Author Topic: Am I Crazy to Buy? Advice Please  (Read 3276 times)

atribecalledquest

  • 5 O'Clock Shadow
  • *
  • Posts: 66
Am I Crazy to Buy? Advice Please
« on: February 18, 2013, 09:43:06 AM »
-
« Last Edit: January 12, 2019, 03:14:31 PM by Kevin »

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28249
  • Age: -999
  • Location: Seattle, WA
Re: Am I Crazy to Buy? Advice Please
« Reply #1 on: February 18, 2013, 09:52:00 AM »
Sounds like you should keep renting.  I wouldn't buy at 350k for 2k/mo. rent with $200 HOA. Those numbers say "rent" to me. Especially since you say you plan to move in the next 5 years.

That's just looking strictly at the financial.  There are emotional reasons to purchase, or not, of course.

Have you run any of the buy vs. rent calculators?

This is my favorite, but there's a bunch of them out there:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

daverobev

  • Magnum Stache
  • ******
  • Posts: 3432
  • Location: France
Re: Am I Crazy to Buy? Advice Please
« Reply #2 on: February 18, 2013, 10:12:52 AM »
Yup, you have to work out how much of that $72,000 has actually "gone" to the landlord after taxes, maintenance, fees, and so on. I mean - you'd be paying $3k in property tax, $2.4k in HOA fees, so that's $16k of the $72k gone already!

Also, when interest rates go up... prices are likely to go down. If you save the few hundred a month you would otherwise be spending (ie $housecost - $2000) until prices come down a bit you will probably end up better off..

Rent = flexibility, too!

Don't get me wrong, I was renting til the middle of last year and hated it (after living in my own house for several years), and couldn't be happier now that I've moved back into a house I own. But my wife and I bought a (relatively) cheap house, with a decent garden, in a small town, near a river, etc, etc.

c

  • Bristles
  • ***
  • Posts: 300
  • Location: NYC
Re: Am I Crazy to Buy? Advice Please
« Reply #3 on: February 18, 2013, 02:36:25 PM »
My numbers are/were similar to yours (rent/income/property price) but I have no set plans to leave here. If I do it will be for something drastic like a great job offer, which I honestly don't see happening. I ran the numbers a few different ways and they came out either even or keep renting, but not by much.

What tilted me towards buying was how much rents have increased in my area over the years I've been living here. The city attracts a different demographic - younger people who are relatively high earners. They come, spend then leave for the 'burbs only to be replaced with young, high earners who spend ..., and I was slowly being squeezed out of the rental market.

If I knew for a fact that I was only going to be here for a certain time that may have changed my decision, but as long as I'm in NY I want to live where I am currently, so that was a big consideration for me too. I imagine the market in DC is similar.

Currently my costs of mortgage, maintenance fees (I'm in a co-op, so this is property taxes, heat, hot water, trash etc), electric and gas is around $200 less pm than my previous rent plus utilities, but I do spend more on upkeep, though most of this is voluntary spend.

There were fees for the purchase, but then tax breaks for the interest. I'm spending more as an owner than as a renter but not by enough to cancel out the other benefits of buying/risks in continuing to rent.