i’ve been through the rent vs. buy scenario a LOT lately.
I have rented the last year and am glad I did. one year ago prices in my area were quite a bit higher than they are now. they seem to have come down a bit. will they come down more…maybe….good chance they will..but how much no one knows.
do your taxes…on sometehing like turbo tax and then look at your net taxes. figure your taxes on this software WiTH the mortgage deductions for the anticpated mortgage interest and the anticipated propety taxes. t hen figure it w/out those writeoffs.
see what your net difference is. i figured for me it was about 700-800 month tax savings to buy a 350-400k house.
so factor whatever you pay in rent…add that amount to it. for me…renting the house i want..or like what I am in now..would be about 1800/month. 2000 max. add that 800 and you can figure that a 1800 rental is like a purchase of 2600.
the principal isn’t something you should realy factor as it’s not a renting cost…you could figure it’s money back in your pocket in that you’re paying down the loan that much… but to compare apples to apples..
i like the idea of comparing interst on the laon vs the rent payment. that way you are comparing renting the money vs. renting the house.
then you have to factor int he non-financial things. do you like moving at the whim of a landlord, do you need to be able to tweak things or mod the house to your lking in a way a landlord would not allow… etc.
renting has some serious upsides.
in temecula you can rent a NICE house for 2000/month. 2500 sq ft, fully upgraded, in a nice area. to buy that house would cost $500-600k. no way you can buy that for a close to th rent evne when you factor in the tax writeoff.
