Buying an apartment/condo vs. renting? (Sacramento, Citrus Heights: real estate, rental, HOA fees) - California (CA) - City-Data Forum

rnb17 · 03-21-2015, 03:47 PM

Hi everyone,

I'm 22 years old and living with my mom right now (my dad passed away), while going to college. I am planning on graduating next year. At this point, I would really like to move out from my parent's house and into my own place. Right now, my mom and I live in a 2-story house that's more than 2,000 sq ft and my mom doesn't want to stay here any longer than until when I graduate, she wants to find a smaller and cheaper home to live in since it will just be her. I have a girlfriend, and she also wants to move in with me as well. How I see it, I have a few options. 1. We could either rent our own place and pay whatever monthly rate that we're am looking to pay at the time, probably somewhere around 800-1000/month. Or, my mom said that she would be willing to buy a place for me to live for probably 60-70k (probably an apartment, condo, or townhouse), and we would would pay her back each month until the place is paid off.

I am looking to stay in Sacramento for the next 3-5 years or so, as my girlfriend is still in school and will take a little longer to graduate.

What would be my best option and why? Any help is appreciated. Thanks a bunch!

NinaN · 03-21-2015, 04:02 PM

Check for condos in that price range and see if they work for you. There won't be many. And don't forget HOA fees which can run in the $300+ range. I think if you can afford it and all else the same, why not buy?

derekjones · 03-21-2015, 04:59 PM

Condo's in that price range will be in the 95823, 95660, 95826, 95842 zip codes. With HOA's roughly $180-$300/month. If you are thinking about going that route I'd drive by the areas and condo's to see if they would work for you. If your mom plans on financing it then also factor in if the condo is accepting any more non-owner occupied purchases as well as if her lender will lend on it.

If the locations do not work for you then apartment it is.

Either way, it would be a good time to start saving up money for a downpayment.

caligirlz · 03-24-2015, 11:15 PM

I'm thinking about your mom.

Where is your mom going to live if she buys you a condo? Will she have enough to buy her own place or will she then have to rent?

If you are only staying for 3-5 years, I think you should consider renting & letting your mom buy a place for herself. I can't imagine that she'd want to move into the condo that you'd vacate after 5 years. Especially a place that is desirable for 20 year old's.

JohnS_15 · 03-25-2015, 09:06 AM

I was in a similar situation to you at your age. I ended up bailing on everything and going to live abroad for a year. It was one of the best decisions I ever made.

My opinion is that you should just find an affordable rental in an area that you really want to live in for the short term. Save some money, have some fun and see what happens in the next couple years. Buying a place could really tie you to a particular area. You are young and you say you want to move on in 3-5 years. Maybe that will come sooner if things go south with your relationship. Maybe you'll want to travel or get a job in another part of the country. If the market was bottomed out then it might be worth it for the investment for your mom to buy a condo...but its definitely not and who knows what will happen in the next 3-years. Its not worth the risk if she is going to need that money at some point.

Good luck with your decision.

NickB1967 · 03-25-2015, 12:15 PM

Quote:

Originally Posted by caligirlz

I'm thinking about your mom.

Where is your mom going to live if she buys you a condo? Will she have enough to buy her own place or will she then have to rent?

If you are only staying for 3-5 years, I think you should consider renting & letting your mom buy a place for herself. I can't imagine that she'd want to move into the condo that you'd vacate after 5 years. Especially a place that is desirable for 20 year old's.

I think if the (larger) old family homestead is sold and mom buys a smaller "empty nest" place for herself, then there should be enough to lend to OP son so he can get a "starter" condo of his own.

Advantages:
1. Real estate has been and is coming back. Especially with the "quantitatively eased" dollar and the inevitable interest rate rise. Even holding only a few years and then selling may be quite advantageous.
2. A condo can be turned into a rental property with ease if / when the OP's family grows.

Drawback:
1. This does mean "rooting" yourself to the area, especially if for some reason #1 does not happen or reverses itself (although I honestly don't see that happening).

homesbyheath · 03-30-2015, 04:19 PM

You're mom could also downsize from her place and buy a duplex. She can live in one side and you and your girlfriend could live in the other unit. Once you move on your mom will still have income every month coming from renting out the second unit.

You may also qualify on your own to buy something. Look into the CHDAP program through CalHFA. Get the seller to credit you for closing costs and you are almost into a house for no money out of pocket.
CalHFA - Loan Programs - CHDAP

caligirlz · 03-31-2015, 12:22 AM

Quote:

Originally Posted by NickB1967

I think if the (larger) old family homestead is sold and mom buys a smaller "empty nest" place for herself, then there should be enough to lend to OP son so he can get a "starter" condo of his own.

Well, he isn't really telling us what mom wants, only what he wants.
If I were in his situation as the mom, I sure would not want to live in a regular shared condo after owning my own home without any shared walls for years. No way.

sacite · 03-31-2015, 09:53 AM

You are not going to pay $300 HOA for a $70k place lol. That's not going to happen. Prob closer to $120. And that would be offset by the mortgage interest/property tax deduction. Since your mom would own it, obviously she would get the deduction. But, you could always ask her to lower your "rent" to account for that benefit.

Your net payment would prob be around $600/mo. Only downside is since your mom would not be living in it, you'd (or technically, "she'd") have to pay full capital gains tax whenever you sell it. But unlike renting, at least you'd be making some sort of profit when you leave.

I had a friend that owned a condo in Citrus Heights which he bought for $80k. His payments with HOAs, etc totalled around $850. When he sold it about 4 yrs later, he made $25k profit. For two people, this kinda seems like a no brainer. You'd hardly pay anything in rent per/mo.

sacite · 03-31-2015, 10:01 AM

Quote:

Originally Posted by JohnS_15

I was in a similar situation to you at your age. I ended up bailing on everything and going to live abroad for a year. It was one of the best decisions I ever made.

My opinion is that you should just find an affordable rental in an area that you really want to live in for the short term. Save some money, have some fun and see what happens in the next couple years. Buying a place could really tie you to a particular area. You are young and you say you want to move on in 3-5 years. Maybe that will come sooner if things go south with your relationship. Maybe you'll want to travel or get a job in another part of the country. If the market was bottomed out then it might be worth it for the investment for your mom to buy a condo...but its definitely not and who knows what will happen in the next 3-years. Its not worth the risk if she is going to need that money at some point.

Good luck with your decision.

I think this is good advice. The only caveat is I have thought this way at many points in my life about being tied down (regardless of age) and low and behold 3-5 yrs goes by and I am still in the same city. That happened at age 20, 30 and now at age 39. That's a relatively short period of time, and unless you have a deep yearning to travel it usually does fly by before you know it.