Good investment? Buy a 1000 ft condo for $45,000-$50,000 in Detroit's northwest suburbs? (Livonia: apartment complex)

[Bhaalspawn]

I'm currently paying $700/month on a month-to-month rent for a 900 ft two bedroom apartment and now that housing prices have come down some, I've been wondering whether it might make sense to try to get a cheap condo.

If I found a 1000 ft condo in, say, Farmington Hills, Novi, Wixom, Walled Lake, Livonia, Commerce, West Bloomfield, or South Lyon, would it be a decent deal for $45,000-$50,000 if it were in decent shape and would I risk losing money on it? What if I could find one for $40,000?

I haven't taken any real steps towards actually doing anything like that, but now that the prices have dropped and with the possibility that we might see lower interest rates, I'm wondering about it. I also wonder if condo owners in that price range would be getting desperate enough to accept low ball offers.

[magellan]

Originally Posted by Bhaalspawn

I'm currently paying $700/month on a month-to-month rent for a 900 ft two bedroom apartment and now that housing prices have come down some, I've been wondering whether it might make sense to try to get a cheap condo.

If I found a 1000 ft condo in, say, Farmington Hills, Novi, Wixom, Walled Lake, Livonia, Commerce, West Bloomfield, or South Lyon, would it be a decent deal for $45,000-$50,000 if it were in decent shape and would I risk losing money on it? What if I could find one for $40,000?

I haven't taken any real steps towards actually doing anything like that, but now that the prices have dropped and with the possibility that we might see lower interest rates, I'm wondering about it. I also wonder if condo owners in that price range would be getting desperate enough to accept low ball offers.

Remember you have to throw in association dues, which might add $100 - $250/month. It also will depend on how long you plan to stay in it. I'm guessing a condo that cheap is an "apartment style" condo (one entrance into the building like an apartment complex)? Not a townhouse?

[Bhaalspawn]

Yeah, I figure that the monthly association fee would be around $250 and no less than $200. In this price range they would all be apartment style condos and not townhouse style.

That's the thing; I'm not sure how long we would be there. What I like about my current arrangement is that if my job vaporizes, I can break the lease with a one month's notice, get a U-Haul, and head for greener pastures. I figure that you have to calculate the total cost of the purchase plus local moving costs and then subtract ($700 - monthly condo fee - bank interest) times number of months lived to figure out the savings over renting, if any.

Do condo owners pay property taxes directly or is that part of the association fee?

[magellan]

Originally Posted by Bhaalspawn

Yeah, I figure that the monthly association fee would be around $250 and no less than $200. In this price range they would all be apartment style condos and not townhouse style.

That's the thing; I'm not sure how long we would be there. What I like about my current arrangement is that if my job vaporizes, I can break the lease with a one month's notice, get a U-Haul, and head for greener pastures. I figure that you have to calculate the total cost of the purchase plus local moving costs and then subtract ($700 - monthly condo fee - bank interest) times number of months lived to figure out the savings over renting, if any.

Do condo owners pay property taxes directly or is that part of the association fee?

Directly. Personally, I'd do it if the condo were in a tax-free Ren Zone where I got state and city taxes exempted. Otherwise, unless you're paying cash, you're going to be paying most of your money toward interest payments (even with the tax deduction). Suburban apartment style condos (in my experience) also don't appreciate that well, even in good markets. If it's near downtown Birmingham, Brighton, Canton, or someplace like that, maybe. But if it's along Telegraph Road or some other megaburb-boulevard, forget it.

And if Detroit had a good mass transit system like Chicago, then I'd buy a condo near the rail stations. Especially with no end in sight with oil barrel prices.