Advice on rent vs buy for young couple?

[brucethebroker]

Dunno about the coastal areas, but in "flyover" country, buying is usually the best option, if staying put for 5 years or more.

Ask nearly any homeowner of 25+ plus years:
1. What they paid for their (now nearly paid off home-hopefully).
2. How much they were paying in rent before buying.
3. How much appreciation in their current home.
4. How much current rents are for a comp. home.

If they have moved a couple of times, ask them to "pretend" they never moved and ask the same questions.

 

[brucethebroker]

For the youngsters, here is the quick answer (in the form of a question) to rent vs buy on a purely financial basis: do you think landlords make money?

In a rental situation, the renter is paying money and the landlord is making money (profit). Sure, a few non-successful landlords are not making money (many times only on paper), but nearly all do. So, for the long run, do you want to pay money, or make money?

There are very few things you can buy and truly enjoy with your money, while owning an asset that (most likely) does not depreciate. A house is one of them. Again, forget the noise about people losing money on houses-I am talking about the long run (in the example above, 25 years or longer.).

A house is shelter. Physical shelter, tax shelter and investment shelter. Can't take tax free profits (every two years) from many other investments.

BTW, DW and I have owned 7 single family homes as our personal residences, during a nearly 35 year span. I wish I still owned every one of them (in our local area). The modest appreciation (the older ones have all have at least doubled in price) and value compared to comp. rents (rents have tripled or more during that time) are eye opening. Again, we do not live in a "hot" real estate market.

good luck to your kids.

 

[dd564]

The only recent time anyone bought and lost money on a house were those who were too far leveraged on a house purchase through 2007-2011.

Prior to that,... the 1930's? Not sure.

With that said, I wouldn't buy if I wasn't going to stay in the area for a few years. Although, worst case if you buy a house and move is that you have a property management company run it for you and rent it out.

The financials are pretty easy to calculate to make it a financial decision, but lifestyle and emotion will probably be the biggest factor in this decision.

 

[LiveBelowMeans]

Might want to wait until they are married to buy a house together. Can be a mess if they break up. Jmho