Rent or Buy a ๐
I moved to Seattle few months back. I find the rental along with parking charges rather insane. I am thinking of buying a home here to ensure I don't end up paying around $100,000 in rentals in next 4-5 years. What do you guys suggest? Should I go for home purchase? I am here on visa which can let me work in US for max 5 years, unless I initiate green card
Buy...Seattle real estate is a steal compared to bay area or Vancouver. Population is growing steadily and house price is going up simply driven by real demand and not bubble.
Thatโs the main reason everyone in Seattle is focused on buying a house now. It makes more sense that renting a house and paying the same amount you pay as mortgage. But I doubt you can get anything with decent price close to Seattle now. You might need to find a house far from downtown.
Take a look at shoreline and MountLake terrace. Kinda affordable to buy. Yes buying is a better option in Seattle.
Sure, but you can also rent in a non luxury apartment building in a similar area that you would buy your home. Rent is substantially cheaper there and often includes free parking or at least readily available street parking. If you're thinking about a condo I'd recommend against based on the insane cost of HOA alone.
Do you have 20% down payment ready ? Looks like you recently arrived .
If you can make more money by investing that down payment somewhere else, renting is better. Otherwise, buy. Of course, you have tax benefits too if you buy a house. So you should factor those in too.
I am not much worried about returns on down payment amount but rather the monthly outgoing towards rental which I may use to build asset instead.
Yeah. What I'm saying is if your other investments are appreciating let say $2000 a month by investing your down payment lets say $200,000 (i.e 12% annual return). So if your other investments are outperforming your rent paid, you're going to build greater equity in other investments and vice versa.
I'm happily renting in this market. I would rather speculate on the stock market than housing market. Don't overlook that buying a house comes with tax, interest, insurance and maintenance that combined likely equal rent.
That's actually my biggest knowledge gap. I don't have clear understanding of how much can buying a house turn I to be. Are there additional costs for buying and selling - one I can thing of is agent commission if I go that route ( or is it the only route).
Buying is better for a number of reasons, IMO. Property tax and mortgage interest is tax deductible. For high income earners (i.e. tech workers) that makes a budget difference. If housing is a stock, then the government is effectively subsidizing your leverage to buy that stock. You'd spend, say, 30K a year to rent. Do the math on a mortgage cost. Remember to subtract the part of the payment that's principle - that's just money going from one pocket to another. Look just at the part of mortgage that's interest and property taxes. If you're in the 35% bracket reduce it by that much since if you don't spend it you'll just pay more in taxes. Then assume a modest 3% appreciation. You'll be surprised how little the additional cost will be vs rent. That additional cost will easily be worth it to live in a house instead of a shitty apartment where you can hear you neighbors or upstairs having a fight / making up after a fight with his girlfriend.
Actually having all your eggs in a same basket is not the right way to go. You need to diversify your investment. The best pasty of housing market is that with small interest rate and little down payment you can get more percentage of returns. Itโs estimated that 4% is the average growth in housing market per year. Letโs say you invest in a 500k house and you paid 20% down payment, 100k and then you paid 700$ additional monthly to your house on top of your interest tax insurance etc which letโs assume will be the rent. So, for 100k + 12 * 7k = approx 109k investment you get 4% of 500 I.e 20k (around 18% of 109k) return with is higher than the average 10% returns in any ETFs etc. maybe stocks get get you more but itโs a big gamble. you can also improve your investment returns if you only pay 10% down and refinance in a year and half or so with the way things are going now.
Primary home is not considered investment.
But you can live in a house...
Buy one then sell it when you leave. You most probably will end up making money.