Young guy - Rent or Buy?

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Ok, admittedly this is not a question concerning Catholic doctrine, but I’m sure it fits the “Family Life” topic, and is probably something many here have dealt with or will deal with soon.

I plan to seek plenty of advice on this, and I plan on this thread being one of those sources.

Being a single mid-20 guy, college graduate, living at “home” still, working, and saving for either further education soon or to buy a house. Like, I’ve got a good career job, but I don’t think it’s where I want to work long term, I want to get more of an engineering job than what I do now, which is what I went to college for. And living at home still, I am able to save more $$, and like Dave Ramsey says, I’m at “gazelle intensity” right now. It’s not easy!
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But I know that soon I will probably be moving out and getting my own place.  I'm of the mindset that it's better to buy a small house (if I'm still single) rather than rent an apartment or house.  Here's my reasoning:

 I can sell the house!!  - If I rent, then that's non-refundable, and sure, I'll probably get my deposit back, but in the whole picture, that's not substantial.  Even considering interest I'm paying on the house (depending on what I pay down and what I get a loan or mortgage for), if I rent for much over a year, I'm probably better off losing a little selling the house.

That is the primary reason.  Now, I understand that renting is the preferrable option for many people in certain situations.  Two situations that come to mind are:
  1. You’re new to an area, and want to spend time making sure you want to stay there and take your time searching to find a house/land to buy.
  2. You’re married (w/ 2 incomes) or you’re married or single w/ one income that’s enough to allow you to rent cheap and still save enough money over a planned period of time to allow you to put a substantial down payment on a house.
Those are the 2 situations that enter my mind.

There are economic considerations that I’m probably not aware of, so if anyone can give me advice/information about this topic, I’d appreciate it.
 
Sorry,

I should add another reason for wanting to have a house (rent or buy). I love outside work! Like, I totally love getting out and chainsawing and mowing and things like that.
So if the house had a big yard with lots of trees, I’d cut most of the trees down, sell or burn the firewood (after I cut it up and split it) and then I could mow more and weedeat less! Arrrrrgh 👍
 
I vote for renting. It gives you more flexibility in case you want to change jobs or go back to school. You can’t believe how much money you can lose on a house if you need to sell quickly or if the selling price does not go up but goes down. I have known lots of people who compromised their long-term financial security because they bought a town house or even a house in the late 1980s and sold at a loss a few years later. (I know that sounds like a long time ago, but those people are only now back in decent financial shape.) If you are going to buy, look at it at as the most important investment you are going to make and research real estate in your area well. Don’t rush in without analyzing all possible worst case financial scenarios.
 
I agree with La Chiara. There are a lot of acquisition and selling costs in buying and selling a house. Unless you are in a high appreciation area, those costs could eat you up if you sell within a short period of time. And remember, home prices can go down as well a up. For that matter, deflation as well as inflation is still possible. I vote for renting until you are sure that you will be in an area for awhile. (But you could rent a house.)
 
Where I live real estate is at a prime, and even homes that don’t seem that great are reaching the median price. Those that are updated are going for even higher and appreciating rapidly.

I just purchased my first home, but went with a townhome for a few reasons:

It’s a nice transition between renting and owning a “real” home as I don’t have to do yardwork and purchase all the implements needed. The tradeoff is that I pay an association fee.

I got sick of throwing my money away. Also, in order to live in a decent area where I wouldn’t have to worry so much about…well, running into my clientele (ie personal safety in relation to my profession) I would have been paying as much or more for rent.

Maybe I’m in a unique position but my profession had a factor in my decision. I work as an insurance investigator and typically people who burn their vehicles for money come from low-income status. The rent which would allow me to save $$ would put me right in the lion’s lair so to speak. (Please don’t debate me on this, it is not the reason I posted it.)

Now, if you can find something affordable and in an area where it’s likely to appreciate, then do consider resale. There were several townhomes I looked at which were far more affordable…however, my misgivings were likely to be the same as others’ misgivings. I also found many many homes for sale in complexes with similar floorplans, indicating to me that they aren’t selling. To buy would be a disaster.

It really is a major financial decision, but depending on your location and position some of the above factors may not apply. Sure, you can always sell…if you can find a buyer. If you can sell at your purchase price you pretty much break even and essentially lived for free (or same as rent) but if you’e in a booming area wiht skyrocketing real estate prices you may be OK.

Consider everything, and good luck!

If nothing else, go ahead and meet with a loan officer and a real estate agent, do some looking, get the numbers straight as to what you can really afford or what range applies…and then decide whether it’s time for you yet. That’s kind of what I did and had I not been able to find a place I was reasonable sure would re-sell I would not have purchased.
 
Reformed Rob:
I can sell the house!! - If I rent, then that’s non-refundable, and sure, I’ll probably get my deposit back, but in the whole picture, that’s not substantial. Even considering interest I’m paying on the house (depending on what I pay down and what I get a loan or mortgage for), if I rent for much over a year, I’m probably better off losing a little selling the house.
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This is one of the best reasons, unless you buy a house in a run down city the chance of it depreciating are slim. If you were to find a new job, most companies will work with you.

We had an apartment when we were first married, the rent kept rising, you have people above and or below you, you hear everyones business and everyone hears yours. and God help you if someone moves in above you with little children. As much as I love them, I don’t think it would matter what shiff you work one is bound to be teething while the other is running across the floor above you.
Another scene, the partier above you, that plays loud music till all hours of the night. Drinks, lives the wild life so you get the pleasure of hearing the matress above you all night.
I could tell you many stories but will end here. If you can afford the house by all means buy it.
Chop the wood, smell the fresh cut grass, and it belongs to you.
 
I’m sorry but when I saw your thread title I thought you were going to ask if it was ok to rent or buy a single guy! :eek: I was going to tell you NOT to offer to rent yourself out and do not sell yourself! 😛

Seriously…I would go with the renting. More flexible.

dream wanderer
 
It’s hard to give advice without knowing more about your situation, but a few thoughts come to mind…

If you are thinking of going back to school soon, and it won’t take forever to finish, you might want to consider staying at home while you finish school. That would give you the least living expense while paying for school and might result in less debt (or more savings) when you finish.

If you don’t plan to stay in a house for long - i.e., “as soon as I finish school I’m out of here for my dream job” - I would counsel to rent. Houses appreciate, but it takes a few years just to earn back the fees and commissions through appreciation. Unless you live in a hot real estate market (in which case, houses will probably be pretty steep anyway), renting will be your least costly alternative in the near term. Equity takes time.

Since you’re young, single and probably not in the higher tax brackets, the tax advantages of home ownership would not be so overwhelming as to make it worthwhile to buy with a thought to turning the house over in just a couple of years.

Look at housing like any other expense (at least at this phase of your life). What gives you what you want for the least $$. Houses can be expensive (maintenance, repairs, etc.). I would guess that living at home is the cheapest, renting next, followed by buying. I would pick the option where the economics work out for you in this stage of your life.

There will be plenty of time for the more subjective benefits of home ownership (yard work, kiddie swings, etc.) to factor into things later.

Save $$$. Get educated. Carpe diem. 👍

Blessings.

ps: of you need an yard work fix, come over to my house. I’ll keep you busy. 😃
 
Buying that first house is almost as traumatic as having your first baby. God made sure that new parents had six to eight months to plan for a baby so they would be somewhat prepared for the life change. You need to do alot of research. In the beginning go to open houses where you can talk to the realtors without committing to one special realtor. In some areas you are expected to stay with the same realtor once they take you out house-hunting. Only consider buying a “fixer-upper” if you LOVE handyman jobs. If you have to re-wire, re-plumb or re-roof you are in for lots of headaches. When you buy a used car you can have it checked out at AAA before buying. There are also inspectors you can hire before you buy a house to see what shape the roof, plumbing, foundation, and wiring are in. Don’t even think of buying one without having it inspected first.

The advantage of buying your home is “pride of ownership”. In America you can “own” something without feeling guilty. When you pay your home insurance, property taxes and all the other fees your city might assess you will not have much left over for a Christmas tree much less money for charity.

If someone visits you and trips on your tree roots that have come through the sidewalk…be prepared for a lawsuit.

If you want privileges…be prepared to accept the responsibilities.

God love you!! Pray for guidance.
 
Hey,

I certainly appreciate all the advice. So far the “renter’s” are in the majority! Everyone has made some good points and offered helpful insight.

Thank you so much, and please keep the advice coming, I’m sure I’m not the only one that could benefit from this over the next couple days!
 
My advice to you would be to get “pre-approved” for a mortgage. This will tell you what the banks feel you could handle as a long term debt. Then, buy a house way below that pre appoved price!!!

This will allow you some flexibilty in your mortgage payments… the more payments you make, and the more you pay, the quicker you will pay off the house and you will pay way less interest!

And then you will not have to suffer being “house-poor”. My husband and I are in that situation now. We got over excited about buying our first home and didn’t take our time and really think things through. So we bought a new home at the maximum price that we were pre approved for. Not too smart:o . But, in retrospect, it may not have been such a bad decision. We bought just before the market literally exploded… our home has appreciated in value considerably (well over 40,000 in 5 years!!!). So if we had waited, we could never afford the type of home or neighborhood we have now…

I know where I live, rental properties are scarce, therefore the prices are through the roof. So where you live and the current real estate market will be huge factors to consider. I know several people who pay more in rent for a smaller space than we do for our mortgage and house taxes combined.

But there are a lot of unexpected expenses that pop up during home ownership too… so you have to be able to put money aside every month for a maintainence fund… and don’t assume new homes are exempt from expenses! There is always something…

Also, one more point to consider…as a single guy, you could really work home ownership to your advantage… have you considered that you could purchase a home with more than one bedroom (or even a seperate suite) and rent it out? Done properly, you could literally have other people pay off your mortgage.

Hope I helped you out a bit…

good luck!

Finella
 
Glad you’re talking houses - not young men!

If you plan on moving withing a year or 2, rent. Another suggestion is to buy a duplex or triplex. You can rent out the other units to good people & because you are living right there, there’s less chance of tenants trashing the place.

I have a relative who bought a duplex & used the other half for her business - a kindergarten. At the time it was cheaper than renting & she also had an investment.
 
Hi Rob,

You posted this question back in September. I’m wondering if you made a decision one way or the other? If you’re still on the fence, here are some things to consider (I am a seasoned Realtor, by the way):

How is your market appreciating? You should be able to find this out from searching on the web at RealtyTimes (they do market updates all over the country). The info is free. Dataquick and your local board of Realtors shoudl also have this information. It’s obvious, but if it’s not appreciating at least 2-3% per year, you probably don’t want to buy. See if you can learn what the anticipated appreciation will be too.

Can you stay put in the home you buy for 5 years? Should you marry and start a family, you’ll want more room than if you remain a bachelor. So have an alternative plan in mind for “contingencies” with your life. Should your needs change, would you rent out the property? (Being a landlord can be a headache. See what it costs to hire a property manager “just in case” before you buy.) And talk to your tax professional about the implications of doing this.

If you can stay in the home you purchase for long enough to make up the costs of buying and selling (closing costs - they vary from state to state and area to area, but often it costs a seller 8% to sell and a buyer 2% to buy in my market - it includes transfer taxes, inspections, etc. not just commissions), you probably ought to look seriously at buying a home. Home ownership is usually the most important way that people come to have financial stability and independence by the time they retire. The United States has kept the mortgage interest deduction, which makes it an incredible bargain, too. (I believe we’re the only country in the world that still has it.)

Whenever you do buy a home, do a LOT of research (both with the agent you choose to hire and also what you choose to buy and the way you do it - which loan program etc.). It will likely be your largest single asset, so do it with great care. Best of luck!
 
I have heard the rule, if you are not going to live there for more than 5 years, rent. The house appreciation will not cover the loan expenses you will have.

PF
 
Even if you are going to be there 2-3 years, I would say buy.

Get an “idiot’s guide” book for mortgages, there are some types that are perfect for only a couple years. The house I just sold I lived in for about 3 years and made a little money, even taking into consideration the closing expenses, etc. When buying, just make sure it is in a decent neighborhood and try to get one that could use a little touch-up. (you did say you liked to work outside)

Usually you can get good deals from divorced women, older people, those that are unable or don’t know how to do outside maintenance.

I’m not saying that to take advantage of them, just that they generally cannot climb on top the roof, make certain types of repairs that a younger person could.
 
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WanderAimlessly:
I have heard the rule, if you are not going to live there for more than 5 years, rent. The house appreciation will not cover the loan expenses you will have.

PF
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Hmmm, interesting, but consdiering I have lived all over the country (including 9 years through the Eastern side of Pennsyvania including right next to Scranton in Wilkes Barre). and in various types of housing, I have never lived anywhere where the host depcreciated around major cities or stable towns. The biggest catches are closed down military base areas, rural areas and sinlge industry towns (ex. mining or steel towns). I have not seen it mentioned here, but have you considered a lease on a condominium or apartment??? I know they are rare, but they exist. Thanks and God Bless.
 
I have owned with my husband 4 different homes and have done well with the sale of each one. Real Estate can be a good investment. However, I am also a college grad and I think that if you have a chance to finish school first then I would vote for that. If you can swing both financially then go for it. If not, school is first on my list of priorities.

One word of caution, always buy a house in a good school district. It will sell faster. Also, get advice on the area from someone other than just your realtor.
 
I was in a similar situation 7 years ago and I choose to buy. Not only was I throwing away a lot of money on rent, but I was paying a bunch in taxes (single guy with no deductions:eek:).

I found a fixer-upper that was for sale by owner and my mortgage payment with taxes and insurance was only $50 more than the rent I was paying on my apartment. Since that time my home has appreciated over 40% and I’ve gained invaluable experience in home repairs.

I agree that you need to really consider all the angles and costs before making the decision. Good luck!
 
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