Would love your feedback and input!
We are thinking of selling our 2/2 condo to purchase a new-construction, single-family home that we fell in love with and would be perfect for our needs.
The condo has been our home for almost 10 years, but we are really tired of the condo "lifestyle" and would love something more spacious, much less noisy and without the hassle of an association, etc. I am also self-employed, work from home, and value privacy and peace and quiet above all else. There are months were new, short-term tenants move in close to our unit and make our life an absolute nightmare. There is also ALWAYS somebody renovating something next door, to the point where the noise becomes unbearable and I can not even hear my clients on the phone. I have been forced to leave my own home many, many times due to the noise.
The condo is on the beach, in a very desirable in South FL (near the Aventura / Hollywood / Hallandale area, on Ocean Drive). It is a corner-unit, and in very good shape. Unfortunately, the market is not ideal at the moment. Way too many similar properties out there. But the fact remains that this is still a nice, extremely popular area (which is part of the problem... honestly, we are tired of the tourists and everybody else being on vacation except for us...).
The condo is paid in full. No mortgage. Total cost to live here is about $17K / year. This includes property taxes, HOA's ($650/month), insurance and electric. In 10 years, we have only had one single special assessment of $1K this past year. But our building reserves went from almost 2 million to about $350K this past year due to structural renovations, etc., so I anticipate additional special assessments down the road.
We are sick of the glorified apartment life where tenants seem to have more privileges than owners. So we started looking around and we immediately found a new development in the area that we loved. It's perfect for our needs in (almost) every way. 2-story detached home, new construction, gated community, with gym and lots of green, literally 5 minutes from family and work, energy-efficient construction up to the latest hurricane code (extremely important in our area), with impact windows throughout, 10-year warranty, lots of custom options, etc, etc.
After running the numbers, it would cost essentially the same to live in this house than in the condo. But one can truly not compare to the other.
We are both 40, have zero debt and about $450K between cash savings and investments, etc. The condo is by far our largest expense. We live well below our means, usually on one pay-check, and we try to save/invest the other one. No kids.
The home would take about 8 months to complete, after an initial deposit. Half of the development is already completed and sold out. I walked the area, asked around, and folks who have been living there for 1+ year are very happy overall.
So, here is where I would love your input:
- We could sell our condo for about $400K. Many similar units in the same building are on the market as well. Average asking price is $440 to $480K, but they are simply not moving, period. So $400K is a more realistic figure. Of course, the market may come crashing down by the time we are ready. So far, only units that are under-priced are moving. This concerns me.
- The home we like is about $480K. We have until the end of the month to also get a once-a-year-only bonus of $30K in upgrades. Essentially, the developer lets you choose up to $30K in upgrades at no additional cost. I asked around, and this is not a BS promo. It really happens only once a year. We think $30K would cover most of the upgrades we could possibly need or want.
- So, all in all, even after selling the condo we still would need to put down an extra $100K or so.
- Do we sell the condo? Do we 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? Or do we get the mortgage and KEEP the condo as a rental?
- The condo could, in the best-case-scenario, generate about $30K+/year in rental income. So our profit after expenses and taxes would be about $10K/year. But I really do not wish to be a landlord nor deal with tenants.
- More importantly, I really do not want a mortgage, period. I have never have debt in my life. The mere idea of signing such a document shakes me to the core.
Still, perhaps a change in mindset would make sense. We could have the house we love, while still keep the condo and generate a passive income stream, hopefully without too many headaches, then use some of our dividend and investment income to pay the mortgage of the new home. Then, once the market is on fire again, we sell the condo at a decent price.
But who am I kidding? I come from a different country and culture. We buy things we can afford. If you can not pay cash for something, you do not buy it, period. I am also, like most of you, the epitome of frugality, and a savings-addict. The idea of having two properties, one still not paid for, keeps me awake at night.
What would you do?
Your thoughts and experience are truly appreciated.
We are thinking of selling our 2/2 condo to purchase a new-construction, single-family home that we fell in love with and would be perfect for our needs.
The condo has been our home for almost 10 years, but we are really tired of the condo "lifestyle" and would love something more spacious, much less noisy and without the hassle of an association, etc. I am also self-employed, work from home, and value privacy and peace and quiet above all else. There are months were new, short-term tenants move in close to our unit and make our life an absolute nightmare. There is also ALWAYS somebody renovating something next door, to the point where the noise becomes unbearable and I can not even hear my clients on the phone. I have been forced to leave my own home many, many times due to the noise.
The condo is on the beach, in a very desirable in South FL (near the Aventura / Hollywood / Hallandale area, on Ocean Drive). It is a corner-unit, and in very good shape. Unfortunately, the market is not ideal at the moment. Way too many similar properties out there. But the fact remains that this is still a nice, extremely popular area (which is part of the problem... honestly, we are tired of the tourists and everybody else being on vacation except for us...).
The condo is paid in full. No mortgage. Total cost to live here is about $17K / year. This includes property taxes, HOA's ($650/month), insurance and electric. In 10 years, we have only had one single special assessment of $1K this past year. But our building reserves went from almost 2 million to about $350K this past year due to structural renovations, etc., so I anticipate additional special assessments down the road.
We are sick of the glorified apartment life where tenants seem to have more privileges than owners. So we started looking around and we immediately found a new development in the area that we loved. It's perfect for our needs in (almost) every way. 2-story detached home, new construction, gated community, with gym and lots of green, literally 5 minutes from family and work, energy-efficient construction up to the latest hurricane code (extremely important in our area), with impact windows throughout, 10-year warranty, lots of custom options, etc, etc.
After running the numbers, it would cost essentially the same to live in this house than in the condo. But one can truly not compare to the other.
We are both 40, have zero debt and about $450K between cash savings and investments, etc. The condo is by far our largest expense. We live well below our means, usually on one pay-check, and we try to save/invest the other one. No kids.
The home would take about 8 months to complete, after an initial deposit. Half of the development is already completed and sold out. I walked the area, asked around, and folks who have been living there for 1+ year are very happy overall.
So, here is where I would love your input:
- We could sell our condo for about $400K. Many similar units in the same building are on the market as well. Average asking price is $440 to $480K, but they are simply not moving, period. So $400K is a more realistic figure. Of course, the market may come crashing down by the time we are ready. So far, only units that are under-priced are moving. This concerns me.
- The home we like is about $480K. We have until the end of the month to also get a once-a-year-only bonus of $30K in upgrades. Essentially, the developer lets you choose up to $30K in upgrades at no additional cost. I asked around, and this is not a BS promo. It really happens only once a year. We think $30K would cover most of the upgrades we could possibly need or want.
- So, all in all, even after selling the condo we still would need to put down an extra $100K or so.
- Do we sell the condo? Do we 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? Or do we get the mortgage and KEEP the condo as a rental?
- The condo could, in the best-case-scenario, generate about $30K+/year in rental income. So our profit after expenses and taxes would be about $10K/year. But I really do not wish to be a landlord nor deal with tenants.
- More importantly, I really do not want a mortgage, period. I have never have debt in my life. The mere idea of signing such a document shakes me to the core.
Still, perhaps a change in mindset would make sense. We could have the house we love, while still keep the condo and generate a passive income stream, hopefully without too many headaches, then use some of our dividend and investment income to pay the mortgage of the new home. Then, once the market is on fire again, we sell the condo at a decent price.
But who am I kidding? I come from a different country and culture. We buy things we can afford. If you can not pay cash for something, you do not buy it, period. I am also, like most of you, the epitome of frugality, and a savings-addict. The idea of having two properties, one still not paid for, keeps me awake at night.
What would you do?
Your thoughts and experience are truly appreciated.
