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Time Frame to Buy vs Rent
Posted on 11/2/14 at 7:07 pm
Posted on 11/2/14 at 7:07 pm
Say you are relocated for work for a 5 year assignment. Do you buy at this point?
$3000 monthly living allowance for duration regardless of whether I rent or buy. 30/single/no kids/no debt. Avg cost to rent is $2000/mth minimum. TIA
$3000 monthly living allowance for duration regardless of whether I rent or buy. 30/single/no kids/no debt. Avg cost to rent is $2000/mth minimum. TIA
5
Posted on 11/2/14 at 7:10 pm to PerceivedReality
San Fran?
Posted on 11/2/14 at 7:17 pm to BACONisMEATcandy
not quite. North Dakota.
Posted on 11/2/14 at 7:22 pm to PerceivedReality
That was my next guess. I can't imagine buying in that market right. IMO it can only go down from where it is right now 
Posted on 11/2/14 at 7:31 pm to BACONisMEATcandy
My rent now is much more than 2K. I've generally agreed with your statement. But over 35K a year thrown away in rent has me questioning that.
ETA: 35K x 5 more years
ETA: 35K x 5 more years
This post was edited on 11/2/14 at 7:33 pm
Posted on 11/2/14 at 7:44 pm to PerceivedReality
quote:
not quite. North Dakota.
There is no way anyone here can guess what the right call is. Property value can continue to sky rocket or oil prices may shut down operations over there. Strange market.
Do you mind me asking what city?
Posted on 11/2/14 at 7:51 pm to I Love Bama
Williston.
Not really asking based on speculation for oil and gas. In you average environment would 5 years warrant purchasing over renting.
Not really asking based on speculation for oil and gas. In you average environment would 5 years warrant purchasing over renting.
Posted on 11/2/14 at 7:53 pm to I Love Bama
Is the $3k regardless, or do they match your costs? So if you spend less, they give you less?
If they give it to you regardless, I'd suggest renting to ensure there's no anchor. Lowers your risk, and really no cost to you (and you make money).
If they match up to $3k for mortgage/rent only, I'd lean toward buying. You can get a decent, cheaper place, potentially rent other rooms to roommates, AND get a 15 yr or 5/1 ARM at a really low rate and pay a shite ton toward principal. If you can find a decent area at respectable prices, I wouldn't expect the market to completely plummet in that 5 yr window. The amount you'd be putting toward principal (for free) is worth it.
Does the company offer any type of relocation assistance upon new roles? With the allowance, I doubt it, but it may help at least unloading the property.
If they give it to you regardless, I'd suggest renting to ensure there's no anchor. Lowers your risk, and really no cost to you (and you make money).
If they match up to $3k for mortgage/rent only, I'd lean toward buying. You can get a decent, cheaper place, potentially rent other rooms to roommates, AND get a 15 yr or 5/1 ARM at a really low rate and pay a shite ton toward principal. If you can find a decent area at respectable prices, I wouldn't expect the market to completely plummet in that 5 yr window. The amount you'd be putting toward principal (for free) is worth it.
Does the company offer any type of relocation assistance upon new roles? With the allowance, I doubt it, but it may help at least unloading the property.
Posted on 11/2/14 at 7:53 pm to PerceivedReality
5 years would have me buying instead of renting, and I'm big on renting.
Posted on 11/2/14 at 7:55 pm to PerceivedReality
If you don't have a family, I would buy or build a quadplex. Live in one of the units while raping three souls on the other units. Should more than pay your mortgage and you're sticking an extra 3k in your pocket every month.
Posted on 11/2/14 at 7:59 pm to LSUtigerME
I get $3k whether my rent is 1000 or 5000.
Posted on 11/2/14 at 8:10 pm to I Love Bama
Construction costs up there would be unreal right now
OP you bring a valid point that this money is getting thrown away regard less. Even if you sell at a loss you could still come out a head
OP you bring a valid point that this money is getting thrown away regard less. Even if you sell at a loss you could still come out a head
Posted on 11/2/14 at 8:28 pm to BACONisMEATcandy
No shite. Wally World starts people at $18.00/hr. You can guess what residential plumbing and electrical contractors charge.
Posted on 11/2/14 at 11:19 pm to PerceivedReality
You should live in a 5th wheel and buy land. Prairie Pothole region of SD is beautiful.
Posted on 11/3/14 at 3:41 am to LSUShock
Posted on 11/3/14 at 5:58 am to PerceivedReality
quote:
Say you are relocated for work for a 5 year assignment. Do you buy at this point?
That is right at the line for my rule of thumb split - 5 years is about your break even point for transaction costs on the buy.
quote:
$3000 monthly living allowance for duration regardless of whether I rent or buy. 30/single/no kids/no debt. Avg cost to rent is $2000/mth minimum. TIA
Rent as cheaply as you can and save as much of your living allowance as you can. There is little reason for a single 30-something to buy for 5 years. You could almost live in a hotel on the $3k. In your case, you've got a built in $1k or better profit you can pocket and do not need to muck around with ownership. If it were 7 years - owning might win.
Posted on 11/3/14 at 6:16 am to LSUShock
That's what I would do.
Posted on 11/3/14 at 8:55 am to BobRoss
Yeah that 3 bedroom house is pricey, but think about what he can get renting out the other 2 rooms.
Low estimate is $1500 a month per room, that's $36k a year, add in the $1k per month homeowner is using as well and it's 48k a year. At the $2000/month rent you own the house outright in 4 years.
Conservatively after 5 years that's $240,000 paid on a $309,000 house.
Even if you can only sell for half of what he paid in 5 years, that is still a lot of profit walking away.
Low estimate is $1500 a month per room, that's $36k a year, add in the $1k per month homeowner is using as well and it's 48k a year. At the $2000/month rent you own the house outright in 4 years.
Conservatively after 5 years that's $240,000 paid on a $309,000 house.
Even if you can only sell for half of what he paid in 5 years, that is still a lot of profit walking away.
Posted on 11/3/14 at 11:36 am to eng08
quote:
Conservatively after 5 years that's $240,000 paid on a $309,000 house.
Even if you can only sell for half of what he paid in 5 years, that is still a lot of profit walking away.
I'm not saying this doesn't make some sense, but at this level of investment, I think smarter money goes into a multi-unit rental property. More flexibility over time - the other risk here is that the fracking gets cut back, the fields get expended or whatever, and then the balloon deflates and he's got dead money there.
I think 7 years - no brainer - buy something. But at 5, he might be right at the edge that he can rent as cheaply as possible, pocket the difference on his housing allowance and move on when the time is right. Nobody ever retires to South Dakota (ETA: North Dakota - same thing.)
This post was edited on 11/3/14 at 11:37 am
Posted on 11/3/14 at 2:09 pm to Ace Midnight
I'm actually going to break ground on a house in Montana in the spring. That will be a house I will not sell though regardless of what happens after this 5 yr stint. If I bought I would not want to rent out the other rooms. A multi - unit would be more realistic as they are building some nice duplexes. Not sure on the price though. I would imagine those are pushing $500000 for both. That is a good idea though.
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