Author Topic: Renting house alone after renting with roommate--thoughts?  (Read 2183 times)

MVal

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Renting house alone after renting with roommate--thoughts?
« on: October 31, 2016, 02:32:17 PM »
I'm curious what some of you think about a life change I want to make.

I've lived with my roommate for 8 years and been thinking for a long time about getting my own place. It's been hard to justify the extra expense, but I'm really to a point that I think living alone will make a vast improvement to my life, giving me privacy and space for all sorts of projects that could lead to better side hustles, among other benefits. My roommate owns our house and is very particular about things are in the house, so it's hard to spread out and have multiple projects going or feel very relaxed.

I make $40K and currently pay $500/mo in rent. That includes utilities, cable, internet, everything. I have no bills except for my rent check to my landlady/roommate. Where I live now is in a very nice part of the city and centrally located to everything, but it about 25 minutes/7 miles from work. I'm looking at a 2BR house right now that is in a decent neighborhood (lower income, but seems pretty safe) and is only 10 minutes/5 miles from work and is listed for $740/mo rent. Granted, I will have utility bills on top of this higher rent to consider too.

My city is right on a state line and where I live now is the only state I've ever lived in, but I work on the other side. Moving closer to work means crossing the state line, so I'm not sure what impact that will make on finances (different taxes, somewhat higher gas and food prices). One thing that I know will go away is a 1% earnings tax for the city where I am now.

Without having too exact of figures, I estimate I'll probably spend an additional $5-6K per year living on my own.

At the outset, this doesn't feel like a very Mustachian move, but do you think with some of the time and gas I'll save on commuting (I hope to be able to electric bike or just regular bike to work part of the time) and the freedom I'll gain by having my own house and garage this is a good choice? My NW is currently $75K, so I still have a long way to go toward FIRE.

Ensign1999

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Re: Renting house alone after renting with roommate--thoughts?
« Reply #1 on: November 01, 2016, 09:11:55 AM »
Without exact numbers, it sounds like it might be a good move.  You can try and calculate what you are spending on gas and other car expenses (number of miles to work and back x number of days worked per year that you will ride your bike instead of driving x cost per mile) and see if that offsets the increase in rent and bills.  You could also attempt to figure out what you might be able to pull in on your side hustles.  If you are able to make more money and spend less money to where you are offsetting the increased cost while improving your quality of life then why not.

Enigma

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Re: Renting house alone after renting with roommate--thoughts?
« Reply #2 on: November 01, 2016, 12:45:41 PM »
If your friend is charging you $500 and that includes all the utilities and you can find a place to rent for $750 w/ 2 bedrooms...  Why not look into buying your own place?  If the landlords are following the 1% rule a place could cost around 50-75k.  Or even around 100k, I think that would be a better investment strategy.  That is just my two cents

MVal

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Re: Renting house alone after renting with roommate--thoughts?
« Reply #3 on: November 01, 2016, 02:02:08 PM »
If your friend is charging you $500 and that includes all the utilities and you can find a place to rent for $750 w/ 2 bedrooms...  Why not look into buying your own place?  If the landlords are following the 1% rule a place could cost around 50-75k.  Or even around 100k, I think that would be a better investment strategy.  That is just my two cents

That's a good thought and I've considered buying, but I just don't feel comfortable with doing that while my 'stache is so small still. I just don't have the capital in liquid assets yet for a 20% down payment, closing costs, repairs and any other expensive stuff that comes up with home ownership. I'm also not certain I'll still be in my current city more than 3 years from now.

I had thought I might rent alone for a while and if that goes okay and I can still build my 'stache, I might look at buying depending on what happens and where I end up.

erutio

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Re: Renting house alone after renting with roommate--thoughts?
« Reply #4 on: November 01, 2016, 08:16:10 PM »
I'd say go for it. 

However, a few questions:  if you're living by yourself, why rent a 2BR?  could you save some money by renting a 1BR?
Would you consider renting/subletting the 2nd BR if you you do go for 2BR?  (even though I understand one of the main reasons for moving out is privacy...)

Regarding buying, it may not be that out of reach for you.  Also, if you buy a 2BR, you could rent out the second BR and have control of who your roommate is, and have more control over how the common areas are used.

MVal

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Re: Renting house alone after renting with roommate--thoughts?
« Reply #5 on: November 02, 2016, 07:47:54 AM »
I'd say go for it. 

However, a few questions:  if you're living by yourself, why rent a 2BR?  could you save some money by renting a 1BR?
Would you consider renting/subletting the 2nd BR if you you do go for 2BR?  (even though I understand one of the main reasons for moving out is privacy...)

Regarding buying, it may not be that out of reach for you.  Also, if you buy a 2BR, you could rent out the second BR and have control of who your roommate is, and have more control over how the common areas are used.

Well, I guess I just want the space. I'd like to have the extra room for storage and projects, plus being able to have guests. For the near decade I've lived in this city, I've never been able to have my family who live 2.5 hrs away stay at my house because I've never had room. And as it is right now, my bedroom is jammed with all my personal effects and potential project material because I don't have another room to put it all. After speaking with the property manager of the $740/mo house, he let me know he has a variety of duplexes in another neighborhood nearby that are only $650 or so per month, so I may look into those this week as well. I drove by them yesterday and they don't look half bad.

If I could get really organized, I might be able to purchase a home and rent the 2nd room out, but I'll most likely try living alone first as I think I just need a break from sharing space with other people.

Fredster4

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Re: Renting house alone after renting with roommate--thoughts?
« Reply #6 on: November 02, 2016, 11:48:20 AM »
From a completely mustachian perspective, and speaking within the context of recognizing that owning your own place will be part of the path to wealth, making this move now will extend the time required for you to save the amount necessary to have a down payment.

Real estate from a pure investment vehicle is pretty poor, in view of the fact that real estate has appreciated on average .3% over the last 100 years.

So when I say the path to wealth being partly in real estate ownership is because of the usual leverage you utilize to buy it. If you buy a place for $100K and it appreciates 5%, that's only 5%. But if you only invested $20K (down payment) and borrowed the remaining $80K, that's a 25% return on your money. So most of the money I've made in my life, outside of my job, has been in owning real estate, so I would bite the bullet for a little longer and then buy your own place.

MVal

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Re: Renting house alone after renting with roommate--thoughts?
« Reply #7 on: November 02, 2016, 03:22:04 PM »
From a completely mustachian perspective, and speaking within the context of recognizing that owning your own place will be part of the path to wealth, making this move now will extend the time required for you to save the amount necessary to have a down payment.

Real estate from a pure investment vehicle is pretty poor, in view of the fact that real estate has appreciated on average .3% over the last 100 years.

So when I say the path to wealth being partly in real estate ownership is because of the usual leverage you utilize to buy it. If you buy a place for $100K and it appreciates 5%, that's only 5%. But if you only invested $20K (down payment) and borrowed the remaining $80K, that's a 25% return on your money. So most of the money I've made in my life, outside of my job, has been in owning real estate, so I would bite the bullet for a little longer and then buy your own place.

Thanks for the objective insight! I think you are right. If I were handier and good with a box of tools, I would probably jump on a little fixer upper for about $50-60K as I could definitely do 20% down on something like that right now. I'm hoping to join Habitat for Humanity and learn some skills soon if I can.