$420k -- Enfield cottage or W Hotel condo? (Omaha: rent, buying a home)

[ScoPro]

I'd pick the Enfield cottage for the primary residence.

Overpriced as it is, it probably will be a better investment longterm.

Around the corner from me, a 15 year old 4,000 sq.ft. house with an inground pool & nice yard recently sold for $299,000. Of course the Brushy Creek area west of Round Rock ain't "hip & trendy"....just a nice place to live. We roll up the sidewalks at sundown. lol

Having said all that, I would like to own a 2 bedroom condo in the W as a weekend in-town place - have printed off a number of their floorplans, and the 2nd Street location is pretty attractive.

[AustinGuy]

I'm not saying that this is necessarily going to happen in Austin, but you might want to look at the condos at the W in Dallas for an example of how a condo investment can go bad. They still can't sell that development out, and there have been a number of foreclosures that have brought the price point down significantly.

We all know downtown Austin is not downtown Dallas, but buyer beware on new developments that are making new highs in price/per sq ft during a soft economy.

[AustinGuy]

I also want to just add my personal opinion. If you are 24 and single (and a well travelled guy), you probably shouldn't even buy a place.

Why tie yourself down at this point in your life if you don't have to? I imagine there are much better uses of your investment money than a condo at the W or an enfield cottage right now. You can easily rent either one of these for much less than the mortgage payment and give yourself a greater level of freedom while still getting the prime address you desire.

[Austin97]

Originally Posted by 80SC

If you had $420k to spend on a place, which would you choose and why? I presently find myself in this dilemma.

The Enfield cottage was built in the 1930's, and retains much if it's charm despite being refurbished with modern kitchen appliances and wood floors. It has two bedrooms, one bathroom, and is nearly 1,200 sq. ft ($364 per sq. ft). In addition, there's a private backyard with several outdoor seating arrangements and tons of foliage.

The W hotel condo is presently under construction and slated to be complete by spring 2011. Everything is upscale -- Miele and Viking appliances, dark wood floors, floor-to-ceiling windows, amazing views. The drawback? My budget places me on the lower floors and in the smallest unit -- all of 621 sq ft.

The least expensive unit is $385,000 ($620 per sq. ft) and most expensive is $454,000 ($731 per sq. ft) among this floor plan.

Pros of Enfield:

1. Recognized area of distinction
2. Convenient to everything
3. Property appreciation

Pros of the W:

1. Very prestigious and exclusive address (159 residences)
2. Access to hip and trendy restaurants, bars, and live shows all within the property.
3. Views

My only real concern with the W is that the property will not appreciate as quickly as the single family home and may be difficult to resell.

Decisions, decisions. Which would you choose and why?

I dont think $600-700/sq ft in austin is sustainable. Once you are in that range, now you are talking houses a few blocks from the beach in southern california which I would take any day. Right now you can get a 2500 sq ft house 3 blocks from huntington beach for 800K. I would definitely wait until resale units come up. Those prices are really unprecendented.

Is the enfield house actually on enfield? If so that might not be a good choice either. There are other nice downtown condos in the 200-300/sq ft range that I still think are overpriced but not so dramatically expensive.

finally the enfield place can become a teardown in the future. If you double the size to 2400 sq ft you have now increased the value of the investment at a cost of about 100/sq ft.

The enfield place is a better investment, but a downtown condo definitely leads to a more party lifestyle.

[mimimomx3]

Enfield Cottage as an investment, W for convenience, especially for a 24 year old. Lots of maintenance on a house. Condo: lock it and go.

What do your parents think?

[FueledByBlueBell]

Originally Posted by AustinGuy

I also want to just add my personal opinion. If you are 24 and single (and a well travelled guy), you probably shouldn't even buy a place.

Why tie yourself down at this point in your life if you don't have to? I imagine there are much better uses of your investment money than a condo at the W or an enfield cottage right now. You can easily rent either one of these for much less than the mortgage payment and give yourself a greater level of freedom while still getting the prime address you desire.

Best point yet. Life evolves at a rapid pace at that age. Keep your life simple and yourself mobile at this stage in your life.

[lemonlime22]

Originally Posted by Jennibc

Isn't the W downtown? Why are you bringing the Domain area into it?

My mistake, I thought it was at the Domain.

[TexasHorseLady]

For long-term investment, my educated gut tells me the Enfield property. It's not that far at all from downtown, and I can't see the property values going down there significantly because they just aren't making any more nice neighborhoods in that close proximity to downtown. (Condos do not count as "nice neighborhoods" - they're a different beast entirely.)

As for renting versus buying, there are strong arguments on both sides of that equation. If you're buying as somewhere to live, you might want to consider renting so as to leave yourself as footloose and fancy free as possible at your age - life does have a way of coming at you sideways with opportunities and you want to be able to jump on one without having to sell no matter what the market is then.

On the other hand, if you're considering it as an investment and would simply lease it out if you moved on and the market wasn't amenable at the time and could wait for the right time to sell, getting started on something like that now could get you ahead in the game at a time when most folks aren't even thinking about that.

A lot depends on who you are.

I do agree, having lived in Dallas and Austin, that Plano is nowhere near an even ballpark comparison to Enfield. Think Park Cities.

I'm also, as someone else above posted, curious about what you do that affords you that lifestyle. If you earned it yourself, you can most likely handle getting into real estate investment now. If it's Daddy's (or Mama's) money, what are you doing asking us? You should be asking them!

[sliverbox]

I also want to just add my personal opinion. If you are 24 and single (and a well travelled guy), you probably shouldn't even buy a place.

Why tie yourself down at this point in your life if you don't have to? I imagine there are much better uses of your investment money than a condo at the W or an enfield cottage right now. You can easily rent either one of these for much less than the mortgage payment and give yourself a greater level of freedom while still getting the prime address you desire.

That's probably the best advice so far.I have a few more thoughts to add to this. Keep in mind this is merely my opinion and nothing more. So I'm assuming you're single? If that be the case then it really makes no sense to be buying anything anyway because come the day you do decide to get married and your future partner decides they either A: Don't like the area and want to live closer to Mom and Dad, B: Want kids and want the house in the burbs with a white picket fence, etc or C: some other unforeseen event.

Secondly, if you in fact actually have $420,000 in your pocket right this minute ( which if you do then congrats because I myself make a pretty good income and I have yet to save up that much even though I'm 10 years older than you) then spending it on real estate is seriously not the best investment for it.In fact, I've always felt that real estate should never be seen as a primary investment vehicle. If anything it might be a hedge against inflation. If you're 24 years old then that means you basically have about 40 years left to save for retirement, which is a long runway. Over the past 100 years stocks have gone up on avg. 7-10% per year over the long term- LONG TERM being key here because people have short memories and think that today's economy is a reflection on past performance. But if that's so, let's say you put just $100,000 of that into various retirement and stock funds. That $100,000 would be worth something like $170,000 in 10 years using the lower avg. That means by the time you hit 50 that total amount would be worth close to a million dollars. Now assume you put all of it into stocks and retirement funds. You see where I'm going with this. At best, real estate goes up about 4% annually. Of course some areas are a little more "special" such as the areas you seem to be looking at. But then again areas like that are also volatile.

Someone mentioned that California real estate on the beach has dropped significantly- which I can attest to since I live there. Given the choice, where do you think the average person would rather spend half a million dollars? For a condo in the middle of Texas or for a beach house? I've visited Austin a few times myself and yes- as an alternative city its nice. We're probably moving there ourselves. But we're moving there because its more affordable than California. If the avg. prices in Austin were all kissing north of 350-400k, then forget it and I think most other people would feel the same. So in my personal opinion, spending loads of money on a condo in Austin seems a bit too volatile.

Anyway, if you've made that kind of dough then you're obviously a smart guy so you'll figure it out. Good luck with whatever you do.

[Austin97]

Originally Posted by sliverbox

That's probably the best advice so far.I have a few more thoughts to add to this. Keep in mind this is merely my opinion and nothing more. So I'm assuming you're single? If that be the case then it really makes no sense to be buying anything anyway because come the day you do decide to get married and your future partner decides they either A: Don't like the area and want to live closer to Mom and Dad, B: Want kids and want the house in the burbs with a white picket fence, etc or C: some other unforeseen event.
.

For a 24 year old I agree that flexibility is probably the most important factor.

1) liquidity - when you change jobs and want to move to another city, you just want to go. Houses are not liquid, stocks are.
2) Some stocks are still relative bargains as they have been beaten down
3) Your standard deduction really reduces the value of the tax deduction for mortgage interest
4) Rent on condos is much lower than the sales value. You would actually save money by renting.
5) Property taxes are 3% of the cost of the house, this has a huge impact on equity especially as you are leveraged 4:1. Stocks often generate dividends of 3-4%
6) Stocks can be held in Roth or regular IRAs which means that you have tax free or tax deferred gains.

One pro for real estate is that you can get an essentially govt backed leverage ratio of 4:1 at extraordinarily low interest rates which you cant get in stocks. This means when the price goes up by 4% you get a 20% return on your invested capital. As a young person leverage is good.



If you put 80K down on a 400K property and it goes up by 5% (20K) you have made 20K on your original 80K investment.

When you sell a house the capital gains are not taxed up to a large amount (tax free)