When is it better to just rent a house?

[Brian Elfert]

I'm wondering at what point is it better to just rent a house? I have my house on the market. The problem is trying to find a replacement house that I can afford and doesn't need major repair. Most of the houses in my price range will need a new furnace and air conditioner probably within five years and the windows and siding usually will need replacement at some point. Good windows and siding can easily cost $50,000 and then another $10,000 possibly for a good furnace and air conditioner. (Yes, my parents spent $50,000 for really good windows and really good siding a few years back.)

I spend $1,880 a month for taxes, mortgage, and insurance for my current house. It almost seems like it would be better to just spend $1,500 a month on rent and let the landlord deal with all the expense of owning a house. I guess the disadvantage is most landlords will never upgrade the house and spend the least amount of money possible. On my house if something cosmetic breaks I fix it. A landlord would likely never fix cosmetic issues. Landlords would be likely to put in the cheapest least efficient furnace possible as the tenant has to pay the gas bill. There would be zero incentive for me to invest any of my labor and money on fixes to a rental home. Besides, the landlord wouldn't want the tenants making repairs.

My current house is worth $335,000 and the houses I have been looking at are between $150,000 and $250,000. I am really trying to be at $200,000.

[Mike Chance in Iowa]

You need to think about some other deciding factors. Would you rent long-term? Do you have animals or hobbies or businesses that would prohibit you from renting certain homes? Can you live in a home that you do not have the deciding factor when it comes to fixing repairs? Do you want to be locked into a lease? Are you prepared to move a second time if you have issues with your landlord?

[Jim Matthews]

If it's a pure money decision, a Price to Rent ratio above 20 means that the cost of ownership will exceed the cost of renting.

From GetRichSlowly:

One way to tell whether it’s better to rent or buy is by checking out the price-to-rent ratio (or P/R ratio). This number gives you a rough idea whether homes in your area are fairly priced. Figuring a P/R ratio isn’t too tough. All you need to do is:

1. Find two similar houses (or condos or apartments), one for sale and one for rent.
2. Divide the sale price of the one place by the annual rent for the other. The resulting number is the P/R ratio.

If you're in transition, renting make perfect sense.
Check out any potential rental after 6pm, when the neighbors are home.

Preferably, do so without an agent running interference.




http://www.getrichslowly.org/blog/20...ng-make-sense/

[Brian Elfert]

You need to think about some other deciding factors. Would you rent long-term? Do you have animals or hobbies or businesses that would prohibit you from renting certain homes? Can you live in a home that you do not have the deciding factor when it comes to fixing repairs? Do you want to be locked into a lease? Are you prepared to move a second time if you have issues with your landlord?

One issue I didn't think about is parking my motorhome. Most homes won't have a space for it without doing some sort of prep work. There are rentals out in the country that have buildings large enough for a motorhome.

I would probably have to store it somewhere and I really don't want to do that.

[Ryan Mooney]

One issue I didn't think about is parking my motorhome. Most homes won't have a space for it without doing some sort of prep work. There are rentals out in the country that have buildings large enough for a motorhome.

I would probably have to store it somewhere and I really don't want to do that.

There are motor home and boat storage yards all over around where I live. Of course you have to figure the monthly for that into the total cost.

[Brian Kent]

Do you have any noisy hobbies like woodworking? My decision point is how long I would want to live there. Less than 3? More than 5? The longer the stay the more repairs and upgrades and equity make sense.

[Brian Elfert]

There are motor home and boat storage yards all over around where I live. Of course you have to figure the monthly for that into the total cost.

Sure, there are storage yards, but I work on my motorhome a lot and I can't do that at a storage yard. Locally, they cost close to $100 a month. Right now, my motorhome is stored away behind my house where nobody can really see it except the neighbors.

I think renting might be out due to the motorhome part. I didn't even think of that when I looked online for rental houses.

[Mike Chance in Iowa]

Sure, there are storage yards, but I work on my motorhome a lot and I can't do that at a storage yard. Locally, they cost close to $100 a month. Right now, my motorhome is stored away behind my house where nobody can really see it except the neighbors.

I think renting might be out due to the motorhome part. I didn't even think of that when I looked online for rental houses.

I'm with you there. We have storage space on our rental property to park it, but no proper cover for it. On Sunday we discovered the factory had not properly sealed a marker light in the top front. This is going to take a bit of work to repair all the water damage and that would not be easy to do at some storage place. We already tore into it and I can't imagine needing to make several trips back and forth to gather all the necessary tools & supplies we have used so far. Plus, if you don't have place to park it at the rental, it becomes very cumbersome to load & unload it for trips.

[Jim Matthews]

Not to be flip,
could you just live in the RV
while you shop for more permanent digs?

How big is it, anyway?

[Matt Meiser]

Have you sat down and figured out what moving is going to cost you after realtor commission, moving expenses, utility changes, etc, etc, etc?

[Brian Elfert]

Have you sat down and figured out what moving is going to cost you after realtor commission, moving expenses, utility changes, etc, etc, etc?

Yes, I have. It isn't cheap to move, especially the realtor's commission. I made some stupid financial decisions regarding my house nearly a decade ago and will almost certainly need to sell it before April 2016 or face possible foreclosure on the house.

Jim, I could live in the RV while finding a home, but I have a place to live if/when my current house sells. It isn't practical to live in the motorhome over the winter due to heating costs. All the campgrounds/RV parks close for the winter anyhow.

[Brian Ashton]

I happened upon a website a couple years ago that investigated the point in ones life were it was actually more economical to rent than buy when it came to return on investment. I've tried googling it but as usually when you really want to find something you can't... In a nut shell, by looking at the financial costs such as: rent, loan costs, inflation, property value increases and such it concluded that buying a house after approximately 50 was a bad investment compared to renting.

[Jim Matthews]

Gotcha.

Too big to park on the Lake.
Plans to keep the RV, I gather?

No better time to sell one, than Spring...

[Steve Peterson]

I happened upon a website a couple years ago that investigated the point in ones life were it was actually more economical to rent than buy when it came to return on investment. I've tried googling it but as usually when you really want to find something you can't... In a nut shell, by looking at the financial costs such as: rent, loan costs, inflation, property value increases and such it concluded that buying a house after approximately 50 was a bad investment compared to renting.

I wonder if this is because a 30 year mortgage started after age 50 is a bad idea? Then why not get a 15 year mortgage and have it paid off by the time you are 65 and ready to retire? The cost is about 50% higher, but it will also be paid off in half the time.

Steve

[Larry Browning]

Have you considered a relocation move? $200K in my neck of the woods would get you a pretty nice home.
Here is just one of many examples.
http://www.homes.com/property/5629-e-us-64-hwy-alma-ar-72921/id-600012152662

Your looking at $80 - $90 a square foot.