The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: MountainTown on September 20, 2016, 11:04:54 AM
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Hi, my wife and I are ready to upgrade our current house situation, one way or another. Real estate prices in my town used to be cheap but have recently skyrocketed. I still wouldn't call them high as some places...but they have been hard for us to get used to.
We are renting at 825 a month and would like a more modern, efficient space, additional bedroom, a little yard, and a dishwasher. We love our location but the reality is, even our tiny house would probably sell for $250k here in this location. Our rent is extremely under market and probably should be closer to $1200 a month, maybe 1300. We have stayed here for quite awhile because of the cheap rent.
I have sort of exhausted myself looking for houses. I had hoped to get something under 250k but it seems like it's either not in our location, or it's too small or too crappy. The houses we probably would be happy with tend to be in the 280k or 290k range. We have found a few things under 250k but have been outbid by cash buyers, sometimes even after I was offering over asking price.
So, there is a rental down the block which meets my criteria and would be 1650 a month. That doubles our rent. It's a hard pill to swallow but I have come to accept that renting isn't always "Throwing your money away." Still it's a tough call.
What does everyone think? Should I go for that rental or keep looking for a better house to buy?
A little about our finances. We are a young 30ish couple, both FT.
DOWN PAYMENT SAVINGS: $73,000 in cash
Approximate Traditional retirement savings: 75 to 80k
Car: 1 beater.
Joint salary: 114000
Savings rate: Has fluctuated as we recently got married. After our 8 to 10% going into retirement, I estimate we have saved around $2200 a month into our cash down payment fund.
Kids: None but perhaps soon we will try
I work from home so this is partly why we would like to have one more bedroom in the house.
Hope this is enough information for everyone. Thanks for the help.
By the way, I have run rent or buy scenarios and it seems like the NY times calculator still tilts towards buying in my area. We just are having a hard time accepting that it may take $280k to find something we actually like as opposed to 250k or under.
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From a landlord's perspective, I would not pay $275k to buy a house that I could only rent out for $1650.
An extra bedroom makes a massive difference to the price of a rental. Perhaps you could look into renting a small office space, or "hot desk" - probably $30 on a daily rate, but cheaper if you sign a contract I imagine. I'd stay put just as long as possible!