Purchasing home vs renting

[Elewynne]

I'm about to start med school in the Philly area later this year. I have dogs and been evaluating my options on what to do for housing. Looks like renting will cost around $1000 a month, maybe more, for a house or apartment. On the other hand, pretty cheap homes for sale appear to be in abundance in the Philly area, with a lot of nice looking options from $50-150k that would appear to run us anywhere from $300 to $700 a month in mortgage.

I'm kind of torn on what to do. The appeal of owning and not dealing with potential landlord issues or rent raises is great. But I don't know if I'll want to stay in the area past med school at this point, so I'd potentially have to sell in 4 years. I'd appreciate some more thoughts/input from others.

---

Members don't see this ad.

 

[TexasPhysician]

4 years is a little short, but the answer still depends on your risk level and knowledge of the market in Philly. If you are able to locate an undervalued home and are willing to hold it until the market rises, I would go for it. Buying and selling costs and then maintenance will otherwise eat away at most savings over renting.

I find that buying does save me money, but I spend time researching the markets to find a steal.

 

[krl7044]

The cost of owning a home is much larger than just a mortgage payment. What about repairs, taxes, heat, water, insurance, etc? This is not an apples to apples comparison.

You can try to do your own calculations here:
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0

In my opinion though, real estate prices (especially when you buy with a mortgage, and not a full cash payment) can be quite volatile, so a 4-year horizon is too short for any type of meaningful buy vs. rent analysis.

The problem will be trying to estimate repairs (nobody knows that one for sure), and it will matter whether you will be doing those yourself (or paying someone for it). If you or your husband are an expert at house repair, then it might make sense.

My gut tells me that buying a fixer-upper is a huge unknown with potentially larger expenses, so you might pay as much or more than renting, and worse yet, going forward, you might lose money vs. a rental. When you are ready to buy later on, and you want to move to a nice area, do you want to deal with another property to sell? That's another cost that is often forgotten - sales commissions. Maybe it is worth renting until you are 100% sure you want to stick around beyond 4 years. The neighborhood might not be exactly the best one to raise children in.

 

[Xardas]

I'd rent if I were you. Also what kind of house are you going to get for 50k in Philly?