mortgage for investment property (insurance, loan, financial, loan)

[planning_ahead]

have mortgage on primary residence - condo - have 35% equity... (would have had 60% equity had the housing 'hickup' not happened) mthly mtg comfortable - mortgage would be approx 50% of rental potential (not including hoa, or insurance etc) my current debt to income ratio is about 20%

my patio is shared with the neighboring condo... current resident is wonderful, quiet, private etc... HOWEVER, have friends who have shared patios with neighbors from hell... the neighbor in question is 85 years old... as time passes the reality of the property coming for sale looms closer. I know that there is a reverse mtg on that condo - done when RE was much higher... have no idea who holds that mortgage.

I want/need to purchase that condo... to control who the tenant is... with the (dream/fantasy) of someday blowing the wall out that separates the two units...

so, have heard that better to tell bank i will rent my current home and move into the other condo as my principal residence... is that really worth it?

what do they look at?
what do i need to plan for the inevitable...

I have been throwing all 'extra' money at my mortgage with the intent of having it payed off in 6 years... odds are the property will be up for sale before i have paid my mortgage off.

should i keep knocking mine down?
should i sock away the money to use for the condo purchase?

i should add i have 10% down right now if i needed to act immediately

any suggests...thoughts, warnings would be greatly appreciated.

[chet everett]

If I read this correctly you are asking if having even greater equity is better than having cash-on-hand to buy adjacent property -- simple answer : you are in a better position to have CASH.

Now the firm that holds the reverse mortgage on the adjacent property may be amenable to directly selling the property to you BUT odds are strong there are other parties involved. Woman probably has kids or other heirs. Might be wise to have a conversation with her or them before things are out of your control...

Overall I am not a fan of condominiums. Too much iwill always be outside of your control. Even if you should acquire adjacent unit you may not gain any advantage as far as HOA elections and such. Rare case where this is some awesome pad (Hawaii...) you still run risk of owners above you being clomping Clydesdales or other annoyances. In a desirable Manhattan co-op it might make sense to own two adjacent units and combine them to double space, but this does not sound like that kind of situation.

[BitterlyHopeful]

Also: Check your HOA documents to be sure they will allow you to do the combining of units (many HOAs prohibit such things).

And be prepared to have a VERY good explanation for any lender that you try to get an "owner occupied" loan from as to why you want to buy the condo next door. Most will assume that you are getting the new place as a rental and trying to getting the less expensive loan for financial gain. You would need to be able to say something like "newly remodeled, sunnier location, less noise" or something along those lines.