Rent apartment or buy house

[Zach Shrader]

Hi all, I'm in a bit of a pickle I've been living in my moms basement trying to save some money and it isn't working out quite the way I wanted it to as I'm not saving much money, and we fight all the time. Anyways I need to get out of there and my only option is to either buy a house or rent an apartment. If I bought a house I could buy cheap and flip and live in it over time until I can sell it for more. I really wanted to buy a duplex or triplex but I haven't found anything promising I do however know of a 4 bed 2 bath single family in decent shape for sale. So anyways what do you all think, buy a house or live in an apartment cause I need a place to live. Lol. I don't have time to search for the best deals I need a place quick and I have a girlfriend and a son. Some advice would be really appreciated because I want to get into REI so I figured a fix and flip wouldn't be bad for a first to get my foot in the door.

[Nick G.]

@Zach Shrader Run the numbers!

Total rent cost scenario = rent due every month

Total own cost scenario = PITI due every month, + utilities, - interest tax deduction, - principal reduction, - avg YoY appreciation/12, - forced appreciation (if you fix it up.)

For example, a completely made-up scenario where the numbers are made-up but demonstrate a very real principal:

Total rent cost scenario = ($1500) Rent = $1500 true internal monthly cost

Total own cost scenario = ($2300) PITI + ($250) utilities - $150 interest deduction - $450 principal reduction - $300 [2% YoY/12months] - $150 [Assuming $9,000 of value added from improvements divided over five years living in home] 

= $1500 true internal monthly cost

Once you've calculated your total liability for each scenario, then you should weigh out the non-tangible benefits of each:

Renting - increased mobility, limited responsibility for repairs and things, lower up-front out-of-pocket cost.

Owning - Net worth of owners across the US has been shown to be much greater than renters. No landlord to tell you when to move out of your house, or if you can paint the walls, or if you can have a dogs, or if you can plant new flowers. 

That's how I tend to run all of my dilemmas in life, as objectively as possible. Personally, I do fall in the ownership camp if you can swing it, but that doesn't mean I think it's 100% right 100% percent of the time. I agree that owning a home now and living in it would jump-start your REI goals - it's what I did myself last year - but you still should run the numbers. Always run the numbers!

Good luck to you.