Buy or rent? 5 year plan

[breathemusic]

I found myself in a similar situation. I got out of college, moved to start a job and once I realized that I would probably make a career of it and stay there long term, I immediately started saving up for a downpayment so I that I could own my own place. Now, I think... hey, I'm single and not married, and given I'm in the DC area, what would happen if I bought in DC but eventually married and it was more convenient to live in MD, or in DC or some other combination of that scenario. It seems a bit hasty to just jump into owning a house. I still am working on saving anyway so that when I do know what I want, I have the funds to do it and don't have to wait years while I save. But it did make me step back and consider what was actually the smart long-term move.

[kork13]

Part of it is what I mentioned above and the other is the fact that our little girl needs some space to run around in. My wife feels this more than I do, but I'm not going to say it's an invalid position. Sometimes it's not all monetary.

Any advice for a situation where you're not sure you'll be stationary for 5-8 years but does need the space for a growing family when there are few rentals? I don't believe buying is completely right for us at this point.

"Renting" doesn't just mean renting an ultra-tiny apartment in the middle of downtown. You can just as easily rent a house as big or small and with as much or little land as you need. It depends of course on the market you're living in, but often, renting a house (SFH) can be less expensive than comparable sized apartment, and for the same cost, you can rent a larger, nicer house with more land. Just as an individual example, I'm moving to Oklahoma, and one place I found for rent had an acre of land with the house, and it was surprisingly inexpensive... The trade-off you typically see, though, is that larger/more open places like that are a little further out from city centers. Really, it's just a matter of looking. In almost every market, there's almost certain to be the "perfect" house for any renter... It just takes some time and effort finding the right one.

Alternately, there's really nothing wrong with buying a house if that's what your family needs. And as I said, 5-8 years is sort of a balance point. It just sort of depends in that time-frame. If you get a good deal, it can be totally worth it.

[PetMom]

Definitely rent.

As mentioned the down payment, closing costs and fixes you want to do would eat up money.

Plus you get the pure luxury (if with a good apartment and manager) to call in the middle of the night for a plumber without paying.

No worries of having to find a buyer when you would sell and people always have to spruce up to sell a home.

Also - no maintenance costs or yardwork costs.

[YLTL_Dan]

It sounds like my advice might be somewhat contrary to most that's given so far... but hear me out...

For me, it depends on two things (outside of affordability):

1. What's the real estate market like?
2. What are you like?

My wife and I were in your position three years ago when we moved to New Orleans. She's on a three year contract (expires Oct 2012) with the possibility of extending or leaving (still up in the air). My advice is based on what we've done.

1. What's the real estate market like?

We moved to an area with high demand and low supply. We spent money to get into the smallest fixer-upper house in a great neighborhood. Our area was expected to appreciate in the years after we bought it, and sure enough it has (wasn't based on BS government predictions either!).

2. What are you like?

I can't sit still, and I've always wanted a house to work on and fix up. My wife and I have completely renovated our house in the last two years. I love what we've done to our house and the memories/experience we've gained from doing it. I can't imagine how different it would've been the last 2.5 years if we didn't have our own house. Even if we sell at the three year mark, we'll still make money on top of the renovation expenses.

Before New Orleans, I rented in Dallas for five years. I was lucky to not have enough money to buy into what is now a weak market there..

[KiwiJo09]

I'm going to be buying a house and I'm planning on living in the area for the next 5 years or so. The thing is, rent down here is ridiculous compared to purchasing price. I was recently looking at a townhouse that is up for purchase for $70,000. The same townhouse model in the same community is also available for rent for $1,600 a month. With all the fees, the monthly payments on the mortgage will be closer to $600 a month. It ends up saving us money after the first year, even with larger upfront costs.

That's the only reason I would purchase. If I were going to stay in the area less than 5 years, I'd just rent. But also, I don't plan on selling after the 5 years is up. I plan on renting it to a different individual. So, for my particular situation, it makes sense.

[Leishrac]

With the time duration you've stated, I'd rather opt of renting property to live with since it gives you the maximum flexibility of moving out even if it is less than the year you stated.

[Kelli-Saving Money]

Renting all the way

Renting is absolutely the way to go if you stay in the home for less than 5 years. You will not have time to get your investment back otherwise.