WWYD: real estate question

[amberlyrose]

We were talking with our friends last night and they are buying in a new town home development. They're trying to decide what to buy that makes sense as an investment. The Denver market is going crazy and having a choice is almost unheard of right now (her dad owns the development, so she gets 1st pick). DH and I disagree on what they should do, they also can't agree, so I was wondering what ML would do. 

1-Big unit: 3 bed, 3.5 bath, 2 car garage, ~1800 sq ft. Middle unit, street facing towards a brewery, large roof top patio $495-510k
2-Smaller unit: 3 bed, 3.5 bath, 1 car garage, ~1600 sq ft. Corner unit, courtyard facing but busy road to the side, smaller roof top, $470k
3-Biggest unit: Same as big unit, but corner unit, also street facing toward brewery with busy road to the side, $575k but dad is offering 2% discount

[onesweetworld]

#2 option.

Why? It'll be an easy resell at a lower price point so more people will have the means to buy it. Over 575k for a townhouse seems crazy high. The old "Smallest house on the block" rules apply here! Also, if renting for a while they can have a more affordable rental price and cover most of their mortgage costs. It's still 3 bedrooms with parking.

[gummybear]

When you say investment do you mean profit when they resell or will this be a rental property?

[amberlyrose]

Aug 31, 2015 9:50:34 GMT -5 gummybear said:

When you say investment do you mean profit when they resell or will this be a rental property?

re-sell

[Deleted]

1 or 3 - in Denver I would think having space for both cars in the garage would be a bonus when the weather is crappy.

[gummybear]

#2

[janegold]

It's pretty hard to say without being familiar with the local market but without knowing anything else, personally, I'd do 3 if it's in the budget, or 2 if it's a stretch. I would almost always choose a corner unit over a middle unit.

Are they buying it for themselves or as an investment property? If the latter, they need to be sure that the market rents are high enough to cover their mortgage, taxes, insurance, HOA, etc.  (ETA, I see this has been answered.)

[housewife]

3 because I would prefer an end unit.

[ladystardust]

#2 but I would be bummed about only 1 car garage. Not bummed enough to pay the higher prices though.

[kris356]

#3 because I would want an end unit. But if that was off the table, I would say #1 because of the 2 car garage.

[amberlyrose]

So I say #2 because it's still a corner unit but 100k less than #3 and only 200 sq ft smaller
DH and her H say #1 because it's only 20k more but you get an extra car spot and bigger than #2, don't think the extra windows are necessary
Friend says #3 because dad is going to discount anyway and corner unit plus 2 cars.

[amberlyrose]

Aug 31, 2015 10:20:53 GMT -5 nursecramer said:

I would not buy an investment property from my dad's development. There are times when the best interests of either party will run counter to each other, and that's not a situation I would choose.

It's almost impossible to buy in Denver unless you have cash or pay way over asking. This is something they've fought over for awhile and decided to do in the end. 

[Deleted]

If I had to pick, I'd say the largest end unit. I think end units are more desirable.

[Deleted]

If I had to pick, I'd say the largest end unit. I think end units are more desirable.

[suzyp]

#1. No way would I buy something that only had space for one car - especially in Denver. I think #3 just sounds way overpriced and too big.

[gummybear]

Why is the father only discounting the biggest unit? IMO that might indicate that the units are 1. not selling well 2. overpriced. Not saying her dad is shady I am just wondering if there is a reason that's the only one he'd offer with the percentage off. I'd be leery. I'd ask the developers what units are selling the most quickly or are generating the most interest.

I'd never want to be in my most expensive house in a neighborhood, esp. when it is debatable whether or not the benefits are worth the huge uptick. And end unit is always more attractive, but that is a huge price increase from #2 to #3. A parking spot and 200 sq/ft to sacrifice an end unit would not be worth it to me (unit #1).

Also, in a townhome development, not everyone is going to need 2 car spots. You'll see a lot in single parents, single people etc. It's not like a SFH where MOST people will have two cars.

[amberlyrose]

Aug 31, 2015 10:27:57 GMT -5 gummybear said:

Why is the father only discounting the biggest unit? IMO that might indicate that the units are 1. not selling well 2. overpriced. Not saying her dad is shady I am just wondering if there is a reason that's the only one he'd offer with the percentage off. I'd be leery. I'd ask the developers what units are selling the most quickly or are generating the most interest.

I'd never want to be in my most expensive house in a neighborhood, esp. when it is debatable whether or not the benefits are worth the huge uptick. And end unit is always more attractive, but that is a huge price increase from #2 to #3. A parking spot and 200 sq/ft to sacrifice an end unit would not be worth it to me (unit #1).

Also, in a townhome development, not everyone is going to need 2 car spots. You'll see a lot in single parents, single people etc. It's not like a SFH where MOST people will have two cars.

Dad is discounting it because his daughter wants that one The units are about 90% sold just internally, but she gets first pick. They haven't gone to market. 

[lavender444]

My first thought Is to go with 1 or 3 but it depends on location. Where in Denver? Are they downtown? Is there decent parking options near the building? Is the neighborhood pretty walkable?

[ladyk]

2,1,3

You don't want to be the biggest in your development because that limits your resale. I would want a 2 car garage as I am assuming the 1 car only has a driveway big enough for one car. If you can park 2 cars wide, then that's different.

I would also not go for the biggest because if the market cools down, even with the 2% discount (which is not a lot when your daddy is the developer- A builder client of mine offered me a 25% discount on any of their homes back when I was working with builders), you could be underwater in a few months of a downturn.

[sonrisa]

It depends on what "end unit" means in practice. If the windows are just facing another close building v. open enough to get light and look through.

[amberlyrose]

Aug 31, 2015 10:34:01 GMT -5 lavender444 said:

My first thought Is to go with 1 or 3 but it depends on location. Where in Denver? Are they downtown? Is there decent parking options near the building? Is the neighborhood pretty walkable?

downtown but still decent street parking, very walkable but in an upcoming neighborhood, so safety could still be a concern. 

[amberlyrose]

Aug 31, 2015 10:40:20 GMT -5 sonrisa said:

It depends on what "end unit" means in practice. If the windows are just facing another close building v. open enough to get light and look through.

street facing and across the street there are zoning laws for only SFH, so no monstrous 20 stories going in to block light. 

[Redpoppy]

#2 if an additional deeded parking spot, otherwise 1.

[kris356]

Even if I only had one car, I would want the second space for storage.