BigMoneyJim
Thinks s/he gets paid by the post
It's a bit premature for me to have a specific question, but I thought I'd see if I could stir up some conversation for me to consider. We've had plenty of "pay down mortgage vs. invest" discussions, but I think we've only skirted around rent vs. buy so far.
I'm 34 and very roughly 20 years from retirement. I just recently became debt free and have a decent pretax nest egg but no after-tax savings--yet. I'm single with no dependents.
Among the considerations for the next stage of my financial life is whether to buy a house or condo or continue to rent an apartment.
Some early thoughts of mine:
- Maintenance: I don't really have to do any maintenance on my apartment, and I like that. If I had a house I'm not sure if I'd keep up with the lawn....perhaps I'd pay a neighborhood kid to keep it tame. I'm lazy these days but am pretty handy and would fix most maintenance issues myself...if the issue bothers me enough.
- Size: I used to think that I would get a 3 bedroom, 2 bath, 2-car garage house thinking of resale value. Now I think that's a waste of space, an expense in heating/cooling the extra area a temptation for me to accumulate junk, and a lot of space to get dusty & dirty between my infrequent cleaning missions, so if I were to buy now I think I would buy a house not much bigger than my apartment (750 sq feet).
- Freedom: I can dump the apartment without much hassle and move due to my whim, job change or other unforseeable event. Not so easy with a house.
- Freedom 2: In a house I don't have to sneak my friend's dog in and out when she visits. I could turn the stereo way up whenever I want, and I can put an antenna up whereever I want (subdivision bylaws notwithstanding). I don't have to worry about my car getting towed out of the driveway if it gets a flat while I'm on vacation. (Almost happened to me once at an apartment.)
- Investment vs. "throwing away money": I've come more and more to view a house (not necessarily the land under it) as a consumable item or at least an expense. Even a paid off house needs maintenance, taxes and more utilities than most apartments. In an income loss scenario an apartment can be summarily dumped at a hit to my rental and possibly credit ratings, but a house seems is not necessarily easily and quickly dumped and could result in credit hits and ultimately foreclosure until I've paid it off. On the other hand I have to live somewhere, and short of living with relatives cheaply I'm living in a fairly nice apartment and spending rent that is nondeductible and nearly enough (or maybe really enough) for a house payment.
I think the biggest issue for me right now is that I'd like to move to another state but have no immediate plans to do so. Although recently I was seriously considering moving by February or sooner, for the moment I wouldn't be surprised if I'm still here in a year or two. (I'm in a change phase in my life and haven't figured out exactly what I want to do next.)
EDIT: There is also the question of whether to save up a down payment first or to buy earlier if I were to buy. Plenty of room for market and interest rate analysis, but I wonder what other budget effects to consider here?
EDIT 2: I'm currently the in Indianapolis area and if I move will probably move to the Fort Worth area.
I'm 34 and very roughly 20 years from retirement. I just recently became debt free and have a decent pretax nest egg but no after-tax savings--yet. I'm single with no dependents.
Among the considerations for the next stage of my financial life is whether to buy a house or condo or continue to rent an apartment.
Some early thoughts of mine:
- Maintenance: I don't really have to do any maintenance on my apartment, and I like that. If I had a house I'm not sure if I'd keep up with the lawn....perhaps I'd pay a neighborhood kid to keep it tame. I'm lazy these days but am pretty handy and would fix most maintenance issues myself...if the issue bothers me enough.
- Size: I used to think that I would get a 3 bedroom, 2 bath, 2-car garage house thinking of resale value. Now I think that's a waste of space, an expense in heating/cooling the extra area a temptation for me to accumulate junk, and a lot of space to get dusty & dirty between my infrequent cleaning missions, so if I were to buy now I think I would buy a house not much bigger than my apartment (750 sq feet).
- Freedom: I can dump the apartment without much hassle and move due to my whim, job change or other unforseeable event. Not so easy with a house.
- Freedom 2: In a house I don't have to sneak my friend's dog in and out when she visits. I could turn the stereo way up whenever I want, and I can put an antenna up whereever I want (subdivision bylaws notwithstanding). I don't have to worry about my car getting towed out of the driveway if it gets a flat while I'm on vacation. (Almost happened to me once at an apartment.)
- Investment vs. "throwing away money": I've come more and more to view a house (not necessarily the land under it) as a consumable item or at least an expense. Even a paid off house needs maintenance, taxes and more utilities than most apartments. In an income loss scenario an apartment can be summarily dumped at a hit to my rental and possibly credit ratings, but a house seems is not necessarily easily and quickly dumped and could result in credit hits and ultimately foreclosure until I've paid it off. On the other hand I have to live somewhere, and short of living with relatives cheaply I'm living in a fairly nice apartment and spending rent that is nondeductible and nearly enough (or maybe really enough) for a house payment.
I think the biggest issue for me right now is that I'd like to move to another state but have no immediate plans to do so. Although recently I was seriously considering moving by February or sooner, for the moment I wouldn't be surprised if I'm still here in a year or two. (I'm in a change phase in my life and haven't figured out exactly what I want to do next.)
EDIT: There is also the question of whether to save up a down payment first or to buy earlier if I were to buy. Plenty of room for market and interest rate analysis, but I wonder what other budget effects to consider here?
EDIT 2: I'm currently the in Indianapolis area and if I move will probably move to the Fort Worth area.