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Old 06-12-2018, 10:02 AM
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Default Buy or rent as part of job move

I will likely be moving as part of a job change within the same company. I currently own my home with a mortgage ($414k balance, $500k value, 3.75%). I will be selling it (no interest in long distance landlordship). The company will pay for all costs to sell the home and move. This includes realtor fees, closing costs, and moving. Zero expense out of my pocket.

The question is what to do on the other end. Likely will be for 3 years and then maybe retire. The company will cover all costs to buy a new home, including closing costs. So this is zero expense out of pocket.

If the company weren't covering all transaction costs, this would be a no brainer and I would rent. But so far, the rental pickins are slim in the potential areas we would move to (Dallas, Pueblo, Leesburg) and buying would get us a house we would enjoy living in vs. a rental we could live with.

So, if the company is covering all transaction costs, why not buy what we want vs. rent what we could live with?

Scenario 1 (buy):

Sell current house: net $86k
Buy new house: no cost to me, but higher interest rate, get what we want, will put 20% DP

Scenario 2 (rent):

Sell current house: net $86k
Rent: no transaction cost, but might not find house we want. Easy to leave. No RE market risk.

After typing this out, renting seems to be the smarter move. Appreciate your thoughts and counsel.

Corn
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Old 06-12-2018, 10:14 AM
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I would rent.

If you don't expect to stay there long term, I wouldn't buy.

Even though there's minimal upfront cost to buying, you said you'd put down 20% so there's that expense.

When it comes time to sell, you still have that hassle to deal with. It's far cleaner and easier to just pack up at the end of your lease and be on your way.

Since the company is covering costs if you buy, will they also give you anything if you rent or just moving expenses? It would be nice if they would cover something toward renting.
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Old 06-12-2018, 10:26 AM
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I would say buying would only make sense if that is where you want to live after you retire.

How sure are you that you will retire in 3 years? If you had another company paid move in your future--well, maybe buying a home in Dallas for 3 years might work.

So, you and Texashusker will be in the same state.
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Old 06-12-2018, 10:26 AM
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Originally Posted by disneysteve View Post
I would rent.

Since the company is covering costs if you buy, will they also give you anything if you rent or just moving expenses? It would be nice if they would cover something toward renting.
That's a really good question. I think they will. A normal exec move package is $100k to $150k, so I bet I can get them to cover a year of rent as I look for a house. If I don't find one, then I just don't spend the whole $100k.
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Old 06-12-2018, 10:30 AM
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Originally Posted by Like2Plan View Post
I would say buying would only make sense if that is where you want to live after you retire.

How sure are you that you will retire in 3 years? If you had another company paid move in your future--well, maybe buying a home in Dallas for 3 years might work.

So, you and Texashusker will be in the same state.
Not 100% positive I will retire in 3 years. The financial part will be met, but if I can find a better work life balance, working more is not out of the question but it will be for fun, not for money.

When we do retire, it definitely will not be in Dallas. Haven't decided where, though.

Is TexasHusker near Dallas?
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Old 06-12-2018, 10:40 AM
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Is TexasHusker near Dallas?
I don't know, but if you start up your own business in 3 years when you retire I might think it is the "Texas" effect.
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Old 06-12-2018, 10:51 AM
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I don't think he is near Dallas.

I would also rent especially if you aren't sure where you are going to retire.
Let your company pay the rent at least for the first year.
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Old 06-12-2018, 12:26 PM
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I too would rent. After you retire move to a LCOL area and buy something nice.

If you're moving to leesburg and want a single family home...you're gonna have to pony up some serious coinage unless you buy a dump. Like most people you'll have to resort to townhome/condo living...at which point you're renting anyway.
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Old 06-12-2018, 12:58 PM
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Quote:
Originally Posted by Like2Plan View Post
I would say buying would only make sense if that is where you want to live after you retire.

How sure are you that you will retire in 3 years? If you had another company paid move in your future--well, maybe buying a home in Dallas for 3 years might work.

So, you and Texashusker will be in the same state.
I am in Texas but I am not a fan of the Dallas real estate market. Unless I was buying something in the $1 million range and planned to stay, there is zero chance I would buy there, even with a 10 year window. I am normally an advocate of home purchase, but Dallas is a very unique market and you can get burned very easily. I know several who have.

The culture in Dallas is that everything has to be "new", or it isn't desirable. As the suburb sprawl began, a place like Farmers Branch was the "latest and greatest". But 10 years later it was all worn out: The place to be was Plano. Then Frisco. Then Wylie, Argyle, Keller, Hurst, Colleyville, Flower Mound, Bedford, Euless, Allen, etc.

So, right now the hot ticket is Allen. Their high school has something like 8000 kids. Everyone wants to be in Allen. Every house is new. So when you buy your $250K house there, it never goes up in value, because they are building brand new ones a block down for the same $$. And you and your neighbors are competing trying to sell your used house. It's only worth $200K because it's used.

Fast forward 10 years, and Allen isn't the latest and greatest any more, and the school there is suddenly in decline. It's all "old." Just like Farmers Branch, Frisco, etc. So infrastructure begins decaying, property taxes start climbing, but home values never go up appreciably, because the latest and greatest development in the section of land next door is attracting all of the buyers. I have seen this scenario play out over and over since the late 1970s and folks just keep playing the game. It's not uncommon to lose 15-20 percent on your house there.

I wouldn't buy a house in Dallas unless it was in the Preston Road, Highland Park, or SMU area, end of story.
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Last edited by TexasHusker; 06-12-2018 at 01:06 PM.
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Old 06-12-2018, 01:30 PM
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Thanks Texas, this helps a lot. I visited Zillow and there are a metric boatload of places for rent. Seems to avg around $1 / sq. ft. for rent. I like that.
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Old 06-12-2018, 02:52 PM
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if you're planning on staying at the new place for an extended period of time, i would buy. having transaction cost covered is a decent incentive.

if you're a short timer, then rent. unless you plan on speculating in the market.
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Old 06-12-2018, 04:21 PM
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Quote:
Originally Posted by corn18 View Post
Thanks Texas, this helps a lot. I visited Zillow and there are a metric boatload of places for rent. Seems to avg around $1 / sq. ft. for rent. I like that.
That's good. You can rent places in the neighborhood that was last year's latest thing at a good price.
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Old 06-13-2018, 02:03 AM
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Do you need to consider space for personal belongings, furniture, etc or will you rent a comparable (or larger) size home?
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Old 06-13-2018, 09:54 PM
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How did the rental pickings go from slim to metric boatload?

I am salivating over the thought of those gorgeous new homes. I'd rent something really awesome.
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Old 06-14-2018, 07:21 AM
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Originally Posted by LivingAlmostLarge View Post
How did the rental pickings go from slim to metric boatload?

I am salivating over the thought of those gorgeous new homes. I'd rent something really awesome.
Pickin's were slim in CO and VA, but outstanding in Dallas.
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Old 06-14-2018, 07:54 AM
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Here are pretty typical deals in the Dallas suburbs. This underscores the whole issue with that real estate market in terms of buying real estate:

https://dallas.craigslist.org/ndf/ap...616005493.html

https://dallas.craigslist.org/ndf/ap...600474515.html

These pretty upper-end houses for a couple $ grand a month. Either house would run you $350K +/- to buy and you might never make a dime on it.

When it comes to DFW, it's rent, rent, rent!
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Last edited by TexasHusker; 06-14-2018 at 07:59 AM.
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Old 06-14-2018, 08:48 AM
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Okay - time to pipe up here.

In general, homeowners have higher levels of wealth than renters, the Bureau of the Census statistics are abundantly clear. Median net worth of owners is something like x100 that of renters (link).

I've given this some thought and I think owning a home actually CAUSES higher levels of wealth. Why? Three reasons.

1. Owners are favored under Federal tax law
2. Owners possess appreciating real assets
3. Owners can borrow against their equity

Renters have none of these advantages.

So, all things being equal, it seems to me to be far better to own than rent from a wealth building perspective.
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Old 06-14-2018, 09:03 AM
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Quote:
Originally Posted by james.hendrickson View Post
Okay - time to pipe up here.

In general, homeowners have higher levels of wealth than renters, the Bureau of the Census statistics are abundantly clear. Median net worth of owners is something like x100 that of renters (link).

I've given this some thought and I think owning a home actually CAUSES higher levels of wealth. Why? Three reasons.

1. Owners are favored under Federal tax law
2. Owners possess appreciating real assets
3. Owners can borrow against their equity

Renters have none of these advantages.

So, all things being equal, it seems to me to be far better to own than rent from a wealth building perspective.
I wonder though, is this true because a majority of the renters in these studies don't have the option to buy? They don't have the option to buy due to lower income, no savings, and/or bad credit. If you have those factors going on in your life, then you will have to rent, and you will consequently have a lower net worth than someone who has their finances in order enough to be able to purchase a home.

In other words, I'm not sure home ownership causes wealth. Being financially savvy leads to wealth. Buying a home is just an offshoot of sound financial habits and behavior.

corn18 is already financially savvy. He has the option to buy or rent. He isn't being forced to do either. His financial habits have lead him to this crossroads.
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Old 06-14-2018, 09:19 AM
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BJ - I'm 100% convinced owning a home CAUSES wealth.

The differential is just too big and too robust to be accounted for any other way. The census data using something called the Survey of Income and Program Participation (SIPP), its cross sectional, but its about as good as it gets for a cross sectional study.

Look at differential in the graphic below, owners have a median net worth of 199K, renters have a median net worth of just 2k. That means owners are 100 times richer than renters. Some individual differences are probably in play, but the size of the difference also suggests macroeconomic forces, like tax policy and market appreciation at work. So, reasoning from that, what would the tax and market forces be? Well, deductions and appreciation. Hence my thinking its causal.

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Last edited by james.hendrickson; 06-14-2018 at 09:23 AM.
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Old 06-14-2018, 09:34 AM
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Because the standard deduction for a family is now around $24K, there are no real tax advantages for owning a home for most people.

In a typical market, buying RE is prudent, as it is a hedge against inflation and you are slowly paying off an asset that should go up in value over time.

But DFW isn't a typical market. You want to invest in areas/neighborhoods that can demonstrate a long track record of slow-but-steady appreciation, and DFW doesn't offer a lot of this. The culture in DFW for "Everyman" is "buy new", old (5 years or older) isn't worth much. That's a big problem when you go to reselling your house.

RE can be a builder of wealth, and it can be a destroyer of wealth. Choose wisely.
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