Renting or Buying A Home Within A 5 Year Time Horizon


Renting or Buying A Home Within A 5 Year Time Horizon
By Scott Rogers • July 7, 2020
If you will only be in your next home for two (or 1, 3, 4 or 5) years -- should you buy that home? Or just rent a home instead? Let's take a look, assuming a price point in the current market of around $175K - which is likely to be a townhouse and might be what you are considering as a first time buyer... As becomes pretty quickly, above, it doesn't necessarily make much sense to buy if you are only going to be in your home for 1 or 2 years -- and once you get to a time horizon of 4 or more years, it almost certainly makes sense to buy a home. For clarity, let's look at how I'm determining the cost of renting and buying this fictional house... The Total Cost of Renting Includes... Monthly rental rate x 12 x # years Yep, that's it The Total Cost of Buying Includes... Monthly mortgage payment x 12 x # years + closing closing costs when buying your home (3.5%) + cost of selling your home (5% + $1K) + potential maintenance costs (1% / y) - appreciation of your home's value (2% / y) - potential tax benefits of interest paid (int x 40% x 25%) As you can see, I am intending for this to be a full accounting of the total costs of home ownership -- not just comparing the rental payment to the mortgage payment. Here's a visual (click for a closer look) as to how those numbers line up over a one through five year time horizon... I should also note that it is quite possible to be "just fine" from a financial perspective if you buy and only end up being in the home for a year or two if... your home's value goes up much more than expected during that time frame you have little to no maintenance costs during the time that you own the property you decide to keep the property as a rental property and thus do not need to factor in the cost of selling the home As you are thinking through whether you should buy or rent -- at a $175K price point or otherwise -- feel free to touch base with me and I can give you some feedback and advice based on your overall circumstances. Receive Updates by Email Recent Articles: Is There A Price You WOULD Pay For This House? There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 24, 2024 (unless otherwise noted).
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