We’re moving! We are putting our condo on the market and moving to our rental duplex next month. It’s not a huge change because we’re moving just 2 miles away and the size is about the same. However, this is causing all kind of anxiety for Mrs. RB40. She hates moving with a passion. Luckily, she’s going along with it this time and she’s been doing the bulk of the packing and organizing. I really hope this works out because this move is mostly my idea. Today, I’ll share my thought on moving from a condo to a house.
Duplex recap
Here is a quick recap of this duplex. We acquired this duplex in 2014 with the 1031 exchange. We sold our old rental home and put the money into this duplex to defer capital gain tax. At the time, I planned to move into the property in a few years so we can take advantage of the home sales exclusion rule. Basically, homeowners can sell their primary residence and avoid paying taxes on $500,000 (for married couples) of the capital gains. This is a big tax break if the value of your home increased over the time you live there. We’ll still have to pay taxes on the depreciation taken when we sell, but that’s another story. Anyway, we purchased the duplex with the goal of moving into it at some point.
Now it’s 2019 and I’m ready to move. Why now? There are many factors. I’ll go over them and list the pros and cons of moving from a condo to a house. I’ll also figure out if this move will help us reduce our monthly housing expense. It should, but I haven’t crunched the numbers yet. BTW, we’re moving into one unit of the duplex. Currently, the other unit is still rented out.
Why move this year?
It’s always difficult to move so we’ve been putting it off. However, this year is the year we need to make the move. Here are some reasons why we are moving and consolidating our properties.
- The real estate market is softening. I think we need to sell our condo while we can. If we wait any longer, the condo market will soften even more. Like many cities, Portland had a construction boom over the last few years. There will be many condos and apartments coming online this year.
- The interest rate is going to keep rising. It’s still very low historically so we’d better sell now. Homebuyers might be less willing to buy when the interest is higher.
- The landlord laws have been getting stricter in Portland. For example, landlords must pay the relocation assistance ($2,900 to $4,500) if they raise the rent more than 10%. Also, there’s been talk about putting a cap on rent increase.
- Our tenant is moving to a bigger home. The timing is just about right.
- We need to simplify our investment. I’ll have to spend more time in Thailand to help my mom and Mrs. RB40 doesn’t want to be a landlord. She had to replace a GFCI outlet while I was gone for 5 weeks. It was a debacle and I’m never going to hear the end of it.
- The stock market has been quite volatile. The US probably will see a recession sooner rather than later. It’ll be a lot more difficult to sell a house in a recession so we’d better do it now.
These are the reasons why I want to sell and move. We’re happy in our condo so we didn’t mind the status quo for a long time. However, it is the time to get going. Who knows what the housing market will be like next year. I definitely don’t want to be stuck paying multiple mortgages.
Pros of moving to a house
We lived in our condo since 2007 and it’s been pretty good. We have an awesome view. I’m really going to miss that. Also, the condo is centrally located so it’s very convenient. However, I’m looking forward to moving into a house too. Here are the pros of moving to a house.
- Backyard – Yay, we’ll have a backyard. RB40Jr is so energetic. He runs around our condo and shoots the basketball all the time. It’ll be nice to have a backyard so he can go out and play.
- Basement – The size of the living area is about the same, but we’ll have a big unfinished basement to store stuff. Eventually, we’ll remodel the basement and increase the living area of the home.
- More walkable – The duplex is located in a more walkable neighborhood. There are many restaurants, coffee shops, bars, and grocery stores in that area. Hopefully, we’ll get out more often. Now, we rarely go out after we get home.
- Better community? – The duplex shares a backyard with 3 other houses. Hopefully, we’ll become a part of the community there. There isn’t much of a community at our condo. Everyone is entrenched in their unit and we rarely talk.
- No HOA – This means fewer rules and regulations. We can remodel the kitchen and plant whatever we want in the yard.
- Better price appreciation – Disappointingly, the price of our condo hasn’t increased much since we moved in. Of course, we purchased at the height of the housing bubble so it’s somewhat understandable. However, I still think the house will appreciate more than the condo.
- Noise… – Usually, this is a big complaint about living in a condo. We’re surrounded by other units. However, it hasn’t been too bad for us. Our building is made from concrete (mostly) and the disturbance has been minimal. About 5 years ago, we had a neighbor upstairs that played loud music at 9 pm before going out on Saturday night. But that was pretty infrequent and he’s gone now. The house should be much better. Our renter is a professional and he’s a reasonable guy.
- Size – The size of the living area is about the same, but eventually we’ll have more space. We’ll remodel the basement and add some living area there. Also, our tenant will move out eventually. Once he left, we’ll have plenty of space. I might turn the upstairs unit into an Airbnb rental, though. We’ll have to evaluate the situation later.
Cons of moving from a condo
There are some disadvantages to moving from a condo as well. We enjoy living here and it’s hard to change. That’s why we stayed for so long.
- The View – We have a spectacular view of the Willamette River and Mount Hood from our condo. We have the privilege of seeing the sunrise every morning and it always lifted our spirit. This view makes a huge difference in a rainy city like Portland. In a house, we’ll just see the rainy street with gray sky above. In the condo, the view is beautiful even when it is raining. I’ll really miss this incredible view. This is the main reason why I was reluctant to move.
- 1 bathroom! – Unfortunately, our unit will only have one bathroom. I don’t think it will be a huge deal, but who knows. It’s not like we spend a lot of time in the bathroom. We’ll just have to manage our bathroom time more efficiently and leave the door unlocked… Eventually, I plan to finish the basement and add a bathroom down there.
- No dedicated parking spot – This house was built in 1890 and there wasn’t a need for a garage back then. I assume the residents took public transportation or just park their carriage in the backyard. Maybe there was a carriage house back then, but the lot has been subdivided and built over. Anyway, we’ll have to park in the street. Mrs. RB40 is unhappy about this because she needs to work on her parallel parking skill.
- Maintenance – At the condo, the HOA handles the maintenance outside of our unit. At the house, I’ll have to handle everything. Well, I’m already handling everything because it’s a rental property. It won’t be a huge difference for me.
That’s all I got for the pros and cons. These aren’t big factors that swayed us to move or stay. It’s really a move with an eye on the future. Eventually, we’ll have a bigger living space and some money on the capital gain tax. This is a long-term play that should pay off later. In the short term, I’m pretty sure the move will reduce our cost of living.
The finance of moving into a house
Now, it’s time to crunch the numbers. This is a little tricky because it’s a duplex and one unit is rented out. I’ll assume the rented unit will pay 50% of the mortgage, property tax, and other shared costs. I’ll add a 3rd column for after our tenant moves out. We’ll assume 100% of the housing cost then.
As I suspected, living in one unit of the duplex will reduce our monthly expense by a good amount. However, the monthly housing expense will shoot up once our tenant leave. That’s in the future, though. I’ll worry about it later. For now, the number looks good to me. The only thing I didn’t add here is entertainment. We’ll probably spend more money on entertainment after we move to this more walkable neighborhood. There is a great ice-cream shop just a block away. It’ll be much easier to eat out too. There are a bunch of great restaurants in the neighborhood. I’ll have to keep an eye on that expense and try to keep it down.
Lastly, our rental income will drop significantly. This reduction will be a big hit for our passive income. However, we’ll get some cash infusion from the condo sale. I’m planning to invest this money in dividend stocks and real estate crowdfunding. There are a lot of moving pieces here. I’ll have to wait and see how it goes.
Okay, that’s the summary of our upcoming move. I’m hopeful it will work out in the long run.
What about you? Have you moved from a condo or apartment to a house? Was it a good or bad move?
*If you’re a renter, it’s a good idea to have renters insurance.
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
Latest posts by retirebyforty (see all)
- Make Your Partner Happier by Being Cheap - March 26, 2023
- 4 Ways to Avoid The 10% Early Withdrawal Penalty - March 22, 2023
- Goodbye SAHD FIRE, Hello Barista FIRE - March 19, 2023
- Don’t Stop Investing When SHTF - March 15, 2023
- Pack Your Bags for A 3-Year-Cruise - March 12, 2023
Thanks for sharing your experience! I am currently renting in a condo unit and I’m planning to buy my own property soon. I am honestly still undecided if I should buy a condo unit or a house. I’ve been living here for years, and I didn’t encounter any issues, and I use the amenities quite a lot. I feel like if I move into a house, it will be a big shift for me and I don’t know if it’s the right choice. I am leaning toward buying a unit from The Spencer for now, but I’ll still consider buying a house.
I like how you explained that in a condo all the units are close together making noise a problem but in a home, your neighbors are a good distance away. My wife and I are debating on moving into a condo or a house. Yesterday we had an in-depth conversation about it which is why I am looking up the pros and cons of living in a house over a condo. I don’t like noisy neighbors so I think for me, a house seems a better choice as of right now.
My wife and I are graduating from college soon, and we want to reward ourselves by purchasing a small home. I’m glad you explained that one of the advantages of living in a home is that the regulations that need to be followed are fewer in number. We will definitely keep these tips in mind as we look for a neighborhood that will let us do our own yard designs for our home.
I’m pretty sure you can lower your water/trash estimate for whole house. I don’t see your family doubling the amount of trash and water used. Also can tell you that w/ 2 teens+2 adults taking daily showers, we aren’t paying that much (but also have good low-flow stuff installed).
And property taxes after a permit – yeah, you are right to be scared of that one. Ours def. went up even though no s.f. or layout change – just a refresh to 50 y.o. baths.
When we left an apartment/condo (what’s the difference??) we missed the garbage chute and massive parking spots we had lucked into. I also missed the amazing insulation of having our unit surrounded on all sides – we had almost non existent heating bills!
Here’s to a good new year!
The insulation was great at our condo too. We’ll spend quite a bit more on heating at the house. We’ll see how it goes.
After living in Europe for over twenty years, I don’t get homesick very often, but reading about your TWO homes in Portland made me wish you’d give me one! I had a similar view to yours when I lived in the PSU dorms. From your description, I can picture where your duplex could be. Whah! I want to go home to Portland!
The nice views are harder to get now. There are lots of new buildings that block the view. PSU is such a cool college. The location can’t be beat. There are so many things to do in Portland. I lived on the Park block on campus in 1999. It was pretty great.
Our duplex is in the NW area. It’s pretty awesome. 🙂
Hope you can visit Portland soon.
I moved from a condo to my house about five years ago. The only two things I miss are the view and the garbage chute. I love the huge maple trees out front that are my new ‘view’, knowing my neighbours, having separate rooms to move between, and having sole say over what gets upgraded or maintained. That last bit was actually the reason for my move, as the condo building got older it became clear that having a bunch of non-professional owners (mostly medical professionals who didn’t know how to do a simple RFP) trying to manage its decay was a disaster.
I’m really going to miss the view. It made gloomy Portland much more bearable.
Maintenance is another reason we’re moving. The HOA keeps increasing and we still have quite a few big projects to deal with.
Oh man, 1 bathroom??!! That would be a hard one for us. That’s almost a deal breaker for Mrs. RoG even for a week or two in an Airbnb! But we have 3 ladies in the family so getting ready, showering, washing hair, etc takes a total of several hrs/day. We have 3 bathrooms and occasionally use all 3. It’s a nice luxury to have (and our daughters clean them!).
Wow, your daughters clean the bathroom? That’s awesome.
Yes, 1 bathroom will be an adjustment. Let’s hope we can handle it for a few years. I don’t think it’s a huge problem right now, but it will be when our son is older.
Hi Joe, moving is hard, no matter how close the next place will be. Take your time, and don’t stress yourself out. I hope your condo will be sold quickly at a good price, and your new place works well for you folks. Take care.
Those are good reasons to sell the condo! In Seattle the market seems to be heating up again (not for condos specifically, but houses again). We live in a house now but I miss apartment living. If it was good for very young kids that like to run….I’d pick a condo again just to save that maintenance.
I know moving is a pain when you are all settled ( and with an nice view like that,) but this sounds like a good move. Aside from the financial aspects, it will be nice having one less property to manage. Especially when you are traveling.
Good luck with the move and sale!
Having a backyard is awesome and you can’t beat the savings on no HOA! That’s one thing I wish I would have known to pay a little more attention to when buying my house. Somehow $90 per month in hoa for a community pool that I never use just doesn’t seem worth it!
That’s too bad about the HOA. We have a pool at our condo and used it all the time in the summer. It’s great for kids.
No pool at our new place, though. We’ll have to go to the community pool. 🙁
It sure does look like you’ve thought of it all. Well done to you.
Hopefully the move doesn’t give you too many headaches.
I don’t envy you Joe! We’ll be moving and downsizing in the next year in order to be rid of our mortgage. It’ll be a big plus but boy is that a hassle! Wish you well in the move. I enjoy your work.
Glad to see you’re getting out of those HOA fees, they can be a killer. Best of luck with the move!
You have a lot going on Joe. Good analysis. I did a similar one when we did our last move to understand the economics. Good luck! Tom
I think the idea of more space as RB40jr grows could be one of the big benefits. I’m curious how life is going to be when we have teenagers (and we’ll have 2).
I’m also curious about the passive income numbers. I know you said that you’ll have to see what happens, but I would think you’d have an idea of what you’d sell it for, what you’d get after commission, how you’d invest it, etc. You wouldn’t have all the exact numbers, but an estimate would be interesting. Then again, I’m always interested in a stocks vs. real estate comparison (even if they are different levels of passiveness).
I’m not looking forward to a teenage RB40Jr at all. We’re already yelling at each other a lot lately. It will be a difficult period for everyone.
We’ll probably collect about $200,000 after selling 2 condos. At best, we’ll make 5% so it’s not much. $10,000 in passive income. That will be less than rental income. Our cost of living will decrease so I think it probably will even out.
Seems like good timing Joe. The condo market is a tricky one and tends to see big swings to the positive and negative. Houses are a bit more stable, and I think you’ll do better there.
I hate moving too, but sometimes you just gotta do it! Our move is probably going to be in a couple years and I’m not looking forward to it.
My realtor friend just told me that the condo market already softened in 2018. I really hope we can sell in a reasonable timeframe.
Moving really is not fun. Where are you moving?
I’m with Mrs. RB40 on parallel parking hehe. I haven’t done it in years and def am not a fan.
The move sounds exciting though. It’s perfect timing. It doesn’t hurt to have lots of entertainment places where you live 😀
She doesn’t drive much so I don’t think it’ll be a big issue. She just needs some practice. 😀
Another advantage of a house… you can now get a dog!
Unfortunately, RB40Jr doesn’t like a dog. What a strange kid! That’s alright, though. We’re really cat people. Dogs are so much more work. 🙂
Sounds like a very good decision overall. But honestly I’d really hate to lose that wonderful view and a dedicated parking spot,
Those are what we’ll miss the most. The view made a huge difference for us. The gloomy weather wasn’t as depressing with this view.
hi, Joe:
I am trying to verify this: I am not sure if you can claim 100% of primary residence tax exclusion over duplex after you moving in converting it from rental to primary. You already had it for 5 years as rental, say you will live in as primary for another 5 years, then only 50% (Qualified Use?) of your capital gain can be used over tax exclusion with 25% depreciation recapture tax comes first. Since the duplex was 1031 exchanged into you will probably carry over depreciation from your relinquished property, right?
By the way, what’s your plan for your Condo when you move out? is it used as primary residence only?
Thanks
You are correct. The tax benefit is now prorated. The calculation is made more complicated because we also used to live in the previous home.
1999-2007 – old home was the primary resident
2007-2014 – old home was a rental
2014-2019 – exchange old home to duplex via 1031 exchange. duplex was rental
2019 to ? – duplex is half rental.
The calculation will be crazy.
Maybe we’ll do another 1031 exchange into a property in Hawaii later. The only way to escape capital gain tax on a rental is to pass it on after you die. The price gets reset then, I believe. It’s complicated.
We’re putting our condo on the market after we moved. It was used only as a primary residence.
Sounds like you’re making a good decision for yourself financially, especially if you can sell off that condo for net-even or better and get the basement done with minimal trauma.
I was thinking about the old rhetorical question the other day “would you rather live in the nicest house of an average neighborhood, or an average house in the nicest neighborhood.” Seems to me like the latter is the best path to FI/RE. You’re trading in a parking spot, a beautiful view, and multiple bathrooms for a place that’s less expensive overall (assuming you maintain tenants or you basically break even) where you decide what does or doesn’t happen inside, a bustling neighborhood with opportunities to meet people, and a place where Junior can run free. Seems like a no-brainer, as the bigger your network of people the more opportunity there is to save on life-enjoyment.
I hope it sells quickly too. The basement will be a long term project. We’ll probably wait a few years to get it done. The problem is that remodeling will trigger a property tax assessment. That’s bad news. Maybe I can get it done under the table somehow.
I’m onboard with the average house in a nice neighborhood theory. The house next door sold for $1.1M recently. Our house is not as nice, but I hope the price will rise in the future.
It’s your house, go ahead and do work on it. Nobody should be allowed to come into your house and “inspect”. Now if you were moving plumbing around, that may be another story. Just research and make sure everything you do is up to code, not rocket science.
I would waterproof that basement before sinking any $ into it. And I just read about a new upflush toilet that doesn’t need a traditional sewer line dug into the floor, it goes straight out the wall-the Sanicompact by saniflo.com. Doesn’t even require a tank!
More info than you ever needed/wanted to know!
I heard that pretty much any permit will trigger an assessment. Adding living area will increase the property tax significantly. Our neighbor pays about twice as much as we do. We need to avoid this. It’s like throwing money into the sea. We already pay plenty of taxes.
Yes, we’ll work on waterproofing the basement first. I’d like to pour concrete all around the leaky area (outside.) That should channel the water away.
Sounds like a win/win! My house is only 98 years old rather than 129, but our basement ceiling is too low for us to ever consider finishing… I’m glad you can do that. When I was 13 my folks had finished their basement enough that I moved my bedroom down there and it was nice to have a place to myself that wasn’t directly across the hall from the rest of the family; it might be nice for RB40Jr to have that option down the road.
Good luck with the transaction and move!
I think our basement ceiling is 7 feet, but I’m not sure. I’ll need to double check. It looks like we’ll be able to finish it, but I’m short. I think RB40Jr would love to move down to the basement when he’s a teenager. Thanks!
Exciting move! Always feels good to sell/make a move after the tenants leave. It just feels more right.
You said you bought the condo at the top of the market? What did you buy it for and what do you plan to list it for?
Interest rates have moved down, and buyers are trickling back in as a result. I don’t think mortgage rates are going much higher.
Sam
We purchased it for $369,000 and I want to list it at $389,000. I need to talk to our realtor first.
We put $22,000 to remodel the kitchen so maybe that’ll help. Great move from the Fed. I was surprised to read that.
It’ll be a good time to buy in Honolulu too, right? Good luck!
I really hope you got much more. Yes, Honolulu real estate where I’m looking has been soft for literally three years now.
Prices are down about 20% from when I first looked in 2016.
I think one bathroom is going to be a problem though buddy. Try to look into building another bathroom ASAP.
Another great post, can’t wait to see the comments pour in.
First off, poor Mrs. RB40, between the moving and the GFCI outlet, she needs a tropical island escape-by herself! Ha,ha.
Smart thinking, smart move, good timing. Have seen your condo, it’s lovely, and the view will also bring you a quick sale, hopefully.
You’ve got good numbers running on the duplex vs. condo. Your home maintenance won’t be that high, you padded it for emergencies, right? Still a good thing to do. Sounds like you have a decent (professional) tenant as well, another plus for you.
I need to Marie Kondo-ize my place. Baby steps!
About the ice cream shop down the street=trouble! Maybe one scoop a month, for Jr. only!
I hope so too. We just need to find the right buyer who values the view as much as we do. It’s been great living here.
The home maintenance will be high for a few years. We need to paint the exterior, fix the deck, replace old equipment, and other things. Hopefully, the maintenance cost will stabilize in 3-4 years. But then we plan to remodel too. That will increase our housing expense quite a bit. We’ll see how it goes. Thanks for your input.
I made the move from my studio to our current place at the beginning of 2017. I went from 400 square feet to 950 square feet. Though oddly enough, the storage is about the same. No complaints though, because it’ll make life easier when we use the KonMari system to get rid of our unneeded junk. Less stuff = less to give away.
We’ll be making a move from our current duplex to a bigger house when we decide to buy our first place together. We will sell my condo before then to raise some cash because a large amount of condo supply will hitbthe market next year and after. This summer will be primetime to sell in my mind.
Good luck with the move. I heard from a realtor friend that the condo market in Portland already softens quite a bit last year. Hopefully, we’ll be able to sell in a reasonable timeframe.
Depending on how big the yard is, etc, you have to also factor in yard work and the equipment needed to maintain it.
I can see why you are going to miss the view, that really is something special from the condo.
You probably will have to have more discipline as I am sure RB40jr will want to visit that ice cream shop constantly. Will be bad for the wallet and waistline for you if left unchecked.
The backyard is pretty small so not much work. The only thing we really need to do is to collect the leaves in the fall.
Yeah, the ice cream, donut, bars, and other shops will be very tempting. We’ll have to keep an eye on our entertainment expense.
Congrats Joe! The obvious huge savings is not having the $500 HOA, but that’s what also covered much of your condo maintenance. If you can keep maintenance costs down you’ll be way ahead for sure.
The maintenance cost should be reasonable. However, Mrs. RB40 wants to remodel quite a few things. The kitchen is from the 80s and it needs a nice facelift. The basement remodeling will be even more expensive. We’ll have to figure out how to fund the remodeling.
We found that having a garden/yard when our kids were at home was big plus. To be honest, looking at your list of pros, it seems to be a sweet deal.
We’ve gone the other way over the past few years, moving from a house to an apartment/condo (I thought Americans and Brits spoke the same language – actually, in the UK, they normally call an apartment/condo a “flat”!). Our new apartment is on the ground floor so we get a garden again, which I think is awesome as it adds a bunch of extra outdoor living space.
That’s what we thought. We can send him out to play in the backyard with the kid next door. It should be good, but we’ll see.
Thanks.
Good luck with the transition from a condo to the duplex. One of the added benefits of not living in a condo is getting rid of that pesky condo fee. The fact that you have no HOA now is just icing on the cake! Love it.
The condo fee is quite high, but it is very convenient to avoid exterior maintenance.
We’ll have plenty of maintenance work to do with this old house.
Joe,
Sounds like you’ve got everything figured out. I’m sensing some excitement here. I’m super happy for you guys!!
Personally, I wouldn’t ever live in or own a home. It’s not even about money. Just not a lifestyle I’d want. Moving would be easy for me, though, since I only own two small bags of stuff. ?
Wishing you guys good luck with the change. I hear you on missing that view. It’s pretty spectacular. But it seems like this is a good call for you guys with the more frequent visits to Thailand and all of that. One less thing to worry about when you’re over here (for both you and the Mrs.) will be a relief.
Best regards.
Thanks! I usually get restless every 7-8 years or so. My parent moved every few years when I was a kid. This 11 year stretch has been the longest I stayed in one home. Moving is stressful for us. We have a lot more than 2 bags. Probably less than the average American family, but still plenty of stuff to move. I’m really going to miss this view.