I wrote this originally as an email to Mr. MM, but he probably doesn't have enough time to look at this... so I'm asking the community. Any insight would be much appreciated!
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I'm writing to ask to be considered for a Reader Case Study. I noticed you don't have a blog post on renting vs. buying a house (if you do and I couldn't find it, sorry!). I would love your opinion on the matter. I know in most of the country, the low price of housing makes buying a house a no-brainer, but in urban areas where housing prices are significantly higher, I don't know which is better. Here's my story...
I am currently 26 years old making a decent salary (100-125k) in NYC. My wife and I are expecting our first kid in May and I know we are going to soon outgrow our cozy 1 bedroom apartment. We currently rent it for $1430/month. I don't have much of stash yet, my goal so far is 100k by the end of 2014 and 200k by the end of 2015. At that time, I should have enough money for a down payment. I'm not sure though what makes the most sense - using the stash and putting it into property or keeping it in investments and continue renting. Here's my options so far.
Option #1 - Renting: We could probably just move into a bigger apartment or rent a house we'd like for $1700-$2000/month. Not having to worry about maintaining and taking care of my own house is definitely a pro to this. (Every time it snows like it did so many times this year, I'm glad I live in an apartment and it is somebody else's job to shovel all the snow!) The thing I start wondering though is am I throwing $1700-2000 out every month in living expense that could be contributing to my stash?
Option #2 - Buying a 1-Family Home: I have been getting a feel for the housing market in the area and the neighborhoods we want to live in run 400,000-600,000 for a single family house. I could technically afford it with a mortgage, but it would set back my retirement date by probably 10 years because I would have to put most of my money into paying off the mortgage instead of building up my stash. The pro to this though is it would dramatically lower my cost of living once I pay it off as I wouldn't have to worry about monthly rent!
Option #3 - Buying a 2-Family Home: Trying to think out of the box, I also looked into duplex houses. They run around $700,000-900,000. I could rent out the 2nd unit for the same $1700-$2000 I was looking to pay as a renter and use that to help pay off the mortgage. In the end, I would have a place to live in and some income! But again, it probably will make adding to my stash very difficult and I don't know how financially independent (aka retired) I would be with a $500k-$700k debt on top of me!
My wife and I already decided that living with our family and friends in NY is part of our happiness - so moving to a cheaper area of the country is out of the question. Besides, I think Mustachian lifestyle can work here in the city too! So... what are your takes on renting vs. buying? Is getting a mortgage not a mustachian thing to do? Please shed insight for all the city-dwelling mustachians. Thanks!