Stop renting and start investing is more than a cliche. It’s smart money management especially if you have a low budget. Why? Because you’ll be paying yourself instead of someone else.
What Do Tenants Want
Since this will be a long term investment, it’s important to choose with a tenant in mind. It should rent quickly because you don’t want months of vacancy in between tenants. Additionally, easy to maintain is a must. This is, after all, your first investment so begin with something manageable.
Here’s what tenants tell me they want in a small condo apartment:
- A good commute to NYC.
- Close to shopping – even better if it’s walkable
- Usable space is important with nice bedroom size
- Available laundry facilities
- Good storage if possible
- Move in updated condition
- Parking is a plus
This all boils down to convenience. Everyone works hard so free time is limited. As a result convenience is tops on a tenant’s list typically.
Englewood Estates at 63 W Hudson Ave
Let’s start with a 1 bedroom condominium apartment in Englewood NJ. I’m using Englewood Estates as an example at 63 W Hudson Ave. It should come to around $190,000 for an updated 1 bedroom condo apartment there.
63 W Hudson Ave is typical of small garden apartment complexes. It was converted from rentals to condominiums. As a result heat and water are included in the monthly maintenance. Additionally coin operated laundry rooms exist in building basements. While there is a waiting list for parking, spots are available on W Hudson Ave.
Englewood Estates is a short walk to NYC express bus commuting. You’ll pass by a bagel store, luncheonette and dry cleaner along the way. Coming home Walgreens and other stores will be open. Check off items 1, 2, 4 and 7.
Englewood as a location is terrific. This is a highly diverse, vibrant city with a lot to offer. It’s one of the most popular Bergen County locations. You’ll find all sorts of stores, restaurants and even a live theater downtown.
Stop Renting and Start Investing
Because it’s realistic, we’ll use 3.25% for the mortgage rate. This comes to $435 per $100,000. Maintenance should be $283 per month, taxes at $2,800 or $233.34 per month and $650 for insurance ($54.16 monthly) Let’s total it up:
- $283 + 233.34 +$54.16 = $570.50
- $190,000 mortgage = $826.50
- PMI = $61 per month (mortgage insurance for less than 20% down)
- $1,458 monthly mortgage
How much are you paying in rent? I’ll bet its more than this. So what’s the catch? You buy less space than you can rent and closing costs.
Saving Up = Winning
After 30 years of renting you have nothing. Owning gives you $190,000 free and clear. Stop renting and start saving is the right idea for you.
Smart real estate investing creates wealth and financial security. This 1 bedroom condo gives you so many future options. You can sell it at a profit in the future, use it for additional income or trade up to a 2-4 family.
Here’s my educated guess on what it will come to:
- $6,65o down payment (3.5% – the minimum for most)
- $1,500 Attorney Fee
- $500 Home Inspection
- $2,200 Title Search and Insurance
- $2,000 Banking Fees
- $650 Homeowner Insurance
- Total $13,500
I based this on a renovated 1 bedroom condo at 63 W Hudson Ave. These units have been renting for $1,550 per month. Live in it for several years while rental prices rise moderately. As you’re doing this, save for a down payment on a house.
Stop renting and start investing. For young, first time home buyers who are on a low budget, its possible and it’s oh so smart. Over the course of 30 years, you’ll be so glad you did.