Problem is, we can't decide if it makes more sense to rent or to buy. The housing market here in Baltimore is just out of control. That might be good, and it might be bad. If it stays out of control, chances are good that in two years, we'd make some good money. If people all of the sudden come to their senses and are no longer willing to pay 300K for 1000 square feet of space (c'mon who are we kidding -- people (as a whole) will never come to their senses), then we might just barely brake even, or even worse: lose money.
I'm not all that concerned about a "housing bubble" because quite honestly, I don't think that's going to happen soon. However, I am concerned about something else that was pointed out to me. A lot of people who bought houses in the last 5, 7 or 10 years, got a mortgage of 5, 7 or 10 year Arm. That means that after their initial 5, 7 or 10 year, their interest rates could go up significantly. Since people tend to live outside of their means, a lot of those people will no longer be able to make their payments after their interest rates increase. Thus, they will be forced to get rid of their homes, and all of the sudden we have more houses on the market. And this is not a good thing if my goals is to make 50K in two years from Real Estate.
So the million dollar question. Does it make more sense to rent or to buy? I'm taking a poll, and I need your input!
Please consider the following:
- It is very likely that will we only be in Baltimore for about 2 more years (though the possibility exists for 3 or 4 (tops).
- Our monthly mortgage payment would probably be in excess of $2200! For 3/4 of that, we could get an awesome apartment.
- I'm ultra, ultra conservative with my money and don't like to spend large sums of money ($20) at at once. A pair of pants that costs more than $20 is extravagent in my opinion.
Comments not only welcome, but desperately needed!
6 comments:
The market is so high right now. I almost cannot believe how much a house goes for. In Hampden just two years ago you could buy a nice place for 90k. Now they are all going for 200+. The question is how long do you plan on staying. If you want to leave in two years you might make a few dollars but how close are we to the peak of the market. Chances are the market will still rise and you can make some money. It's a hard question these are some reasons to rent and the only reason I bring them up is that you plan on moving in 2 years, but I not sure what I would do if I were in your shoes:
Ten Reasons to Rent Rather Than Buy
Don’t feel left out if buying just isn’t for you (now or ever). Tenancy can
make good sense for a multitude of reasons…
1. All you typically need to get into a rental is first and last month’s rent and a security deposit – much less than the average down payment and closing costs.
2. Want to come and go as you please? Renting offers the ultimate in mobility.
3. You don’t have to worry about the trouble and expense of major maintenance. If the roof leaks or the building needs a fresh coat of paint, you’re off the hook.
4. It may cost less per month to rent, even with the tax benefit of owning.
5. There is no guarantee that your home’s value will appreciate – and you could make more money in another investment.
6. You don’t have to bother with property taxes.
7. Your landlord may cover some or all of your utilities.
8. If your credit isn’t perfect, it’s often easier to rent than buy.
9. Like any other investment, real estate is volatile. If you lie awake at night wondering if you may lose your life’s savings, you may be better off renting.
10. You could have the use of a pool, tennis courts, and social rooms included in the cost of your rent – out of range extras for most homeowners.
Mario,
Thanks for the input. You brought up some good points that I hadn't thought of. I really like the flexibility that renting provides, and it's also very true that money can be invested in other ways besides real estate. All good points.
Nice post!
Pppppbbbbllllttthhhh!!! I say I'm sick of trying to make decisions. I don't want to think anymore. I want to go to sleep for a few days, and when I wake up, someone will have made the right choice for us ... and moved all our stuff for us too!
Buy the friggin condo!
lemme give a shout out to Captain Lou and China....Holla!
Including college (which is really renting, if you think about it), I rented for 9 years after high school, then got married, then rented for the first 3 years of marriage. At 31, I bought my first home.
Once I realized that our rent was more than our mortgage payments would be (which it was for the type of house we wanted to buy where we lived in Washington state), then buying was a reasonable option. I'm not sure we would have bought if this weren't the case. Also, the home prices were much more reasonable in our part of Washington state -- if we lived in Seattle, we couldn't have afforded a house we wanted and probably would have continued to rent.
It's better to rent a place you like than to buy a place you don't want just for the sake of buying.
Dumb luck is important too. You have to live (or want to live) in an area where the home prices are in your favor. You're sort of screwed if you live in a market like San Francisco or San Diego, where a shack near the airport is $500,000. Don't buy something just to own it and then be screwed by being stuck with it if the market collapses.
Agreed!
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