Buying a Condo in Texas?
Thinking of buying a 1BR condo (price range ~$350K) in one of the major metro areas of Texas (Austin, San Antonio, Houston, Dallas) at the beginning of the new year before moving to the state in the summer. Have found a unit in the exact neighborhood I want to be in with low HOA fees - I couldn't care less about the bells and whistles that most buildings tout (i.e., lounge area, gym, pool, roof deck, etc.).
At the end of the day, I am just a single dude looking to get a decent spot without having to throw my hard earned banking dollars away at renting in one of the area's "dime-a-dozen" luxury apartment buildings.
Anyone think that this is a good / bad idea?
Depends on a lot of factors, many of which come down to your personal preference.
If you look at a P&I loan amortization, you’re still going to be “throwing away” most of your monthly payment that will go to interest rather than principal repayment for the first 5 years. Factor that in with the fees you pay at purchase/origination and it becomes even less attractive.
The rest is kind of up to you. Questions to think about (you don’t have to answer). Do you want to stay in this city long term? How big is your down payment? Do you come from money/have a high earning job? or have you had to save a lot to come up with this down payment?
If you’re killin it or come from money, fuck it, buy the condo. If the down payment represents a lot of money that took a lot of work to save, I would rather invest it in the market (or private deals if you know the right people).
Last thing to think about is freedom - there is certainly intangible value in having freedom and a (relatively) illiquid investment in a condo ties you down (unless you come from money, but if you’re asking WSO about this, I would guess you don’t.)
Thanks. I do not come from money but I do have a high paying job. By the end of 2021, the ratio of my liquid investments (cash + index funds) to the down payment (assuming i move forward with the purchase) will be about 2:1
Nice dude. Yeah I’d buy it. Capital and freedom aren’t limiting factors in your situation - you’re not tying up your life savings in this and if you want move to a different city, you can keep it and rent it out.
How much do you make
and what do you do?
~$250K working in PE
Any other thoughts?
I am not an expert in this, so take my advice with a massive grain of salt.
But my understanding of many of the major Texas markets is that a bunch of those neighborhoods, especially the newer up and coming ones, don't hold their real estate value very well. I know Houston has been expanding in all directions for a long time, and because land is so cheap and everyone drives (e.g. no premium on being near transit), in ten years your home could be worth less than it is now. So buying isn't even a great option, if you aren't building home equity and you aren't intending on staying there long term.
At that point, renting seems like a potentially more economic choice. Maybe the neighborhood you're in is really old money or is actually downtown. All I know is the expansion of the ring road system has helped push the suburbs further and further out, which implies that land which was wealthy and suburban thirty years ago is now not desirable.
Thanks. Luckily it is not in a suburb, but in the heart of the city center
Lol then ignore me. Generally the safest option anyway
Good to know. I’m not familiar with the Texas market but recently started researching San Antonio. The prices are absurdly low (I’m in CA)
Great idea!
Having lived most of my professional career in Dallas/Houston/TX in general, I would caution against a condo. You would be better served looking for town homes.
The cities aren’t terribly dense and commuting is huge.
Agree. I am based in Dallas and it is not a condo market in the slightest.
Agree. Even townhomes are relatively rare - at least outside downtown.
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