Expert: Hans Weber, Licensed Broker Associate - 1/6/2008

Question
Good day!  I looked at a Condo yesterday in Central Islip, NY for 1 bed / 1 bath at 138,000.  There last sale last month for the same unti sold for 153,000.  Here is the issue:  I KNOW with in 3 - 5 years I would have to sell this unit to move, to get a 2 bedroom.  At this time I coudl NOT afford a 2 bedroom in that area.  I am very afraid with the market, that I will buy this now, and not be able to sell for what I bought later.  What do you think?  THANK YOU!

Jade

Answer
Hello Jade,

Thank you for the question.

That is a question most first time buyers struggle with.  Will my real estate investment go up?

Well, the question is really, is it a safe investment?

Yes it is.

You can't afford a 2 bedroom, only a 1 bedroom now.  The one you want to buy is already priced 10% below the last sale so it seems to be a good value.  You want to know if that will be the same in 3 to 5 years.

I cannot predict if values will go up or down.  But, when you think about it that does not really matter.  What really matters is the relative difference between the price of a 1 bedroom and a 2 bedroom and in fact of all real property.

Your one bedroom is now 138 and a 2 bedroom is probably 170 or 190ish.  You are worried that if your 1 bedroom goes down in value to 100k will you be able to buy the 2 bedroom for 180k?  Well, the 2 bedroom won't be the same price anymore either.  It too, will go down in price proportionately to 140k so the difference you have to make up will be the same.  The same holds true if your condo's price goes up to 200k the 2 beroom will be 260k.

In the meantime you grow your equity, have fixed payments and have tax benefits and pride of ownership and won't be paying out rent money which goes up every year.

I hope this makes sense to you the way I explained it.

Buy it and enjoy your new home.

Hans