I need to figure out my living situation and I’m looking for opinions on my options.
I’m currently renting a one bedroom apartment and need to rent something bigger so my kids can stay with me when they are home. They are both in college, DD in her first year and DS in his last year (or close to it).
I live in HCOL area. The chances are good that I will stay in this area a long time, but part of this depends on where my kids end up. I suspect that they’ll also try and stay in this area, since this is where they grew up, but you never know.
For me to buy something, it’s going to be around $700k and most likely a townhouse, even though long-term I’d prefer a house. That’s a harder proposition though, since what’s available is either old or expensive. So for this example, I’ll stick with looking at a townhouse.
A three bedroom townhouse costs around $670k. This is about $3k/month: $2.5k mortgage + $500 insurance/taxes and a $134k downpayment (20%).
So I’m looking at three possible options:
1. Buy. This means I’d be paying $3k/month and a $134k downpayment which can earn me $225/month at 2% (lost income).
2. Rent. A townhouse like this rents for up to $3k/month, even though I could probably find something around $2800/month.
3. Since my kids are mostly gone at school, I really only need a bigger place when they are back during breaks. In this case, I could keep renting a cheaper one bedroom and while they are here, we can travel or get an Airbnb, etc. Assuming I rent a one bedroom for around $2k, this can save me $12k/year, which buys a lot of travel/Airbnb time.
Of course, I’m not taking into consideration any capital expenses if I buy, so it would end up costing more than $3k/month. But I think this should be minimal since townhomes are newer, I’m capable of a lot of basic repairs, and I’m not taking into consideration any potential appreciation (even though at these prices I’m skeptical I’d see much return).
Other things to take into consideration:
1. There’s a good chance DS will live with me after graduating college to save up so he can buy his own place. This could be a couple of years (and I won’t charge him rent).
2. I’m not sure I’ll like living in a townhouse. I’d probably prefer to have a smaller house/yard. But on the flip-side, I know I don’t like living in an apartment.
3. The downpayment significantly reduces the amount of cash I have available. My cash flow is fine, but most of my assets are tied up in tax sheltered accounts, which I can’t access easily.
4. #3 above isn’t really an option, even though it could be fun.
5. The longer I wait, the more after-tax cash I can accumulate. This can free me up to potentially buy something nicer. Plus, I don’t know where my kids will end up and I’d hate to buy something just to have to sell it in the future.
6. I don’t like moving. Ideally, I’d like to buy a place where I can see living well into retirement (aka, before the long-term care facility).
Having written this out, I’m thinking it’s a no-brainer for me to look for a townhouse to rent. This solves my immediate problem for having space for my kids and still leaves me with a lot of flexibility. I can then decide what to do after my kids are really on their own and/or I’ve saved up enough to easily buy a home where I could see myself living indefinitely.
Am I missing anything?
And if you’ve read this far, thanks!
I’m currently renting a one bedroom apartment and need to rent something bigger so my kids can stay with me when they are home. They are both in college, DD in her first year and DS in his last year (or close to it).
I live in HCOL area. The chances are good that I will stay in this area a long time, but part of this depends on where my kids end up. I suspect that they’ll also try and stay in this area, since this is where they grew up, but you never know.
For me to buy something, it’s going to be around $700k and most likely a townhouse, even though long-term I’d prefer a house. That’s a harder proposition though, since what’s available is either old or expensive. So for this example, I’ll stick with looking at a townhouse.
A three bedroom townhouse costs around $670k. This is about $3k/month: $2.5k mortgage + $500 insurance/taxes and a $134k downpayment (20%).
So I’m looking at three possible options:
1. Buy. This means I’d be paying $3k/month and a $134k downpayment which can earn me $225/month at 2% (lost income).
2. Rent. A townhouse like this rents for up to $3k/month, even though I could probably find something around $2800/month.
3. Since my kids are mostly gone at school, I really only need a bigger place when they are back during breaks. In this case, I could keep renting a cheaper one bedroom and while they are here, we can travel or get an Airbnb, etc. Assuming I rent a one bedroom for around $2k, this can save me $12k/year, which buys a lot of travel/Airbnb time.
Of course, I’m not taking into consideration any capital expenses if I buy, so it would end up costing more than $3k/month. But I think this should be minimal since townhomes are newer, I’m capable of a lot of basic repairs, and I’m not taking into consideration any potential appreciation (even though at these prices I’m skeptical I’d see much return).
Other things to take into consideration:
1. There’s a good chance DS will live with me after graduating college to save up so he can buy his own place. This could be a couple of years (and I won’t charge him rent).
2. I’m not sure I’ll like living in a townhouse. I’d probably prefer to have a smaller house/yard. But on the flip-side, I know I don’t like living in an apartment.
3. The downpayment significantly reduces the amount of cash I have available. My cash flow is fine, but most of my assets are tied up in tax sheltered accounts, which I can’t access easily.
4. #3 above isn’t really an option, even though it could be fun.
5. The longer I wait, the more after-tax cash I can accumulate. This can free me up to potentially buy something nicer. Plus, I don’t know where my kids will end up and I’d hate to buy something just to have to sell it in the future.
6. I don’t like moving. Ideally, I’d like to buy a place where I can see living well into retirement (aka, before the long-term care facility).
Having written this out, I’m thinking it’s a no-brainer for me to look for a townhouse to rent. This solves my immediate problem for having space for my kids and still leaves me with a lot of flexibility. I can then decide what to do after my kids are really on their own and/or I’ve saved up enough to easily buy a home where I could see myself living indefinitely.
Am I missing anything?
And if you’ve read this far, thanks!
