Should I buy an old house or new condo??
Should I buy an old House or new Condo??
OR,
Condos. What they don’t want you to know.
Most people know renting is not a way to create financial independence. There is no capital gain paying someone else’s mortgage. Certainly getting into a condo is a first step to the real estate market, but a detached house will always be the highway to capital gain in real estate.
Why?
“My house went up $100,000 in the last 5 years”.
Actually, No it didn’t. Your lot went up $100,000. Your ‘house’ actually depreciated! A house is just a car parked on property. When did you hear of a car appreciating in price? They’re making lots of cars & houses. They’ll always meet demand- That’s business. But property is finite--- they’ve stopped making it on this planet!
With a condo the land component is smaller so the condo doesn’t go up as much. A $250,000 condo might have a land component of only $50,000. If the market goes up 10% the condo goes up $5000. An old house that’s $500,000 might have a lot worth $400,000 & it will go up $40,000. So twice the price & 8 times the profit.
Condos appeal to our appetite for newer, for glitz that’s “easy”. Developers know this and appeal to it in their “lifestyle” marketing. Granite counters, stainless steel appliances, low down payments, low monthly payments, etc.
Buying an older house doesn’t have this glitz appeal and requires maintenance and a bigger down payment. A basement suite can help with monthly payments. There are no strata fees & assessments and you do get your own yard for kids and pets. It’s not as “easy” but it is a much better real estate investment.
So sure, buy a condo, it's a start & it’s better than renting---- but get into a house as soon as you can if you want to build real equity.