Author Topic: rent or buy? what am I missing in my calculations  (Read 2627 times)

Beckyemerson

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rent or buy? what am I missing in my calculations
« on: August 06, 2013, 02:58:32 PM »
I am trying to figure out if we should rent or buy.

Buying
I live in an expensive area so a house would cost me about 350K. I don't have a full down payment to buy one but we could get a VA loan without PMI. Taxes would run about 3K a year. Fees $3K I guess. Inspection 500. Maintenance estimating 3K a year.

I will only live here for two years. After the two years if I sell. If the house sells at the exact same price. I will lose... interest 21448.80, Taxes 6K Fees for buying and selling, 6K Inspection 500, Maintenance 6K. Total 39948.80

Renting
2150 plus repair deductible (100 per repair estimating 5 repairs per year) 1K. Total 52600
I could squash my family into a small townhouse but in addition to a small house my kids wouldn't have a backyard to play in. 1700 a month totaling $41800

Should I rent or buy?

daverobev

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Re: rent or buy? what am I missing in my calculations
« Reply #1 on: August 06, 2013, 03:05:00 PM »
Rent.

Risk of not being able to sell again in 2 years is too high. You could make 10% or lose 10% (or more, obviously) so that cancels.

Rent somewhere near a park!

Numbers Man

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Re: rent or buy? what am I missing in my calculations
« Reply #2 on: August 06, 2013, 03:11:19 PM »
You are forgetting the real estate commission when you sell. Six percent times $350k selling price is $21k. I suggest that you rent since there is no guarantee of the value of your real estate and if you would be able to sell in two years.

arebelspy

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Re: rent or buy? what am I missing in my calculations
« Reply #3 on: August 06, 2013, 03:12:35 PM »
house would cost me about 350K...
I will only live here for two years...
Renting 2150 [or] 1700 a month...

Run the numbers here: http://www.nytimes.com/interactive/business/buy-rent-calculator.html

But a general guess based off those numbers and especially combined with that middle statement = I strongly vote rent.
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Another Reader

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Re: rent or buy? what am I missing in my calculations
« Reply #4 on: August 06, 2013, 03:13:42 PM »
You have underestimated selling expenses.  Commission alone at 6 percent would set you back $21,000.  I would not buy if I were sure I would only be somewhere for two years.

AJ

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Re: rent or buy? what am I missing in my calculations
« Reply #5 on: August 06, 2013, 03:35:28 PM »
Rent somewhere near a park!

This! Our new house has a small yard, but is walking distance to a park and it is awesome! It's like a back yard you don't have to maintain, plus the swings and play structures are far bigger and nicer than anything we would have bought for ourselves. You may be able to get the same effect renting near an elementary school...