I’m looking to settle down and have kids within the next year, so doing from a 3bed apartment to a house. I just don’t understand why you would but here? I’m finding some lakefront 5bed houses on Mercer Island or Medina/Clyde Hill for like 8K/mo to 10K/mo with their own piers. If I were to buy these, the mortgage interest itself would be more than the rental payments for the first 10 to 15 years. So I piss away more in mortgage interest than I would in rent. So why isn’t renting for a 5yr lease the best deal? Few of those owners are willing to do a 5yr to 7yr lease with capped increases on rent.
People with kids generally want stability and predictability. Do you want to take your kids out of their school at 13yo because your lease is up?
Any home I buy right now would be a starter home anyway that i would be out of in 5 to 7 years.
Sounds like a ‘you’ thing then and maybe renting is a better option for you.
RE with leverage generally beats the stock market. Unless you can later downlevel your home , you’ll be looking at a high mortgage amount 7 years from now if you choose to buy then. Also, account for the tax deduction on the mortgage interest.
I’m already doing rental properties on the side so my portoflio is balanced. It’s just that I can get some really amazing houses on rent - by the lake, with private piers and water access, and I’m not just in a position to just them or take a mortgage out on them. So renting is easily 5x better QoL
Ok, then you know what you are doing :). Makes sense
Put stake in the ground. If you rent and RE takes off it would be much harder for you to buy then. But if you already have a starter home, you are somewhat sheltered. Then depending on your price point, there could be some tax benefits.
Yeah real estate is insane right now. I think prices are going to catch up with reality here pretty soon. It’s like rockets and feathers though. Sellers are quick to try and get top prices when prices are going up and really resistant to take less than “comparables” from 6 months ago when they are going down.
I thought RE is Royal Enfield.
OP, totally with you. When valuations get out-of-whack compared to rents, it makes sense to rent. And if the property appreciates enough to cover the difference, you’ve still got the same problem the following year, except it’s even more out-of-whack, so the required appreciation is even more. Too “pyramidy” for me.
Yeah - the ones I’m looking at are renting for even less than the Mortgage interest, let alone the full mortgage payment
If you’re not looking to stay then renting can work out as the better option. If you’re looking to stay then buying is the better option. In any case, buying near the height of the market is rarely a good move.
Rent is going up, nationally.
Yeah they generally are but for these specific properties rents are comparatively cheap
Because you’re not building equity that way?
But this rental cost is less than the mortgage interest. I can take the amount that would have gone to equity and invest elsewhere with it
Where are you going to live after retirement? Unless you have another property
It depends, but you’ll miss out on property appreciation
Well - if I rent I can still take the portion that would go into the equity part of the mortgage payment and put that towards investments. So not missing out. In fact saving money since rent payment is less than mortgage interest
Because OP you leverage when you get a mortgage. Any appreciation on home prices is multiple of your equity. Whereas if you put same money in stocks, no leverage.