House vs Townhouse in NH

I am a bit torn between the choices of a single family home versus buying a townhouse. The choices I have: A single family home is prices at about 279,900. But it is in a bad shape and to get it to where I want, I would need to put in about 40k. A townhouse condo which is a end unit prices at about 239,900/-. It is bank owned, has had water damage but the bank is fixing all of it.

I plan to put in a offer for about 225k on the house so that I am not burdened by the cost. I hope to procure the condo too at about the same price.

We plan to move in about 4 years, due to reasons like going back to school. Hence, though we like the concept of a house much more (due to our lifestyle and interest in doing / fixing things) the condo/ townhouse seems a better option in terms of resale and a quick turnaround.

Could people here, throw their ideas and thoughts on the same? Do you think the condos will be more in demand in the future on account of baby boomers who would want not to have to deal with the menace of maintaining a home? With the market expected to bounce back around 2010 -12, what would you call as a better investment?

The house is in Salem, while the condo is in Windham, NH. The taxes are about the same - $4000.00, except that the condo has a condo fee of about $250.00

Reply to
Slain
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Could you state why an apartment is unacceptable for this four-year period? For one thing, as a general rule of thumb, the transaction costs of buying and selling tend to argue for renting unless one stays in a house for around five years.

"Slain" wrote snip for brevity

Which market? Stocks or housing?

Reply to
Elle

I agree with the other poster who asked why you wouldn't want to just rent if you know you are only going to be there a few years. If your only two choices for buying are a fixer-upper you're not really interested in fixing up, and a water-damaged condo, renting probably makes even more sense.

Also, even without the water damage, in many areas single-family homes are much more in demand and will sell a lot more quickly than condos, so you shouldn't jump to the conclusion that you can always get a quick sale on a condo.

-Sandra the cynic

Reply to
Sandra Loosemore

Four years is kind of borderline given the costs of buying and selling, but August 2007 home purchasers have an additional risk factor to consider...we're in the early stages of some significant changes in financing for mortgages, especially for people with bad credit. This whole subprime story is all over the news so no need to go into detail about that.

Depending on the impact of subprime borrowers in your local real estate market (even, in this specific condo complex), you could see historically-unusual price changes over the next four years. An example is here in CA where some of the sub-markets dominated by those purchasers have seen 20%+ drops in price over the past year...and the homes still aren't affordable relative to the household incomes in those areas. And there's still two more years of subprime borrowers (from

2005-06) who will get their adjustable rates reset...and now they can't refinance or sell.

It's very local in nature though and there's no way to generalize that for your specific condo/home. Perhaps your local papers are reporting on the topic?

-Tad

Reply to
Tad Borek

Whatever you do, it would be unwise to base your decision on that expectation. Think about it for a minute. Would you make a decision as to whether or not to invest in stocks on the basis of peoples' predictions about what the market is going to do in 2010?

The other people who have responded to your question have made general predictions about how the time frame in buying and selling a house usually works out, but you should realize there are many exceptions. Actually to answer your question with much confidence more details about your specific situation are needed. What other investments do you have? Any debts? Is your job situation very secure? Do you have money for a big downpayment, or do you have to rely on "creative financing"? Could you possibly keep the house after the 4 year period and then rent it to tenants over the long term? Lost of variables at work! My experience has been that real estate is an excellent investment over 20 years but a poor investment over 5 years. (I suspect a similar statement applies to stocks.)

Reply to
Don

"Elle" wrote

Oops, possible bad on me. Discount real estate buying and selling services are surging in some parts of the country. So transaction costs might be way down compared to the past. Bear in mind that some states, bowing to the realtor yada lobby, have been successful at disallowing discount services. If such "on the cheap" services are not available where you are, my comments above apply. Run the numbers (transaction costs of buying and selling, home insurance, prop taxes, upkeep vs. renting), and it will be clear whether it's a borderline situation or not.

Still, for a four-year time period, without any clear financial advantage, the hassle of buying and selling to me argues for renting.

Reply to
Elle

The housing market in your area? In general I would say that it's impossible to call future market directions. Housing markets are dependent on locations. So it's even tougher to call what your specific market is going to do in 4-5 years time.

Reply to
PeterL

Don't forget to get a building inspection before you commit.

Prices are reasonable in both areas, so you should be fairly safe in your investment.

In my area, condos are not moving as fast as houses.

You can hire people to mow lawns, plow driveways, and shovel sidewalks.

The stock market will be better, but a home is a good inflation hedge.

The heating costs will be less in a condo, but the quality of life might be lower.

Be sure to have at least 3 bedrooms and 2 bathrooms to have a good range of buyers.

Make sure that you have natural gas heat. Yes, it's hard to find in NH.

-- Ron

Reply to
Ron Peterson

Thank you guys!!!! All the suggestions were helpful. The reason for us planning to buy over renting are a couple of reasons. Both me and my GF are moving to the area and we feel, that it is better to put the money towards mortgage, when the rent is almost similar. That is our reasoning for going for a cheaper home.

The market is in a bad shape and hence, we can possibly get the price we want.

We both have excellent credit. We are getting involved on the 5% down, but have a good program with BoFA which allows us good interest rate etc. We have stable good earning jobs. Do not really have much debt.

Finally I did a whole spreadsheet on renting versus buying, while putting the opportunity cost into the stock market (12% return). At the end of 4 years, my NPV still comes out positive.

The townhouse seems to be in a anice shape after fixing up but we will surely get the home inspection done.

We do not prefer apartments, for the reason of "Quality of Life". House would be our first preference, but sadly they are much more expensive :(

If I was single, I would have ruled out buying. In about 4 years, even if we break even I would be happy. That way atleast we did not spend money on renting.

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Reply to
Slain

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