Rent vs Buy in 85225>Question Details

Swami, Home Buyer in 85225

Should I buy a house now even if I don't plan on being here for 5 years? Or am I better off renting?

Asked by Swami, 85225 Mon Oct 19, 2009

I was in the market for a house until recently when I heard someone say that if I'm not planning on staying for 5 years, it may not be worth it. Am I better off renting? My rent is about $950 now and if I bought a house (here in AZ), my house payments would total around $1500 a month (fora 200K house, PMI insurance etc). I am not sure if I will stick around here for too long--no plans for moving, but at the same time, I need to have that option.

What do you think? Do you think it might still be worth it financially, considering the first-time home buyer credit, interest deductions, low interest rates, etc? Or should I continue renting?

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Kate Barnhart’s answer
If you are at all hesitating, think three times. If your loan will be much higher than your rent, consider where you are living. Can you live there another 5 years -- if you do stay put? Will you be there 2 years? If you bought and paid $1500/mo, could you rent it if you had to move and couldn't sell quickly? Do you have savings to carry the house in case of an emergency?

I completely advocate buying over renting. BUT only you can make the determination if YOU are ready to be a home owner.
1 vote Thank Flag Link Thu Oct 29, 2009
Everyone's circumstances will be different. If you have a financial adviser it might be worth a call / appointment to discuss things. You will need to make assumptions about any growth in the value of the investment, weather or not you believe that your current rent payment will change over time, and what if any break you would have on your federal and state taxes. Also include your costs to dispose of the property if you decide to move out of state. Yahoo Finance has a thing that i have linked below that might help you as well.
1 vote Thank Flag Link Mon Oct 19, 2009

Did you end up buying a home?

How did it work out?
0 votes Thank Flag Link Sun Nov 18, 2012
The first thing you should consider is market conditions. If you think the market is improving, then buying a home now may be a great idea. Interest rates are at a historical low and it won't get much better than this. House prices are climbing at a steady pace, so even if you only stay in your house for 3-4 years, chances are you will have some nice equity by the time you sell it again. You may even decide to keep that house as a rental property and have somebody else pay off your mortgage for you.

I own several rental properties, all of which cash flow. Before you buy, find out what houses rent for in the area and if rents are on the rise. If your rental payment would be as much or more for a similar propety, then you know buying is the right choice for you. Building equity is your prime goal, so hire a Realtor that understands what is going on with the market both with rentals and sales. Ask them if they own rentals and what their experience has been. Nothing replaces actual experience when you intreview a Realtor.

Deirdre Lehner
Realtor, SFR/Team Leader
Century 21 Arizona Foothills
(480) 707-9510
0 votes Thank Flag Link Sat Jul 21, 2012
There are so many great home buying opportunities here in AZ right now. Anyone who can take advantage of the interest rates, first time buyer incentives and a great inventory should definitely buy a home. You may need to spend some time searching for the right one, but it is worth it to speak to a lender, get a picture for what you realistically qualify for and go for it. The benefits of owning far out way renting. Having realistic expectations is a must, and more importantly have a good Agent working for you.
AJ Stewart
Veracity Realty Group
0 votes Thank Flag Link Thu Feb 9, 2012
You can evaluate rent vs buy by using a tool like which is designed to find cash flow positive properties. If it is cash positive, then it is good for the owner. After you weigh in the transaction costs, those would be possible buy signals. However, if the property is negative cash flow, then it is definitely far better to rent.
0 votes Thank Flag Link Sun Nov 1, 2009

60 months multiplied by $950.00 assuming no rent increases in the 5 years (very doubtful) = $57000.00 WOW! This is not rocket science, you practically answered the question yourself. 1. First time home buyer credit. 2. Interest rates at an all time low. 3. Homes at rock bottom prices. 4. Property taxes and interest are tax deductible. Why wait! You can buy something with a lower price point and get very close to your monthly $950.00.
0 votes Thank Flag Link Thu Oct 29, 2009
Not buying the right property in this market is a big financial mistake - that's why it's called a "buyer's market". It's like your favorite store selling an item you always wanted to buy at a huge discount. We may never see opportunties like this again in the valley. What do all rich people have in common? They own real estate. And the second thing? You buy what appreciates, and rent what depreciates. And when you rent - you pay someone else's mortgage, you make that someone rich, and you end up with.... nothing rather than a something - like a house you own. And another thing, 5 years is almost a complete real estate cycle. No one can predict the future, but ask yourself the question, in 5 years, are houses going to be worth more? or less?
There's your answer of what your decision should be.

Don't confuse cash flow with monthly payments as a good financial metric for your decision. If you want the facts, I can show you worksheets of rent vs buy with your own numbers so you can make your own decisions. Let the numbers speak for you.
0 votes Thank Flag Link Thu Oct 29, 2009

Should I buy? Shouldn't I buy?

HEY!! Snap out of it Swami! We are not ordering Chinese here, were buying a house !

If you wanted to buy a home. You would.

If you walked into a house and said I have just got to have this home, it`s perfect! would buy it .

You need to look at homes in the 100 to 150K price range, I am sure if you found a home that you could own for less than renting you would buy it.

And you could put an end to all of this wishy washy B. S.
0 votes Thank Flag Link Mon Oct 19, 2009
Mr.P, Other/Just Looking in Arizona

That is a great question and one you may want to discuss with your accountant.
5 Years is along time and things don't always work out the way we expect them to, I think if I were you I would live for today. Buying a home at these prices and rates are not going to happen again for a long time.

You have tax write off's when owning your home that you don't when renting.

Many investors are buying properties because they see a great opportunity of buying low. Selling high maybe not in the near future, but there are a lot of investors flipping homes too.

If you bought today and moved in 5 years and only made 5,000-10,000 would you be pleased?

I think we have hit bottom and you just need to ask yourself do you want a home or investment?

The buyers credit should off set the first year and not even counting the your Tax write offs.

Call me if you need a Realtor Sara Pichelmann 480-495-4175
Web Reference:
0 votes Thank Flag Link Mon Oct 19, 2009
..and we can close in 15-20 days..
0 votes Thank Flag Link Mon Oct 19, 2009
Absolutely! Think about it for a sec.. $8K tax credit back to you (which will likely be extended) and you buy a home for $180k (which is a nice home in this market) which equates to 3.50% for a down payment of $6300.00 ($8000-6300 = $1700 = You made money)

This will give you a payment within $1200 to $1300 a month. Then you get that back in the tax credit and you own your own home while being able to deduct the interest from your taxes. It makes perfect sense! Hope this helps you!
0 votes Thank Flag Link Mon Oct 19, 2009
Hi Swami, if you're thinking of cashing in on the 1st time homebuyer tax credit, that will require action SOON since is on schedule to expire Nov 30th. There's a possibility it may get extended but we don't know that yet. Also, the lenders are taking on average about 45 days to close a loan. If you have to pay for your housing, whether that be renting or owning, wouldn't you rather have the benefit of interest and real property tax deductions? Additionally, interest rates are at the lowest and are predicted to increase. I believe we are at the bottom of the market as all the data suggests the same. I don't think there's a better time to buy than now and would make that choice over renting any day. If you're thinking of making a move, feel free to give me a call. I can set up a website search for you based on your requirements so you can start looking. Stephanie Weiss (480) 273.7472
0 votes Thank Flag Link Mon Oct 19, 2009
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