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Old 02-11-2009, 11:29 AM
 
343 posts, read 872,651 times
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Me and my wife to be are considering buying a townhome/condo after we get married. We are currently buying a lot to build a house on but that will not be until 2-3 years down the line. Just wondering how this market is doing during these times.
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Old 02-11-2009, 11:53 AM
 
Location: A little suburb of Houston
3,702 posts, read 16,927,858 times
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If you are going to be building a house in 2-3 years, I would consider renting.
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Old 02-11-2009, 01:07 PM
 
343 posts, read 872,651 times
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Quote:
Originally Posted by Poltracker View Post
If you are going to be building a house in 2-3 years, I would consider renting.

What are the pros of renting rather than buying? My thinking was to buy a condo then either sell it or rent it out.
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Old 02-11-2009, 01:33 PM
 
Location: Houston, TX (Bellaire)
4,900 posts, read 12,381,462 times
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Quote:
Originally Posted by ssgmun5000 View Post
What are the pros of renting rather than buying? My thinking was to buy a condo then either sell it or rent it out.
The pros of renting is not having to sell your condo at a loss after 2 years. You should never buy for just 2 years. Lets look at a 200k condo rent vs buy:

Rent:

$1500 x 24 months = $36,000

Own:

Closing Costs to Buy: $6000
Mortgage and Assoc Fees: $1900 x 24 months = $45,600
Closing Costs to Sell at 205k: $14,350
Total Cost: $65,950
Less Equity: $8000
Total to Own and Sell: $57,950

Owning will cost you roughly $22,000 more than renting over a short period like that and that assumes some appreciation in the market which most areas are not having right now.
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Old 02-11-2009, 01:58 PM
 
152 posts, read 501,361 times
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That's a nice analysis...

With the $22K extra cost over 2 years, which averages to $917/month, the question to OP becomes: is it worth paying $917 extra per month to get a (presumably) better-looking, more spacious space, better safety in a condo vs. a rental property?



Quote:
Originally Posted by chris_ut View Post
The pros of renting is not having to sell your condo at a loss after 2 years. You should never buy for just 2 years. Lets look at a 200k condo rent vs buy:

Rent:

$1500 x 24 months = $36,000

Own:

Closing Costs to Buy: $6000
Mortgage and Assoc Fees: $1900 x 24 months = $45,600
Closing Costs to Sell at 205k: $14,350
Total Cost: $65,950
Less Equity: $8000
Total to Own and Sell: $57,950

Owning will cost you roughly $22,000 more than renting over a short period like that and that assumes some appreciation in the market which most areas are not having right now.
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Old 02-11-2009, 02:08 PM
 
78 posts, read 271,957 times
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Quote:
Originally Posted by chris_ut View Post
The pros of renting is not having to sell your condo at a loss after 2 years. You should never buy for just 2 years. Lets look at a 200k condo rent vs buy:

Rent:

$1500 x 24 months = $36,000

Own:

Closing Costs to Buy: $6000
Mortgage and Assoc Fees: $1900 x 24 months = $45,600
Closing Costs to Sell at 205k: $14,350
Total Cost: $65,950
Less Equity: $8000
Total to Own and Sell: $57,950

Owning will cost you roughly $22,000 more than renting over a short period like that and that assumes some appreciation in the market which most areas are not having right now.
that is a good analysis. thanks for breaking it down like that. really helpful.
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Old 02-11-2009, 02:21 PM
 
58 posts, read 110,988 times
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Don't you get back the mortgage amount for 24 months in the price you sell for? I would think the only loss is closing costs and interest to the bank.
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Old 02-11-2009, 03:18 PM
 
Location: houston
438 posts, read 1,157,277 times
Reputation: 252
Quote:
Originally Posted by rx81 View Post
Don't you get back the mortgage amount for 24 months in the price you sell for? I would think the only loss is closing costs and interest to the bank.
Depends if the market appreciates or not. If you bought at $200k and in two years you sold your home for $180k. You still owe them that $20k difference. You'll need to pay property taxes during those 2 years as well.
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Old 02-11-2009, 04:27 PM
 
Location: A little suburb of Houston
3,702 posts, read 16,927,858 times
Reputation: 2075
Quote:
Originally Posted by rx81 View Post
Don't you get back the mortgage amount for 24 months in the price you sell for? I would think the only loss is closing costs and interest to the bank.
No, remember that for the first several years what you are paying is mostly interest on the loan, not equity. So you will only see back a very small portion of that mortgage payment.
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Old 02-11-2009, 04:40 PM
 
343 posts, read 872,651 times
Reputation: 165
Quote:
Originally Posted by chris_ut View Post
The pros of renting is not having to sell your condo at a loss after 2 years. You should never buy for just 2 years. Lets look at a 200k condo rent vs buy:

Rent:

$1500 x 24 months = $36,000

Own:

Closing Costs to Buy: $6000
Mortgage and Assoc Fees: $1900 x 24 months = $45,600
Closing Costs to Sell at 205k: $14,350
Total Cost: $65,950
Less Equity: $8000
Total to Own and Sell: $57,950

Owning will cost you roughly $22,000 more than renting over a short period like that and that assumes some appreciation in the market which most areas are not having right now.

Thanks for the breakdown.
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