Rent vs Buy in Philadelphia>Question Details

Betsy, Home Buyer in Philadelphia, PA

Will it be better for me to rent or buy if I only plan to live in Philadelphia for about 4 or 5 years?

Asked by Betsy, Philadelphia, PA Sun Feb 10, 2008

I can afford up to about $800/month in mortgage or rent (a little more if heat is included) and would like at least a 2 bedroom. I have plenty of money saved for at least 20% downpayment, as well as toward points for lowering my interest rate & I have excellent credit. My income is under $30,000 though. Anyway, my main confusion is that I just don't understand the tax benefits from owning a home and how much I might make selling the house in 4-5 years. Thank you.

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During an earlier career I moved 10 times and never made money on my house sale .Every time I was at the wrong time in the wrong place for buying and selling. Only one time I made a killing on a second home where I had the choice of picking the right time. However it still took me 15 years to triple the price .
I never looked at real estate as an investment .It is just the cost of doing business, You have to live somewhere and it depends if you can live wih a landlord ,telling you what you can or can not do.
If you decide to buy , pick a house that is rather new so you don't end up replacing and improving many things for the next buyer ,who will not pay you what you have put in.There will be several other considerations as well. One is that with your income there will not be any tax advantages and any major unexpected repairs on the house will be difficult for you to pay for.My advice Rent ! Don't gamble!
0 votes Thank Flag Link Sun Jan 18, 2009

This is an opinion only...............

1-2 year

3-4 year or buy

5 & up year stay..... buy

Good luck with your decision.
0 votes Thank Flag Link Sat Jan 17, 2009
Philadelphia I think is at the tip of the iceberg to collapse- late bloomer to rise, late bloomer to fall. It happened in the early-mid 1990s and a lot of the same stats are there such as high amount of time on market, high inventory rates, etc. We did not bottom out until 1997-98 while other cities bottomed much earlier. And depending on where in Philly, your expected depreciation, which I expect, could be pretty severe especially if you're looking at the Northeast, Fishtown/Richmond, or Manayunk.

I am an accountant and even with the tax write-offs, you'd be a fool to buy here now.
0 votes Thank Flag Link Tue Dec 30, 2008

TD Bank offers a great way to calculate this. Just enter your information in the appropriate fields. It also offers a graph option - be sure to check mark it.…

It's a good general guide. I can help you with more specifics, but try it for yourself first, ok?
Any quesyions, give me a call at 215 266 7227.

0 votes Thank Flag Link Sun Dec 21, 2008
It sounds like you are a perfect candidate to purchase a home. If your credit is good and you have enough money saved for a downpayment and closing costs you should think about buying a home rather than renting. Since you will be here in Philly for 4-5 years that is plenty of time to build equity and get a positive return on your investment. When you rent you do not see any of the tax benefits of owning a home. I am not an accountant but I can tell you this, you will be able to claim all of your interest at tax time which will be the majority of your mortgage payment in the first years. You will also be able to claim any improvements you make on the home as well. The only thing to do now is determine where you would like to live. You can search my website to see every listed home in the city as well as read articles about the process of purchasing your first home.
Web Reference:
0 votes Thank Flag Link Wed Feb 13, 2008
Tax advantages? Absolutely. Enough to outweigh the interest paid? Nope. Many people try, and with much success, to tell everyone of the tax "advantages" you have on owning a home. Let me put it this way. If you purchased a home and your loan amount is $150,000 at a 6.5% interest rate, you will pay approximately $9000 in interest for that first year. That $9000 will cut only a few hundred dollars away from the bottom line on your taxes.

The reason someone gets into home ownership is the pride of owning a home in the first place and that under normal circumstances, real estate doubles in value every dozen years or so. I would not go with what "everyone" says about the tax "savings" from owning a home. Go to the expert, a good private tax adviser and crunch the numbers with them and you be the judge.

Owning a home is always a good choice to make. Paying it off quickly, even better. Contact me for ways to pay off that home fast. There are a few good tips.
0 votes Thank Flag Link Sun Feb 10, 2008
Im sure if you ask 10 people that question, you may get 10 different answers. I believe real estate is the best single investment one can make and have seen tremendous equity built over time for many individuals, including myself. The doom and gloom we see on the TV every day regarding the housing market is overblown, especially in Philadlephia.

I think the great news for you is that it sounds like if you did buy the type of property you are looking for, 4 or 5 years from now you could either sell that property or keep it as a rental. That option is awesome and provides for much more flexibility down the road. In the meantime, the HUGE benefits are building equity every month, having a healthy mortgage interest tax deduction every month and participating in the future appreciation of Philadelphia, which I believe will be there !

See our website below for other helpful info.

Good luck !
0 votes Thank Flag Link Sun Feb 10, 2008
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