Profile picture for BAHDS

Need a nice house for 2-3 years - rent or buy?

Should I rent or should I buy?  What do you think given the New Orleans area specifically?  I will move to New Orleans in late summer '11 (job transfer) with wife, two children (ages three and nine when we arrive), and possibly mother-in-law (no special needs). 

Some factors: 
- It is likely we will move again after two to three years, so we will not be there all that long.

- I will work downtown.  

- I would like to have a commute of about 30 minutes or less (less is better).

- I want at least 4 bedrooms/2 baths (and prefer a split plan for master bedroom). Five bedrooms would be even better.  

- I would like something somewhat more upscale in house quality.

- I want a safe area with good schools and no real flooding risk.  - We could live in an apartment, but I don't know if we'd find something large enough. 

- If I buy, I don't feel I should spend much more than $2.5k/month fully inclusive (maybe a min $250k - max $450k house.) 

- If I rent, I'd like to keep it to not much above $2k straight rent (give or take) before utilities, etc.

- I have access to USAA for insurance, mortgage, Mover's Advantage (and am a veteran).

I have essentially no New Orleans experience other than a week a decade ago on the job.  Where should I start looking? Metarie? Slidell? Mandeville? I don't know where to start. 

Zillow is lean on rental listings for the area, but I'd think there are surely a lot more than what I'm seeing. Is the rental market lean or robust? 

I don't see this so much as an investment as I do a means of putting my family in a nice living situation for our time in New Orleans.  If I bought, it would be because that was the better way to house my family well.  In general, I'd rather rent just to avoid the pain of selling in less than four years. 

What do you all think? 
  • March 27 2011 - New Orleans
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Answers (6)

Profile picture for sunnyview
For 2-3 years I would rent. I had that choice myself after moving to a new area for a 3 year timeframe and was grateful not to have bought. It is very hard to recoup loan costs and transaction costs in that timeframe even in a stable market.
  • March 27 2011
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Profile picture for kittenonkeys
I am a Louisiana licensed real estate agent, but New Orleans is not my market.  I couldn't begin to tell you what the market is doing in that area post-Katrina.

The articles referenced by the other respondents are good.  My best advice is to have USAA refer you to one of their agents in the area.  Chances are that agent will be affiliated with a company that has a property management division as well as a sales department.  In addition to providing some insight into local market conditions, their property manager should be able to show you some available rentals that would meet your needs.

Welcome to Louisiana!  I hope you embrace the culture and enjoy your time in our state.  Explore some of the rest of the state while you are here also.
  • March 27 2011
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Rent. You need to be mighty darn sure you will own the property for at least 5+ years if you are going to buy - otherwise it rarely makes financial sense. The answers below from Mike Shirley and wetdawgs are right on the mark!
  • March 27 2011
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Profile picture for Mike Shirley

BAHDS,

Sounds to me like you are the prefect candiate for renting.  There are allot of costs involved  with buying a home and with property values level at best and still falling in many areas most folks won't recover those costs unless they are ready to stay put for at least five years.

  • March 27 2011
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Profile picture for the_country_hick
Look at the links below. They show how to decide this.

"Does it make more sense to buy, or to rent? Here is the way to find out for sure."

"Why rent if you could buy for less money? Valid reasons inside."

It really comes down to realtor fees and closing costs. Those will cost you at least 10% of the sales price. That is not even including the huge risk of not being able to sell in 2-3 years OR that house prices could drop even more in that time.

When you look at amortization almost nothing is paid off in the first 3 years. Almost the entire payment goes towards interest. That means even if house prices stay the same you will lose money buying for that short a time frame.

Renting is the smart and simple choice. You have an easy in and out for such a short time living in that area. You can always rent in a nice district.
  • March 27 2011
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Profile picture for wetdawgs
I'd rent in your shoes.   In the best of times, one is lucky to break even with a 4 to 5 year time frame for home ownership.    In addition to the expense, there is the hassle factor of buying and selling.

  • March 27 2011
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