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I'm 22, living by myself, going to graduate school (in mathematics) next year. I've been living in an apartment the last few years and almost have been almost entirely supported by my father. This is okay with him; I'm an only child and he makes a fair amount of money, he's willing to support me.. We live in separate cities, so living at home isn't an option. I have a car and commute to campus.

Next year I'll be going to graduate school and be making roughly $20k/yr (US). My dad is willing to supplement my income as needed. I'm looking at places to live now, mostly at apartments in the $700-800/month range range (the city I live in isn't terribly expensive). My dad mentioned that it might be worth it to buy a condo. I will be in graduate school for the next 5-6 years and don't really want to move during that time. I looked online and there are several condos in the 90-100k range that seem appealing.

My question is this: Is it a good idea to buy a condo in my situation? I'll admit, I don't have much background in financial matters. If I can afford the upfront costs is a condo a better deal in the long run? Looking on zillow, it says for a 100k condo the monthly payments would be around $400-500--but this can't be all the cost, right? I still have to pay property taxes and whatnot. How would the monthly costs compare to an apartment?

A downside I could see is that it is more difficult to get rid of a condo, in that, I have to actually sell it as opposed to wait for the lease to end. Beyond that, I don't know too much.

  • Condos can be tricky. You will almost certainly have monthly fees to pay to the condo association for the upkeep of the building and common areas. Also, if the condo association is in a downward spiral financially you are gonna have a bad time. – JohnFx Apr 11 '15 at 16:30
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    Purely personal reaction: condos combine all the disadvantages of renting with all the disadvantages of homeownership. There are places like NYC where a condo may be the best option available, but in saying that I'm praising it with faint damns. – keshlam Apr 12 '15 at 3:49
  • you have to pay back any money you borrowed plus pay condo fees. In my experience condo fees are anywhere from 1/3 to 1/2 what you think rent in that building would be. And then yes there will be property taxes and possibly utility bills too. – Kate Gregory May 12 '15 at 21:24
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If you will be there 5-6 years it could be viable.

Here are some of the cost considerations:

  • Downpayment (usually if you can't put 20% down you will need to pay PMI)
  • PMI (Private Mortgage Insurance) additional monthly cost b/c the down payment is less than 20%
  • Property Tax
  • Home inspection costs
  • HOA (Condos usually have monthly HOA fees) These fees can range.
  • Insurance (you'll need to take out condo owner insurance, usually not too much more than renters insurance)
  • Closing costs & Loan origination costs (you could be looking at $2k - $3k)
  • Selling cost (When you sell the real estate agent can take 6% of the selling price. so if you sell it for $100k -- they take $6k)

There may be some more fees, but that should be the bulk of it - You'll have to do the math on all of the above and see which makes sense :)

  • The condo fees, mentioned, can be significant. In addition, the condo board may require special assessments from time to time. I've seen these be more than $20,000, though that's very rare. – ChrisInEdmonton May 12 '15 at 13:00
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When purchasing a condo in a university town, it is almost guaranteed that the prices will be inflated as a result. This is because you are competing not only with single-home, primary residence homeowners, but also with a multitude of investment buyers and landlords who want to purchase a rental property. Universities are popular rental markets due to their stability (there will always be students looking for a place to live), and as a result the areas attract investors more than other markets.

This can work in your favor, however. If you don't mind sharing your residence with other students, and you don't mind the part time work that being a landlord requires, you can live much cheaper and even make money over the next few years as your roommates pay your bills. Owning a primary residence rental property also brings a lot of tax benefits because you can claim expenses and depreciation against your income. This could benefit your father who could be a co-owner and would certainly benefit from the write-offs against his higher tax bracket.

The real trick that makes or breaks the experience is finding mature, responsible roommates who will cause the minimum amount of headache. If this part of the equation is missing, it can lead to distractions from school and even legal worries when you have to think about things like unpaid rent and/or evictions.

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