Home Buying in Boston>Question Details

Jj, Home Buyer in New York, NY

buying and possibly renting out

Asked by Jj, New York, NY Mon Mar 25, 2013

We want to buy a house but there is a chance that we might have to move in about 3 years in which case we will rent out the house. In your opinion, is it worth it to buy now and possibly rent it out in 3 years or just rent for 3 years considering all the fees and taxes that we have to pay etc?

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Answers

18
I guess the big question is: how big is the chance of moving? Are you perpared to be a long distance landlord which means you may have to pay someone to manage the property for you?
1 vote Thank Flag Link Mon Mar 25, 2013
In MA, you can only deduct $2500 each year in rent payments from your MA tax bill.
I would use last year's taxes to calculate what your expenses and taxes would be with a rental deduction and with an owners' interest deduction.

(Please note: when you choose an answer as a Best Answer, or at least give a thumbs up, it helps those who answer questions here.)
0 votes Thank Flag Link Wed Apr 3, 2013
It depends on which location of MA you are interested in buying. Right now the market is very busy and the inventory is still on the low side which is driving prices up. While there is guarantee this will slow down it might be worth considering waiting until end of summer or fall. In regards to renting, again, that really depends on where you are considering because some rental markets aren't as strong as others. If you choose and area that has strong rentals then, yes, your plan is a good one and could easily work so long as you are ready to be a landlord :)

Territory.com
Massachusetts Premier Broker for Buyer's
617 848 5407 x706
Web Reference: http://territory.com
0 votes Thank Flag Link Thu Mar 28, 2013
The biggest question deals with where you are looking to purchase.
Rental units can be a great way to create income while you move, but you also have to consider what type of people will be looking to rent your place.
For instance, are you near a college and want to rent to undergraduates or grads?
Are you near a busy hospital, where there are a lot of staff that needs a nice place to live while stopping over at that certain hospital?
From my experience, I have found that people tend to be happy with the rental situation because they know they are gaining equity while renting out, but they have to deal with maintenance (if local) or property management (if not).

Best of luck with your decision either way.

Thaddeus Kuznicki
0 votes Thank Flag Link Tue Mar 26, 2013
Although it is difficult to forecast where the economy will be in three years, condo investments in certain parts of Boston proper, Brookline, and Cambridge have held their value because of the high demand for rentals from the international sector, as well as medical, tech, and biotech populations. I would definitely recommend buying with interest rates as low as they are. I'll be happy to speak to you about your options.
0 votes Thank Flag Link Tue Mar 26, 2013
JJ

Depends on your price range, location of what you are seeking to buy or rent. Your need for tax advantages and your understanding of the positive and negative aspects of both.

It is a VERY competitive market especially in Brookline, Newton and Needham, These are communities that hold there value and are also desirable locations to rent. Which gets back to my original ? price.

Happy to discuss your needs and wants further.

Louis
0 votes Thank Flag Link Mon Mar 25, 2013
Well this is a interesting question and honestly it depends on where you wish to rent/buy in Boston. Some agents will say if you are not going to be in the same place for 5 years rent but with rents sky rocketing in our market it may be worth looking at purchasing a home and then renting it out after.

Can you provide more information ?
0 votes Thank Flag Link Mon Mar 25, 2013
What are your thoughts on that same question applied specifically to the South End?

I know it's a robust rental market but from what I have seen it seems like most condos violate the rules of thumb that are out there for rental property investment (e.g. purchase price should be
0 votes Thank Flag Link Mon Mar 25, 2013
It depends on what your investment is for... if you're thinking short term then it's difficult to make the numbers work for buying in a "high rent" location as they are high priced. But if you're thinking long term investment, meaning you'll hold onto it for years... then eventually the numbers start to lean in your favor.... Usually someone with a sizable cash down payment is the best buyer for those areas... i'ts the age old catch 22 - you have to have money to make money.
Flag Wed Apr 3, 2013
Hi, JJ -

Depending on the area you're considering living in, buying with future rental possibility is a sound investment...

the trick is finding the right area that fits you and also is a high demand area for renters.

At City Central Realry, LLC we are a multi-dimensional realty office who knows the greater Boston rental market.

Feel free to contact me for more information and assistance.
0 votes Thank Flag Link Mon Mar 25, 2013
There are pros and cons to both sides of the rent versus own equation. In a real estate market like the one we currently have in Boston (on the verge of booming), the better way to go is to own. However, if the real estate market takes a turn for the worse (who knows what's going to happen in 3 years), your 500,000 investment may be worth 450,000. Or, it may be worth 600,000. Please feel free to call, text or email me with any questions you may have.

Bill Meissner
Owner, M&C Metrowest Realty, Ltd.
339-225-1737 or billmice@aol.com
0 votes Thank Flag Link Mon Mar 25, 2013
Hello,

Buying def. will be your best option. The interest rate are very low and you would gain equity at the same time vs. renting (you would never see that money again)

Best of luck.
0 votes Thank Flag Link Mon Mar 25, 2013
It's always better to have equity than canceled rent checks! Especially for three years when the current interest
rates are so favorable.
The areas in and surrounding Boston are so desirable that it would be hard to go wrong as an investment.
0 votes Thank Flag Link Mon Mar 25, 2013
With interest rates currently so low now is the time to buy regardless if you rent or sell your house in 3 years. Property values around Boston are also on the rise so it's a good bet that what you purchase today will appreciate some in the next 3 years. The same with rents. Then of course there is the possible tax benefit of owning versus renting
0 votes Thank Flag Link Mon Mar 25, 2013
Actually, property management is inexpensive and will make the job of being a landlord easy and effortless for you. We manage properties for owners who are not in the area or often even in the US. For them, they just get a statement and a deposit into their account so I wouldn't let that be a deterrent for your decision.

You didn't mention what town you were considering. My specialty is the Boston area. Of course, no one can know exactly what's going to happen in the future but it seems that prices are low right now in Boston and just starting to head up so it's a good time to buy. Also you should factor in the tax breaks for home ownership and the broker fees that you have to pay to rent. Most Boston-area apartments require four months rent to move in - first and last month's rent, security deposit, and a one-month broker fee.

Just use that money for a downpayment and enjoy living in your own place while watching its value increase instead of your rent. Good luck!
0 votes Thank Flag Link Mon Mar 25, 2013
Richard hit the nail on the head - are you willing to potentially be a long distance landlord? If you are, now is a great time to buy!

Where are you looking?

j
0 votes Thank Flag Link Mon Mar 25, 2013
The key here is what will the house appreciate in three years? Will it cover the costs of having to sell it. I believe home prices are moving up around the country. You have to buy smart and not at the top end of the price range in order to get out.

Also look at your costs to rent for three years. Monthly rent x 36 months is a big number.
0 votes Thank Flag Link Mon Mar 25, 2013
If you can buy now I would say buy now as the market prices are still affordable now and 3 years from now they may increase a lot. You can always rent out the property later and the rents may even be higher then, which would then mean a better return on your investment. Call or email me if you have any questions or need assistance.
0 votes Thank Flag Link Mon Mar 25, 2013
This is the perfect time for you to buy and keep to rent, or resell if you wish.
Great market, and greater conditions.
Please let me know if you need any help here.
0 votes Thank Flag Link Mon Mar 25, 2013
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