The renting vs. buying discussion isn't new, but I'd like to present our case to you for your feedback.
The wife and I live in a nice part of Southern California. We love it here, have family roots here, and I part-own a business that can't be "moved."
We started our path to FI very late in life and bring home on average $8,5 K per month combined after taxes. My FICO is now 841, my wife's 802. We have no debt.
We have been renters "forever," in large part because it's silly expensive here.
Lived in a small 2+2 midtown charmer at $1,500 per month, a home the landlords would NEVER want to sell, until they informed us after 13-1/2 years that they needed to sell the house. We got 60 days to move. Looked everywhere, got lucky slightly outside town and rented a 3+2 for $2,200 per month, another house the landlords NEVER wanted to sell. In both those cases applicants are standing in line to get lucky. At that point we didn't want to depend on luck anymore, so we made plans to buy a year or so later. Went to about 100 open houses and learned the market inside and out.
Crazy enough, about a year later, the landlords informed us that they wanted to sell the house. They were asking $595K, which we found about $100K to expensive. We then lightened the belt and shortly later bought a wonderful home in need of some work, but with great potential, for $555K.
Paid 10% down, our 30-year mortgage is $3,149.59 including PMI of $133.20.
If we were to rent this or a similar house, it would cost us about $2,500 to $2,900, so just a few hundred dollars less. Our mortgage is basically rent plus principal.
We are slowly improving the property, started out with all new wood floors ($10K), then did the siding ($15K), countertops, now doing landscaping. We plan on staying another 9 years, at which time the property should be worth about $690K. We will by then owe still $390K, so after selling fees we should be left with $250K, give or take. Our plan is to take that money and buy our final house outright. Most likely in or around Asheville, NC.
By then the sale of my business and my retirement investments should be sufficient to survive. Eventually, we will get about $2,500 in SS benefits per month, so we'll be fine.
Given the circumstances outlined, was buying a house a smart decision or crazy? Any advice for us or people who live in a market where rent and real estate are out of control?
Thanks!