Author Topic: Buy or rent in Europe  (Read 1518 times)

poeli

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Buy or rent in Europe
« on: September 23, 2016, 09:39:53 AM »
Hi all,

27 year old me wants to move out of my parents place (about time!) I live 1hr40 away and really want to live closer to work (been working at the same company for almost 2 years now). I would move to the capital or somewhere between the capital and my work (cycling distance to both). My situation: savings around €60k, no student debts or so, saving for pension (only 80 a month).
I own no car and do everything by bicycle or train (huge cost saver). Now my question: looking at stuff to rent it always seems to be so expensive to me €650 for a small studio of 30mē? Damn. Buying on the other hand seems to be more reasonable, found some places around 170k for 60mē(looks decent from photos- have to look in real life). Now i don't know how long i'll be working at this place (i guess still at least a year), could be that i become crazy take my bicycle and start cycling the world or so. But it seems to be a pretty big step to instantly buying in a city i don't know very very well. I've looked into cohousing but then again, it seems to be expensive for what it is to me: +500€ for a small room...
I ear around 1900€ a month after taxes (hope to get a raise in december, but with hopes you don't pay banks). How 'good' would it be to buy straight away? I know i still can rent it out or sell when i'd move out, but my biggest concern is having to pay +-1000 a month and having no money anymore to enjoy the little things in life like travelling (but then again: me away in the weekend = air bnb). I'm torn between the two options, but i lean much more into buying right now, even when the big loan scares me a bit. How realistic is it for me to buy? The interest rates are low right now so it might be an oppertunity...I'm an engineer so falling without a job is not very realistic.

I'm not planning to buy a car soon or to ditch my bicycle. I just don't know what the future holds, i'm young and could move to another country in maybe 2 years (but that's not a given). Right now i'm quite happy at my job, only thing that bothers and depresses me so much is the commute.

Thanks for your time.
« Last Edit: September 23, 2016, 09:42:00 AM by poeli »

Jack

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Re: Buy or rent in Europe
« Reply #1 on: September 23, 2016, 09:56:24 AM »
Even if it's financially better, it does you no good to buy if you don't know what you want. Sounds to me like you'll have to rent, if only for a little while until you figure out which neighborhood etc. you want to buy in.

Other than that, read this: https://www.biggerpockets.com/renewsblog/2016/07/02/first-time-home-buying/

Dutch

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Re: Buy or rent in Europe
« Reply #2 on: September 27, 2016, 04:03:19 AM »
what about moving out of Brussel and live in a smaller village with a train station?
The rent should be lower and the prices for buying should be lower. You have a little more communting distance but maybe that is the only reasonable option.

bpleshek

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Re: Buy or rent in Europe
« Reply #3 on: September 27, 2016, 09:00:15 AM »
I don't know how property ownership works in Europe, but in general it's always good to rent for a year just to find out where you want to live.   It sounds like you're not particularly familiar with the city 1h40m away other than the commute and maybe some drinks after work.  So rent.  Get to know your new city on weekends or evenings.  Walk around, take the public transportation or bike to other areas of the city and "walk" the neighborhoods.  Talk to people who are outside walking dogs or doing yard work and ask them about how things are in those areas.  Get a feel for things.  Once you find a few good areas to live in town, then consider how close they are to grocery stores, work, places that you'll go.  Are they walking or biking distance, etc. 

Remember, the true cost of ownership of a house is not just the payment.  There are other considerations.  Higher utilities than an apartment because it's larger.  Anything that breaks is on you, not a landlord.  If you have a yard, then you have lawnmowers and edgers, rakes, snow shovels and more to buy.  Insurance is higher and you have taxes to pay.  You also have to save a sufficient down payment.  Comparing a rent payment to a mortgage payment isn't the way to go.  If your parents own a house ask them about the expenses of owning a house.

Then you mention this, "I just don't know what the future holds, i'm young and could move to another country in maybe 2 years...."  This also tells me to NOT buy.

So, you say that it bothers and depresses you about the commute.  Ok.  What is the cost of that commute per month?  Since you don't own a car, I'm assuming that you're taking a train between your city and the other one.  What is the monthly cost to do so?  If it's €200 per month, then that cost goes away but is replaced by a rent payment of €650.  But effectively it's €450, using my numbers.  Also you gain back 8 hours of your life each week due to not commuting and there is some value to that. 

Also, just on another thought, you're saving 4.2% of your after tax money in your pension.  I know you say you have savings of €60k, so you're saving more than that, but the "experts" say you should save 15%(which will let you retire in 45 years) and if you have read MMM's post on early retirement, you know that this amount is woefully inadequate.  50% is more a reasonable number and that will allow you to retire at current standard of living-ish in 17 years or so.  How does retiring at 45 sound compared to a house?  Everything is a choice.  Good luck.

Brian

MrSal

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Re: Buy or rent in Europe
« Reply #4 on: September 27, 2016, 11:35:56 AM »
Hi all,

27 year old me wants to move out of my parents place (about time!) I live 1hr40 away and really want to live closer to work (been working at the same company for almost 2 years now). I would move to the capital or somewhere between the capital and my work (cycling distance to both). My situation: savings around €60k, no student debts or so, saving for pension (only 80 a month).
I own no car and do everything by bicycle or train (huge cost saver). Now my question: looking at stuff to rent it always seems to be so expensive to me €650 for a small studio of 30mē? Damn. Buying on the other hand seems to be more reasonable, found some places around 170k for 60mē(looks decent from photos- have to look in real life). Now i don't know how long i'll be working at this place (i guess still at least a year), could be that i become crazy take my bicycle and start cycling the world or so. But it seems to be a pretty big step to instantly buying in a city i don't know very very well. I've looked into cohousing but then again, it seems to be expensive for what it is to me: +500€ for a small room...
I ear around 1900€ a month after taxes (hope to get a raise in december, but with hopes you don't pay banks). How 'good' would it be to buy straight away? I know i still can rent it out or sell when i'd move out, but my biggest concern is having to pay +-1000 a month and having no money anymore to enjoy the little things in life like travelling (but then again: me away in the weekend = air bnb). I'm torn between the two options, but i lean much more into buying right now, even when the big loan scares me a bit. How realistic is it for me to buy? The interest rates are low right now so it might be an oppertunity...I'm an engineer so falling without a job is not very realistic.

I'm not planning to buy a car soon or to ditch my bicycle. I just don't know what the future holds, i'm young and could move to another country in maybe 2 years (but that's not a given). Right now i'm quite happy at my job, only thing that bothers and depresses me so much is the commute.

Thanks for your time.

how would you be paying 1000 a month?

If you are in Europe, rates there are around 1% or less for mortgages. Also usually mortgages can go higher than 30 years (until you are 75 I believe it depends on markets... so if you are 27 you should be able to finance at 48 years bringing the monthly expense lower.)

Assuming however just the standard 30 year mortgage even at 2.5% we are talking around 500 Euros for the mortgage per month for a 126k euros loan... not the 1000 you talked about.

and this is based on a 30 year mortgage. I fyou can go higher then much much less