If you rent and that enables you to save money and invest, is buying a home a bad call?

Question

Im a renter. I have a roomate and never have had trouble with roomates, and my girlfriend and I are moving in. Local rentals are about 1000-1100. The mimumim home prices around here are 300K-1 mil+ (NJ)... with property taxes being as much as 8-10K, does buying make financial sense at all?

(I know about appreciation etc etc, but houses suck money away)

Answer 1

I'm not too familiar with NJ or your particular area, but rental prices for $1000-1100 in an area where home prices are 300K+ seems like a value to me. In my area the homes are $130,000+ and the rentals are $850-1,500/month.
Also, you'd probably get better financing if you were married as opposed to being bf and gf. I'd recommend to go ahead and rent for a year. If it seems like you'll be in the area for 5 years or more I'd consider trying to purchase now, but only if you are certain of being there for a few years.
A year is a good time to settle in with the girlfriend and see if it gets more serious, pay down any debt you have (to improve your credit score), and manage your investments. The nice thing about houses for most people is that its a no brainier investment... for around the same amount they used to pay in rent they get to eventually own something that tends to go up in value over time.
You are correct in that houses suck money, which is one of the reasons it doesn't make sense to own if you aren't going to be there long. You don't want to have to pay a major repair bill/ replace a major appliance and then move out a year or two later without being able to reap the benefits of what you paid. Moreover, if you do eventually buy and you can show that you've been able to save and invest while paying an amount similar to what will eventually be your monthly payment it'll make it easier to be approved for financing. Other options to consider are investing in property to rent out to others or other types of real estate investments.

Answer 2

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Answer 3

Keep renting until you need a home. Let's say you buy a $300,000 home in NJ. The monthy payment for your mortgage and taxes would be around $2,000 per month versus renting at $1,000 to $1,100 per month. The interest on your mortgage is deductible, but you are still financially better off by renting. I would suggest waiting until you need a home or if prices come down. Otherwise you will be house rich and cash poor. A bad situation to be in if the housing market continues to stay flat.

Answer 4

Have you ever considered taking a real estate course at a community college or university. The cost is usually minimal and the amount of information is great compared to what an ordinary buyer has .. going into consideration of land ownership.

The rent in our area of Tennessee is comparable to home ownership rates... so it is to our advantage to buy rather than rent. I did miss the pool...so we got one 5 years later.

See the links below to gain some insights into current properties available in the New Jersey areas near you.

Answer 5

Buying your own home and making mortgage payments is always better than collecting rent receipts. This is of course if you can afford it. You have to do the Math. Your house is your biggest investment by the way. Good luck to you.

Answer 6

Save if that is what you want to do. Anyways the price are droping throw the floor.

http://www.breakingbubble.com/index.htm

Soon if you have a nice down payment and do not over exten your self you will be just fine.

Answer 7

Buying is not always a good idea. You gotta do the math. Keep in mind that the house you live in is the biggest expense in your liability column.

Answer 8

Rent-To-Own Home - http://RentToOwnHome.uzaev.com/?nmDP