New Job Opportunity - Rent or Buy?

[CRG]

Hope this is in the correct forum…

I’m 38, married and have three children with another on the way. My wife has stayed at home since the birth of our first child just over 10 years ago and has no plans of returning to work until our children are older. I’ve been working for the same company since 2003, which is located in the SF Bay Area. Due to the HCOL, it’s made sense for us to rent. I should mention that the company I work for is a niche company with no others like it within a few hundred miles, meaning that we’d need to leave the area if something were to happen to my job.

I’ve been presented with an exciting opportunity to work for a large and well-respected company, but the job is in Ohio, about 30 miles outside of Cleveland. Benefits to this job would include higher total compensation, lower COL and a new set of challenges career-wise, or so it seems. The downsides as I see them include moving away from family, leaving a job that is comfortable and relocating to an area with harsh winters and hot summers.

One of my primary concerns revolves around housing and whether to rent or buy. We are excited because, for the first time ever, we could actually afford a nice home. I’m not talking anything extravagant, but nice. My wife has a bias toward buying, as she’s newly pregnant and wants to feel settled. While I’m not crazy about the idea of moving and then moving again a short time later, I recognize there are some risks involved with buying (e.g. job doesn’t work out as planned). I should mention that buying is favorable to renting within this particular area, at least from a financial perspective.

Would appreciate your feedback.

[nereo]

First and foremost, I would run this rent vs. buy calculator for the area you are moving to in order to decide where the "tipping point" is for renting vs buying.

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

Then (if the equation favors renting) factor in the 'premium' you are willing to pay to own your own home over renting something of similar quality in order to 'feel settled'.

[mskyle]

How long do you think you're going to stay? If you hate the job and the new place will you still stick it out for at least three years or will you move back after six months?

Selling at a loss would be unfortunate but not the worst thing. Your worst-case scenario is not being able to sell the house when you want to move. Imagine having to make house payments for a year (or longer!) on a house that you're not even living in. The best strategy for avoiding that is to be careful what house you buy (less house than you can afford but a good house in a good area) and always keep positive equity in the house so that you can sell at a loss if necessary.

I'm guessing this is one of those markets where rental houses are way less desirable than homes for sale. There's nothing wrong with wanting a nice house. If you can manage the risk, go for it!

[CRG]

First and foremost, I would run this rent vs. buy calculator for the area you are moving to in order to decide where the "tipping point" is for renting vs buying.

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

Then (if the equation favors renting) factor in the 'premium' you are willing to pay to own your own home over renting something of similar quality in order to 'feel settled'.

Thanks - I'll run the calculation tonight and report back.

[CRG]

How long do you think you're going to stay? If you hate the job and the new place will you still stick it out for at least three years or will you move back after six months?

Selling at a loss would be unfortunate but not the worst thing. Your worst-case scenario is not being able to sell the house when you want to move. Imagine having to make house payments for a year (or longer!) on a house that you're not even living in. The best strategy for avoiding that is to be careful what house you buy (less house than you can afford but a good house in a good area) and always keep positive equity in the house so that you can sell at a loss if necessary.

I'm guessing this is one of those markets where rental houses are way less desirable than homes for sale. There's nothing wrong with wanting a nice house. If you can manage the risk, go for it!

My plan is to stay for at least 5 years, or longer if the job and the area are favorable. Of course, these are unknowns, which makes for a difficult decision. From all the research I've done it seems that the company has many long-term employees at all levels, and they are investing heavily in the business vs the company I'm currently working for. They also have a definitive vision of where they're headed, also unlike the company I'm currently working for.

[mskyle]

How long do you think you're going to stay? If you hate the job and the new place will you still stick it out for at least three years or will you move back after six months?

Selling at a loss would be unfortunate but not the worst thing. Your worst-case scenario is not being able to sell the house when you want to move. Imagine having to make house payments for a year (or longer!) on a house that you're not even living in. The best strategy for avoiding that is to be careful what house you buy (less house than you can afford but a good house in a good area) and always keep positive equity in the house so that you can sell at a loss if necessary.

I'm guessing this is one of those markets where rental houses are way less desirable than homes for sale. There's nothing wrong with wanting a nice house. If you can manage the risk, go for it!

My plan is to stay for at least 5 years, or longer if the job and the area are favorable. Of course, these are unknowns, which makes for a difficult decision. From all the research I've done it seems that the company has many long-term employees at all levels, and they are investing heavily in the business vs the company I'm currently working for. They also have a definitive vision of where they're headed, also unlike the company I'm currently working for.

I was thinking more of the culture shock/homesickness, especially if you're used to living close to family and will now be far away from them. I've seen friends and family move out to the suburban midwest (from the East Coast) for great job opportunities and then come back earlier than they intended because they were just really unhappy and missed their community.

What if your kids and/or wife are miserable? How long will you stay then?

[CRG]

@mskyle - it's a good question and one that we have a bit of experience with. I didn't mention in my OP that we had moved back east (PA) for a job change back in 2006, only to return a year later once I found out that the job wasn't at all what was promised. If the job had been satisfying then we would have stayed, as the area was beautiful and affordable.

I can't say that either of us are terribly close with our immediate family, mostly seeing them at holidays or birthdays. The kids are young enough @ 10, 7 and 3 that I'm not sure the move would affect them much. Having my wife at home would help with the transition.

This is obviously a big decision and it helps to talk it out.