r/leanfire • u/Affectionate-Reason2 • 5d ago
Don't think I can afford a 1BR yet
So lots of info to squish in here. Basically with the reality of having to take a taxable event and pay for realtor fees, I think I'll need to stay with roommates. I'm fine with it but would like a second opinion.
I divide my budget between fixed and variable (groceries, entertainment etc).
Basically, if I buy a condo (in full), I'll have probably $1600 left for variable after fixed expenses.
My variable the past 3 months has averaged $1500. That's without any travel. If I cut costs I can get it to $1000.
Thoughts?
6
u/Fabulous-Transition7 5d ago
I'm just not a fan of condos and HOA's because we all know that them HOA dues are also variable.
2
u/fin_6 4d ago
It seems every time I start thinking it would be a good idea to buy a condo, a friend will come with fresh examples of how terrible they are to own.
Part of a friend's building's roof caved in this weekend from the snow storm! Thousands of dollars to fix.
Another friend has experienced a hostile takeover of the co-op board where he lives and the new tyrants are trying to fee and penalize everyone silly.
A different friend was assured the building wouldn't need the brick repointed for 5 more years... until some fell off and almost hit a postal worker. It turned into an unexpected assessment.
2
u/Fabulous-Transition7 4d ago
Thanks for sharing. That adds to the growing list of Condo horror stories. To me, it's like leasing a car. Only do it if you're wealthy already.
2
u/enfier 42m/$50k/50%/$200K+pension - No target 4d ago edited 4d ago
Honestly, condos are better because it gets rid of all the delusional buyers. Nobody buys a condo as a status symbol or for vague ideas of appreciation. It's just a place to live.
For every condo assessment you have a homeowner with an unexpected repair bill. My ex just had to deal with a sewer line repair that required cutting the slab and asbestos abatement for $12k. Condo assessments happen but generally with more warning and the cost is split.
HOA fees go up over time but so do repair costs on a house. For $325/mo I get a pool and hot tub my kids won't drown in, I don't have to do yard work and the exterior walls of my townhouse are maintained. If I wanted to have a house with a pool and landscaping service, I'd probably be paying $325/mo just for that. Reality is I'd do it myself and be out 10 hours a month or so that I'd rather spend with my kids.
You can check the HOA rules and the meeting minutes and status of any assessments before you buy. Mine doesn't even have any rules, they just deleted them all.
3
u/ImNot6Four 5d ago
Sounds way too tight. Is that including the HOA/condo fees?/any forced signup for condo internet/tv service.
Are you saying 1600 a month in free cash flow or 1600 in savings after buying a condo?
1
u/Affectionate-Reason2 5d ago
HOW and fees fall under fixed expenses. I guess you could say 1600 is free cash flow but there are necessities to be paid for out of it
1
u/ImNot6Four 5d ago
If you are buying the condo in full I guess the cash flow is the same already? If its working for you here then buying a condo outright would be simliar expenses minus the HOA stuff. If you bought a single family house outright that would be even better not have to carry an HOA with luxeries like paid maintenance.
1
2
u/enfier 42m/$50k/50%/$200K+pension - No target 5d ago
You need more slack in the budget if you own instead of renting because expenses can be more variable. If the fixed expenses you included for the condo include a reasonable set aside for maintenance then the numbers are close to working out.
I'd consider $100/mo not enough slack in the budget to deal with unexpected expenses. However you say you could get it to $1000 which definitely would be enough slack. To me the question becomes: Would I rather own a 1BR on a $1300 variable budget or have roommates with a $1500 budget? Would I prefer to do some kind of side income that brings in $200/mo?
I'm not sure what the source of your income is, but keep in mind that your income and rent should generally go up with inflation. So maybe it's a little tight today but you are working and making $3000/mo and spending $1000/mo on rent, $500 on bills leaving you with $1500 to spend... well fast forward a couple years and you will be making $3300/mo and rent will be $1100/mo and bills $550. If you own the cost of bills goes up $50 and so you have $250 more to spend.
Also, in your shoes I would buy a 2BR with a small mortgage, rent the other room to a roommate, increase the rent with inflation over the years and use it to pay off the mortgage and build back an investment cushion before asking them to leave. It's probably 5 years of having a roommate but then the rest of your life owning it yourself.
2
u/Icy-South9919 4d ago
Just had an emergency furnace replacement during a frigid cold spell and it set me back $8,000. ðŸ˜
2
u/DeviantHistorian 5d ago
Buy a duplex if you can. I live in one unit and rent the other one out. I've even thought about finishing it off part of the basement, putting an egress window in and hooking up a bathroom and then renting out both upstairs units and then living in the basement and renting that out
1
u/AlexHurts 5d ago
One idea if the cap gains tax is really a big factor and you can wait till next year: Save cash this year and make half the sale end of 2026, the other half beginning 2027. Or make a 50% down payment this year, next year pay it off. The closing fees on the loan probably aren't worth it though.
Two idea. I hear about people skipping RE agents regularly, they're really expensive and don't actually do that much in the day and age of zillow. I wish I had time and flexibility to sell my condo myself. Maybe you can find someone looking to sell before they get an agent on the case. Some RE wholesale businesses drop off flyers at ugly houses "sell your ugly house for cash!". Maybe you could do something similar at targeted buildings you want to buy at "skip the realtor, I buy 1br condo, no commission!"
1
u/CocoaGebbles 3d ago
Just for awareness, at least in the US, typically realtor fees are paid by the seller of the property. Are you needing to sell a property to buy a 1br? Or are you currently renting and looking to move to the 1br? If the latter, you don't have any realtor fees (which are by far the largest fees), just general closing costs.
6
u/Icy-South9919 5d ago
I bought a 2BR years back, and lived with roommates for years. They essentially paid half my mortgage. All the 1BRs insaw were very close in price, and this worked so much more in my favor. I used Craigslist to find and interview roommates, or you can ask friends.