The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: GHG7F0 on November 13, 2016, 08:16:17 PM
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I recently moved to Roseville Ca. I'm considering purchasing a home. It is my wife, new baby and myself. I expect to be here for 7 years and then I will retire to a low cost of living area with no state tax. At this time I will sell or rent it.
The home I have found is new and it is $430K. It has a Mello Roos fee for $225 which I really don't like. It has no HOA fees. The property taxes are 1.1%. I can finance with my VA 100% or 20% down conventional. I am also able to pay cash.
If I was to rent a condo instead I can do this for $1375 per month or a house would rent for maybe $2000.
Which one would be better financially? The other possibility would be to buy a condo for about $220K plus HOA fees of $231.
Thanks!
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http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
You are probably better off renting.
-W
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You might consider buying an older house that meets your needs and has no Mello-Roos. Should be much less expensive. I see a number of nice houses in the $350k range on Realtor.com.
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If I was to rent a condo instead I can do this for $1375 per month or a house would rent for maybe $2000.
To accelerate your FIRE date, rent the condo.
The other possibility would be to buy a condo for about $220K plus HOA fees of $231.
HOA fees and property taxes don't stay constant. When they change, they only
change in one direction: UP.
In the 6 years I owned my condo, my HOA fees doubled and property taxes
went up 25%. This doesn't include HOA "special assessments" including a
$2000 assessment that I paid just one month before selling my condo.
Relevant article: http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
This isn't to say that any condo/house purchase is terrible (mine worked out okay),
but given the figures you presented, a condo rental looks like your best option.
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Many good pieces of advice were given here. Especially, I like one about buying an older house.
My personal view is always consult with real estate professional, when you’re make such big financial decisions. They know the market better, thus they can find the most appropriate apartment for you. I think, that buying is a better way in your case.
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Not to hijack, but does the 1% rule for buying a house to rent out also work for deciding to rent vs buy? For example, if the rent in the area for $300k houses is $2,500 a month, is it smarter to rent? Or is that too simple?
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Too simple (just because of tax advantages/disadvantages, if nothing else). Use the calculator.
-W
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If I only planned to stay in an area for 7 years, I'd never buy.
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I'm familiar with Roseville and Mello-Roos (ugh). In CA, seven years is usually a pretty safe timeline, but is not guaranteed. BUT, you need to keep shopping. You've fallen in love with a too-expensive house.There is a lot of variety in the area. You can find something more affordable.