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Moving Out, Buy or Rent?
Malgaras
Registered User regular
Registered User regular
I'm 22, living with my parents, and looking in to the prospect of moving out. However, I'm caught at the moment. I currently have a pretty good income and I think that I could probably save enough up for a down payment if I stayed with the folks a little bit longer.
My thinking is that, since interest rates are in the toilet right now, getting something like a townhouse would potentially be cheaper than rent on a nice apartment, and I would be getting some equity. On top of that, I worry that interest rates will go back up and the same house will cost me more later.
However, on the other hand, I worry about other kinds of expenses that might come on top of a house like property tax, repairs, and the like. I also worry if I decide I want to move later, I'd have to worry about selling the house first.
Any thoughts? Also, for you apartment dwellers out there, what do you like/dislike about apartment living?
My thinking is that, since interest rates are in the toilet right now, getting something like a townhouse would potentially be cheaper than rent on a nice apartment, and I would be getting some equity. On top of that, I worry that interest rates will go back up and the same house will cost me more later.
However, on the other hand, I worry about other kinds of expenses that might come on top of a house like property tax, repairs, and the like. I also worry if I decide I want to move later, I'd have to worry about selling the house first.
Any thoughts? Also, for you apartment dwellers out there, what do you like/dislike about apartment living?
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Long paper summarized. If you are planning on staying in the area for the next 5 years you will likely come out on top financially. If you stay in the same house for your life you'll be ahead millions of dollars.
Now that being said, since you are not at the peak in your career, it may be prudent to wait until your career has a few years of stability in front of you before you go after a house. The market now is very good for buying a house too. So I would suggest if your career path keeps you in the same area that buying a house would be to your advantage. On the other hand, Apartments right now ill be cheaper than a house right now, and everything is taken care of in an apartment. If your main sewage line is clogged it's 350 bucks to get a plumber with a snake, whereas an apartment complex that is run well can have a guy there faster and snake your drain for free. On the flip side your completely reliant on your apartment complex. There are also other benefits of an apartment complex, some of them offer shuttles to the metro station, pools, cleaning, security (access control is an invaluable commodity in some areas),
So the decision comes down to this. For long term financial benefit, where you aren't going to be moving around, buy a house. If you value short term financial benefit, and need the freedom to move around, rent an apartment, or rent a house even. If you want a pet, get a house. Pet fees and deposits will eat your face with an apartment.
Of course since I'll see you Sunday we can talk then.
That said, if you're comfortable enough living with your parents, and they don't mind having you around, staying home at least a little longer is a fantastic option. Having your own place is fun, and not having to worry about upkeep or selling it is great, but shelling out a ton of money you'll never even potentially see back for rent is far, far more miserable than the other options are fun. Finding someone to sublease to can be a monstrous pain in the neck too; few financial transactions sting more than payments on overlapping leases when you have to move in a hurry for a job. Renting is a necessary evil when you're in your twenties and aren't sure where you want to spend the next half decade or so, though. (Edit: Not that there is anything wrong with choosing to rent later in life too, I don't mean to sound like some kind of snob, sorry about that if it came off bad. I'm renting myself too, I'm just not a big fan of it.)
Quality of life matters a lot, and if you really hate living with your parents, maybe the best thing would be to try and find a short six-month lease rental and get a feel for the waters there. (Unless, of course, you end up fairly certain that you want a house in which case shelling out any money on rent in the area is a waste).
Prices vary a lot by market and of course quality. Renting could be more or less than buying, more so when you add all the taxes, etc. Town homes and condos tend to move slower than stand-alone houses. Down payment (20%) is the same, cost may be close, property tax will probably be less than a house, depending on the area. Equity is only if the value goes back up, which may or may not happen. Until it's sold, a house is a liability.
Apartments are OK, pluses & minuses to them too. Some people never buy and are quite happy with it.
I would start saving now, and start looking around at apartments and town homes and single family's. See what's out there, see what neighborhoods you like, etc.
Get the data on the place you want to go, punch in the numbers, and think about the results.
Let 'em eat fucking pineapples!
Man if I could keep living with my parents I would. 25% of my paycheck saved... that's a hell of a lot of money in a year.
Especially if you think you'd like to move later. I thought about buying a house a few years ago, but held off as I realized I would be moving in a few years. I really enjoy renting anyway. I like not having to shovel the walk. I like that when my bathtub leaked, it was replaced with no extra cost (or labor) on my part. I LOVE LOVE LOVE that I can easily move if crappy neighbors ever move in. (Of course with houses you aren't normally sharing a wall with neighbors, but a bad neighbor can still make your life miserable.) I like the ease of movement and the feeling of living in a new place. I've been considering moving again (within the same city) not because I dislike my current apartment, but just for a change of pace. (But I think I will hold off for a few years for financial reasons.)
Obviously a lot of this depends on finding a good apartment and good landlords. I certain have had some rotten ones! But that is one of the reasons I recommend renting first. Because it took me some time to develop the "NOPE NOT HERE" and "DON'T TRUST THIS GUY" instincts with regards to apartments and landlords. I cannot imagine how horrible it would be to make that mistake with a house.
Conventional real estate wisdom has been that w/r/to condos/townhomes, they are the last to go up and the first to go down in a real estate cycle, since sfh (single family homes) are the most in demand dwelling.
That said, demographic shifts (boomers retiring) may inform future valuations of various types of dwellings.
Unless you can put 20% down and have excess reserves to deal with the expenses over the first few years (furnishing, painting and trim fixing, landscaping, pest control, unforeseen repair) I probably wouldn't buy right now even though rates are ridiculously good. Check your credit to se if you can even qualify for the best rates.
Either way, not paying rent or mortgage and banking that income for as long as you can swing it is going to put you in the best shape financially.
20% downpayment, 10% repair (save this), 10% appliance/window/roof/insulation stuff if you want to head towards an energy efficient home (you should).
Also, when it comes to buying a house, what you make matters, but you also need to look at the long-term prospects for your job. Are you going to want to be changing jobs in a year or two? Or five, even? Because when it comes to job hunting, a house is a fucking albatross around your neck. It's probably worth changing apartments to shave 15 minutes off of your commute, but barely worth selling a house to shave an hour off unless you turn a profit.
I just wanted to echo this.
When I was in my early 20s, I struggled to live on my own for a while, mostly out of pride. It was a bad decision. I absolutely should have accepted my mother's support for a little while.
Build up a little savings and try to have an emergency cushion before you move out.
I also agree with this.
You learn a lot from your first apartment. Jumping into a big financial responsibility like owning a home without having a little bit of experience living on your own (or with roommates) could lead to some bad decisions.
Try to build up your savings while living with your parents, and then find an inexpensive apartment for a year. That's my suggestion.
the "no true scotch man" fallacy.
It has to be one of the single largest regrets I have at this point in my life. I love the independence, I love getting off of work and heading into a house that is mine, it is a wonderful feeling. But it is a lot of work, and honestly I am still learning what needs to be done to sustain the house as it is.
I would most definitely stay home as long as possible, and if you absolutely cannot stand living with your parents any longer I would rent a nice apartment or condo for awhile.
If you are a sadist and love stress and headaches and coming home from work to stay up all night because something broke, or needs repair, or you can't stand that godawful color of your living room, buy a house.
Hell, I'm 32 and have still never bought a house. For all the "good" people tell me it will do financially, I watch those same people constantly complain about having to spend all their free time doing honey-do crap around the house. If I inquire what most of the guys at work are doing for the weekend, it's some variation of mow the lawn/fix a leak/paint a room/remodel the bathroom et al.
If that sort of thing isn't for you (like it isn't for me), then all the financial benefit in the world won't make it worth it. There are other ways to build financial security than owning a home.
Plus you're young, so fuck that noise.
Yeah, I am just not that guy. Computers/electronics are my thing, I can barely swing a hammer. It is what it is, and in the modern world, I just don't have the need to be able to do that. Does it mean I will probably never own a home, or never own one outside of a condo community with implied maintenance? Probably. But like I said, I'm happy with it, I know my personal limitations. I've also learned other ways to secure my financial future than equity in a home (equity that we've learned in the last few years isn't quite as ironclad as we had been spoonfed for 50 years).
Things I would consider when buying a home:
Research - Know the area you're buying a home in, talk to realtors who love their job, who dream about selling homes at night. Now is great time to buy because the interest rates are so low, and there are still so many foreclosures, short-sales, artificially depressed areas. Think of your future, if you're going to be moving in less than 5 years, or you haven't planned anything out to 5 years, rent.
Parameters - 15 year fixed rate mortgage where the payment is 25% or less of your monthly income. Have 3-6 month emergency fund in a savings/money market account. Insurance, get good home-owners insurance, someone gets hurt on your property, and they sue for $250k, you want a big hairy insurance company between you and bankruptcy.
Know your limits - buying a house you can't afford is a curse not a blessing. There are a lot of incidental costs to home ownership and if your budget is super tight, one little mishap can have an immensely magnified results. Don't get too attached to a house, start small, and you can always sell and move up in house later. This is why buying a house is considered a good idea. Generally speaking, property goes up in value. So if you pay $100k for a house, over the course of 5-10 years it goes up in value, and you can get your original money back out of it plus capital gains. But, there's a lot of :effort: that goes with home ownership, so just bear that in mind.
Steam
Only the strong can help the weak.
You don't want a leaky roof to teeter you into bankruptcy. There's a reason in most areas buying a house of the same square footage will easily cost $300-500 less a month than renting, you're not accounting for maintenance in your mortgage (and property taxes [ and their profit, but that's above the line]).
Stay at home as long as it does more good than harm. If living there is holding you back from a better job or stopping your parents from being able to do something then factor that in and maybe move out if your secure financially. If they like having you around, you don't mind living there, and it saves you all that money you would be spending living on your own then stay awhile longer, but double down on saving.
Don't blow that money you save by living there on eating/drinking out or buying tons and tons of clothes/gadgets/crap. Allow yourself a modest budget for those things and really save your money for your future.
When you do decide to move out I recommend renting first.
After reading your comments, I'm starting to think an apartment may be the way to go. I've run the numbers before and costs look about the same(after repairs, tax, insurance, and all that) and I don't anticipate moving very far since all the places I'd potentially work are right around where I live, but I think there might be some things with maintaining a house in other respects that I just don't want to bother with spending the time on right now.
Anyways, keep the comments going, I really appreciate it. Thanks again.
Also take in to account that you'll probably want to drop 5-10k on furniture when you first move (as you'll have nothing, and you don't sound like the type that wants a bachelor pad with a futon and cinder block entertainment unit). Don't skimp on a good bed, for the love of god. You'll spend a majority of your home life in your bed (asleep or otherwise), and spending good money on one is important (I mean the mattress and stuff, what kind of head board you get is up to you).
I've also been looking to ballpark gas/electric/water but I assume I won't be able to really get good figures on this outside of checking with some other tenants for each unit I'm looking at.
5-10k is reasonable to furnish an entire place from scratch with stuff that is slightly higher than Ikea quality, but isn't solid oak hand crafted either. Your biggest outlays are going to be your mattress (don't skimp here), a TV and likely your couch. Don't be afraid to go Ikea on certain things (end tables, coffee table, entertainment system), but I would avoid ikea for "comfort" items like your couch and mattress. You can save some money here by not getting things you may not use regularly, like a kitchen table. As a single male, I eat at my computer and in front of my TV, so I just let my wife have the kitchen table in the divorce and haven't replaced it yet.
Also, if you can afford it, try a Tempurpedic and see if you like it. Mine was worth every penny I spent on it, but beds can be so subjective I don't want to be all "GO BUY ONE RIGHT NOW".
Luckily the TV is already covered, but the other two I'm probably gonna have to pick up. I could probably take my mattress from home if I wanted, but I'm not very fond of it. As for a Tempurpedic mattress, I actually tried one a while back and was quite fond of it. I may actually end up going that route. Do those require a platform bed or do they have a pseudo box-spring type object?
Also, don't be fooled by "we sell Tempurpedic cheaper!" stuff, Tempurpedic sets the prices at the factory and stores have almost no wiggle room with it. If they are giving you some kind of "deal", it's likely they are screwing you somewhere else to recoup the cost they are losing.
e: Also, be prepared for the smell. Memory foam mattresses stink to high heaven for the first week you have them. It's like the new carpet smell, but stronger. Best bet is to let the matress air out as much as possible (take the sheets off when you head to work for instance).
You can get a foundation for them (basically a box spring). If this is your first place, definitely rent. Also don't worry TOO much about buying all new furniture. Scour yard sales in the spring and you can find a ton of useful and decent pieces for pennies on the dollar of what lesser quality stuff would cost in a store. In addition, I recommend a roommate for the "how do you live with other people" lessons that you should learn in life, if you haven't gotten them already, as well as cost savings of splitting utilities.
Somethings you'll want that you never thought about.
Shower curtains/shower hooks
cleaning gear (mop broom paper towls cleaner toilet brush)
cooking gear (pots pans cutting board spachula)
lamp. In your area living rooms often don't have lights
There will be other stuff, and be prepared to drop 250-300 bucks on just odds and ends.
I used a plastic banquet table from Staples - cover with a table cloth, good to go!
$1000 for a bed, trust me on that, and $3000 for the rest of the fixtures.
If you're okay with ikea (don't get ikea for a bed) then you can probably do $2000 total. Things you'll probably want are:
Entertainment stand (for the TV) ($200-300)
Additionally, their might be an audio/video tower that accompanies it (if you have surround sound, or lots of consoles)($100-200)
Couch ($700)
chair/recliner ($400)
coffee table + 2 end tables ($500)
Dining room table + 4 chairs ($300-500)
2 night stands for bed ($400)
You can get a queen sleep number bed for like $900, don't skimp on the bed.
My prices are used the local furniture store around here that uses real wood. It's worth the price. Like I said, you can probably knock $1000 off the price by using ikea furniture. Again this is all furniture, you still need shit like toiletries, towels, sheets, blankets (get extra), pillows (get extra), pots, pans, cooking/baking shit, silverware, chef's knives and such (get a good set), steak knives (get a good set).
Which will probably add another $1000 or so.
How many slats is it? Is it just 3, or is it like 10+ with small gaps? If it's the latter, it's fine for a memory foam...you just need consistant support across the entire length of the matress.
My daughter has a bed from Ikea with the roll out slat base, which is like 15 slats with an inch gap between them. Supports her memory foam mattress fine (she has an off brand, not a real tempur). My bed is a real wood full on bed, that only has three slats. I need a foundation for my Tempurpedic.
Why was moving out so great?
1. A place to get my fuck on
2. A place to get my drink on
3. A place to get my anything on
Theres something liberating yet scary about being on your own. The whole "save a bunch of money and then move out" just seems so boring and something an accountant would do. And at what point are you ever really ready to move out with that mentality of saving being so important. What is the point of saving if you have to sheepishly bring a girl home to your parents house as a 24 year old?
My wife's boss has 3 kids at home, 28, 26, 23 who all live at home and none of them seem like they will ever move out. And it's weird. and they mooch off their dad who works a ton to support all of them. They all seem like stunted adults who have no responsibility or ambition. I've known a lot of people over the years who idealize living at home because they basically get to be a teenager all over again, but can drink and spend money on flashy stuff.
Yeah i probably have the same slat base, so that's all i need? keep in mind i am a big boy(275 atm). i don't want to end up with a pile of 1 inch slices of memory foam after my first night.
Nah, you should be good if you have the roll out slat base I described. If you're really uncomfortable about it (which I understand, good memory foam mattresses are spendy), go pick up an Englander foundation for ~$150 bucks.
Or just be more financially responsible, and make sure you can afford your property taxes. From what I was told by my mortgage broker, having them "take care" of my property taxes is kind of risky. For instance, if my taxes increase, the bank may not know about it and will continue to pay the previous amount. Then, suddenly, the city is hitting me with all sorts of charges for unpaid taxes.
In any event, you can set up a monthly payment plan with the city on your own. There is no reason to involve the banks in anything except a mortgage. This includes your retirement savings as well.
It will vary from apartment building to apartment building, but not by a drastic amount (outside of glaring efficiency issues). Ask someone in your city who lives on their own what they spend, and you'll probably be in around the same figure. Water is usually included in an apartment (if not all utilities) because they won't have a meter for every single unit. Try to find a place with utilities included if you're really that concerned, but it's usually just a convenience more than savings money. The rent will obviously be higher because of it.