continue renting vs buy a house

[amdskip]

Current rent: $485, most likely will increase to $525 next year
Approximate house cost: $60-90k

I'm 24 and working full time while doing 2 grad classes a semester and I plan on living here another 2-3 years. I have enough to make a 20% down payment easily.

I just feel like I am throwing away money and I have nothing to show for it. My current landlord is already asking if I want to renew for next year.

Edit: Small town of 21,000, 9,000 during the summer when the college students are not here. I don't see the market dropping off here. If I do get a place, I will definately put some money in it as I enjoy do it yourself type of things.

 

[pmoa]

60-90K is a down payment on a house here in Baltimore! I say go buy!

 

[vi edit]

Given the time frame (2-3 years), the current slumping housing market, and the fixed income that students typically have....

Rent.

 

[krunchykrome]

Originally posted by: amdskip
Current rent: $485, most likely will increase to $525 next year
Approximate house cost: $60-90k

I'm 24 and working full time while doing 2 grad classes a semester and I plan on living here another 2-3 years. I have enough to make a 20% down payment easily.

I just feel like I am throwing away money and I have nothing to show for it. My current landlord is already asking if I want to renew for next year.

WTF? $485 rent? $60K-$90K for a house? God damn thats cheap.

 

[iamwiz82]

No way if you only plan on staying another 2 years.

 

[SarcasticDwarf]

Originally posted by: vi_edit
Given the time frame (2-3 years), the current slumping housing market, and the fixed income that students typically have....

Rent.

Yup. While you might make a small amount of money (and are equally likely to lose some), the hassle of selling a house 2-3 years later is not worth it.

 

[krunchykrome]

Originally posted by: pmoa
60-90K is a down payment on a house here in Baltimore! I say go buy!

For real, thats what I was thinking. Houses here start at $450K.

 

[iamwiz82]

Originally posted by: krunchykrome

Originally posted by: pmoa
60-90K is a down payment on a house here in Baltimore! I say go buy!

For real, thats what I was thinking. Houses here start at $450K.

Every time a thread like this is posted there is always a group who makes comments like this. That's great that your housing market is stupid, but most of the country's is not.

 

[Danman]

I wish the cost of houses here in Orlando were that cheap. I'm paying 1195/month for a 3 bed / 2.5 bath with two car garage townhouse. The average cost of houses around here start around $225 to 250k.


Edit: If you have the money, go for it. But I would definitely think twice on how long you want to stay there, who knows how the market will be in three years.

 

[krunchykrome]

Originally posted by: iamwiz82

Originally posted by: krunchykrome

Originally posted by: pmoa
60-90K is a down payment on a house here in Baltimore! I say go buy!

For real, thats what I was thinking. Houses here start at $450K.

Every time a thread like this is posted there is always a group who makes comments like this. That's great that your housing market is stupid, but most of the country's is not.

To those of us who live in a "stupid" housing market, those prices are astonishing, and there is nothing wrong with us pointing that out....in every thread.

 

[Queasy]

Buy and rent out when you leave for extra income?

 

[dullard]

Rent
Rent for 3 years at $525: $18,900. But you get to invest your $18,000 downpayment. By putting it in the bank (onine, but stay with the 100% safe banks), you'd get $2800 in interest. Thus, renting costs you a net of $16,100.

Buy a $90,000 house
[*]You are looking at ~$3,000 closing costs.
[*]$14,380 in interest.
[*]~$6,000 in property taxes (this depends a lot on where you live).
[*]$1,000 in insurance.
[*]$5,000 to sell the house.
[*]A $90,000 house is too small to get a tax deduction, so no help there.

Not cost: $29,380.

It will cost you an EXTRA $13,280 to buy the house. Now, if your house goes up dramatically in value, you may make up that difference. However, nationwide housing prices are going down. You will very likely sell the house for less than $90,000 in 3 years. Thus, you could lose $15,000+ by buying.

Now answer us the question. Is living in a house so much better that you are willing to lost $15,000? The answer may be yes, or it may be no.

 

[Stunt]

dullard,

Don't forget maintenance costs, utilities (usually included in rental appartments), additional living area to furnish.

 

[amdskip]

I wouldn't really furnish the additional living space. I pay utilities now so that wouldn't change. Taxes would be $3k or less I believe.

I have also considered renting a bedroom out if I got a place but that might be more of a pain than it's worth.

 

[dullard]

Originally posted by: Stunt
dullard,

Don't forget maintenance costs, utilities (usually included in rental appartments), additional living area to furnish.

I considered those, but they were just way too hard to estimate in a general post like that.

Originally posted by: amdskip
I wouldn't really furnish the additional living space. I pay utilities now so that wouldn't change. Taxes would be $3k or less I believe.

I have also considered renting a bedroom out if I got a place but that might be more of a pain than it's worth.

Utilities change dramatically on some houses. It depends on what you get though. Around here (Nebraska), an apartment will run you up to $100/month in winter and summer (half that in spring and fall). But an old house will run you $400/month in winter for heating alone. You cannot assume utilities will be the same. They may be similar if you get a newer house - but they can be far, far higher for an older home.

 

[Genx87]

Why not buy it and rent the place out when you leave?
500 dollar a month rent on a 70K unit isnt bad. Do you have roomates, what is the total rent for the entire house?

 

[radioouman]

Buy the place and then rent it out.

 

[amdskip]

I live in a 1 bedroom place now, most places with multiple bedrooms here rent for $400 a person and up.

 

[Stunt]

Originally posted by: amdskip
I wouldn't really furnish the additional living space. I pay utilities now so that wouldn't change. Taxes would be $3k or less I believe.

I have also considered renting a bedroom out if I got a place but that might be more of a pain than it's worth.

Utilities on a larger living area is much more expensive.

I've thought of buying myself but my rent is always lower than the sunk costs of the house. I just cannot justify the financial side.
Very little of the principle is paid down in the first year and at 6% mortgage = $5400 /yr
Maintenance; mowing grass, general upkeep, potential upgrade. = $1000+ /yr
Utilities will be more (larger area) = $50 /mo = $600+
Property tax = $3000
Total sunk costs per year are at least $10,000

Compare that to your rent = $5,820, going up to $6,300.

It's a no brainer really.

The above calcs are again sunk costs, not even accounting for additional money on the principle. Even then, there are much better investments out there which could appreciate much faster than a house.

 

[Fingolfin269]

Rent. You actually do have 'something to show for it'. You have a place to live and don't have to take any responsibilities in that property other than paying your rent on time.

 

[dxkj]

Buy and rent out a room or two.

live for free!

 

[cavingjan]

Two other things to consider: do you want to be tied down in 2 years when you finish your degree and decide to move on. If you are going to stay in the area after your degree, it makes the decision easier. If you will have to move to the other side of the country, trying to sell a house quickly or renting from such distances along with still maintaining the house can be difficult. Does your area have companies that will handling the renting for you after you move out of the area (again, if you do)?

Most importantly: do you have the time to maintain the house? Right now you have a place that takes about 2 hours (I'm just guessing) to completely clean with no repairs/maintainance. A house will now have lawn maintanance, snow removal, flowerbeds, plus a larger interior space to clean and the interior maintanance (mostly plumbing when the toilet continues to run or the occasional dripping faucet).

If you don't have both the money commitment and the time commitment, then I would continue to rent.

Without an increase in the selling price, you usually need 4 to 5 years to overcome the loss of the closing fees.

 

[Golgatha]

Originally posted by: dullard
Rent
Rent for 3 years at $525: $18,900. But you get to invest your $18,000 downpayment. By putting it in the bank (onine, but stay with the 100% safe banks), you'd get $2800 in interest. Thus, renting costs you a net of $16,100.

Buy a $90,000 house
[*]You are looking at ~$3,000 closing costs.
[*]$14,380 in interest.
[*]~$6,000 in property taxes (this depends a lot on where you live).
[*]$1,000 in insurance.
[*]$5,000 to sell the house.
[*]A $90,000 house is too small to get a tax deduction, so no help there.

Not cost: $29,380.

It will cost you an EXTRA $13,280 to buy the house. Now, if your house goes up dramatically in value, you may make up that difference. However, nationwide housing prices are going down. You will very likely sell the house for less than $90,000 in 3 years. Thus, you could lose $15,000+ by buying.

Now answer us the question. Is living in a house so much better that you are willing to lost $15,000? The answer may be yes, or it may be no.

Get one roomate paying $400 a month rent to the owner for 3 years and you make just a bit of cash. You also get assistence with food, utilities, etc.

Get two roomates at $400 a month and you profit while in school.

 

[Golgatha]

Originally posted by: dxkj
Buy and rent out a room or two.

live for free!

If it's a college town, then why not?

 

[snoopdoug1]

Originally posted by: Genx87
Why not buy it and rent the place out when you leave?
500 dollar a month rent on a 70K unit isnt bad. Do you have roomates, what is the total rent for the entire house?

That's a pain if he's not in the area anymore...