Buying vs Renting (real estate, apartment complex, rental)

[baker_001]

Hello,
We are in the phase of deciding as wether we should buy or rent. For me renting for some time is a better option but owning an equity is good too. So if you guys can help us in deciding , I would really appreciate. For me the buying is like you are committed for no less than 30 yrs payment and then the extra cost etc.

[houstonfan]

This is broad generality but rules of thumb:
- buy if you plan to live in same spot for 5yrs or more, you'd likely lose money if you move before
- buy if you like the lifestyle of owning versus renting (you won't have to worry about maintenance, you may have amenities like gym, pool, etc if you rent)
- you can comfortably afford to buy in the house and area that you like (factor in tax, repairs, interest, insurances, etc). No point to buy a house you don't like or to stretch yourself thin just to 'own'. I would also suggest renting until you know where you want to buy.
- buy if you need lots of space. It's hard and expensive to find a large apt, although you could rent someone's house. If all you need is 1-2 bdrm and no yard, you may save by renting for the same neighborhood and quality of housing.

Remember that ownership does not always mean a better financial decision. If you buy in an area that depreciates or doesn't appreciate enough to keep up with inflation, and factor in real estate transaction costs, you may be better off renting.

[hulio82]

open up a spreadsheet and start to document all the costs associated with both. I love having a house, but personally feel there are just way too many expenses which you just don't think off.

e.g., we were living in sugarland in an apt where our rent was $925 monthly. our mortgage for the house is $1200 which isn't a lot, but we will have to pay approx $10K in property taxes which is almost a full years rent.

also, in an apartment, our expenses were pretty close to fixed- in a house, its like everyday i find something new i need to pay for. but i guess that's just part of home ownership.

but like i said, just make sure you know what you are getting into- all the expenses involved becuase we didn't and had we known them, we may have postponed our plans to buy a house.

[Jonathz]

In that case, you might want to consider renting a house to see if owing a house make both economic sense and fit your life style

[piyf]

Even if you live there for 5 or 10 years you will still most likely lose money unless you pay cash and don't use a real estate agent.

[Mr. Krinkle]

Originally Posted by piyf

Even if you live there for 5 or 10 years you will still most likely lose money unless you pay cash and don't use a real estate agent.

This is a ridiculous statement unless you plan on trashing your house.

[rabii]

I am going to buy the house so that when I retire I don't have to worry about paying rent every month.

[Meyerland]

You have to start sometime on the property ladder. If we had bought that townhome in the Galleria area 15 years ago, we would have doubled or tripled our investment. Instead, we gave our money away to our Apartment complex and partied. Later we bought a cheap home in the burbs, which we made a little bit of money on when we sold it.
Hindsight, eh?

[abdulf]

You can buy in a masterplanned community and have some assurance of stable property values (+/- 10%).
You can buy a place whose monthly rental income is at least 1% of the property value. (1000/rent = 100,000 property).
Outside of that, you're just buying because you like spending on houses.

Don't buy because rates are low.
Don't buy because prices are going up.

Buy when you can afford to. If you don't like what you can afford, rent. If you can't rent what you like, then buy what you can afford as long as you've determined you can rent it for a profit.

[KC_Sleuth]

Originally Posted by Meyerland

You have to start sometime on the property ladder.

Having owned a house, I find this not to be true. I hated home ownership. I don't want my home to be an investment....I invest in options for that...if I lose my shirt at least I don't have a large item to maintain. As for when I retire, I can just buy an airstream and live out of that if things became tight (but I plan on making money until I am dead). My situation is different - we are DINKS and don't want a family. As for paying rent forever, I always worried more about having infinite revenue streams rather than having expense with finite timespans.