Post # 1
Member
99 posts
Worker bee
- Wedding: April 2014 - Hotel Baronette Renaissance in Novi
So FI and I are currently renting a house in a super “trendy” area, but the house we are renting is not one I am open to staying in long term. It’s cute enough, and it definitely got us through our “getting established” phase, but once we’re married, I just want something a little nicer, but in the same area.
What were not sure about is do we rent, or do we buy a starter-ish house? We will have two incomes, and within the year we would be able to buy a place that would be small, and probably older, but definitely attainable with room to reno/improve on what we would like to improve on. However, we’re also tossing around the possibility of renting a nicer place for a long term lease and saving up a larger down payment for a nicer, larger, newer (possibly even new construction) home.
Here’s the double edge sword: if we BUY now, we’re going to buy an older home, which has the potential to need major fixes and renovation. If we rent, we face a few obstacles because we have a dog and two cats, which is not doing us any favors in finding a place. We’ve already been looking for about 2 months with a realtor for places to rent, and we’re just not finding what we want that will also allow us to keep our pets. I’m getting so frustrated with all of the demands of potential landlords, that I almost just want to buy a smaller place instead of waiting, and buying a newer place in the long term.
Bees… what would you do?
Post # 3
Member
3281 posts
Sugar bee
We pretty much had that option and it was a no brainer for us. Renting a small two bedroom apartment would be over twice our mortgage including taxes. We’re still in college so we bought a small two bedroom older home that we plan to stay in for 2-3 more years until I finish my masters. It’s helped us build credit and we made a bunch of improvements that we could do our way and increased the value of our house a lot. If renting will cost more than buying I’d say definitely buy. Just depends on the area, loans, etc
Post # 4
Member
7315 posts
Busy Beekeeper
- Wedding: October 2011 - Bed & Breakfast
It’s a very individual decision. I will say that buyng a home is a huge decision and you may be stuck with one far after you want to be rid of it. You need to go into the decision with eyes wide oipen to the long term implications. How long would you want to own this “starter” home? If the market took another nose dive, could you live in said “starter” home, raise a family there, etc. long-term? If not, would it be cheap enough for you to keep up with the mortgage and maintenance (which can be more expensive on an older home) while seperately saving for another down payment? How much down payment would you have on this starter home? You would want to put enough down up front so that you would be able to walk away clean if you needed to sell. Remember that there are several sunk costs in buying and selling (your share of closing costs when you buy 0-6%, your share of closing costs when you sell 0-6%, staging money when selling 1%, all of the realtor fees when selling 3-5%, and money set aside to potentially pay 2 simultaneous mortgages if you buy a new place before selling the old one). You need whatever you put down to at least cover all of that so that you can walk away from the house without owing anyone more money (assuming your house value does not drop during ownership). If you want to walk away with some money from the deal, you need to put down even more up front. Remember that only 25% of your mortgage payment for the first 10ish years will actually go to your principle. The rest is escrow and interest. So you are really not going to be paying down your loan much in those years.
Post # 5
Member
8012 posts
Bumble Beekeeper
i know people who are in both the pro BUY and pro RENT camp and their reasonings are very valid.
how long are you planning on staying? if you plan to spend 10 years, 7 minimum, buying is a good option. if you plan to move around, i would stick to renting.
Post # 6
Member
12259 posts
Sugar Beekeeper
If you’re thinking 5 or more years, I would go house! If you’re thinking 4 or fewer years, I would keep renting.
Post # 7
Member
99 posts
Worker bee
- Wedding: April 2014 - Hotel Baronette Renaissance in Novi
Thanks, bees!
If we were to buy a smaller house, we would plan to stay there for 5-7 years. We don’t plan to have a large family, so I don’t see needing a larger home being a necessity for a growing family. However, it’s the fixes that kind of scare us both. We live in an older home that our landlord does not upkeep very well… last year our sewer backed up and we found out that the plumbing has been shot for a long time and is just progressively getting worse. The more it’s put off, the more money it’s going to be to fix. Things like that definitely add up, and that scares the KittyDaddy.
However, finding a place in our area to rent that is reasonable is a hassle. We cannot lease an apartment, townhouse or loft in the area, because my dog would never be able to not have a yard. It’s just becoming a hassle to find a house that I’m comfortable staying in long term, that has a fenced in back yard, even allows 2 cats and a dog, for under $1.8K.
Ugh… decisions. 🙁
Post # 8
Member
1800 posts
Buzzing bee
In your situation I would probably rent for a few years longer to save up a larger down payment. A couple of years in the grand scheme of things won’t be a huge deal. It would take my SO and I 5-10 years to save up for a bigger house while renting, so we know that we will probably start in a condo or townhouse rather than our dream home since we don’t want to be renting until we’re 30. It’s all about what you think is obtainable in the next few years! Also, if you did buy the starter home would it be something that you would be able to turn around and sell in 5 or so years if/when you guys outgrow it since you said it would be small?
Post # 9
Member
328 posts
Helper bee
- Wedding: June 2014 - Excalibur
I’m from your area so I can say a mortgage on a home is a lot cheaper than rent. Though, things do add up. can you afford a downpayment, taxes, any repairs? With apartment though, you have the landlord to take care of all upkeep and repairs. Do you mind a small house? Will you be able to still save for a larger house while paying a mortgage and bills? If you buy house, when you sell it down the road you’ll hopefully have some equity in it to buy your next home. I bought a new construction home and though you hopefully won’t have to pay for repairs, you’ll have to spend money on things like appliances, AC, landscaping, etc. I know repairs scare you, but any home will need some sort of repair down the road. Are you and your FI handy or know someone who is?
Post # 10
Member
471 posts
Helper bee
coming from a person who watches HGTV, so he thinks he’s an expert. only you can figure out what is best for you and your SO. BUT, I would say rent a place until you can save up to buy a house that doesn’t need that much work and that you can enjoy for a while.It definitely sucks to rent, basically paying someone elses mortgage, but it’s better than being belly up on a house that costs more repairs then the home is worth.
I honestly wouldn’t buy a small place because it would just annoy the hell outta you, with pets and eventually a baby (i’m assuming) it’s gonna be tight REAL REAL quick!
A lot of people rush into buying home because they think it’s what is best. Maybe buy a condo or townhouse, basically it’s a combination of both. You can get an end unit to only share a wall with one neighber (kinda like a house) but don’t have to deal with the yardwork (HOA fees usually cover this). so it’s the best of both worlds.
Post # 11
Member
1962 posts
Buzzing bee
If you can’t see yourself in the house you buy for more than 5 years, I’d just stick to renting for now.
Post # 12
Member
3082 posts
Sugar bee
@kittymama426: how’s the housing market by you? What’s the trend? are prices increasing, decreasing, or staying the same. Thats something to think about especially since interest rates are going up.
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