My partner and I are starting to think about where to live next year. We are tired of our current apartment. It’s very inconveniently located for my work, lacks storage, and has a terrible kitchen. The square footage and rooms/bathrooms are good, though.
We are on the fence about rent vs buy. In most of the financial calculations, I think that buying would work in our favor vs renting as long as we keep our budget to <$280k, which is totally doable in our area. I have a few specific scenarios that I’m interested in hearing a second opinion on…
Scenario 1: Stay in current apartment. This means a long commute for me but zero commute for DH as we live across the street from his work. It’s about a 15 minute drive to daycare which we would have to make every day (we drive to daycare, drop kid off, then I get the bus and continue to my work).
Rent: $1640 for 3 bed/2 bath apartment. Will probably go up next year to be closer to $1700 if history is any guide.
Advantages: Good space/sq. footage in apt, good layout, the things I don’t like aren’t dealbreakers. Room to add another kid or remote working office space if needed.
Disadvantages: Rent is pretty high, location isn’t the best or easily accessible to public transit. Drive to daycare is pretty long and needs to be done 4x a day (DH and I drop kid off, DH drives back to work/home, DH drives to pick kid up, DH drives kid home). The miles and time add up.
Scenario 2:
Rent townhouse across the street from daycare. Walk to daycare. 2 bed/2 bath, so we’d lose a bedroom and some square footage, but we’d gain a small yard, garage, and a downstairs family room. $1600/month in rent. None on the market to buy at this point in time.
Advantages: great location, upgraded in all the areas I care about (better kitchen, better layout/space, better storage, yard/outdoor space). Roughly same or a bit less in cost than we are paying now.
Disadvantages: ??? No major ones that I can think of… DH loses easy walk to the office, but he only would need to go in once a week or so, or if his boss is in town. I would still catch the bus to work but my commute time would be shortened from 40-45 min down to about 30 min.
Scenario 3:
Buy different, smaller townhouse also within walking distance of daycare. 2 bedroom/1.5 bath, no bonus room. Purchase target would be about $160k with 10% down. All-in monthly payment (PITI + HOA) estimated around $1215/month. Currently there are a few units for rent in this complex, rents vary from $1450-1550/month. The idea behind Scenario 3 would be to buy, live there for a few years or until DD is out of daycare, then rent the unit out as an income stream while we move to our “forever home.”
Advantages: good location, mortgage payment much cheaper than renting, build equity, future income possibilities.
Disadvantages: To buy at our target price point, the available townhomes are pretty small and the layout is not my favorite. No bonus room and the living/kitchen is a little tight. I think we could make it work as a family of 3 but if we upgraded to family of 4 we’d be bursting at the seams.
My favorite option is scenario 2, but that’s because the townhome is the most “livable” for us/me in terms of location, size, layout, etc. We’d still be renting under that scenario and not building any equity or laying the groundwork for a future income stream from a property rental which is something I feel we need to be looking at. Scenario 3 makes a lot of sense from a financial perspective, but the size and layouts of the townhomes make me really nervous about trying to force us into a space that won’t work for us just because the money is better.
It’s possible that a townhome would come up for sale in the Scenario 2 complex, which might be the best of both worlds, except that in looking at recent prior sales, the prices in this complex are much higher - $230-$250k range – but the current rents are not much higher than the cheap complex (around $1600/mo), which makes the math not quite as appealing as Scenario 3.
Interested to hear thoughts/opinions/things I’m not considering…
