Profile picture for darrylcooper2

Paralyzed by buying/renting choice

Hi, I have been paralyzed over whether or not to buy a house for over a year.

I live in Los Angeles/SF Valley, and I currently pay $2400 a month to rent a 2 BR house that I could probably purchase for a lower monthly payment.  I am eligible for a VA loan with no down payment and a locked in low interest rate.  It seems silly to pay the same amount (or more) in rent than I would be paying for a mortgage on the same quality place, but is there something I'm missing other than that factor?  Fear of making a bad decision has kept me from pulling the trigger.

Thanks very much!
  • December 13 2013 - Los Angeles
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Answers (15)

Profile picture for gator70
For years I rented when I could buy. In 2008 and 2009 the market crashed. I was in a perfect position to buy low. I did it on several properties. Each situation is different. Your area has had some hefty appreciation in the last 18 months. Your decision should be based on freezing future prices increase via a purchase today. ONLY if you believe there will be price increases. 
  • January 07 2014
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Profile picture for signwithmanny
Hi,

In my professional opinion, you should really look at your financial philosophy, financial goals, and financial thermometer to find your answer. Many of us can tell you about all the great reasons to own a home;
* Tax breaks
* Investing in yourself
* Having your money work for you
* The quality of life a home gives you
* There's even studies detailing the correlation of home ownership and its positive effects on your health

We can then discuss the negative side of your situation;
- You pay $2,400 a month for what?? is it worth it?
- Buying is like slowly filling a bucket with money, over time it gets full. Renting is like, throwing money aside
- You may lack commitment, with all due respect, in my experience lack of commitment is a high motivating factor for not purchasing your first home
- Maybe you don't want the responsibility
- Lack of faith in your job security or skills
- Lack of vision in what you want in a home?
- Lack of decisiveness, you would hate to make a decision, then feel like your stuck in rut
- and I can continue......however these are all valid emotions to have.

I can tell you why do it now vs later, low interest rates vs high, low inventory vs balanced, but again none of this means anything unless you give it a meaning.

When I encounter a buyer such as yourself, I have a full blown discussion about their financial/Real Estate goals, then I show them a set of properties that matches what they have addressed as their requirements, then it's up to them to make the connection. However, none of this happens if the buyer is not motivated, nor shows any interest. My momma used to say "Son, you can lead a horse to water, but you cant make it drink". 

For many Americans, owning a home IS the "American Dream". For others its a frightening decision to make. "He who never undertook anything never achieved anything" French Proverb.  You have everything you need, now YOU have to find the WHY, or you don't, it's your choice. 

I wish you luck and a thrilling journey.


  • January 06 2014
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Profile picture for hpvanc
My suggestion would be to put it on the back burner until you are sure. Your subconscious is trying to tell you that you aren't ready (and the sales people on this thread are taking stabs to convince you otherwise), listening to it and waiting is your best course of action.
  • January 02 2014
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Profile picture for CraigWhite1
Hi there,

I'm not sure if you've gotten the answer you're looking for or have even been considering this being we're just now past the Holidays. That said, you're not alone in how you feel.. As a matter of fact there are a lot of people that fear pulling the trigger for many reasons. If you're a first time buyer that adds another element of fear as well. What's really great is that you can get a VA loan!! With their programs it's make it really nice not to have to come up with much or sometime any out of pocket money. Although that doesn't make it any less scary to jump into buying a home. I can tell you this; housing prices rose over 24% in LA this year, different %'s in different areas but that's good. It's also expected to go up again this year, about 10% or more. (these are published numbers by the California Association of Realtors)  What that means is it's very likely if you do buy you're going to start building equity right away. I sell homes in the SFV and I'm confident you'll find a great home in your price range.

My suggestion would be to find a Realtor you're comfortable with and take a look around just to see what's out there. Find somebody that works with first time buyers, that's patient and not pushy. Take your time, don't feel rushed and the right house will pop up.The right agent will help you through the fear and will get you into a great home!!

I hope this helps and I wish you all the best in your search.

  • January 02 2014
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You'd be better off buying.
Renting is like throwing money down the drain

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  • December 29 2013
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I can't. And, I was about to say that the Amy's statement was a safe assumption. I'm not an Accountant. I am justa lowly redneck with dime-store professional licenses, and two degrees, who has never paid an Accountant a dirty nickel, in his thirty six years as a taxpayer, and owner of multiple businesses.

darrylcooper2, there is a high probability that there will be tax advantages to owning a home over renting one!!!!!
  • December 13 2013
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Can you imagine a scenario where somebody who is paying $2400/mo in rent would not have a tax benefit by buying a house?
  • December 13 2013
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Profile picture for wetdawgs
@Amy:  Do you know the poster's income, tax bracket and deductions?  If not, how can you say "There is definitely the tax benefit"?    Are you a CPA?

  • December 13 2013
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It truly is a personal choice. There is definitely the tax benefit and at some point you will accumulate equity. I am not that familiar with your local market but in my market area many people are choosing not to sell when they retire or relocate because the rental market is very strong and normally will keep in line with inflation should you decide to move.  There is a strong pool of qualified quality tenants in spite of the horror stories you may hear of.  I am sure your landlord did his/her homework and verified your income, credit , etc.  With rates low and housing prices still reasonable I personally feel its a great time to buy... ( I just moved AGAIN last year and kept my previous home as a rental with positive cash flow. Good luck and be thoughtful and cautious. Best of luck !!
  • December 13 2013
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You want to buy, but you're afraid it won't turn out well? Don't buy.

Look, you can't do everything in life, and there's no point in buying and worrying about whether it's going to turn out to be a good investment. If you're afraid the investment won't turn out, don't make it. We can't assure you that it will turn out okay, and life is short - why buy a house when you KNOW that if it doesn't turn out to be a good investment, you won't enjoy it?

Rent. 

All the best,
  • December 13 2013
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Profile picture for sunnyview
I would see if you can actually buy a place for the same as or less than rent that you would like to live in. If you can buy with a PITI (mortgage+insurance+taxes) close to rent in an area like LA where rentals are generally in steady demand, it makes sense to buy if you plan on staying in the area.

The other thing to consider is making sure you can afford the place you choose. Generally, it is a good idea to buy in areas where you are buy for close to the cost of renting especially in markets where rents are high. See what you can comfortably qualify for, run the numbers for the type of house/condo that you would live in and actually start looking online in the price range you can afford. If it makes sense numbers wise, then don't be afraid to buy.

Smart buying can be a good long term way to build equity and fix part of your living cost over the long term. Do your own research and set your own budget. If buying makes sense to you, then go for it.
  • December 13 2013
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Profile picture for wetdawgs
Let's consider another perspective.   When paralyzed, sometimes leaping is sensible but sometimes it is sensible to think a bit longer.

Are you ready to live in the particular area for at least 5 to 10 years? 

"rent the same amount as mortgage"  -   is this included property taxes and insurance calculations?   How much are you budgeting for maintenance annually?   A rule of thumb is  2 to 4% (on average) of the market value of the home.  If you can do much of it yourself (painting, landscaping etc) it is less than if you have to hire for everything.   But furnaces and roofs can be big ticket items.

There are some standard real estate fluff statements in some of the responses, so work through them carefully.

"You also have a great tax write off when you own a home."   Many taxpayer with smaller mortgages and lower incomes don't qualify for this.  Do your own calculations for your income, deductions and tax rate.

"you will have equity as you slowly pay off your loan".     Maybe.  There are many who bought 2004 to 2008 or so who are still under water.   So, equity isn't guaranteed.
  • December 13 2013
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Yes my broker friend calls this analysis paralysis!
 You are correct that in your case, you would be much better off owning. You also have a great tax write off when you own a home. Plus you will have equity as you slowly pay off your loan.
  • December 13 2013
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The decision to purchase a new home is always a personal decision. Purchasing a home will give you tax benefits and property appreciation which are the major advantages to home ownership. The disadvantages are paying for any maintenance to your home along with any improvements you plan on making to the home yourself. While renting you are not building any equity but the maintenance and improvements are always taken care of by the property owners at no cost to you.

In your situation with a VA loan at your disposal you are in a strong position to purchase a new home with a good interest rate and low to no costs to you. I would recommend contacting a bank or mortgage company to find out what you can qualify to purchase and start looking to see if you like the houses you qualify for. If you like what you see then go ahead and pull that trigger!
  • December 13 2013
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This is a good environment to purchase a home with low interest rates and values not yet close to the peaks we had several years ago, and rents are becoming more expensive than mortgage's when you add that you get a tax benefit from uncle sam when you have a mortgage.

In your scenario you shouldn't hesitate the VA program that you have at your disposal you should use it's a good program, and we thank you for serving our country.  Take advantage of what you have. there are many long term benefits to home ownership like appreciation. 
  • December 13 2013
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