Buy VS Rent with specific details included:

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Buy VS Rent with specific details included:

Postby Enyar » Thu Sep 27, 2012 6:32 am

Hello everyone! I am a long time blog reader but first time poster. I was hoping to get your opinion on things.

My situation:

Currently renting a townhouse with 2 roommates. With utilities, I pay about $500 a month. Its a great size and very nice, the only issue is it's 45 minutes from work and farther away from where I want to be.

I've been looking for homes and I found one very close to what I am looking for. It's on the other side of town and about 20 minutes from work. Asking price is $150,000 and I would put 20% down. As an added bonus it is about 2 minutes to the nearest boat ramp and it is KIND OF waterfront which is great because I have a boat and love being on the water. The drawback is it only has a 1 car garage, probably requires flood insurance and not a great school district.

The thing that keeps me hesitant is the future. My 2 roommates would move with me but it would make their commute longer. I can easily see one of them not enjoying the longer commute and eventually moving out. The other one I think I could count on until early 2014. Also once 2014 rolls around my girlfriend's lease would run out and she would probably move in with me. That would be great but it also ads another x factor because that is right around the time she would probably switch jobs and who knows where that would be.

My details:
Income ~$58k a year
No debt
$55k in savings.

What do you think?

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Re: Buy VS Rent with specific details included:

Postby timwalsh300 » Thu Sep 27, 2012 12:21 pm

Buying a $150k, three bedroom home on your income and net worth isn't unreasonable, but you seem happy with one bedroom for yourself, so you'd be stuck throwing away money on space you don't really want if your roommates move out (and they will, eventually). I think you'd save both money and stress by continuing to rent one bedroom. Maybe look for an apartment closer to work, maybe with different roommates. Reconsider the "buy vs. rent" calculation if you find a one bedroom condo for sale, or if you get married, have a kid, and suddenly need more space.


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Re: Buy VS Rent with specific details included:

Postby Bichon Frise » Thu Sep 27, 2012 12:56 pm

timwalsh300 wrote:Reconsider the "buy vs. rent" calculation if you find a one bedroom condo for sale, or if you have a kid, suddenly need more space and then get married.


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"If you only have 1 year to live, move to it will seem like an eternity."

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Re: Buy VS Rent with specific details included:

Postby dpixel » Thu Sep 27, 2012 1:28 pm

With mortgage rates so low and very possibly going lower and housing well off it's highs, I would say real estate is one of the best investments right now.
In your situation though, you could go either way. It depends what you really want.
If you do get a mortgage, go with a 30 year and hang on to as much cash as you can. Rates this low, just might be a once in a lifetime opportunity.

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Re: Buy VS Rent with specific details included:

Postby catchingup » Thu Sep 27, 2012 2:06 pm

Would you have to have roommates to want/afford the condo? If so, I'd be very wary of making the purchase. I certainly wouldn't count on either of them beyond the length of their lease.

If you intend for you and your girlfriend to live together it might be worth waiting so that you can both pick a place and make it y'all's rather than yours, especially if you think marriage/kids/etc is on the horizon. On the other hand, if you're serious but not quite that serious it might be advantageous to have the condo clearly belong to one person.

Then there's the usual questions of how stable your job is likely to be, is it a place you'd be comfortable in for at least 5 years, etc etc. I also like to ask how the condo market is doing in your area because around here most suburban condos are still in the tank despite house values doing well through the recession, which could really hurt you if you sell in a few years.

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Re: Buy VS Rent with specific details included:

Postby bunbury » Sat Sep 29, 2012 7:53 pm

wow...why is your GF stuck on such a long term lease?

anyway, being next to water is great, but be sure to budget for flood insurance if it is in a flood zone (or is that covered by HOA?)...FEMA sets the rates, so you can't find a deal.

anyway, if you're young and mobile, and don't expect to stay 5+ years, probably not the best time to buy. You should also consider market conditions--if outlook is bleak, why tie yourself down to a potential bad investment.

If your commute is that bad, ditch your current roomates and find some place closer for rent...considering the purchase price in your current target location, rent can't be that much higher. sounds like you're in a situation living with your BFFs(?), so I guess we can't have it all...

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