Rent vs Buy - planning to move in 5 years (real estate, rentals)

[zeekosu]

Current situation:
Live in HB
Pay 3500 per month for rent - 3bdrm 3bath house 1900 sq.ft., about 1/4 mile from beach
Salary 165k per year

I do not plan to stay in California for more than 4 or 5 more years. I have a good job with the potential for a decent payout in 4 or 5 years. I would then move back to east coast near my family and work a less stressful job.

I'm curious what everyone's thought is on whether or not its smart to buy right now. From what I see it costs about $1000 more per month to own than it does to rent the same house. If I dont plan on being in this home does it make sense to even entertain the idea of buying? If I was going to buy I'd only really be looking at homes that need work, as I enjoy that. But most homes like that are snatched up pretty fast it seems.

Also with the election next year and everything that's going on in the financial sector, I'm not sure if this is a good time to buy or not. Others are telling me to wait until after the election next year and others are saying the market is at a high point right now. So if renting is a safer bet then maybe that's the way to go.

But curious to get your thoughts.

Thanks

[Electrician4you]

How much are you putting down? What’s your target price? What city are you looking to buy? How recession proof is your job?


Personally........I would hold off. Any or most gains are gonna get eaten up by commission. Save yourself 60,000 bucks. Unless you need that much house (assuming you’re single or small family) I would go as far as moving into a smaller townhouse at around 25/2700 for another 50/60k have a addiction 120k to take with you in 5 years.

I don’t think the gains are gonna be as high in the next 5 years as they were in the last 5 years. I’m actually selling a rental property really close to HB

[zeekosu]

I can put down 120k. I've been targeting my monthly payment and I really don't want to spend more than what I'm paying now. I have a wife and 2 kids. I work near lax and I'm ok with the drive from hb but I dont really want to much farther unless I can really save a good deal of money in doing so.

My job is for a privately funded startup. Things are going well but as with any company that is funded by venture capital theres always risk. Our startup is in a growing industry that was unaffected by the last recession or market crash in 2008.

[Electrician4you]

Originally Posted by zeekosu

I can put down 120k. I've been targeting my monthly payment and I really don't want to spend more than what I'm paying now. I have a wife and 2 kids. I work near lax and I'm ok with the drive from hb but I dont really want to much farther unless I can really save a good deal of money in doing so.

My job is for a privately funded startup. Things are going well but as with any company that is funded by venture capital theres always risk. Our startup is in a growing industry that was unaffected by the last recession or market crash in 2008.

Even though you have the money to buy I would hold off. I’m very pro home purchase/Real Estate investment but the only thing stopping me if I was in your case there are a few things telling me to say rent. The 5 year and I’m out strategy is the biggie, $1000 less rent vs buy and truthfully your job. While it is a good money maker if the economy starts recessing bad things can happen and you’re left holding a bag. I’ve been through two big downturns in our economy the mid 90s and the late 00. I’ve seen people lose jobs and lose a lot of assets because of that.

If you were holding long term and stayed here........I would say otherwise.

[joepierson]

That rent is very cheap for a house that size so close to the beach. I keep renting.

[Electrician4you]

Originally Posted by joepierson

That rent is very cheap for a house that size so close to the beach. I keep renting.

Yeah I would keep renting. Are you renting from a LLC or a private LL?

[zeekosu]

I'm renting from a private landlord.

[zeekosu]

Has anyone come across any online articles that discuss this in detail to argue which direction is better.


Does it generally cost more to own than it does to rent? With mortgage and taxes insurance etc are you likely going to spend more on a yearly basis than it costs to rent the same house? Even with 20% down it seems like monthly expenses are much higher

[Electrician4you]

Originally Posted by zeekosu

Has anyone come across any online articles that discuss this in detail to argue which direction is better.


Does it generally cost more to own than it does to rent? With mortgage and taxes insurance etc are you likely going to spend more on a yearly basis than it costs to rent the same house? Even with 20% down it seems like monthly expenses are much higher

Really depends.

In the beginning it usually cost more to buy than to rent. Both in initial cost to acquire and monthly payment not to mention repairs.. Eventually the rent overtakes the ownership cost. At least in my case. Right now strictly speaking about our rentals the rents are double my mortgage payment would be.

My most recent house where 8 live I bought three years ago. 20 down. The property went up in value about 25%. To rent a similar house it would be about $3-400 more than my payment.
If I were to sell now say I would get 625k.i would give 40k to the agent, another 19k in various taxes fees etc. I would walk away with 50k profit not including the equity. So for three years 8 would walk away with somewhere around 16k a year in profit.

Now my rentals since they were long term hold id walk away with quite a bit.

[CA4Now]

Originally Posted by zeekosu

I'm not sure if this is a good time to buy or not.

It's debated frequently in the Real Estate forum.

//www.city-data.com/forum/renti...p-renting.html