I am posting this on behalf of friends so these are not my personal numbers, but the problem was such that I thought I'd seek out collective wisdom.
The friends do not read MMM but are interested in making the best financial decision. First the financial situation:
Family of 3. Late 30's
Income: $1550-ish every two weeks take home
$80 per paycheck to 401k and $25/paycheck to HRA
Assets:
Truck (OLD! But paid off at least)
2013 Hyundai - still owe $14,132 on it. 3.49% interest rate
401K -approximately $40k
Savings just got wiped out to purchase new tires for the car
Rent $1100
Utilities:
Cellphone $150
Water $90
Garbage $20
Internet $36
Electric/gas $115
Car:
Payment $245
Insurance $120
Gas $130 - $170
Other:
$60 YMCA membership
$75 Storage unit
Entertainment:
Netflix $8
Hulu $8
Estimated $250-$400 on food which does includes some eating out/fast food. (working on breaking the fast food habit)
They just finished paying off medical credit card debt and other debts to the tune of several hundred per month split between several creditors.
I mentioned that there would be pushback on the car loan, but I am assured that they intend to meticulously maintain this car for 200k miles or more and only upgrade it when there are new all-solar, self-driving, flying models available.
I also asked about medical and here are the numbers: dental, medications & other insurance costs: $50/month. Their insurance typically covers other recurring costs unless there is an emergency.
Adding this all up I get about $3150/month take home (slightly more) and about $2600 expenses so there should be ballpark an extra $450 for month for savings and emergencies. They currently have no emergency fund.
The real question:
They currently rent a mobile home in a very nice mobile-park, surrounded by vastly more expensive homes in a generally HCOL area. It is in a good school district. The owner would like to sell it to them for something like $120-$140k which I suspect is nearly all the cost of the land.
The home is Pre-HUD and they are having problems finding a lender. The current owner would be willing to finance for 10 years but the house would have to be paid off during this time. Is this feasible with their current income? If so, how? They estimate taxes and insurance at approx. $200/month and HOA dues of $180/year. They would also be liable for all home repair and maintenance. I have no idea how that sort of rent-to-own financing would work if they went with the owner's offer so any advice about that would be appreciated.
Is it a good idea?
Rents for 2-bedroom houses are $1400 anywhere within a reasonable distance of work (currently they are very close to work).
I know that if MMM forums had a commandment it would be "Thou shalt not pay interest on a depreciating asset" but I don't know that they can do better than this either by renting or trying to purchase a traditional house.
We look to your face-punching and advice.