Cheap condo now or wait for duplex?

Question

I’m 23, about 6 months out of college, living in Wisconsin with my mom and her fiancé. The home environment has gotten really stressful, so I’m feeling a lot of pressure to move out for my own mental wellbeing. I make $62k/yr and have $24k in liquid assets ($11k in investable assets after setting aside my desired 5 month reserve fund).

My long-term plan has always been to buy a duplex to house hack, but I came across a cheap 2-unit condo listed around $110k that looks updated and move-in ready. The seller claims the HOA fees are only $33/month, which seems unusually low and makes me unsure what to look for or what the risks might be. Because the condo price is so low, I would still have a decent monthly savings rate towards my next deal.

I’ve done a lot of research on duplex house hacking but almost none on condos, so I’m unsure how big of a deal things like HOA reserves, rental restrictions, special assessments, or resale value are. I’d only want to live there for about a year before buying a multifamily, but am unsure how this would impact my future plans of house hacking my first multifamily.

Given my situation, would it be a mistake to jump into a condo like this just to move out, or is it reasonable as a short-term stepping stone? Also—any suggestions on what I should be asking my realtor or paying attention to at the open house specifically with this condo?

Would appreciate any advice or experience from people who’ve been in a similar spot.

Aaron Zimmerman · Answer

For the HOA, you'll want to review meeting minutes, financials, and see if there's a rental cap because ideally you'll want to rent out post-move out or if there's a spare bedroom, be able to rent that.

As for the condo vs multi-family, if you can buy something and save money for next property in time for next year, I'd say do it. Otherwise, if this will inhibit you from buying multi-family, could you rent a place with roommates instead and still save money?

Abby Gruendemann · Answer

Thank you all for the great advice! I spoke with my realtor and found lots of red flags that would come along with buying this condo. I've decided to wait it out until I can comfortably afford a multifamily.

Peter Falk · Answer

Yes, dig into the condo docs.  Some duplex units are set up as zero lot line properties where instead of owning one unit in a 2-unit condo association and the condo assoc. owns the building, you actually own your half of the building and land.  Those may have similar docs where each side agrees to pay for half the roof when needed or siding, but that gets association shared expenses down to very little, maybe a small shared insurance policy for the full roof as you aren't going to replace half a roof.

Small condo associations (2-units) also may lead to more frustrations if there is a dispute on how to maintain something and who to turn to if one side isn't paying or keeping things looking nice.

Theresa Harris · Answer

I agree with Aaron.  Talk to a realtor and find out if there is something up with the condo.  Also why not look at renting a room in a house for a bit to get out of your mom's house while you are looking to buy your home?

Abby Gruendemann · Answer

Great advice, thank you!

Cheap condo now or wait for duplex?

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