Profile picture for gpsimms

Rent or buy, 2 years in indy

I am a teacher living in Indiana and my wife is a medical student.  We have about 5000 liquid, and my wife's parents set up a college fund when she was born that she never used that we could dig into.

For her rotations, we will move to Indianapolis for two years.  Looking around, it seems like in many areas the rents are so high that we should consider buying since the market is so low.

Is it too risky to assume the market will not be this low in two years?

Is it too expensive to buy for an investment of only two years?  We are both young and no next to nothing about this and would appreciate any good advice!

thanks
  • January 23 2009 - Indianapolis
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (10)

You're asking whether it might be cheaper to buy or more advantageous. It's not necessarilly more expensive to own a home versus renting.  Yes there are extra costs in home ownership like real estate taxes, homeowners insurance, maintenance but depending on where you live it can actually be cheaper to own versus renting.  Further, you'll make money if you sell it - this depends of course if your home is worth more than  you paid for it. Owning is more advantageous it makes you eligible for certain tax deductions.

Find out what you can afford, then think about how long you want to live in the property and where you think the market will go in those years.

  • January 26 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Renting issues:

If you choose to rent, you may be responsible for a deposit, monthly rent payment, renters' insurance and utilities. But, because you will not have ownership of the property, your rent could increase at the end of your lease, you will not earn tax savings and you will lose the chance to build equity.

With a [link removed by moderator] or any move, if you rent, it is easy to move out (although there may be a cost if you move before the lease expires). A "military" clause in the lease or renter's agreement should allow you—without penalty—to break the agreement if you are transferred or decide to move on base before the lease ends. Consider having your base housing office review the lease before you sign it.

Buying Issues:

If you buy a home, you may have to make a down payment, pay closing costs and get insurance before you even move in. Then, there are property taxes, utilities, homeowners' association (HOA) fees and more that you may face on a monthly or regular basis. If you secure a fixed-rate mortgage, your payments will remain the same, but your taxes and insurance could increase. As a homeowner, you get to deduct mortgage interest, property taxes and some home improvement items, such as energy efficient appliances or new windows. However, you have to itemize your deductions to get these tax breaks.
  • January 22 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for ChandaB
I know this is an old post, but I ran across it when answering another "rent vs. buy" question...

Just curious as to what you decided to do.  With the money required for closing costs and down payment on top of a monthly mortgage payment, I'm not sure it would've been the best idea to buy unless you were planning on holding onto the property after you move and rent it out until you could sell it for a decent profit...Don't forget when you sell there are closing costs again, in addition to agent commissions if you list with an agent.
  • January 21 2010
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

$7,500 tax credit may don't need to return. The money is give away

congressional effort to stimulate home sales. That program offered a credit of as much as $7,500 to buyers who had never bought a house or hadn't owned one during the previous three years. To qualify, taxpayers would need to complete a home purchase between April 8, 2008, and July 1, 2009.

Although final details on a revised credit are still subject to negotiations between the House and Senate -- and to passage of the economic-stimulus package itself -- there's a good chance that buyers who sought the credit in 2008, and new purchasers in 2009, will be relieved of the repayment requirement.

Congress may make $7,500 home buyer tax credit more attractive
http://www.latimes.com/classified/realestate/news/la-fi-harney25-2009jan25,0,2101901.story
  • January 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for gpsimms
Thanks all,

Still planning on looking into it, as a few City foundations (like SEND) are able to help out a lot with all of the up front costs; but it seems more likely that we can find a reasonable rent someplace.

Anyway, thanks again for the advice.
  • January 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I would tend to agree with Roberto.  You need to do a really indepth look at rent versus own.  If rent far exceeds owning then you might have a possibility of buying, just from the standpoint that theoretically you would be able to continue to rent out unit after two years.

I will say this though... Do not expect the market to even let you break even should you decide to buy today and sell in 2 years.  That is a risky endeavor based upon what is happening nationally.

If rent far exceeds own, and you start thinking about buying.  I would try to do some conservative projections of rental inventory on the market today as well as best educated projections of rental market in 2 years (hint many areas are currently projecting rental declines).  If it still looks like you should buy then I would approach the purchase of home as "income" property which would demand a certain amount of return on investment.

for residential a simple rule of thumb is net 1% of purchase price a month.  If you are around there and all other factors are telling you buy...

Good Luck.
  • January 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

The suggestion was to get all the information to make a good decision...not to jump in with eyes closed. Nothing to do with Commission....just helping to educate amidst all the negativity and personal feelings.
thanks for the cool last name comment.
  • January 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

buying a home has quite a few costs: inspections, appraisals, loan fees, recording fees, possibly taxes etc.

selling costs commissions, in addition to the rest.

your home would probably need to go up 10% in the next 2 years just to break even. I think a more careful analysis of hte cost to rent versus buying is in order, I doubt your rent on most homes is more than the monthly costs of owning it given your small downpayment and short time frame.
  • January 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Bette Defarm
IMHO you would have to be stark raving mad to buy a house given your circumstances. There are too many great posts outlining exactly why on the threads for me to take up the bandwidth repeating them. Look at the posts of people here who don't benefit from a commish. You will get all the info you need to make a decision.
  • January 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Great question. Several things to consider...
1) current mortgage rates are really low and allow you to buy more house for less money.
2) because of the decline in prices and the large inventory of homes on the market, you have a good likelyhood of getting a "good" if not "great' deal on a home.
3) There is no way of telling what the market will be like in 2 years, but with the two above conditions, it may be well worth it to buy now.
It would be best to work with a realtor to assist you in all 3 of these aspects and get all the information you need to make a sound decision.
Please feel free to call or emai if you have any other questions.
Have a good weekend
  • January 23 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.