I just found a condo I really like and I am debating with myself whether it would be a good idea to pursue it from a financial perspective. I'd like to get some educated, objective opinions on my situation to see if this is a terrible idea or not.

Here is some background:

  • I'm 23, no wife/girlfriend/children
  • $80k income ($6,667 per month) and likely to increase above six figures within the next few years
  • $20k student loans I'll need to start repaying in August of ~$300 / month
  • Own a condo now (owned for a year and six months while finishing undergrad), still owe $33k and have ~$30k equity
  • Will probably sell this place before moving, but I'm not averse to renting out as income property
  • No auto loans, credit cards, or other debt
  • Have $15k cash saved, putting away $2-3k / month

The condo I like is listed at $240k (mortgage payment estimators range from $1200-1800 / month depending on how much I put down) with HOA fees of $498/month (ouch) but it is close to nightlife and has all the amenities I'd love to have in a home. I live in west Michigan so the relative cost of living is low.

So my question is, assuming this place provides the style of living I like, would buying this condo be financially justifiable for me or a nightmare waiting to happen? If you heard of someone in my situation buying a place like this, would you scoff at them or does it seem sane? Just hoping to get some advice/criticism from people with more experience. Thanks!

UPDATE I confirmed that HOA fees are $375/month and residents are only responsible for electric and tv/internet (water, heat, trash, etc. are included).

  • Kind of a big deal question: What are your plans to settle down and start a family? Are you a "no way I am getting married guy", or a "eh, if it happens, it happens" type?
    – Pete B.
    Commented Apr 21, 2014 at 12:28
  • I lean more towards the "if it happens, it happens" mindset, but even if I met my future spouse today I wouldn't get married or have kids for at least 3-5 years.
    – user14650
    Commented Apr 21, 2014 at 19:39

2 Answers 2


HOA fees of $498/month

Run away.

  • This seems ridiculously high to me as well, and I'm not 100% sure this is accurate. I read this number on some third party listing site, so who knows where they got this number from or how accurate their data is. I've got an email out to the listing agent to confirm. Thanks for the feedback.
    – user14650
    Commented Apr 21, 2014 at 2:36
  • 2
    Unless the HOA fees cover everything including the kitchen sink (and maybe even then), it probably indicates the HOA is not in good financial shape. This means it would be a risky purchase regardless of your finances. Banks may not be willing to loan on it either.
    – Craig W
    Commented Apr 21, 2014 at 2:39
  • 1
    Doesn't it depend what the amenities are? Pool? Tennis court? A lot of grounds with landscaping? My rented condo, worth just over $200K, has a $189 fee, but no amenities that I listed. Curious how high such things push the fee. Commented Apr 21, 2014 at 3:34
  • True, I'd need to investigate what all is covered by that fee and I definitely don't want to get involved with a poorly managed HOA. But as far as amenities, there's a large pool, hot tub, landscaped courtyards and trails by a river, a gym, game room with pool tables, etc., a restaurant and coffee shop in the building (open to the public, not sure if that's relevant), a rooftop deck area that overlooks the city, a theater room with regularly scheduled movies, two parking spaces in a private parking garage...
    – user14650
    Commented Apr 21, 2014 at 4:05
  • @CraigW I've confirmed that HOA fees are actually only $375/month. How can I verify if the association is in good financial shape? Any links to articles you recommend for brushing up on the subject? Thanks again!
    – user14650
    Commented Apr 24, 2014 at 5:01

HOA of 500$ isn't that bad. Does it include hydro, electricity, heating, parking? I'm paying 600$, but it includes all of that. We also have large reserve fund for future repairs (which is good). The only thing I need to add is internet.

How "stable" is your income? do you risk losing your job in the next few years? What is the interest rate you are paying on your student loan? What is the interest rate you are paying on your mortgage? What is the expected return you could make renting your current condo?

Without having the while picture, I can't tell you what to do, but I would suggest you use that 15k saved up and pay off your student loans. The return you will make investing it will probably not beat the interest you need to pay.

Next, sit down and calculate if keeping or renting our current condo makes more sense. What can you expect in terms of rent for that place? What is the expected vacancy rate? Will there be needs to repair/renovate? I think that if you are looking to mortgage your next place, that you will need to sell it, as the banks will not agree to a mortgage which isn't your primary residence.

In the end, take our opinions with a grain of salt and go to the bank and talk with a professional adviser.

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