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Rent vs Buy 2019 | Renting Vs Buying Calculator

Rent vs Buy?

This year, hundreds of thousands of people will be using a rent vs buy calculator to make a decision on whether to buy a home or to continue renting.

While you’re searching through the rental ads, and weighing the possibility of buying, consider how saving your money and renting might be a better lifestyle and investment choice until you’re ready.

Is the rental market better? Is this the time to buy or are prices still too high to commit to?  With a flood of new construction rentals across the nation (San DiegoDenverChicago) there’s more inventory.  While single detached houses, townhouses, condos, and duplexes are pricey, a rental might be available in the neighborhood you need to live — close to work, transit, and giving a carefree lifestyle. It’s a decision you need to work on.

What’s Up for Home Buyers in 2019

  • mortgage rates are falling
  • home prices are flat
  • listings have been growing
  • home prices are still very high and may fall in 2019
  • rent prices are leveling off yet renters are paying high portions of income on rent
  • economy is excellent for 2019, but what happens in 2020?
  • wages are rising but is higher unemployment on the horizon?
  • employment rates are at record levels
  • more new construction units becoming available but not enough to satisfy demand
  • more people have saved the $100,000+ needed for the downpayment
  • it’s reported that relatives are helping 50% of homeowners pay their mortgages (bank of mom and dad)

So there’s lots to think about regarding renting vs buying. Most renters stick with a condo or apartment which offers more carefree convenience financially and in living. They could put it off a few more years until they have the resources to manage it more easily. Some say, don’t buy at all.  Prices are too high.

Lifestyle Renters are a Big Target Market

Babyboomers are renting in the Chicago rental marketMiami marketPhoenix market and Las Vegas market to savor lifestyle benefits. Millennials, after making their rent vs buy calculations are seeing the benefits of co-living and apartments in key neighborhoods in these cities.

Whether for retirement lifestyle benefits or career benefits, many multifamily developments are catering to these groups. Read more about the new developments in Chicago and Denver.

If you’re one of the many who are migrating to a new city, and have limited downpayment funds, AustinOaklandDenverHonolulu, Tampa, Miami, Dallas, or Charlotte, might offer better rental markets.

Buy Vs Rent Comparison

A big part of the analysis depends on your down payment, taxes and fees, price of the house, mortgage interest rates, and mortgage restrictions. In a lower cost housing market such as Detroit, Philadelphia or Tampa, buying vs selling calculator might favor buying.  Check the latest rental market report and consider which cities have rent prices out of control. These cities likely have fast rising home prices too.

Take this example below, for a small 2 bedroom home in San FranciscoSan JoseToronto, Seattle, Vancouver, or San Diego:

Rental Investment Calculation

Price: $600,000
Mortgage: $500,000
Down payment: $100,000
Mortgage Rate Rising: 4.1%
Mortgage Payment: $3,228
Tax Writeoffs?
After 25 Years: $600,000 plus rental income? $2000 month

For Renters: Monthly Rent: $3000 plus zero equity after 25 years

Is the home and neighborhood good enough? Will purchasing leave the buyer with more money to spend each month?

The US is a Renter Nation

The rental property market is strong because investors are buying properties to rent out. Some call them speculators, but they can and do buy properties and those properties aren’t for sale. This is why there’s been such a boom in the property management business.

They get the income earnings benefit, capital gains later, along with tax benefits. That’s dried up housing availability and raised home prices.

It’s not an inviting scenario for hopeful home buyers with simple wishes. That’s lead to America becoming a renter nation.

Does Buying Really Deliver Value?

There are many with an unshakable belief that a home is also a retirement savings asset, while others suggest that you can’t eat a house when you’re 65. Many seniors today can’t sell because there’s nowhere to go. In TorontoVancouver, or in most cities in California, buying just doesn’t make sense.

Compare the Key Benefits of Buying vs Renting

  • creates long term wealth accumulation
  • tax advantages
  • rental investment income possibility
  • greater feeling of security and stability
  • interest rates are low currently
  • it may be cheaper to buy than pay high monthly rental rates
  • if you divorce your spouse, it could create severe losses
  • there is a housing crisis and big demand for any home or apartment should push prices higher
  • real estate as an asset has performed better than any other asset type in the last 30 years (if you consider tax write-offs, price appreciation, and rental income, it outperforms by far)

The Benefits of Renting a Home or Apartment

  • no downpayment stress
  • no worry about mortgage commitments
  • no high cost of house and property maintenance
  • no worry of buying a money pit
  • no worry of mechanical breakdown
  • freedom to travel and move
  • many buildings and condo complexes have fitness centers and swimming pools
  • no worry of real estate market collapse
  • unemployment doesn’t mean you could lose your investment

However, we’re asking if buying a house right now in 2019 is wise or does renting a condo or apartment make more sense.

Major Considerations before deciding on buying or renting:

  • whether this is the right time to buy for you personally and emotionally — do you really want to be tied down to a house and property with all the stress and responsibilities?
  • will you be marrying and raising a family? — can you raise children well in a high rise condo or a downscale neighborhood where you can afford to buy?
  • how much can you can afford, or can you really afford it all — prices are so high in cities such as San Francisco, New York, Miami, Dallas, Austin, San Antonio, Denver, Seattle, San Jose and Los Angeles for instance, it may take all your income to pay for the cheapest unit.
  • how high will mortgage rates will climb — can you pay your payments if they rise by 70%?
  • how much other debt do you have? — do you have student loans and credit card debt to add to your mortgage payments?
  • alternative investments — what else could you invest in right now with your down payment (bitcoin, startups, gold, stocks)?
  • should you buy to rent out yourself? — rents are rising fast with very low vacancy rates ensuring a positive cash flow

Buy vs Rent Cost Calculator

To get a better view of your buying vs rent decision, try out the rent vs buy calculator from the NY Times. This widget still requires your input on forecasting a few things, yet it might help clarify the pluses and minuses for you.

Graphic courtesy of NYtimes. Rent Vs Buy Calculator.

Here’s a few don’ts to ponder:

  1. Don’t buy because you think it’s an investment, unless you plan to rent it out.
  2. Don’t buy because that’s what your friends are doing.
  3. Don’t pay the going asking price because the seller thinks it’s worth that much. Consider why they’re so eager to sell right now.
  4. If you buy right now, you’re paying a speculation price. If you do buy, only buy at an affordable price for a home, condo or apartment.
  5. The only exception to this would be to buy an investment rental property. When your property earns big income from hungry renters with few rental options, it’s a good investment for the next 5 years. If you have to sell it, you’ll likely see a positive ROI.

Good luck with your buy vs rent decision. And if you’ve thought it through and are confident about your choice, feel good about what you’re doing. Being positive is a must for anyone.

Please read our new State of Property Management report, and learn more about what property managers are doing to improve their businesses.


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