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Rent vs Buy in Austin : Real Estate Advice

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  • Home Buying760
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Activity 7
Mon Dec 9, 2013
Douglas Ray Goff answered:
Generally not a common practice in TX. Please contact a TX licensed Real Estate Attorney. As TREC (Texas Real Estate Commission) advises all legal questions be referred to a licensed professional. Its been my experience that many Lease to Own contracts favor the Seller and there is little if any protection for the Buyer. Mainly due to cutting costs and not having an attorney review and explain the risks. Caveat Emptor (Buyer Beware). ... more
0 votes 6 answers Share Flag
Mon Jul 8, 2013
Stephen McClain answered:
Good day to you Ruthe,

Thank you for the opportunity to answer an age ol' question. Actually your question is two- fold. Your specific question as it relates to property ownership and the general economic question of Ownership vs. Renting.

1st. Question: Answer- Economics (Supply & Demand) and the forces surrounding it. As the housing market has been soft over the last few years due to most specifically economic uncertainty, job uncertainty and tighter credit/lending practices more people have been forced or chosen to rent as opposed to buying a new home. This drives demand up for rental properties thus the rent values go up as well. It has been good times recently for landlords. The landlord is reaping the benefit of ownership and the positive cash flow on their money (investment). Their money is making them money. Your money is well, making them money and not you money. The mortgage vs. rental comparison is based on basic financial principals. You borrow x and pay interest on x which is amortized over a certain time period thus creating a lower payment than typical rent. You simply are re-paying a principal amount plus the cost of borrowing that money over time. The rental rate takes the previous statement into account and then adds to it a profit (cash flow) based purely on what the landlord can get on a specific property or what the market will bear. A mortgage payment drives towards an ultimate 0 balance and 100% ownership equity in a property while a rental payment is constant and ultimately derives you no wealth or return on your monthly investment. Over the last year rates have remained artifically low- at unprecedented levels. That means the cost of borrowing is historically low. Now, you have a shilft in the market favoring Seller's as opposed to Buyers. That will qickly drive demand meaning higher housing cost and ultimately higher borrowing rates.

2nd. Question: Answer- Core investment rules just do not change. Your money can work for you or for someone else. If you pay rent each month you might as well take the money and throw it in the street in terms of any return. You lose out on:
1. The growth of your money (Equity)- Wealth
2. Tax Benefits
3. Interest Deductions
4. Ownership Benefits: Financial and Otherwise

You give all these up to someone else in a rental situation. If there is any way you can qualify for a mortgage you are generally speaking always better off owning vs. renting. We all work to hard in today’s world to throw away our money or make someone elase wealthy.

Hope this helps.
Stephen B. McClain, Broker Owner
Cornerstone New Home Solutions
512 876-3116
smcclain@cornerstonenewhomesolutions.com
... more
0 votes 9 answers Share Flag
Sun Jul 29, 2012
Voices Member answered:
Always a demand in West Campus. $70+/SF.

Now, what you build will determine the demand. Are you building something janky, but with all the modern amenities students enjoy, and at a monthly rental rate lower than currently offered?

Or, are you building the Taj Mahal and charging exorbitant rates?

Is it east of San Gabriel, or west of Leon?

The WC market is saturated with new builds, as is. When The Block starts offering 100% commission structures, you know the competition is stiff. What will you be offering that sets your build apart from the others?


Aaron Marcus
Realtor® | 512.696.0490
Voted #1 real estate company by Daily Texan's UTMost FOUR times in a row!

West Campus Living | The Good Life
504 W. 24th Ste C., Austin, TX 78705
O: 512.588.2969 | F: 512.236.5237
www.westcampusliving.com
... more
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Tue Apr 5, 2011
Spirit Messingham answered:
You will get a lot of answers and opinions from agents and realtors. I would also suggest you speak with a CPA for tax ramifications of owning a home, as you can "write off" the interest you pay on your mortgage. Also, speak with a financial advisor, as many will tell you owning a home is considered "a good debt". In the end, look at what it would cost you in rent a month Vs a house in your price range; you can use a mortgage calculator to see what a $150K house would cost in monthly mortgage. Only you can decide if you can continue to live renting or if you want the freedom of owning your own home, hard to put a price on that.

Are you pre-approved? Before you even start looking, I strongly suggest you meet with a local lender, get pre-approved, review a mortgage calculator with them, and etc. If you can't get approved now, they can work with you so that you can improve your scores so in time, while you save for the down payment you can also increase your scores.

Best of luck.
Spirit
... more
0 votes 12 answers Share Flag
Tue Oct 19, 2010
Buyers House Realty answered:
Charlie,

Hello. Decisions, decisions.... Well of course there are some obvious adnamtages to buying. 1. Protection against rent increases. 2. Tax benefits. 3. Equity. 4. Your not helping someone else increase their wealth. That being said, sometimes it is better to lease if you are not ready to buy. You DO NOT want to buy the wrong home. Rents in Austin are increasing and depending on the area your rent could be competitive with what you can get a mortgage for. Ultimately, I would recommend you consulting with a mortgage pro to determine if it is more financially feasible for you to buy.

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BuyersHouseRealty is the virtual evolution of real estate, and we firmly believe in educating buyers! So much that we pay our buyers for their education! Learn more>> http://www.buyershouserealty.com/WhyChooseUs!

Happy House Hunting,

Gavin St.Louis
Managing Broker/Owner
BuyersHouseRealty
877.77.BUY75
"The Real Deal"
... more
0 votes 10 answers Share Flag
Mon Jul 5, 2010
Betina Foreman answered:
Dear Acsura,
I just wanted to check back with you and see if your any closer to your relocation to Austin. It has been three months since your initial question. Have you gotten the answers you were looking for, or do you need more information? If I may be of help please let me know. Good luck!
Betina
... more
0 votes 19 answers Share Flag
Tue May 26, 2009
Bruce Lynn answered:
Shawn,

You need to check the HOA documents. It will be clearly laid out in this documents when the HOA will take over from the developer.

This is a great question....and an important one. We've seen some real issues lately where for example where developer goes bankrupt and quits paying their portion of HOA expenses, leaving a real mess for the other residents. Perhaps less likely in a apt conversion, but a very tough situation for homeowners in a master planned development. ... more
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