So as a I follow up, we decided to buy. The market in this area (my new town, on the opposite side of the country from my original post) is incredibly hot, and we were having no luck finding any cheaper rentals that satisfied what we wanted in a house. Our current rental will be going up to $1550 next year. We pay towards all utilities. I'm not entirely sure but I think that $1550 didn't include the $100 garage I was renting. I found some houses around town renting for between $1650-$1800.
Three main problems were:
1) desirable and non-desirable sides of town, but similar prices. Stuff on the less desirable side of town just sat longer. We decided to stay on the desirable side of town, which is also only 7 minutes from my work as opposed to 20 or 25. It's also within riding distance of my work.
2) All of the cheap homes needed more than just paint. When I say "cheap", I really mean, overpriced. They were either in terrible neighborhoods, had lots that limited expansion of small houses, or were condos with additional monthly fees. We couldn't find anything that didn't have a glaring issue (45º driveway anyone?), bad neighbors (trailer across the street) or wasn't a combination of both issues (overpriced, outdated house on a funky lot with weird neighbors).
3) Condo and HOA fees in condos or newer subdivisions. We went back and forth a bunch of times about buying a cheaper condo, but HOA fees are sunk costs, and spending $260k for a 3bed2bath condo with a $150 quarterly fee just didn't seem worth it. There are some nice neighborhoods with new home selling for $325k, but they also have $150 quarterly fees and no backyards, and they aren't any closer to work.
We ended up spending a solid $300k on a house, but that was after putting offers on 4 different houses at the same price, all of which needed work (outdated), all built prior to 1995, all of which ended up selling for more than asking price. Another, cheaper house was offered to us, but it needed so much work that we didn't think we'd ever get to live in it as it's final "desirable" form. For $240k it was essentially a tear down. Nice lot though.
The home we did find however, is close to my work, built in 2007, very unique with great curb appeal, and being a custom built home has lots of fancy features. We also got away with paying pretty much exactly $300k, as a seller's credit covered most our additional costs. The only issues are some grading work that needs to be done on the side of the house and I need to expand the parking, and I got quotes for both for under $4,000. It needs nothing in the interior.
So after 3 years I'm aiming to have paid something like
~33k towards interest-~11k towards principal
~1.5k in closing
~18k to sell the house (worst case scenario)
~6K in taxes
~4k in opportunity costs of investing that 60k (assuming 2%) (I'm a bad investor)
~5k in maintenance (which is more like $5k towards things that will hopefully add value)
~1.5k in property insurance
All this being said, I completely expect to lose money. I highly doubt the house will appreciate much more, and if it does it'll only be because I spend money on expanding the parking which would improve its already good curb appeal, but as a whole I don't think it'll appreciate. I hope when we do sell that I can negotiate a lower commission by using a family realtor to generate MLS listing and paperwork. So even if we sell it for $305k with $5k in concession, and manage to only pay 3% in commission, we'll still be out $10k, plus taxes, plus interest, plus maintenance...putting us just about breaking even on renting (36 months at $1550 is $55,800).
If we had more (cheaper) rental options, we wouldn't have bought. If we had more housing options (and being within 5 miles of work wasn't as high of a priority to me), we would've bought cheaper, saving us more in interest and commission fees later on.
If we come out of the other side with $1 more than what we put in, I'll be extremely happy. If not, I'll chalk it up to being a learning experience.