What's your story of why you chose to rent where you live or finance a purchase?
I've purchased a few homes I have lived in, and never owned/lived in them long enough to make up for the closing costs, interest, property taxes and insurance over that time period. I could have rented for the same price or less over the past 4 years without all the costs that come with purchasing and owning a house. What's your story?
I'll chime in.
We moved and bought our home in 2015 after 6 years of renting. Having lived in Brooklyn for several years, we experienced small apartments and signing large rent checks. Had enough of that. Home prices in my area of the Midwest are much more affordable. We made a conscious decision that we wanted to stay in here long term. We love the people, the pace of life, and the culture. That being said, had we not been steadfast about our choice to establish roots, we would have probably kept renting, or at least house-hacked.
I have owned and rented multiple properties in different cities and parts of the country. I strongly prefer buying.
Even with taxes, insurance, interest, and closing costs I have come out ahead, even on the properties that were single family homes.
I live in a relatively modest 3 bed/1 bath, 1300 sq. ft. home that I paid $125,000 on a 15 year mortgage and 5% down. My PITI is $1125/month. Houses in my neighborhood are renting for $1350-1500/month. If I rented here, I would pay more and get no mortgage pay down or appreciation. I also could not rent the property out after I leave (which is the plan).
We are looking at a similar situation. We are moving to a new town, under contract for a 3/1, 1165sqft 123,000. Appears I cannot use a VA loan as the purchase price is less than $144,000 a VA requirement. We just found this out AFTER being pre-qualified, going under contract, paying for inspections and had an appraisal. We wrote a congressional letter of inquiry to request a waiver of this requirement and will see what the VA says.
In the mean time, our choices are going conventional 30 or 15 year and 5% down (and pay PMI) . We dont want to put down 20% even though we could, we want to stay liquid for other investments.
Almost always makes sense where you are planting roots. We always think we are planting roots but we stay open to opportunities and they have presented themselves yet again.
I have never heard of that requirement for a VA loan.
Keeping that in mind, if you have the funds available, I would get a conventional mortgage with 5% down. The PMI will be minimal, and if you want, you can prepay it.
I have made up the costs of buying, but I have owned my current home for more than 20 years. IF I had it to do over again, however, I would have bought a duplex/triplex, rented out 2/3 sides, gathered some cash, did it again. A personal residence can be profitable but I think it's mostly folly to think of it as an investment, unless you stay put long enough to realize long-term gains *or* live in a rapidly appreciating market that allows for equity harvest @Michael Swann.
Originally posted by @Jason Turo :
I've purchased a few homes I have lived in, and never owned/lived in them long enough to make up for the closing costs, interest, property taxes and insurance over that time period.
Sounds like you have been buying turnkey at full blown retail price, which is a no-no in REI, whether it is your primary residence or not.
To contrast, every single property I've ever purchased, I would have overcome the closing costs, interest, property taxes and insurance to make a profit regardless of if I sold the day after I closed escrow or 10 years from that day, or any point in between. I regularly made more money on my primary residence per year than I did with my W2 job salary, and I'm fairly well paid. You have to find great deals in order to make that happen, which means you have to hunt for them ... they won't likely be turnkey and they won't just fall into your lap, they must be found, or better yet, created.
Exactly why buying a home isn't the investment people have always thought it to be. For that reason (not staying in it long enough to make up for the expenses) as well as plenty of others.
I own several investment properties but I rent my apartment in LA.
Here's more on my mindset of it all-
Yay for cash flow! Not typically to be found in your own home :)
I bought the house I live in 28 years ago for about $38K and put about $3K down. I bought it from a bank as they had repossessed it. It had quite a few problems. Payments were about $100 per month less than renting. I had my wife and 2 very young children. I paid the house off in less than 10 years when I sold my trailer house and land I lived in before moving here.I wish I had known more then and bought 20 more houses like this one. It has more than tripled in value, and is in a nice neighborhood. I eventually began buying rentals slowly about 20 years ago after the local economy had began coming back. My house is now worth about 5 times what my annual salary was back then. I just wish I had bought more, but it was a struggle to feed the family and keep a roof over their head back then.
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