Should We Rent or Buy in Our Current Market

Question

Hello all,

I've been on bigger pockets for a while now but this is my first post. To give you some back story my wife and I live in the Atlanta area and bought our first property back in 2017 and put it up for rent two years later. We have since decided to take advantage of the current increase in home values and put the home up for sale. It is currently under contract and the profit from the sale will allow us to pay off our consumer debt entirely and leave us with about $15,000 in cash.

My wife wants to rent an apartment but I want to buy something that we can live in for a year or two and then turn it into another rental. That $15,000 will be all we have in our savings, so I am torn between using some of the cash to put down on another investment or keeping the money in savings and just finding a decent rental until we have more cash to invest.

So, should buy now while money is cheap, or should we rent until the market (hopefully) comes back down a bit and we can possibly get a better deal.

Thank you!

Ryan Howell · Answer

@Corday Eden - Big congrats on getting rid of your consumer debt. Personally, unless I had access to a line of credit or some other low interest option for emergencies, I wouldn't buy anything yet. $15k could easily be spent with one emergency and cause you to have to take on credit card debt and put you back in the hole....which could undo the benefits of the investment. I would probably rent for 6 months and build up your savings.

Another reason to wait (and I'm going to sound a bit like Dave Ramsey) is to ensure you've changed your spending habits that originally created the consumer debt in the first place. If not, then again the benefits of the investment may be easily offset by the overspending on the consumer side.

Best of luck and congrats!

Theresa Harris · Answer

Based on the fact that your wife wants to rent, I am guessing this is the only property you own? If so, I would buy another property. While you have no idea how the market will go, if it is going up and you step out and rent, you risk not being able to get back in. I have some rentals in one area and bought 2 on year, 1 the next. Prices had increased a bit when I got the first two, but the following year they really went up. Initially my plan was to hold the third one for a few years and then sell it and buy a bigger one...well prices kept going up and now (5 years later) they are almost double what they were. This is not normal, but it can happen in popular locations.

As you mentioned interest rates are low right now. Even if you used that money to buy a property and rented it out while you rented elsewhere, it would still keep you in the market....though you'd need 20% down payment

Justin Lee · Answer

Hi,

Congrats on the move and becoming debt free. THAT IS HUGE! My suggestion is to take the money as a downpayment while money is cheap. As a realtor and investor, I tell people rent is the worst thing that you can do as you are literally throwing money away. Now that you have sold your home you should be eligible again for a 3% FHA Loan in which wouldn't require the full $15k unless you plan to purchase something $500k lol

Should We Rent or Buy in Our Current Market

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