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I just did a search.. there are numerous townhomes listed for sale between $200-$225k (before negotiations) in the Naperville area that my wife and I would be perfectly happy with for at least 5 years, provided we can at least sell it for what we paid for it. The zip code is 60564 - is that area of Naperville decent? Those townhouses would give us more space than renting and would actually be less $ per month than renting for a 30-year mortage. I understand that an older house would appreciate more, but if it costs $250/month more for maintenance and utilities, then it would have to fetch at least $15k more when it comes time to sell. I appreciate the help.
What I'm wondering:
1. Is there a better market for the $200-$225k townhomes vs the $250k+ townhomes in Naperville?
2. Are there any closing costs/real estate transaction fees/comissions associated with buying or selling that are above and beyond what is customary?
You should rent one of those townhomes for a year and then buy if you like it. After closing costs and taxes and association dues you will not be ahead buying, especially if you are looking to be there only 5 years. You need to stay put at least 7-10 years to justify buying. This is not a flippers market with prices forecast to drop another 10 percent over the next 1-2 years.
I rent a townhome in Itasca that I own for 1500 per month. I put 20 percent down and bought it in 2003. With association dues, taxes and principal and interest at 5.50 30 year loan I make about 100. I put 43k down and make 100 per month. Not a good investment. Value is only slightly higher than what I paid so no real appreciation gains. I bought it for 215k.
You should be able to rent nice townhome in good parts of Naperville for 1500-2000 per month.
What stable market are you coming from where I assume you will be selling your present townhome and when did you buy?
You need to have your first place sold before you buy your next place. You may or may not have as much equity in your existing place depending upon your market and when you bought.
If you tell us when and where you bought we can run the numbers. In most markets if you bought in the last 6-7 years you are underwater unless you put a huge down payment down (20 is not huge).
Thanks for the excellent points, Chet. You seem well informed, and I appreciate the comments. We already have all the furniture and electronics, etc. we need whether we choose to rent or buy a townhouse. We're fairly good with our finances, and we would never consider purchasing without at least a full 20% downpayment.
We currently own a townhouse and are perfectly comfortable with the time and money required for its maintenance.
I did run some numbers comparing renting vs. owning. I made the following assumptions (that may be wrong, so please correct me if they are):
1. We can probably get a good deal on a townhouse and should be able to sell it around the price paid for it.
2. Property taxes are 2% (I have no idea, but this is a guess)
3. Homeowners insurance for townhouse is $100/month (this is what our current insurance is).
Based on the numbers I ran, renting a smaller townhouse will essentially break even with purchasing the ~$250k townhouse (based on the above assumptions, accounting for tax breaks, maintenance, association fees, and closing costs as mentioned below, etc.)
Where I'm from, buyers typically pay total closing cost fees of 1.5-2% of purchase price plus the escrow account startup fees. Sellers pay the real estate comission and a few small fees (0.5% purchase price) and that's it. Are there any additional closing costs/fees that buyers or sellers have to pay that are special to IL, DuPage County, or Naperville?
I definitely agree with being disciplined and living well within your means. Is there a better market in Naperville for the cheaper $200k-230k townhouses? If the demand for those exists, we can purchase something at least as good as we can rent, get a 15 or 20-year mortage, and build equity fast.
You have some what I think are dangerous assumptions. Your assuming you'll be able to resell this townhouse in a couple years and get back what you paid.
You'll have to make more than what you paid to cover closings costs, appraisals, surveys, etc. Plus there's no gurantee you will sell your place.
I'm currently trying to sell a townhouse in the exact same area your talking about, there's a lot on the market. I bought my place not necessarily as a flip but open to the idea of trying to flip it as it was a foreclosure I got for cheap and fixed up nice on the cheap doing the work myself. I'm priced 15k cheaper than anything else on my block plus my place is updated and nicer and I have had two showings since June both were back in June. I dont mind as I'm content living there but was open to the possibility of flipping it if I could make some money.
As for taxes I dont really understand them or even know what % I pay but I would imagine property taxes in Naperville, Aurora or surroundnig burbs will be much higher than your currently paying. I watch some of these house hunter shows nad people are getting mansions with acres of land in colorado and paying half of what I pay for a cheap little duplex with no land in illinois.
Also, association fees are something to look out for. Many places association fees for TH are only like $105 but in some communities can be upwards of $300 or more. There are some duplexes relatively close to the area your looking for that have no association but then you are responsible for snow, mowing lawn, etc all thing syou dont want the headache or cost of dealing with.
I just did a search.. there are numerous townhomes listed for sale between $200-$225k (before negotiations) in the Naperville area that my wife and I would be perfectly happy with for at least 5 years, provided we can at least sell it for what we paid for it. The zip code is 60564 - is that area of Naperville decent? Those townhouses would give us more space than renting and would actually be less $ per month than renting for a 30-year mortage. I understand that an older house would appreciate more, but if it costs $250/month more for maintenance and utilities, then it would have to fetch at least $15k more when it comes time to sell. I appreciate the help.
What I'm wondering:
1. Is there a better market for the $200-$225k townhomes vs the $250k+ townhomes in Naperville?
2. Are there any closing costs/real estate transaction fees/comissions associated with buying or selling that are above and beyond what is customary?
Thanks for the help.
That zip area is the far south side of naperville, basically in plainfield. There was quite a bit of development there during the boom but has pretty much stopped. A general rule of thumb anything south of 75th street is the "bu-fu" part of napervile and the least desirable, but still has the naperville address. Also keep in mind association dues and property taxes could be brutal.
That zip area is the far south side of naperville, basically in plainfield. There was quite a bit of development there during the boom but has pretty much stopped. A general rule of thumb anything south of 75th street is the "bu-fu" part of napervile and the least desirable, but still has the naperville address. Also keep in mind association dues and property taxes could be brutal.
That area of Naperville is not bufu,It's also not necessarily less desirable though some people do contend district 203 is superior to 204, honestly both are excellent schools, your kdis future is not going to be any brighter because they went to Central instead of Neuqua.
I wouldn't say south side of Naper is less desirable though traffic can be terrible juts gtting to an expressway. There's plenty of people like the OP who would rather have a new home and large yard than be within walking distance to downtown Naperville. Providing you dont commute via 88 there's really not that much upsdie to not living on the south end of naperville.
For the poster however who is pretty much guranteed to sell this place in 3-5 years I would say it would be a smarter decision to buy in other area of naperville
Thanks again for all the helpful comments. I'll tell you a little bit more about our situation. Our move will be part of a corporate relocation. Although I haven't seen the specific details, my understanding is that closing costs, commissions, fees, etc. are covered both on the selling and buying end. As is typical with corporate relocations, there will be a limited about of time we would have to receive benefits toward purchasing a place (typically 6-12 months), so we would prefer to take advantage of that opportunity.
I took a look at the Naperville zip code map. We would prefer to be in either 60563 or 60540, although northern 60565 would be fine for us, unless it'd be much harder to sell in that area. 60564 is too far out of the way. There are several newer (post 1990) single family houses on the market in the 60540 zip code in our price range. Would that be a better bet than a townhouse? We're not guaranteed to sell the place in 3-5 years, it's probably more like 5-7 years.
Based on some of the comments I've read, I'm concerned about the property taxes in Naperville. Our current property taxes are approximately 2.1% of market value after exemptions (i.e. $5775/year or $481/month on a $275k place). Are Naperville property taxes in that ballpark, or are they considerably higher? For comparison, our current HOA fees are $100/month and covers water, landscaping, and common area insurance.
The current tax rate (and I do believe they're raising it again) is 71.67 per $100 assessed value.
So to get your property taxes you'd take the price of the home and divide it by 3 (to get the equalized assessed value or whatever they call it). Then subtract the $5000 homeowner's exemption. Finally multiply that number by the tax rate.
So were your townhouse assessed at $275,000: 275,000/3 - 5,000 equals right at $87,000. Multiply that by .07167 and you get $6235.29, which would be about $520/month.
Thanks again for all the helpful comments. I'll tell you a little bit more about our situation. Our move will be part of a corporate relocation. Although I haven't seen the specific details, my understanding is that closing costs, commissions, fees, etc. are covered both on the selling and buying end. As is typical with corporate relocations, there will be a limited about of time we would have to receive benefits toward purchasing a place (typically 6-12 months), so we would prefer to take advantage of that opportunity.
I took a look at the Naperville zip code map. We would prefer to be in either 60563 or 60540, although northern 60565 would be fine for us, unless it'd be much harder to sell in that area. 60564 is too far out of the way. There are several newer (post 1990) single family houses on the market in the 60540 zip code in our price range. Would that be a better bet than a townhouse? We're not guaranteed to sell the place in 3-5 years, it's probably more like 5-7 years.
Based on some of the comments I've read, I'm concerned about the property taxes in Naperville. Our current property taxes are approximately 2.1% of market value after exemptions (i.e. $5775/year or $481/month on a $275k place). Are Naperville property taxes in that ballpark, or are they considerably higher? For comparison, our current HOA fees are $100/month and covers water, landscaping, and common area insurance.
Like I mentioned earlier I dont really understand the tax rates beyond knowing they are ridiculously high and were getting screwed lol.
Just to give you an idea the property i mentioned before I bought for just under 100k i believe its valued at about 135. My property taxes are somewhere around $3400.
Good comments from others on relative Napervile location / building trend, taxes and association fees. My experience as an investor/ landlord and real estate agent over the past is what leads me to be down on townhouses -- while they, alongnwith all other finds of real estate were selling well in the recent "boom", the long term track record of them for resale has been spotty. New construction has a window of deseriabiity, followed by a decline phase that can be awful. Exceptions to this rul are mostly for "downsizes" but even they are hurting terribly as of late.
In short while I do not think erosion of value is locked in, any significant appreciation is, from my vantage point, a long shot..
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