Buy Or Rent a Home
March 9, 2010 9:18 AM Subscribe
Should mid-sixties semi-retirees buy a condo or rent a house?
Similar questions on Mefi go back to 2008, so I'd like more input on the current buy or rent ratios in this ongoing volatile real estate market. I can't find an online buy/rent calculator that takes into account an all-cash home purchase. Probably stay put for 10 or fewer years. The numbers:
Buy a condo for $275,000 CASH with $500/mo. covering maintenance and real estate taxes. No mortgage.
OR: Rent a house for $1800 a month. All house maintenance and taxes covered in rent.
The cash is currently earning about 1.5% (UGH). It is not retirement money.
Tax bracket is 10%. Living off monthly social security of $2000 a month, plus another $3000 a month of freelance income, with just under a million in untouched retirement funds earning an abysmal 1.5%. Will probably start taking out 1-2% in the next three years.
Quality of life is about the same for both current rental and condo.
Similar questions on Mefi go back to 2008, so I'd like more input on the current buy or rent ratios in this ongoing volatile real estate market. I can't find an online buy/rent calculator that takes into account an all-cash home purchase. Probably stay put for 10 or fewer years. The numbers:
Buy a condo for $275,000 CASH with $500/mo. covering maintenance and real estate taxes. No mortgage.
OR: Rent a house for $1800 a month. All house maintenance and taxes covered in rent.
The cash is currently earning about 1.5% (UGH). It is not retirement money.
Tax bracket is 10%. Living off monthly social security of $2000 a month, plus another $3000 a month of freelance income, with just under a million in untouched retirement funds earning an abysmal 1.5%. Will probably start taking out 1-2% in the next three years.
Quality of life is about the same for both current rental and condo.
This calculator suggests you'd be ahead by about $160,000 on the buy scenario if your investments continue to moulder at 1.5%. You'd have to be making better than 8% interest on your investments before the rent scenario makes sense over a 10-year time frame.
posted by drlith at 1:42 PM on March 9, 2010
posted by drlith at 1:42 PM on March 9, 2010
Response by poster: Thanks for the information. I did try out both calculators, which ask for slightly different input. The Times calculator says to rent into infinity. The other one says to buy. Go figger.
posted by Elsie at 7:16 AM on March 10, 2010
posted by Elsie at 7:16 AM on March 10, 2010
Response by poster: Yes it will, but we've got two years on a new lease at the old rent. (By the same token, real estate isn't going up much anytime soon.) What I can't figure out is why one says we lose $160,000 if we rent, and the NY Times calculator says it's better to rent going out from now, to ten years, to thirty years.
posted by Elsie at 11:47 AM on March 10, 2010
posted by Elsie at 11:47 AM on March 10, 2010
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A rudimentary look suggests renting would be preferable.
posted by saeculorum at 9:54 AM on March 9, 2010 [1 favorite]