Buy house for only 3 years?

Question

Mike D'Arrigo · Answer

@Brandon Courtain-Tharp I'm not clear on your plans. Are you saying that you would only keep it for 3 years or plan to rent it out in 3 years and hold on to it? If you plan to sell in 3 years, then I would say no. Appreciation is slowing down and you won't have enough appreciation to cover your closing costs and real estate commissions in that short of a time.

Exavier Hamilton · Answer

If you plan on selling within 3 years maybe a quick bridge loan a do the trick.

Michaela G. · Answer

Sure, if there's appreciation in those 3 years. Look in an area that's close to some new development, so that it will bring up values faster than as if it was in an area where nothing's happening.

For example, in my neighborhood, values doubled this past year.

You'll have to pay attention. Maybe read curbed.com , if they have an issue for your area.

Joe Facenda · Answer

3 years is a dangerously short time to own a home.  Warren Buffet says something like he has complete confidence that the market will be higher in future but don't ask about tomorrow.

You have to be 100% sure you will be renting it when you leave.  If the possibility exists that you will need to sell or that numbers based on today's rents don't make sense, do no buy.

Two other thoughts

1. I don't know what market you are in and all real estate is local but in my market, even in the downturn, when prices went down, rents stayed stable and even increased a bit as more families were looking to rent instead of buy.  So if it cash flows with today's numbers, it has good odds of cash flowing down the road.

2. When someone uses a VA loan, that typically means 2 things  a) a low down payment scenario and b) a property in decent condition.   Look at the numbers carefully.  I am a pretty good student of various markets around the country.  It is hard to see how a no money down loan on a turn key property will generate positive cash flow based on today's rents

Hope that helps.

Andrew B. · Answer

Generally, no. The fees associated with buying a place, usually don't make financial sense if you only own it for a couple years. The exception is if you do a "live in flip." This is when you buy a run down place, fix it up while you live there, then sell when you move. This is tax free up to $250k gains because it was your primary residence.

You also have the option of buying a place to fix and rent out when you move. This however, requires you to be a long distance landlord. Make sure buy and hold rentals are your endgame if you go this route.

Brian Garlington · Answer

@Brandon Courtain-Tharp

Absolutely............But you won't have to sell it.............buy it..........move in............live there for 3 years....or 2....or 1......When the time comes for you to move...............Do NOT Sell

Put a renter in the property..........Then, refi out of the VA Loan...............so that you can use it again....repeat.

Heath Ryans · Answer

@Brandon Courtain-Tharp

1) do the numbers work if you rent it?

2) is it worth tying up part of your VA loan on a cheaper property?