Profile picture for When in doubt

better to buy or rent

  • October 14 2013 - Sonoma
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Answers (8)

Profile picture for Scudo Realty
I think the best place to start in making this decision is identifying your objectives and laying out your future plans and goals. Also, taking into consideration your current conditions (what you can commit to, afford, etc). Renting or owning can both be great options depending on what your trying to accomplish.
  • October 30 2013
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Hi Sue!

In the long run, buying your home is a better investment of your money. Sometimes renting can be more convenient for you, but buying a home is best for your future. Rent typically increases more rapidly over time and you are essentially throwing that money away. Buying, however, gives you more benefits in the long run. The longer you live somewhere, the higher the return on investment. If you plan on living somewhere for a long period of time (5 years or more), then I'd say buy the home!

Hope this answers your question. Have a great day!!

- Mike Silver
  • October 15 2013
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Profile picture for SteadyState
"Rent is a sunk cost, meaning it cannot be recovered (it's thrown away)."

Mortgage interest is also a sunk cost and cannot be recovered (it's throw away). The commission and closing costs you pay are completely throw away (cannot be recovered) . I guess ignorance is bliss. Unless you buy the property clear and free (say with cash)  you do not own the home - the home belongs to the lender. At best you own only the fraction paid for by your down payment and whatever you pay above the rent you pay to the bank! If the price of the home goes down you may have negative equity - you don't own the home AND you owe the bank. Ask the buyers who got foreclosed in 2007/2008 to confirm what I say.

Now to your question - you need to use a buy vs. rent calculator and work out the numbers. Many buyers look for break even in 7 to 10 years which is reasonable. Use caution when buying as you are placing a long bet of Real Estate  - you are borrowing money to bet that the price of your home with go up in value.
  • October 15 2013
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Rent is a sunk cost, meaning it cannot be recovered (it's thrown away). 
When you own a home you are paying a mortgage (if you financed), that is not a sunk cost because no matter that property is yours (except foreclosure) and you're building equity.
Owning a home is a much, much larger responsibility as others have pointed out. You are now paying to have all repairs fixed, taxes, etc. 
As a renter you can just call your landlord with problems or move out and move on, not with owning.
Buying or renting will heavily depend on your situation. 
Do you live where you want to spend the next 10+ years?
If something spendy broke (plumbing, a new roof, etc) can you afford to fix it?
Can you grow with the home? You may be single now but do you want a family?
Can you afford the taxes?
Can you afford a mortgage?
Do you have 5+ months of mortgage payments if you lost your job?
What is your debt to income ratio?

Research agents in your area and sit down with 2-4 and interview them.
SAME with a lender. Research, interview, learn and then execute.

Best of luck =)


  • October 14 2013
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Hi

Best thing is to put in the variables and find out for yourself.

I happen to have a calculator on my site that can do that, Feel free to use it.
This calculator will determine if it makes sense to rent or buy a home. Enter your information and explore the graph to find your break-even point.
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  • October 14 2013
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Well, it does depend on YOU. Can you handle all the responsibilities of home ownership which includes but not limited to: maintenance, taxes, mortgage(banks are not as forgiving on late payments as the average landlord). 
However, if you do have the financial means and more importantly the intestinal fortitude neccesary to keep a home going then by all means(see above list)--buy now while interest rates are still low--actually have dropped in the last couple of weeks.
Renting is safer, neutral and less demanding but gets you nowhere from a net worth standpoint.
  • October 14 2013
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In Vallejo California homes under $200,000 with a minimum down payment(FHA) your payment will be approximate $1350 a month and a rent payment for that is aprx $1500 a month. 
  • October 14 2013
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Profile picture for wetdawgs
Hi Sue:

The only correct answer to this is "it depends".

Here's a link to Zillow's article on the subject.
  • October 14 2013
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