Author Topic: Please Convince me to rent (...or buy)  (Read 1099 times)

teltic

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Please Convince me to rent (...or buy)
« on: September 21, 2017, 07:40:25 PM »
Hello!  First off, thanks for reading & offering advice.

About Me:
Age: 26 (single)
Salary: $62,000
Investments $139,000 ($65k of it in individual... Down payment on a house?)

Current Living Situation... LIVING WITH PARENTS. (eeeeeek... or is it?)


I'll be honest, I've been living for free with my parents for a while.  I just graduated with my masters (finance) in May, and told my parents its time to pay rent.  My parents are too nice to me.

We negotiated $300 a month (they wanted it to be $100... Again they are too nice).

I currently live 12 miles away from work.


Long story short do I...
1. Continue to rent a room from parents
2. Rent a place closer to work (roommates perhaps?)
3. Buy a place (buy a fixer upper? maybe a decent place and grab roommates?)
4. Any other advice you can offer


I live in Salt Lake City area.  Looking in the lower class area (rose park, fair park, where my work is located), I could get a house for $250k, which that could be rented for $1500 a month (3 bed, 2 bath).

Thoughts?








rws

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Re: Please Convince me to rent (...or buy)
« Reply #1 on: September 22, 2017, 07:28:07 AM »
Hi teltic,

Nice working getting a Masters and putting away that much money. At 26 you're doing well for yourself. I'm no expert on real estate or rental property, but i have both rented and owned, so I'll share this story with you. Not advise, just food for thought.

At 26 I moved out of my parents house into a rental unit with my girlfriend. 4 years later we bought a house with a 20% down payment. We sacrificed a fun and experiences in order to do this, but it was important to us. We chose a house in an expensive area because it was close to both sets grandparents (planning a family) and to both of our jobs. We are now happy with the house and comfortable financially but those 3 years renting ate up a lot of money that we will never get back.

Meanwhile my cousin bought a duplex, rented out one half and lived in the other half with a friend who also paid him rent. Rental income from the tenant and the friend more than covered all costs of owning and maintaining the property. After 3 years he moved into his girlfriend's place and is now renting out both sides of the duplex, making a very good income from it.

tl;dr - consider buying a duplex if they can be found in your area. I'm not saying it's a sure thing, but if the numbers are right and you can find good tenants you might be able to own and still get out and enjoy life while retaining more of your wealth.

Let us know what you decide!

elvizzle

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Re: Please Convince me to rent (...or buy)
« Reply #2 on: September 22, 2017, 08:36:29 AM »
I agree with rws that a duplex would be a better investment option if you find.  I just looked on redfin and saw a duplex in the fair park area for $310k currently renting for ~$1200 for each side.  If you have the means, try looking at triplexes and fourplexes as well.

surfhb

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Re: Please Convince me to rent (...or buy)
« Reply #3 on: September 22, 2017, 09:03:45 AM »
Live with your parents till you're FI!  It will come faster than you think

rws

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Re: Please Convince me to rent (...or buy)
« Reply #4 on: September 22, 2017, 10:27:55 AM »
I disagree with surfhb because if teltic can find the right property at the right price then he could essentially live 'rent-free' or even have a positive cash-flow, whereas in his parents house he is paying $300 a month.

Sure he'll have to pay to fix things but hiring people to work on your house is really not as intimidating as it might seem, and he clearly has the savings discipline to pay for any issues that arise.

Also imo moving out of your parents house is an important step in anyone's life, for your own personal growth and happiness (and in some cases, your sanity!). You have to move out sometime, and at 26 with your level of savings and income (and unhindered by a spouse/children) you are in a solid position to make an investment.


uwp

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Re: Please Convince me to rent (...or buy)
« Reply #5 on: September 22, 2017, 02:15:52 PM »
I would lean toward buying + roommate with those numbers - provided you're committed to the area for a while.
You could be paying roughly what you are now, not living with parents, and building equity and/or a potential rental unit down the road.  While $1,500/$250k doesn't quite meet the 1% test, it is a pretty appealing number for buy vs rent calculations.
.

teltic

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Re: Please Convince me to rent (...or buy)
« Reply #6 on: September 27, 2017, 11:47:32 PM »
I agree with rws that a duplex would be a better investment option if you find.  I just looked on redfin and saw a duplex in the fair park area for $310k currently renting for ~$1200 for each side.  If you have the means, try looking at triplexes and fourplexes as well.

I did see that duplex on redfin! My only beef with duplex's is they are usually in shitter neighborhoods... But maybe I need to shut my mouth and as long as it makes sense financially, to do it? I can 100% see myself renting it out forever and managing it myself.

Thank you everyone for your input!! Still need to digest what to do... But I think overall if I buy a house/duplex, it will either be a fixer upper house or a duplex that cash flows a bit (that example is a decent one!)

teltic

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Re: Please Convince me to rent (...or buy)
« Reply #7 on: September 28, 2017, 06:17:31 PM »
Thank you for the reply.

I'm looking for a house or duplex that would get me .8% of month rent / purchase price.

I would jump all over a deal that brought me 1%! But I don't think that will happen.

The best deal I can find is a duplex that gets $2500 a month that is $310,000. In poor condition. It's a tempting One... And I actually going to go drive by it right now.