Author Topic: The olí renting vs buying thread  (Read 654 times)

use2betrix

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The olí renting vs buying thread
« on: January 15, 2021, 11:43:36 AM »
I understand that thereís calculators out there, and in my situation it would likely lean towards renting.. I have a few intangible factors that are tough for me to take into consideration:

Some background:
- Married (32M, 27F)
- Wife is 3 months pregnant with our 1st
- We have been together 8 years. Spent the first 5-ish years leaving in a 40í 5th wheel traveling around the country for work
- The last couple years we rented apartments. Have been at our current apartment ($1800/mo) for two years
- Since I have always travel and weíve moved around for my work as a Contractor, Iíve always earned per diem, typically between $700/wk and $1000/wk tax free.
- Wife does not work
- My income is high, in 2020 I took home around $325k (incl 401k/match)
- We have avoided buying homes, because by moving for projects, itís helped me justify the per diem. We also typically arenít living in places longer than a year.
- Have one vehicle debt with a $550/mo payment. No debt otherwise
- Approx. 840k in savings/investments

Next week I am starting a new job that will last around 2-2.5 years. Itís about 75 miles from where Iím at now. Pay will be around $350k/yr, but all taxed. I believe my take home will be somewhere between $18k-$20k/mo.

Obviously with my commute, and that our lease is up soon, we are going to relocate closer to the new job. We have mostly been considering renting (since we always have) but now that Iím not getting per diem, we are considering buying. If we rent, our rent would be around $2000-$2300/mo. If we buy, weíd probably put 20% down and have a mortgage of around $2700-$3200 (approx 17% of my new take home pay). If we buy, weíd be in much nicer of a house/location than if we were to rent.

Concerns:
- We will likely be here 2 to 2.5 years (could be longer but thatís unknown)
- If we move after 2 years, we could have to deal with the market falling in the meantime, in which case we could consider renting
- Weíve always rented, so not sure how big of a hassle it would be to move somewhere, then have to sell it in a few years
- There is a fair possibility I could get work in the same area (live in the Mecca for my industry) and stay in the area
- This isnít my FIRE location for sure, but weíre probably around 6-8 years from FIRE

Financially Iím not worried of any sort of disaster (aside from losing my job, the stock market crashing, and house market crashing, all simultaneously lol).

Iím looking for more feedback on the decision. Thereís obviously some unknowns, and things I will never be able to predict, but hoping that those with more wisdom in home ownership may have some guidance.

Since this is a new position, we plan on 3-4 weeks of ďmaking sure everything seems goodĒ before moving to the new location and/or starting to look to buy a house. Iíll speak to my supervisor at that time as well.

Thanks in advance for any feedback

ixtap

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Re: The olí renting vs buying thread
« Reply #1 on: January 15, 2021, 11:49:12 AM »
If you move in 2 to 2.5 years, the market falling isn't your greatest concern. That usually isn't enough to justify closing costs unless the market sky rockets. Even 6-8 years isn't viable in many locations.

Everything you laid out points to renting.

Pretty much only the nesting instincts are pointing to buying. Is that strong enough to go through the hassle?

use2betrix

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Re: The olí renting vs buying thread
« Reply #2 on: January 15, 2021, 11:59:07 AM »
If you move in 2 to 2.5 years, the market falling isn't your greatest concern. That usually isn't enough to justify closing costs unless the market sky rockets. Even 6-8 years isn't viable in many locations.

Everything you laid out points to renting.

Pretty much only the nesting instincts are pointing to buying. Is that strong enough to go through the hassle?

No nesting instinct here. I am the one considering buying, my wife hasnít even considered it...

The instincts pointing to buying are continually making $200k-$300k+ for years and years and just getting tired of living in mediocre apartments.

We can easily afford a $3500 rent in a place similar to what we could buy with an identical mortgage, but I donít want to drop that on rent thatís 100% going to someone else..

Weíll likely just continue renting, but still looking for other possible opinions.
« Last Edit: January 15, 2021, 12:02:43 PM by use2betrix »

socalteacher

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Re: The olí renting vs buying thread
« Reply #3 on: January 15, 2021, 12:59:50 PM »
I have a friend who is in a similar scenario as you are. They move around every 3-4 years and have high income. They purchase a home at every stop. Last time we hung out he had 5 rentals going and the first had been completely paid off and he was using those payments for house number twoís payoff. Iím not sure how he is fairing in todayís market but his strategy seemed to be working well for him. He never meant to start buying a home every few years but he hated living in apartments as his family grew.

remizidae

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Re: The olí renting vs buying thread
« Reply #4 on: January 15, 2021, 02:58:35 PM »

The instincts pointing to buying are continually making $200k-$300k+ for years and years and just getting tired of living in mediocre apartments.

We can easily afford a $3500 rent in a place similar to what we could buy with an identical mortgage, but I donít want to drop that on rent thatís 100% going to someone else..

Renting a nice house or fancier apartment seems like the obvious solution here. It's not 100% going to someone else in that you're the one who will get to live there!

Beach_Stache

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Re: The olí renting vs buying thread
« Reply #5 on: January 17, 2021, 05:26:21 AM »
I agree w/renting as well.  Some people have it in them to buy, I'm always one who wanted to buy (even at the wrong time - 2006, so we had to dig ourselves out a bit from that).  If you are on a 2 year horizon and  you haven't owned a home before, I wouldn't start right now when you've got a little one on the way.  When the baby comes you'll want to focus on baby stuff, and not little homeowner problems, especially if this is the first time.  If you make so  much money and are saving by renting vs buying and will possibly move w/in 2 years, or even 7-8 years, the closing costs are going to hit a break even point in the range of years most likely, then factor in another 10% to sell the house. 

I'm in a military town, plenty just rent, there are some really savvy officers who buy a house ever 2-3 years when they move, make smart upgrades, and then either sell the house or keep them as rentals.  If you have the stomach for that it can be very good, but I think it takes a certain person.  I am not that person so will just stick w/my 1 house where I can poorly manage those problems.

You may find that after a year of renting, you want to stick around much longer and buy, but I think generally the break even point is at least a few years to re-coup the closing costs, and I probably wouldn't consider buying unless you're going to be there 6-8 years, unless you want to turn the house into a rental when you move to  your next location.

cincystache

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Re: The olí renting vs buying thread
« Reply #6 on: January 17, 2021, 07:56:24 PM »
Congrats on the kid! I vote renting.. much easier with your job situation and a kid on the way. Also congrats on the awesome income, keep banking that money and you can do anything you want in a few more years.


ixtap

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Re: The olí renting vs buying thread
« Reply #7 on: January 17, 2021, 08:05:55 PM »
If you move in 2 to 2.5 years, the market falling isn't your greatest concern. That usually isn't enough to justify closing costs unless the market sky rockets. Even 6-8 years isn't viable in many locations.

Everything you laid out points to renting.

Pretty much only the nesting instincts are pointing to buying. Is that strong enough to go through the hassle?

No nesting instinct here. I am the one considering buying, my wife hasnít even considered it...

The instincts pointing to buying are continually making $200k-$300k+ for years and years and just getting tired of living in mediocre apartments.

We can easily afford a $3500 rent in a place similar to what we could buy with an identical mortgage, but I donít want to drop that on rent thatís 100% going to someone else..

Weíll likely just continue renting, but still looking for other possible opinions.

If you run the calculators, you will likely see that for your time frame, the rent is saving you money, not tossing to someone else.

Once you do the math, whether you choose to go cheap or rent the nicer place is on you, not on renting vs buying.