Author Topic: Relocating for Work - Rent or Buy?  (Read 2934 times)

wisermiser

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Relocating for Work - Rent or Buy?
« on: July 18, 2016, 03:01:52 PM »
I'd like some advice on what you would do in the following situation.  I've just given notice and I have less than a month to relocate to the new job site near Ventura CA area from Portland OR.  I should have about $600K cash after selling my house that is almost paid off.  I was planning to rent but wanted to know if anyone could provide an argument for buying (tax advantages, insider knowledge of the area, etc). 

It looks like I will have to pay $2500 - $3000 to get a rental that meets my criteria (decent school rating, walk to a grocery, 1200+ sqft for a family of 4).  I believe I could buy a house of similar quality for $600k-$900k.  The pros and cons I'm considering are:

Renting Pro:
- Job might not work out and I save selling fees if I have to move again.
- I don't really have time to research the area to be comfortable buying.
- Housing market is in a bubble?

Buying Pro:
- Is there a tax advantage if I invest the gains on my house into another house (should be over $100k gain)?
- I may be able to buy a nicer place than I can rent.
- I don't know of much better options for investing the cash.

What would you do? 

JLee

  • Walrus Stache
  • *******
  • Posts: 5668
Re: Relocating for Work - Rent or Buy?
« Reply #1 on: July 18, 2016, 03:06:04 PM »
I would rent.  Mobility is nice and if you're sitting on $600k in cash (plus ? investments/etc) you're likely close to FI-able in a LCOL area.

If you do decide that you want to buy, I would rent for a year first.

NV Teacher

  • Bristles
  • ***
  • Posts: 491
Re: Relocating for Work - Rent or Buy?
« Reply #2 on: July 18, 2016, 04:19:35 PM »
Last time I moved for a new job I bought something right away.  In hindsight I wish I had rented for a year and gotten to know the area much better.  I definitely wouldn't be living where I'm at now but I'm a short timer so it's not worth moving since I'm leaving once I'm done with work.

slugline

  • Handlebar Stache
  • *****
  • Posts: 1172
  • Location: Houston, TX USA
Re: Relocating for Work - Rent or Buy?
« Reply #3 on: July 19, 2016, 01:59:39 PM »
This looks like an obvious "rent" situation to me. Use that time to really experience the city and learn which neighborhoods you like . . .  or even if the Portland idea as a whole is a suitable fit for your family.

cj25

  • Stubble
  • **
  • Posts: 136
Re: Relocating for Work - Rent or Buy?
« Reply #4 on: July 19, 2016, 02:42:48 PM »
I'm not a MMM pro, but I live in Ventura County and I would say rent.  Not sure where in VC your job actually is, but the area is very "pocket-y".  You may like  Ventura or Camarillo (I wouldn't suggest Oxnard), but both areas have a of old vs new areas & pockets of good & bad.  Or if you're on the east side of VC, there is Thousand Oaks, Simi Valley, Moorpark, but costs/quality vary slighty.  It takes awhile to figure out where you'd really want to be and get a feel for the different cities.

And yes, I would say we're in a bit of a bubble.  It's slowing down, but nothing has really dropped since it started its climb in 2013.  I wouldn't buy right now unless I found my dream house in my dream neighborhood.  Depending on the neighborhood, it could potentially be cheaper to buy than rent right now, but I'd still suggest waiting to see where you like. 

If you have anything specific you want to ask about the area, send me a message. =)

aschmidt2930

  • Bristles
  • ***
  • Posts: 273
Re: Relocating for Work - Rent or Buy?
« Reply #5 on: July 19, 2016, 05:38:40 PM »
Absolutely rent.  Many people I know (including myself) have relocated and then moved back in a year or two. Consider buying once you live there at least a year and are sure you want to stay long-term.

wisermiser

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Relocating for Work - Rent or Buy?
« Reply #6 on: July 19, 2016, 05:52:21 PM »
Thanks for the advice to rent, and the offer for info CJ25. 

With the influx of cash from my house I'm thinking I should put some back into a Vanguard REIT.  Any suggestions on an allocation? 

Maybe something like this:
54% - Vanguard US Stock Index (VTSAX)
20% - Vanguard REIT Index (VGSLX)
13% - Vanguard Foreign Stock Index (VTIAX)
10% - Vanguard US Bonds Index (VBTLX)
3% - Vanguard Foreign Bonds Index (VTABX)

This looks very specific but its just a sort of random formula I made in Excel that becomes more conservative over time based on my age. 

Any opinions would be appreciated.


Josiecat

  • Bristles
  • ***
  • Posts: 304
Re: Relocating for Work - Rent or Buy?
« Reply #7 on: July 19, 2016, 06:03:23 PM »
Yep rent.  Sadly, I just moved for a new job which I hate. Fortunately I didn't sell my old home which I will be moving back to when this one year assignment is completed (contractor).

FINate

  • Handlebar Stache
  • *****
  • Posts: 1397
Re: Relocating for Work - Rent or Buy?
« Reply #8 on: July 19, 2016, 07:00:30 PM »
As long as you've lived in your current house as your primary residence for 2 of the past 5 years then the $100k gain should be free from federal capital gains taxes. I don't know how your state treats it.

I think renting for a least a year is a good idea. What you do with the capital in the meantime kinda depends on how long you plan to have it invested. If you think there's a good chance you will buy real estate in the next 1-2 years then I wouldn't invest in a bunch of stock funds, or even bond funds which can fluctuate in value as yields change. Problem is, yields on short term bonds and CDs are so low...I honestly don't know what a good strategy would be for lots of money that you might need to access in 1-2 years. Would it make sense to rent out your home in Portland? This can complicate taxes a bit but could be worth it, and the federal tax free capital gains would still apply as long as you sell within that "2 of the past 5 years" window.

wisermiser

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Relocating for Work - Rent or Buy?
« Reply #9 on: July 19, 2016, 08:38:28 PM »
Renting is possible if I can't sell for a fair price but It seems that won't be the case.  Thanks for the tax clarification.  Looks like I'll rent for at least a year or two. 

ManchVegas

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Relocating for Work - Rent or Buy?
« Reply #10 on: July 20, 2016, 07:25:10 AM »
I'm in the same boat, moving to another state later this year. We are planning to rent for a while until we figure out exactly where we want to be. The last thing I want to do is rush into buying a house and regret the location later on.

soccerluvof4

  • Walrus Stache
  • *******
  • Posts: 5477
  • Location: Artic Midwest
  • Retired at 50
    • My Journal
Re: Relocating for Work - Rent or Buy?
« Reply #11 on: July 20, 2016, 09:11:47 AM »
Rent, make sure the Job works out and study the area for the best place and or time to buy. Why rush