"If you're planning on moving in the next 5 years, rent" (investment, mortgage)

[karmic line]

There was a very popular financial writer who wrote a column arguing as much recently. You can easily google it, i'd post it but it would violate rules here.

Do you agree or disagree? FWIW the writer's main argument was about equity and mortgage fees, so unfortunately he made no case either way for those buying with cash.

[Mike1306]

This has generally been true for most areas for quite a long time, nothing new, 3-5 years. Of course if you are buying cash it changes it a bit on the time frame.

[chet everett]

Even if you are paying cash the transaction costs and taxes in many parts of the country would make it a losing proposition.

[MrRational]

Originally Posted by karmic line

You can easily google it, i'd post it but it would violate rules here.

You can LINK to the article (as well as quote a pertinent paragraph or two).
Here's a LINK to another webpage discussing common wisdom.

Do you agree or disagree?

Odd exceptions aside... most common wisdom is valid.

[davebarnes]

The minimum transaction cost of selling is 7%.
Typical can easily approach 10%.

The minimum post transaction cost for a buyer is zero$.
This does mean sheets nailed to wall to act as curtains.
Most people spend in the 2+% range.

Rent if 3-5 years.
Buy if 5+ years.

[manderly6]

Hard to argue with basic math.

[farmermac]

around here mortgage closing costs are under $1000. I wouldnt even consider them if buying a place. Inspections (general, pest, radon) cost $450. So $1500 cost to buy a place. Not sure thats worth 5 years of renting to avoid..

[manderly6]

Originally Posted by farmermac

around here mortgage closing costs are under $1000. I wouldnt even consider them if buying a place. Inspections (general, pest, radon) cost $450. So $1500 cost to buy a place. Not sure thats worth 5 years of renting to avoid..

You also have to factor in the costs to sell at the end. And for most people that is automatically 5-6% just for a realtor. Plus home ownership costs not associated with renting.

[city living]

We bought a place even though our future is uncertain.

As long as we renovate things, I don't see us having a problem or losing money. Most likely, however, our renovations would actually allow us to list probably 50K higher than what we our place for and probably sell it for 40K more. We didn't really pay much in terms of closing fees and our rent was higher than our mortgage + maintenance costs. They're not huge renovations so there should be a net profit and the housing market here wasn't hit as hard as other places.

We bought the place because I'm very familiar with the real estate and could see this as an investment. I could really only justify buying a place in the short-term (<5 years) if I was very familiar with the market in the area and knew a little bit of work would bring me a little bit of cash. I would never buy something to live in, short-term, that's been completely redone (no way to improve value) and the market seems relatively stagnant.

[TimeMachine]

We purchased undervalue and still have about 20% equity. We've added ceiling fans, new lights and a backsplash. We are planning on living here 5 years, with the current equity and the small upgrades (keeping on top of maintenance), we hope to be able to sell when we leave. There just aren't many rental communities in our areas, other than ramshackle six unit buildings with open dumpsters pushed up against the side of the units. ::shudder::