Saving For Condo Down-payment and Not Buying Car - Am I On Right Track ?
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Thread: Saving For Condo Down-payment and Not Buying Car - Am I On Right Track ?

  1. #1
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    Saving For Condo Down-payment and Not Buying Car - Am I On Right Track ?

    Hello,

    Little Context Info About Me : 24, Single, Toronto, started working couple of months before, salary ($45k) and currently live with roommates..so rent is just $300/month

    I also have about $12k in GICs savings (saved it doing part time jobs while in college), about $2k in emergency cash savings and $500 in ETFs.

    When I eventually move out and rent my own condo / apartment, it would obviously cost me anywhere from $1100-$1300 per month at-least. Thus, I thought it would be better to save as much as possible for Condo Down-Payment which would be $60k (20% of $300k) and try to own it. I know condo will have very high maintenance fees but I am not in a position to save for house down payment which could be at-least $120k-150k (20% of 600k-750k).

    Thus my plan is to stay with roommates for next couple of years, use public transit to save on transportation cost (I have a long commute to work but getting a car won't reduce it drastically) and save as much as possible for $60k downpayment.

    I have $12k currently, Parents have agreed to chip in another $15k for down-payment. Thus, $27k is total with me currently. If I am able to save $33k in next couple of years, I can potentially make down-payment for condo.

    Is this a right financial track for me to go on ?

    Thanks for any help!

    Last edited by Gujju; 2017-06-07 at 10:24 PM.

  2. #2
    Senior Member tygrus's Avatar
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    Umm, to put it bluntly...nope. Never buy a piece of real estate without land you control. Condo doesnt meet that criteria.

    You are only 24, why the rush to get into debt. People usually dont buy until they are 30 and more settled. Is the marketing getting to you...FOMO?

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    One thing I'd say is to beef up your emergency fund while you're saving for that down payment. $2k is too small. Are you expecting any major salary increases in the coming years? 45k/year is about $3k/month after tax.. a mortgage + condo fees would eat up over half your income as it is right now. Way too high for sustainable, comfortable living in my opinion.

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    Quote Originally Posted by tygrus View Post
    Umm, to put it bluntly...nope. Never buy a piece of real estate without land you control. Condo doesnt meet that criteria.

    You are only 24, why the rush to get into debt. People usually dont buy until they are 30 and more settled. Is the marketing getting to you...FOMO?
    I think it as if I am paying $1200 per month for rent or $1200 per month for mortgage, at-least I am slowly owning a real estate in 2nd case.

    House prices are not in my reach currently and I don't think so they will be in my reach even after 6-7 years. I get your point about owning the land. Do you think I should hold longer and may be go for a small freehold townhouse instead of going for condo ? I am not sure even if I wait for 4-5 years, I would be able to save for 20% downpayment for freehold townhouse.

    Thanks!

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    Quote Originally Posted by DollaWine View Post
    One thing I'd say is to beef up your emergency fund while you're saving for that down payment. $2k is too small. Are you expecting any major salary increases in the coming years? 45k/year is about $3k/month after tax.. a mortgage + condo fees would eat up over half your income as it is right now. Way too high for sustainable, comfortable living in my opinion.
    I am expecting a salary increase..may be around $50-55k after 1 year and up-to $60k in 2-3 years.

  7. #6
    Senior Member tygrus's Avatar
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    I think you should rent and invest your money and get your popcorn out because there is going to be a good show soon.

    Seriously, make no sense to own a home until your job and life settle down. At 24, they havent yet. I would save as best as I could for another 5 yrs, then started getting more serious. Debt is an anchor and its easy to go underwater in a house.

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    Wouldn't invest until after crash. Would consider home that cost the least amount to live in no condo fees perhaps solar powered.

  9. #8
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    Quote Originally Posted by tygrus View Post
    Umm, to put it bluntly...nope. Never buy a piece of real estate without land you control. Condo doesnt meet that criteria.
    You are only 24, why the rush to get into debt. People usually dont buy until they are 30 and more settled. Is the marketing getting to you...FOMO?
    I agree with what you are saying regarding the preferred form of RE ownership, but I also recognize that there are thousands and thousands of condo owners across the country, and thousands of condos bought and sold every month. So I can't condemn it outright. Like owning any real estate, there are horror stories, but there also appear to be many who do just fine.
    Owning a condo is also a lifestyle choice - not one I would choose - but again, it seems to work for thousands of others. Elsewhere in the world I think it may even be the predominant type of RE.

    Stronger I think is your caution about locking yourself into RE and debt at an early age, particularly if your career & family life are not yet settled.

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    I posted a blog post about this very topic. Can't post links right now but if you go to danbk dot ca and have a look at blog posts, you'll see one about whether you should buy or rent a condo. In my opinion, this is a renters market. Hope this helps.

  11. #10
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    Quote Originally Posted by Dkogan View Post
    I posted a blog post about this very topic. Can't post links right now but if you go to danbk dot ca and have a look at blog posts, you'll see one about whether you should buy or rent a condo. In my opinion, this is a renters market. Hope this helps.
    Good writeup Dan, thanks for sharing.


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