Buy or rent?

New / R&D
crazyface

New R&D

 crazyface
Sep 13, 2019 16 Comments

Trying to harness the power of the community here so would love any advice -

I'm trying to understand what's better for the following situation -
I'm living in a *super* high COL area but bought an investment property in a low COL area. Now I have the option between buying a second investment property in the low COL area (with 75% down payment) or putting it as a down payment towards a house in the high COL area (as only a 25% down payment), what's better - keep on paying someone else's mortgage or pay the same as my own mortgage (and giving up on the opportunity to invest it into real estate with higher yield)?

Anyone here had the same "problem"?

16

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 TOP 16 Comments
  • New / Finance
    sCMt

    New Finance

    PRE
    UBS, Lazard
     sCMt
    I think it depends on which stage of life you are in. If you are young and single, I say you do the investment. But if you are at a stage you are ready to settle down, maybe you can consider putting it towards a house that you and your family wants to live in. But why do you need to put 75% down for investment? ?
    Sep 13, 2019 7
    • New / Finance
      sCMt

      New Finance

      PRE
      UBS, Lazard
       sCMt
      what's your ROI? if you have no ties to the place you are investing in, then have you done research to see if any place closer to where you live would have the same or high ROI and is easier to sell or take cash out of equity? it sounds like that you don't have a specific reason to buy a place to live right now or in the foreseeable future, so the question is where you will come out ahead financially if you don't get any emotional value out of living in a house you own. Lay out your cash flow for the next 10 years, and make reasonable assumptions and see where you end.
      Sep 14, 2019
    • New / R&D
      crazyface

      New R&D

       crazyface
      OP
      20% cash on cash I couldn't find anything alike where I live (for obvious reasons...)
      Sep 14, 2019
  • HealthChannels / Project
    txdi

    HealthChannels Project

     txdi
    There are own vs rent calculators that take into account local taxes, hoa, and insurance. I would use one of those.
    Sep 13, 2019 3
  • Symantec / Other
    jawbone

    Go to company page Symantec Other

     jawbone
    Owning the home that you live in is the best possible investment you can make. As you build equity, the difference between your cost to own and the “owner’s equivalent rent” represents nontaxable imputed income. It doesn’t get better than that.
    Sep 13, 2019 1
    • New / R&D
      crazyface

      New R&D

       crazyface
      OP
      But if prices go up on the low COL I'm earning more towards even a bettet house where I live in, no? Isn't it better looking forward?
      Sep 13, 2019
  • In general, buy what you rent, rent where you live. You get way more tax write-off for investment properties. However, keep in mind it's hard to manage property if you don't live around.
    Sep 13, 2019 0
  • I would suggest that you rent. Put the remaining money in low cost etfs. You will come out much ahead over time. Renting gives you the flexibility to move around and play the job market.
    Sep 13, 2019 0