May 8, 2013

Investment Property

The condo next door from us has been on sale for awhile.  It actually almost sold at one point but that must have fallen through because the for sale sign is back up.  I've been really thinking about purchasing it and renting it out.  But because it would be an investment property, the bank is requiring us to put down 20% plus have 6 months of mortgage payments to cover both our mortgage and the investment condo's mortgage.  I'm ok with having the 6 months mortgage payments.  I like having money in the bank.  I'm having a hard time thinking of parting with the 20% down payment. 

My husband really doesn't have much interest in financial matters and although I think it makes him a little nervous, if I wanted to buy this condo he would go along with it.  I've contacted a friend of my sister's who is a realtor to get her take on it. 

The first hurdle was finding financing.  I didn't try to get pre-approved because I didn't want to pay the $125 fee until I know for sure that I want to go forward with this.  I am only considering this specific condo because it is right next door and we have lived here a long time.  We are familiar with the building and the condo association. 

We have a great condo association.  They aren't nit picky like you hear about sometimes.  In the 8 years we lived here, our HOA fees have only increase once and it was only $10 a month.  We have never been asked for anymore money for anything else. 

The condo is listed for about $12,000 more than what I feel the condo is worth so that's a big hurdle we have to get past if we decide to move forward.  I think they are basing the price on what was paid for the condo, but we recently had our condo appraised and it was appraised at $12000 less than their asking price and we've done some major improvements in the last two years. 

So this has been what has been on my mind all day.  I wanted to do this a while ago but my local bank told us we had to put 30% down which was too much for us.  But I checked with a credit union we use also and their terms are more doable.


  1. Wow, this would be a big change. Would you rent it out and manage the property yourselves? I'm currently a homeowner and I would also feel nervous about parting with a large sum for a down payment.

    1. The goal would be to rent it out and manage it ourselves. Since we've lived here for so long we know what the condo association takes care of and we are familiar with the types of repairs that we are responsible with. My biggest fear is parting with the large down payment. But I did some research and if for any reason we would really be in need of money, I could always get a home equity line of credit. We still have other savings as well but its nice to know there is another option if for whatever reason we needed it.

      I did speak to a realtor and she thinks the price they are asking is fair. I guess appraisals for refinances aren't accurate to go buy for market value. So not sure what our next move will be. We would only want it if we could get it for a lot less than what they are asking.

    2. I know the market is picking up and all, but I still think buyers have the upper hand. It doesn't hurt to submit an offer lower than the asking price and see what the counter is. I was so nervous about coming off as a low baller when I submitted my offer but I needed to remind myself that it's a business transaction, no one but me is looking out for my best interests.