Real Estate Decision: House or Townhouse

Parent Cafe
1

My son is 22. He is in grad school. He’ll be done in less than a year and has stacked his resume with relevant stuff. I’m not worried about him getting a job out of college but I don’t know what city he’ll relocate too.

So, anyway, just for fun I decided to check out some real estate just in case my son ends up back in Orlando. I am mostly just scouting out locations and prices. Sure enough, I start to get into it and discover a few perfectly located, perfectly sized, reasonably priced properties and now, suddenly, and unexpectedly, I am thinking about selling my place and upgrading.

I don’t know what the market(s) are like where you live but where I live, in Central FL, prices are getting hot again I can tell you that. I do not want him to be house poor. I know he can’t afford a house right off the bat but I am going to pitch in a possibly substantial amount so I am looking at $350,000 and down.

I also told him I’d help him buy a new car as a graduation present so we probably should keep a running tab at this point. I quickly realize we can get a giant house for $350K or under but that I hate giant houses. The property taxes are too high and it is just way too much house. Why bother being in debt for 30 or 40 years? No, just not worth it.

So, I start zeroing in on 1,750 to 2,250 square foot properties and this is when I start to find some really compelling deals. There are some really smartly designed properties near my wife and I that my son could live in, start producing grandkids for me and my wife to spoil, begin his career, you know the drill. He’ll need help with the grandkids, obviously. Houses are fine but seem to be over priced. I am beginning to think anything above $125 per square foot is frothy.

Townhomes, on the other hand, seem to be the right size at the right price. Am I missing something? They are modern, eco-friendly, have amenities and are not more space than a family really needs. Have you come to the same conclusion? One property I looked at was 1,800 SF, as I recall, a townhouse, they only wanted $206K, they had a pool, the property taxes weren’t bad but the deal breaker was the HOA dues were $500 a quarter and when you add that to the property taxes you are looking at $5,500 or there abouts per year which is on top of the mortgage, obviously, and means you never really pay off the house you are stick with near $500 forever. That sucks. I just saw another TH, they must be far cheaper to build, and thus far cheaper to buy per SF, is about $250K, no pool, not much community property, gated, about 1,750 or 1,850 SF (they have two models) but has much lower HOA dues. That is a way better deal that these $370K and $350L McMansions that people are trying to sell and you can tell the neighborhood is half empty and has forecloses all over the place because people are trying to get out of all that mortgage debt.

Oh well, I need to stop this before I buy something. I like my house. It isn’t glamour house but it works for us.

2

Is this for real? You should stop. Your son should be responsible for his own housing decisions. Apartment, condo, whatever. Twenty somethings are often in the move for work, and don’t want to be tied down with maintenance. Let him live as an independent young adult.

3

Yes, for real. He will have skin in the game. Why not help him?

4

Just Whoa!! You’re doing exactly what I always do, and it usually doesn’t end well. I let myself get carried away planning their lives until I realize none of my fantasies are what they are interested in.

5

Thanks. I’m not going to constrict him. If he moves to Miami that is fine. Either way, he’ll need a place to live. Renting isn’t ideal. Rents are way too high down here. It will take him a few years out of school to be “settled” anywhere so I am thinking wayyyyyy ahead. I like TH’s. I really like TH’s!

6

I am a believer of renting first before buying when moving to a new place. When I first moved back to NYC after being abroad for few years, I rented for a year before I bought. It was good to know where I waned to live in long term before I went through the expense of buying a place.

I also agree with others that you should let your young adult make the decision of where he wants to live and if he wants to own or rent. It is time to back off a bit. :slight_smile:

7

Not every 20 something is your stereotypical urban dweller, moving from job to job every few years.

Nevertheless, the decision really should be his to make as the choice will affect maintenance/upkeep and quality of life (on top of budget). If space/privacy are big on his list then go for the free standing house. If close proximity to shopping/restaurants is what he’s looking for, and he doesn’t mind the often cramped/claustrophobic layout of townhome neighborhoods, then go for the townhome.

Budget wise, he should try and stay somewhere between 20% and 25% of his gross monthly income, including HOA and property taxes. (IMHO)

8

Vote for having him rent wherever he lands first. It will give HIM a chance to scout out the area and make a decision about his own housing. He might also decide that the first job he takes is a stepping stone and only plans to stay for a few years…and doesn’t want to buy!

Give him the car. He probably will be able to use that. But even with that…wait and see…if he ends up in metro DC or NYC or Boston, he won’t want or need a car.

And regarding a house…your offer is a generous one…but I would suggest giving a money gift to him…when the time comes…that he can use towards the downpayment on the house/type of house he chooses.

9

Feeling chatty, long post.

Unless his grad school is in Florida I wouldn’t count on him returning to the state soon. There is a wide, wide world out there just including the US. As a single, 20 something, young man he needs to explore his options without considering Mom and Dad. It sounds like he is likely in Florida from your description of job cities. Anything instate is plenty close to parents now and when/if he has a family. It would be good for him to experience other parts of the country before settling down.

Okay, even if he chooses to live in the Orlando area (we retired to Tampa- I like it better, btw) you need to BACK OFF. Let him choose where to RENT initially. It could be near his job or near where others of his age tend to be. HE needs to make his own choices.

Our experience for our still 20 something son. We lived in Wisconsin. Kid got his first job in his college town and needed a car. He wanted to get the good terms car loan for new grads but because of holidays and his needs couldn’t get the needed paperwork proving he had a job in time so we bought it (relatively inexpensive and we could easily afford it). He moved from his campus area apartment to a place closer to his job after his lease expired. We moved to Florida, more than a thousand miles away. He then changed jobs and is in Seattle, nearly 3000 miles from us. He still rents- a studio apartment even though he could afford a better place (frugal kid). Walks to work. Based on the crazy Seattle market he perhaps should have bought a condo a couple of years ago. But- did he know then where he wanted to be, even if at the same job…?

Your son needs flexibility at this stage in his life. He also needs to do his own choosing. A 1700 square foot home could be much larger than he wants. You do not state that he is married- no grandkids (hopefully) until he is- and then his wife should be the one helping make decisions. He needs to be financially independent of you- ie no strings attached. A car is a one time gift. A house involves a lot more. He should live within HIS means, not yours, as well.

btw- in Florida there is no state income tax so I wouldn’t complain about property taxes. Plus, property taxes are lower than many places, as is the cost of housing. Sales taxes are similar to many states.

10

I’m sure the housing market in Seattle is depressing. Where is it not?

Like everything else, incomes do NOT keep up with these crazy costs. I can’t find anything wrong with townhouses versus houses. It should go without saying, I thought it did, that it is his decision as to what city to live in and whether to rent or own and if he decides to own something whether it should be a house or a TH. He will not be making big money straight out of college. It will take him time to build up a down payment and so forth. I hope he lives at home which will allow him to save faster. But, it is all up to him. There is a 50-50 chance he goes to Miami. I lived in Coral Gables (suburb of Miami) for 5-years so I fully support him to move down there.

He will, almost certainly, end up back in Central FL as will his brother, I am betting. I have more than I need and I can hand that off after I die but it is even smarter to parcel it out while I am alive. Nothing would make his mom/my wife happier than having our kids live close by and everyone in my household knows it. I understand the “let them be responsible” them but rather than have him finance everything with this bank or that bank and all the attendant fees and costs it makes good sense, if you think about it, to help him out as he goes in-house so to speak. That will not do anything to ruin his industrious ethic, I assure you.

11

How about your son’s happiness?
Did your parents tell you where to live, what to buy?

12

I miss my father-in-law so much. He was such a wise man. FIL told DH on our wedding day, “You know your mom and I would love it if you lived in our town. I know MLH’s parents would love to have her near them. But you guys need to start your life together and move where YOU want to. Having some distance between you and your parents is probably a good thing.” I will never forget his words, and I will say them to my kids when the time comes, too.

13

^^^Oh, wow. That’s awesome. I need to use that on S1 and his fiancee, as they struggle to figure out where to live.

14

so here’s an idea- research CAREFULLY and buy a townhouse in BOTH your names in a DESIRABLE area of Orlando -one that you can EASILY rent out to snowbirds, retirees, vacationers, etc, etc. Maybe your son will want to live there in a few years, maybe not. But you can write off much of the income you earn from rental receipts in the form of depreciation , gift it to him annually , but DONT TELL HIM HE IS PART OWNER.
that WOULD be putting undue parental pressure on him to live near mommy and daddy- something he may have NO interest in doing in the foreseeable future.

that way you can have your cake and eat it too!!

15

Last year when D2 was applying to law schools, she was accepted to a school in CA, DC, midwest and NE. She said the only ones she would consider would be within few hours of NYC. She ultimately decided to take 2 years off to do an internship in NYC instead of going to law school right away. Five months later, she is telling me she is ready to go outside of NYC, like CA, because she is ready for a change. I was so surprised because until recently it was NYC or bust.

Young people in general are very unpredictable in terms of what they want to do for work, where they want to live, and who they want to date/marry. They want and should have the freedom to explore. There is no reason they should be tied down to a house.

16

Also, keep in mind that with TH and other properties that have common areas, special assessments can occur to fix things or pay for attorneys or other things and they can be quite significant. They do NOT go away, and DO need to be factored into any purchasing decision. Check the history of such costs in the places you’re considering buying; take a good look at how well/poorly maintained/constructed things are, etc.

17

Totally agree with Oldfort. DD wanted to go to college in CA. We figured she would never return. Nope…not her cup of tea to live.

OTOH…we thought DS would be sort of nearby. He is 2000 miles away.

You just can’t predict!

18

If you buy, I’d say it has to be just an investment property and NO strings for your S. It IS a big world out there and why restrict your kiddo – possibly keep him from a dream job and let him try his wings a bit? We are hoping our kids will live close when they settle but are happy they are spreading their wings a bit. I’d rather they try out things now, when they are single and have no debt than down the road when they may have dependent and other obligations–just more food for thought.

Buying the investment property may make it difficult for you to help your S when he needs help with a down payment, as it may take some time to sell your investment and prices may have fallen.

19

I would NOT buy this with your son. What happens if he wants to move elsewhere…and you don’t want to sell this place? If he wanted to buy another house, he would already have this portion of ownership as a debt.

If he wanted to sell, would you let him, and how would you divide the proceeds of a sale?

Figure this all out before you enter into joint ownership…with ANYONE.

20

Absolutely do not buy a house in his name. That’s crazy. Who knows what he’ll do. After we got married we spent five years in Germany. Then we rented for six months until we figured out where we wanted to live and what we were looking for. Townhouses have pluses and minuses, but we decided we wanted a stand alone house. What our parents did do and was a big help was to help us with the down payment. We had a lot saved, but thanks to their gift we were able to put 20% down and avoid mortgage insurance. When we outgrew that house we were able to move up. Again our parents helped by “renting” our house for a month so we could do some necessary renovations on the new house. (We couldn’t get a bridge loan and the bank didn’t think we could afford two houses at once.) But whatever you do, let your son make his own decisions. You can let him know if you can offer financial help, but its up to him if he wants to take the help or not.