Monkeys,
My wife and I are starting to get serious about buying a place here in Chicago. We're not ready to leave the city and head to the suburbs, so we're considering a condo purchase in one of the neighborhoods. For the sake of argument, assume I know the pluses' and minuses of condo versus home. Our debate is thus this: do we purchase a 3 bedroom place and potentially max our (albeit conservative) budget (or pay PMI), or do we consider a 2 bedroom place, and save some cash?
The difficulty is this: A 3 bedroom is ideal as we start a family and will give us time to grow in the home and not force us to sell as quickly and it will also most likely be more valuable down the road (poorly worded, but arguing price appreciation per square foot 3BR sqft > 2BR sqft). A 2 bedroom doesn't allow for much growth, but we could potentially more easily pay down principal, rent it out after a few years and buy a home and turn it into an investment property. My thought is that a two bedroom will have more takers for rent than a three bedroom and be easier to find tenants. I know all of this would need to be approved by the HOA, etc.
So what do you think? Hit the top of the budget and go for the place we will be comfortable or go smaller, save some dough, and attempt to turn it into an investment property within 5-7 years? For those of you in Chicago, I'm happy to discuss targeted neighborhoods (looking at Logan for price appreciation as well as Lakeview, Lincoln Park, Wicker Park - typical areas for late 20s couples).
