Moving - rent before buying?

Question

My family and I are planning on moving to Florida within the next 18 months. We currently own our home, and upon the sale, will have about $200K in cash. We are looking at a townhome to purchase, but my wife is leaning towards leasing a townhome in a gated community for a year or so in order to get acclimated to the area, schools, shopping, amenities, etc.

From a financial POV, a lease would be between $2300-2500 per month, with a monthly maintenance fee of $105 (lawn, cable, garbage, etc.). A new townhome purchase, based upon what we can afford, would be between $2500-2700 per month, plus a $35-50K down payment, and HOA, which is typically $500-800 per month).

I'd be curious to get some feedback and opinions on the pros and cons of the above.

Any advice is greatly appreciated

Thank you

*we are looking in Palm Harbor, Apollo Beach and Dunedin

Account Closed · Answer

Thank you. I have twin 14-year-old girls (one has cerebral palsy) who will be entering high school this September. That being said, we must have a good school district. High on our list would also be an area that has a good restaurant and shopping scene. We are into dining out, books, wine bars, etc. We are looking at a place called Cyrene in the Apollo Beach area. It has everything we are looking for in a gated community (pool, gym, on-premise amenities, close to stores, and water).

The more we think about renting, and read the above replies, the greater the chance that this is the route we will initially take. There are SO many great towns in Fl. The ones I mentioned all have very good schools, and when we were down there this past summer, we all loved each of them.

Account Closed · Answer

Wow, amazing information and insight. Thank you so much. This is EXACTLY the type of information and websites that I was looking for.

Cathy Svercl · Answer

Palm Harbor and Dunedin have a similar feel.  Apollo Beach is quite different.  definitely rent before you buy.

Steven Hassett · Answer

Hey Ben,

I would recommend renting and then determining where you would want to live while renting here. Your closing costs on a purchase 2-3% plus the cost to sell that townhome 6-9%, not to mention loans are front loaded heavily with interest. So you would pay down almost no principal during that period. Also if you planned on renting the townhome afterwards it would likely have negative cashflow. Renting will allow you to explore, as the areas you mentioned are very different from one another and there are about 20 other small cities in the Tampa Bay area that once you live here you may find a good fit to live in.

Josh Green · Answer

The short answer is: it depends on your long term goals and immediate financial position.  If you plan to stay for at least 3 years, by and far I would recommend purchasing as soon as you’re able. Prices in Dunedin and Palm Harbor are not going to come down. I would anticipate at least 5-10% higher home prices within the next 6-18 months as rates are projected to continue to drop.  Rents will undoubtedly increase next spring as it tends to lag behind increases in home prices as well.

Theresa Harris · Answer

If you are new to the area, I'd rent for a year.  That gives you time to get to know the area.  I would also advise against buying if you plan on moving again in a couple of years.  buying and selling a home is expensive and while house prices may go up, in a 2-3 year period, they are unlikely to go up enough to cover all of the costs associated with the purchase.

When it does come time to buy, look at single family homes without HOAs.  Townhouses are a good place to start, but the monthly fees can add up especially if the complex is poorly managed.

Lorien Rollins · Answer

@Wyatt Wolff

David Holcombe · Answer

Definitely find an area you really like before you buy. It's very expensive to decide a year into it that you want to move somewhere else. That being said, since you have 18 months, you have plenty of time to explore the area. You could visit/rent AirBnB's in the areas you're interested in during the next 18 months. If you do decide to rent, make sure to negotiate a termination clause in your lease so you'll be able to have the flexibility to buy when you find the right place.  (Even if you have to pay a month or 2 of rent as a penalty, it could be worth it). Your specific situation is interesting and allows you some options that most buyers don't have and that is: you have a large down payment, it will be your primary residence, and your timing seems to be flexible. If you're looking at it from an investment point of view, I would try to use those strengths to your advantage.  For instance... you're in a unique position where you could assume someone's FHA loan. Check out other FHA loan requirements here.  The challenging things about assuming an FHA loan are that you have to have a large down payment in most cases and that it has to be your primary residence. The benefit is that you can assume their 30 year fixed rate loan at rates as low as 3% which could have a HUGE impact on your monthly payment and how much house you could afford. You can identify houses that are for sale that have assumable loans with sites like RoamHomes. As always, it's important to find an experienced local agent.  Good luck with your search!

Logan Laperriere · Answer

Hey Ben,

Welcome to the forum!

If you purchased a townhome how long would you plan on owning the property? If you only plan on staying there a few years also consider the selling costs of the new townhome in your equation.