we are so fed up of renting that we are thinking of buying a condo in central nj after putting down about 60% ( total condo cost ~ 300k) . However we may have to move in 1-2 years , depending on where our careers takes us .besides we'd like to move to a bigger single family. Our thinking is this :
1. The prices have hit the bottom or near bottom and we get a good deal .we can use the rent saved to pay down the loan. And we can sell the house if we have to.
2. the prices have not hit the bottom but we can still rent out the condo for a few years and still move if we have to.
Do you guys think this is a good move ? Or at least not a bad one ?

Dude101 said:we are so fed up of renting that we are thinking of buying a condo in central nj after putting down about 60% ( total condo cost ~ 300k) . However we may have to move in 1-2 years , depending on where our careers takes us .besides we'd like to move to a bigger single family. Our thinking is this :
1. The prices have hit the bottom or near bottom and we get a good deal .we can use the rent saved to pay down the loan. And we can sell the house if we have to.
2. the prices have not hit the bottom but we can still rent out the condo for a few years and still move if we have to.
Do you guys think this is a good move ? Or at least not a bad one ?

With all the information you provided, the answer is a resounding yes.

Usually by the time we hit the bottom it is cheaper to buy than to rent. Remember to factor in the fact your down payment would be earning 4-5% if it weren't sunk in a home which is potentially declining. If it is cheaper to you to own, then go ahead and do that.

Another measure is affordability. Median income is 56k in Mercer county. Typically the ratio between median income and median home is between 2-4X. Central Jersey is not known for its quality of life and both income and property taxes are high so I'd expect it to be closer to the bottom of that range.

Just my 2 cents.

Dude101 said:
But what if we rent out the condo instead of selling after 1-2 yrs ? The rent for these kinds of condo is around 2000.
We are paying close to 2000 p/m rent ourselves.
The monthly interest on 300k (cost of condo), assuming a modest 6.5% APR, is $1625. Add taxes and insurance and I am sure you are well over $2000. Add HOA fees, regular maintenance etc. to that. What if you cannot find a tenant for a few days/months?

More importantly, are you ready to be a landlord, possibly long distance since you are considering moving.

Dude101 said:we are so fed up of renting that we are thinking of buying a condo in central nj after putting down about 60% ( total condo cost ~ 300k) .
Why exactly are you "fed up" with renting? This is an important question. If you are "fed up" because you feel that you can do economically better with owning than renting, then all it takes is an honest analysis of the costs versus benefits.

However, if you are "fed up" because of intangibles, that's a totally different non-economic decision.

Dude101 said:However we may have to move in 1-2 years , depending on where our careers takes us .besides we'd like to move to a bigger single family. Our thinking is this :
If you have good reason to think you will move in 1-2 years, you should under no circumstances purchase anything. Frictional costs of moving and selling are generally minimum 5%, probably more like 6-7%. That's $15k just in frictional costs. If you move after two years, that's paying $625/mo for nothing, if you move in one year, you're paying $1250/mo for nothing! That's 2/3 of your rent!

Dude101 said:1. The prices have hit the bottom or near bottom and we get a good deal .we can use the rent saved to pay down the loan. And we can sell the house if we have to.
This is the biggest real estate crash in history. Prices could easily fall another 25%, particularly for condos, and it could happen over the next year or two. If this happens, you're out $75k (plus frictional moving costs). I implore you to investigate price-to-rent ratios in your area, unit costs to salaries, lending standards, etc.

Think of it this way. Even if you're right that your local market has hit bottom, what kind of appreciation are you going to get in 1-2 years? Almost none, those days are over. But if you're wrong, you're going to be out tens of thousands of dollars directly from your pocket. Contrast this with just shoving that $160k into bank CDs for two years, then buying. You're pretty much guaranteed 8% appreciation (4%/year). I'm sure another $15k would help a lot when you buy your real single-family place in a couple of years!

Dude101 said:2. the prices have not hit the bottom but we can still rent out the condo for a few years and still move if we have to.
This could be a recipe for disaster for reasons other FWers have already pointed out.

I implore you to read Patrick.net and understand what he is saying before buying anything. I'm not telling you to agree with all of it, but please understand his arguments before you do anything!

What part of central nj are you looking at?

As far as I could tell if you've made up your mind about purchasing real estate....then..... at this time it appears that you can get a much better deal on a single family home versus a condo.

I've seen 3 and 4 bedroom houses on realtor.com going for around like $250k.

It's a gamble though, as prices appear to continue to fall.

only reason i've even been looking is because i'm thinking of getting an investment property

Dude101 said:uutxs said:Dude101 said:we are so fed up of renting that we are thinking of buying a condo in central nj after putting down about 60% ( total condo cost ~ 300k) . However we may have to move in 1-2 years , depending on where our careers takes us .besides we'd like to move to a bigger single family. Our thinking is this :
1. The prices have hit the bottom or near bottom and we get a good deal .we can use the rent saved to pay down the loan. And we can sell the house if we have to.
2. the prices have not hit the bottom but we can still rent out the condo for a few years and still move if we have to.
Do you guys think this is a good move ? Or at least not a bad one ?
That usually means, DON'T buy.

But what if we rent out the condo instead of selling after 1-2 yrs ? The rent for these kinds of condo is around 2000.
We are paying close to 2000 p/m rent ourselves.

Are you sure you want to be a landlord? It can be a royal pain.

Franklin Township was voted #5 of bets places to live in USA by Money magazine last month.
Taxes are high, but quality of life in very high.

xxjt said:Usually by the time we hit the bottom it is cheaper to buy than to rent. Remember to factor in the fact your down payment would be earning 4-5% if it weren't sunk in a home which is potentially declining. If it is cheaper to you to own, then go ahead and do that.

Another measure is affordability. Median income is 56k in Mercer county. Typically the ratio between median income and median home is between 2-4X. Central Jersey is not known for its quality of life and both income and property taxes are high so I'd expect it to be closer to the bottom of that range.

Just my 2 cents.

cashonlyplease said:If you are considering a move in 2 years just stay put. I live in Western Monmouth County and rent a garden apt for under 1K per month. Condos are a tough sale once you need to move especially in this market. They are still building so you need to realize you will be competing with new units coming on stream. While this area is a great place to work I cannot wait for the time I can pick up and buy my 3000 sq. ft. home down in the Research Triangle for 200K. Hopefully they'll be a little lower in a few years. The taxes up here are a killer.
Research triangle in NC ?

sensia said:frankm said:What part of central nj are you looking at?

As far as I could tell if you've made up your mind about purchasing real estate....then..... at this time it appears that you can get a much better deal on a single family home versus a condo.

I've seen 3 and 4 bedroom houses on realtor.com going for around like $250k.

It's a gamble though, as prices appear to continue to fall.

only reason I've even been looking is because i'm thinking of getting an investment property

Depends where you have found 3-4 BR house in CNJ for 250K- I would assume it to be in Hamilton or around Trenton outskirts. The best place to live in Central jersey is probably Princeton area as well as West Windosr/Plainsboro area, where you will be able to locate a bunch of 20-30 yr old condos for 250K (don't forget to add exorbitant property tax and high association fees), but forget about a 2BR/2BA single family home.
I am almost in your boat- but my rental payment is about 1K and no matter what I buy, it will be cheaper for me to rent for now. I would certainly commit in a property when moving is on the plate in coming future. My suggestion is, move to a cheaper rental property and save the extra for your future purchase.
Dude got a green as I am from CNJ too.

It was in Edison, NJ.

Edison is nice too (or at least i dont know of any ghetto in edison), also a nice commute to nyc.