FI by 2024
Recycles dryer sheets
- Joined
- Dec 29, 2013
- Messages
- 331
I will be moving to a large city this summer and I'm debating the pros and cons of buying a house. Based on my situation, any advice?
- I will probably live there 3 years.
- I don't know whether I would keep the house as a rental unit after leaving or sell it. The decision would be based on the market at the time.
- Current average rents would cover PITI plus maintenance, but I *might* have to go out of pocket for property management. Again, it would depend on what the market looked like in 3 years.
- There is a chance I will live in this city again, so I might want to keep it.
- The housing market in this city is historically strong for both landlords and sellers due to a constant influx of people. It's a transient city, but also has a large population that lives there long term.
- I can afford a 20% down payment without affecting contributions to tax-advantaged accounts or selling any investments.
- However, I would stop contributions to my taxable account for the next 6 months to gather more money for the down payment and moving expenses.
- If I buy, I am debating whether to buy a simple fixer upper or move-in ready. I don't mind doing simple renovation projects: paint, lighting, fixtures, floors. If something more involved were needed I'd hire help. I would have cash to cover any renovations needed.
- Initial calculations look like I could return 40-60% of my initial investment (down payment) in 3 years based on predicted growth (calculated conservatively) and counting principal paid down during that time. If growth slows, obviously I will return less.
- Renting an equivalent property to the move-in ready houses I'm looking at will cost approximately the same as PITI. PITI would be lower than rent if I buy something needing renovations by about $200-400/mo.
The estimated growth points me towards buying, but it's also a short time horizon and I don't know what the market will look like in 3 years. So, thoughts?
Sent from my iPhone using Early Retirement Forum
- I will probably live there 3 years.
- I don't know whether I would keep the house as a rental unit after leaving or sell it. The decision would be based on the market at the time.
- Current average rents would cover PITI plus maintenance, but I *might* have to go out of pocket for property management. Again, it would depend on what the market looked like in 3 years.
- There is a chance I will live in this city again, so I might want to keep it.
- The housing market in this city is historically strong for both landlords and sellers due to a constant influx of people. It's a transient city, but also has a large population that lives there long term.
- I can afford a 20% down payment without affecting contributions to tax-advantaged accounts or selling any investments.
- However, I would stop contributions to my taxable account for the next 6 months to gather more money for the down payment and moving expenses.
- If I buy, I am debating whether to buy a simple fixer upper or move-in ready. I don't mind doing simple renovation projects: paint, lighting, fixtures, floors. If something more involved were needed I'd hire help. I would have cash to cover any renovations needed.
- Initial calculations look like I could return 40-60% of my initial investment (down payment) in 3 years based on predicted growth (calculated conservatively) and counting principal paid down during that time. If growth slows, obviously I will return less.
- Renting an equivalent property to the move-in ready houses I'm looking at will cost approximately the same as PITI. PITI would be lower than rent if I buy something needing renovations by about $200-400/mo.
The estimated growth points me towards buying, but it's also a short time horizon and I don't know what the market will look like in 3 years. So, thoughts?
Sent from my iPhone using Early Retirement Forum