Sunday, June 24, 2007

Condo versus TIC

When I see large, historic renovation condo projects like 74 New Montgomery, with (admittedly New York tiny) studios list priced at $379,000, I have to wonder whether the TIC market has gotten a bit ahead of itself.

Prices being the same, would I opt for a condo with less square footage versus a roomier TIC? I suppose it depends upon layout and location.

Financing is a factor. Right now over a five year span buying a TIC is going to cost about $10,000-$12,000 more in mortage payments, on average $200 more per month. Longer term buyers will likely need to refinance their TIC mortages more frequently than condo owners, because no 15, or 30, or even 7 or 10 year fixed rate mortgages are available for TICs. That refi in year five means you will rack up some significant bank and title company costs down the road. Figure another 2% of the money you are borrowing, or $10,000 on a $500,000 mortgage.

But of course there is the sanity factor. Some individuals (and couples) live just fine in "ship's quarters." Others don't. $200 per month is a fair price to pay for daily sanity.


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