoy this huge advantage.

The condo used to be a great place. Nice community, polite owners and renters that were mostly harmless. At one point I felt like we were the only "young" folks here (we moved in in our very early 30's and the average age at the board meetings was probably 65). But, things changed for the worst in the last 2-3 years. At the risk of being misinterpreted, the building went from hosting mainly a fun, old-school Cuban and Latin and American community (mostly the owners), something that is very typical of South FL, with (mostly) polite and easy-going Canadians visiting in the winter... to, to be blunt, becoming Little Russia and a magnet for anchor babies overnight. All I see today are pregnant Russian 20-year-olds who also already have 3 other babies. And lots and lots of short term rentals where there are not supposed to be any. Please do not read anything remotely political nor cultural in this remark. It is simply the facts and what we have been seeing every day for the past 3 years or so. It is no different in the rest of the buildings in the area, from the ultra-luxury high-risers to the older, less fancy buildings like ours.

It is still a very desirable area, but my fear is that we will not be able to sell at a decent price.

Very stressed at the moment. We really do not wish to get an "interim" rental, and I also do not wish to get a mortgage, regardless of how quickly we can pay it off. Of course, we need to either do one or the other, unless we get crazy lucky and can put the property on the market at a very competitive price as soon as our new home is ready, then move in and pay cash. I suppose this will be next to impossible...

All your comments are very helpful, so please do keep them coming.

 

[RunningBum]

Very stressed at the moment. We really do not wish to get an "interim" rental, and I also do not wish to get a mortgage, regardless of how quickly we can pay it off. Of course, we need to either do one or the other, unless we get crazy lucky and can put the property on the market at a very competitive price as soon as our new home is ready, then move in and pay cash. I suppose this will be next to impossible...

I was just wondering which of the two was more palatable. Seems to me the advantage of selling early is that you can hold out a little more for your price. Once you move out, you'll probably want to sell pretty quickly.

I'd probably get out as quickly as I could. What are the chances that the place will go back to being more pleasant and livable, vs. getting a worse reputation and being tougher to sell?

 

[38Chevy454]

It sounds like your current condo is going downhill fast. Get it on the market and sold now. Once an area gets that downhill momentum, it tends to snowball before it bottoms out and takes many years to recover. Your downhill trend is not due to the whole local area market being down, it is due to your building is being taken over by bad owners and tenants. If the new place is what you decide, then get a mortgage for that, it will start as a construction loan and then transition to std mortgage once completed. If your current place sells, deal with moving to a temp housing until your new place is ready to move into. I would not rent out the current condo, just sell it and avoid the landlord hassles and riding the downhill slide in values that seems to be occurring.

 

[pb4uski]

What about market risk on the condo or not knowing exactly how much you will clear from the sale to defray the cost of the new home? I know it's a pain, but I vote for putting it on the market as soon as they sign paper on the new home..from the OP's description of his condo there's more downside then upside in holding for a year or longer.

Well, I suspect that if they clear $380k or $420k rather than $400k that $20k isn't critical to the decision, but that is for the OP to assess.... as is the risk on being able to sell and prices of the gradual decline of that building/area over the next year.

The risk of putting it on the market now is that it sells quickly and the OP ends up having to move twice since his new home isn't ready in time... I know a few people who have had to do that and it isn't fun.

But I would agree with you that IF there is substantial risk that the value of the condo will decline over the next 12 months that it would be better to sell sooner rather than later but I don't get that impression from reading the OP's posts.

 

[ShokWaveRider]

This is the selling season in Florida, where we are at least, from January (After New Years) to about March. 3 homes have sold in our community this month already and are under contract. So if I were you I would try to sell it, otherwise you will most likely need to wait 9 months or so for the next window.

We have our home listed on Zillow as a "Make me Move" listing. Not as much exposure as For Sale By owner or a Realtor's MLS listing. But this is OK for us as we do not have to sell but would like to downsize. We will put a sign in the front for passers buy or neighbors to tell their friends. If it sells we will rent till we find another home, if not well no harm done. Unlike MLS listings the for sale on and off markets are not logged, so the home does not go "Stale" as such. Buyer's realtors do see these listings and get notifications from Zillow. You manually have to select "Make me Move" in order to see them if you are not a realtor though.

 

[Music Lover]

Especially when you realize it means fixing or replacing the floor where the walls used to be, and fixing the ceiling for the same reason.

Tearing down a non-supporting wall is easy...anyone can do that in 20 minutes. It's the repair of the ceiling and floor that takes all the time and money.

If the floors are hardwood the boards probably won't line up and you have to replace all of it or put in a filler strip that runs the other direction. Even if they are carpet someone has to find a matching piece and then hope that the grain runs the same way.

 

[omni550]

Tearing down a non-supporting wall is easy...anyone can do that in 20 minutes. It's the repair of the ceiling and floor that takes all the time and money.

If the floors are hardwood the boards probably won't line up and you have to replace all of it or put in a filler strip that runs the other direction. Even if they are carpet someone has to find a matching piece and then hope that the grain runs the same way.

Being in Florida, chances are high that the floors are tiled. And trying to retrofit a cut-tile area (like at a former wall) is some work and becomes a major challenge if the floor tiles are not readily available.

omni

 

[ivinsfan]

Well, I suspect that if they clear $380k or $420k rather than $400k that $20k isn't critical to the decision, but that is for the OP to assess.... as is the risk on being able to sell and prices of the gradual decline of that building/area over the next year.

The risk of putting it on the market now is that it sells quickly and the OP ends up having to move twice since his new home isn't ready in time... I know a few people who have had to do that and it isn't fun.

But I would agree with you that IF there is substantial risk that the value of the condo will decline over the next 12 months that it would be better to sell sooner rather than later but I don't get that impression from reading the OP's posts.

I

Well the op said they were seeing hookers coming and going from the unit next door..I can't imagine that's a good sign for strong prices..

 

[Gotadimple]

I don't think OP has to worry about this since his condo is an apt type condo, so it's only what's inside the unit that OP has control over and they are generally fairly standard, so there won't be anything to fix or it will be really minor from home inspection.

However, OP looking at existing houses should consider it a MUST to get a home inspection, to uncover everything including termites.

Actually, I DO think the OP has to worry. (1) There are exterior components that signal the association isn't maintaining the property (like termite damage, or seepage at the foundation), and (2) There are interior components that don't belong to the condo association.

I'm sure they've maintained their unit well, but, the association doesn't own the water heater, the interior doors not fitting in frames, and most importantly, the caulking in the windows. Written inspections (esp. if the inspector is a good well) will detail all the components needing attention.


- Rita

 

[RunningBum]

OP probably knows about most problems and can fix any in advance. Why pay for another inspection when the buyer will do one. No guarantee the first inspector will find everything anyway.

 

[Karloff]

Thank you all for the comments. I just came back from seeing the model of the property we are considering buying with my contractor friend. Overall, he was very impressed and thought it was a solid choice. He said implementing my idea to bring down a wall was no problem at all and agreed it was a good choice, and that he could do it all in a week or less for about $2K, *including* all materials and a completely new wood floor (the standard floor in all the upstairs rooms is carpet). This is a close friend, so that is the "family" rate, mind you. Otherwise, he said the floor alone would cost that much. But that, all in all, it would be a fairly straightforward project.

In regards to the condo, I hope I am not being overly dramatic. Yes, things have indeed taken a turn for the worst, and I doubt this will be what it used to be (demographics have changed too much), but this is still a very desirable area in the middle of it all: on the beach, close to anything once could possibly want... Some folks love that. I do not (I will take middle-of-nowhere peace and quiet, thank you).

My fear is that our condo will just not sell for any reasonable amount. Our realtor illustrated how, when it comes to condos, this is really a buyer's market, and that the oversupply is gigantic. She thinks we should start with a competitive asking price of around $439K (which means about $405K in our pocket after expenses).

Just yesterday we received a notice from the county. They keep building and building around the area. Next project is a huge new development across the street, next to the intracoastal, in the opposite corner of the block, that will include new luxury condos, a convention center and a 5-star hotel. They do not mention when this will all start. Right now it's all in the early stages. But I know this area will never be UNdesirable, at least not within the year. I am, however, not sure how such a project would affect property values. It's not like there are not a dozen similar projects within a 1 mile radius anyway...

 

[Karloff]

Well, I suspect that if they clear $380k or $420k rather than $400k that $20k isn't critical to the decision, but that is for the OP to assess.... as is the risk on being able to sell and prices of the gradual decline of that building/area over the next year.

The risk of putting it on the market now is that it sells quickly and the OP ends up having to move twice since his new home isn't ready in time... I know a few people who have had to do that and it isn't fun.

In all sincerity, a difference of about $20K is not a deal-breaker. I really, REALLY do not want to move twice. I am willing to lower the asking price for the condo, once our new property is ready, in order to avoid this. My mental sanity and the well-being of our marriage are worth the price difference.

Right now, I am more inclined to make a deposit on the new property by next week in order to take advantage of the $30K incentive (they only ask for $5K to start the process). They then asked for 20% down, which we could do, but I negotiated this to only $500/month instead, until the house is ready. That dramatic difference in figures tells me that one can call some of the shots here and they are willing to at least try and be flexible. They are aware we have an existing property that we own outright. After the deposit and signing the contracts, we continue with our daily lives and pay $500/month. About 3 months or so prior to the house being completed, we put our condo in the market at a competitive rate. If it does not move in 2 months, we re-think the price and price it aggressively and try to negotiate a 5% total commission with the realtors instead of the normal 6%. And after that, it will hopefully sell and it will all be about a balancing act between the buyer, us and the developer in order for us to move out of the condo and into the new place. They even said that in the worst-case scenario, if the house is completed, and the condo has not sold, they can give us another 6 months.

 

[Karloff]

Actually, I DO think the OP has to worry. (1) There are exterior components that signal the association isn't maintaining the property (like termite damage, or seepage at the foundation), and (2) There are interior components that don't belong to the condo association.

I'm sure they've maintained their unit well, but, the association doesn't own the water heater, the interior doors not fitting in frames, and most importantly, the caulking in the windows. Written inspections (esp. if the inspector is a good well) will detail all the components needing attention.


- Rita

Our unit is in nice shape. New kitchen, newly painted master bedroom, custom-made cabinets and closets, new impact windows, new electric water heater... The caulking was re-done a few months ago as part of the 2-year renovation project that depleted most of the building's reserves...