Rent or buy? Good deal and a good time to buy?

[G in MP]

Originally Posted by BRU67

Oh, and yes, I am. The OP asked whether utilities cost less for a smaller place, so it's relevant. My heating bills in the house were ridiculous. Up to $400/month sometimes, back in the mid-00s. My current apartment's highest gas bill last winter was like $130. The tenants pay for their own heat.

I suppose if you're renting a whole house and responsible for the heat it's a wash, true. But the OP wanted to know if he could reduce his housing costs with a smaller place. The answer is yes.

Well you and I were chatting specifically about rent vs buy, but anyways, guess what, your furnace, water heater and/or insulation is no bueno!

I got me a 2800 sq foot house, well insulated with high efficiency mechs. My highest gas bill of last 2 years: $91 last Feb. Pretty high for the winter, I'm usually paying $70's around then. In the summertime, I'm in the high $20's to low $40's. Yey for home ownership! See, you could decide what you have when you own place.

[BRU67]

Originally Posted by RamenAddict

It depends on where you live. I am in a home now that is around the same size as my last apartment and the utilities are lower. I had an ancient (like 30yo) HVAC unit that was wildly inefficient and the heat was electric. That said, the AC was more expensive than the heat. I would spend $200+in the summer for AC. I think the main difference of a house is that you can choose when to update your HVAC and how efficient you want it to be. In an apartment, you are at the mercy of the landlord because they really don’t care how much you pay for utilities as long as it works.

True, good point, but after the joys of home ownership, I'd personally take the mercy, LOL! If you get a bad LL who won't fix things, you can always move when the 1 year lease is up. With a house, that's not so easy.

[globalnomadmw]

I'm a finance guy who owns rental properties and have actually done a lot of number crunching on this exact topic.

Based on my experience, if the rental cost is equivalent to the buying cost (almost never, but it's getting close in a LOT of markets in the last ~5 years or so now that we have things like case shiller and hedge funds participating in the market), and home prices go up with inflation and so do rent (which is a safe assumption unless you think you have better insight), it looks like this:

1 to 4 years before you sell: rent it
5 to 10 years: anything is better than renting, but interest only is the winner when compared to 30 year or 15 year loans
10 to 30 years: I/O beats the pants off everything with 15 year being the second best after 20 years
30+ years: 15 year mortgage is the winner

So my advice is rent until you can't (some markets there just aren't rentals), I/O if you can get one, and 30 year if you can't, since almost nobody actually lives in a house for more than 30 years, especially since kids leave after 20 years.

[51squirrel33]

you mentioned of knowing some things will have to be fixed: believe me there will be many more you do not know about, if you need close to $100K to make it livable or presentable to yourself, think for some time before you buy. Even the newer dated houses have issues needing much money to fix it up, everything over 4o years old will have more problems than you can anticipate. Finding general or specific contractors these days is a lottery ticket. If you do not need all those sq feet just look for some smaller houses: gas bills are doubled this winter as oppose to last winter. Space is good to have but maintenance of extra space cost extra money. You may be lucky to sell it quick and for more in 4 years, but the key word is: may be.