Buying a house outright versus renting cost effectiveness for 50 couple w/one teen, in Austin?

Asked by ruthesiegel, Austin, TX Fri Jul 5, 2013

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Anna Culina, Agent, Austin, TX
Fri Jul 5, 2013
Without know the numbers, it's difficult to project how long it will take for buying to outweigh renting. You can try using this calculator the rent vs. buy calculator.
1 vote
Stephen McCl…, Agent, Georgetown, TX
Mon Jul 8, 2013
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
0 votes
Don Groff, Agent, Austin, TX
Sat Jul 6, 2013
The longer your timeframe the more likely it is you will come out ahead buying something. If your time horizon is less than 5 years renting may be better. While the Austin market is hot right now anything can happen. We are in a good area and people from around the country are flocking to Austin and that should help property values increase steadily over the upcoming years.

Take a look at other opportunities for the cash you would put into a home and see how they would compare from an investment standpoint. Nobody can predict the future but if your horizon is long enough real estate investment in Austin should prove to be a wise choice. Do the homework to make sure it is the right choice for you and your circumstances.

Hope this helps.

Don Groff | REALTOR® & Mortgage Broker
Austin Real Estate Pros & 360 Lending Group
o 512.669.5599 | m 512.633.4157 |
websites: |
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0 votes
Eric Hegwr, Agent, Austin, TX
Sat Jul 6, 2013
Hi -
I have some handouts and spreadsheets that can help you figure out the best use of your money.

Send me a note or give me a call, and I'll send them right over.

0 votes
JOSEPH E JAR…, Agent, Austin, TX
Fri Jul 5, 2013
And by the way, if you can afford to purchase right now with rates as low as they are, purchasing is typically a much wiser move financially than renting, especially if it is going to be for more than a year or so… As one agent mentioned, rental rates are at or near all-time highs and you will just be paying someone else's mortgage…

Joe Jarusinsky, Realtor/Master Instructor, Keller Williams Realty, Austin's #1 Real Estate Company, Ranked #1 by Buyers and Sellers (JD Power & Assoc. 2012) Call 512-261-4415
0 votes
JOSEPH E JAR…, Agent, Austin, TX
Fri Jul 5, 2013
Ruth, the answer to your general question really depends on a lot more specifics than you have given us. Things such as if you have the wherewithal to purchase, how long you will be in Austin, where you would like to be, etc., etc. If you would like to give me a call, I would be happy to discuss some details and give you an educated and honest answer. Tomorrow, Saturday, I have appointments most of the day, so if you call me please leave a name and number and reference this question and I will get back to you as soon as possible. If not tomorrow, I can get back to you Sunday at the latest. I had to handle both purchasing and leasing and am one of the top agents in Austin, so I will be able to give you some excellent advice and steer you in the right direction!

Joe Jarusinsky, Realtor/Master Instructor, Keller Williams Realty, Austin's #1 Real Estate Company, Ranked #1 by Buyers and Sellers (JD Power & Assoc. 2012) Call 512-261-4415
0 votes
Steven Nusin…, Agent, Austin, TX
Fri Jul 5, 2013
It really depends on how long you plan on owning the home. I would be happy to discuss your financial objectives and brainstorm ideas with you without obligation.

Please feel free to contact me anytime.

Steve Nusinow
0 votes
Ronald Culli…, Agent, Austin, TX
Fri Jul 5, 2013
Hello Ruth.

The hot story in Austin is the hot rental market. Prices for rentals are soaring right now due to the large number of people moving to Austin. The purchase price is also increasing but not as fast. What you have going for you now, is even though interest rates are rising, (they are currently in the low 4's for people with good credit), there are many affordable homes available that will have a lower monthly cost than renting a similar property. That, coupled with the mortgage interest deduction makes it a better economic calculus than just renting. If you were planning on moving away from Austin in a couple of years, then it would make more sense to rent, as it's difficult to recoup the cost of the home after only a couple of years in it these days.

Feel free to contact me to discuss your situation for a thorough analysis of what is best for you. I help people rent as well as purchase and am up on both markets. it's what i do.

Ron Cullinan
Avalar Austin
0 votes
Laura Rosales, Agent, Austin, TX
Fri Jul 5, 2013
Hi Ruth,
Owning a home is the best way to build personal wealth and take advantage of great tax deductions.
Owning it outright is an option but, with current interest rates, getting a loan to purchase your home is probably the best solution to allow for interest rate deductions and holding onto any cash reserves you may have for your families security incase of unexpected emergencies or college expenses.
I hope this information is helpful. If I can be of further assistance or answer any questions that are specific to your scenario, feel free to call or email me directly. Best Regards, Laura Rosales

Laura Rosales, REALTOR®

Premiere Team Real Estate

Call: (512) 771-5334
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