let me first say WOW. i have received a LOT of advice…and I sincerely appreciate it from all of you. this website is great.
i do think my numbers were a bit off. If I crunch the numbers to buy they are:
$3100-3200 to buy. That includes everything. the mortgage, taxes, HOAs, insurance, the gardner….
I can rent a comparable house..in fact probably a slightly larger for functional house, in a comparable area, maybe even down the street for no more than $1800. with some negotiating..maybe even a bit less 1600-1700.
I calculated the tax savings by doing my taxes via turbo tax..then manipulating the deductions to either add or remove a housing deduction. I understand that i’d lose the standard deduction, and then itemize….the bottom line is that the net change in taxes I would owe for the calendar year is less if I own…i’d have a huge writeoff…but even wih the house as a writeoff.. i would only be saving about 600-700 / month in taxes. If I also factorin principle reduction of 200-300/month… my net “benefit” of buying is NO MORE than $1000. if you strictly look at cash flow… I savre only $700 at best vs renting.
So rent the same type house for $1700-1800.
Buy at a net cost of $2400. ($2200 if you factor in principle reduction).
1700 vs 2400 is quite a big spread. $700/month is a lot of money. Even though I lose the “tax deduction” I still pay more.
this is why when i would go to open houses and realtors would say “why are you renting, you’re throwing money away”..then I would explain the numbers to them,a nd they looked at me like i was crazy… renting = throwing money away. obviously that’s not the case.
as to whether the landlord is sincere in his offer to sell at $350k… i don’t know. i told him i thought a good deal for me was 300-325. he then called and said $350k. i told him to fax his proposal in writing and I would discuss with my wife and get back to him. 2 days and no fax is forthcoming..so maybe he’s not for real..who knows.
in my opinion, given the costs… if he would actually sell at 300k… or perhaps 325k and agree to covera ll my closing costs..the numbers would in fact be so close taht buying makes sense. at 350k…. i think i’m still better off renting. it’s certainly a huge price drop from where things were at a year ago…but by passing on what looks lke a good deal, i think i have a good chance to do better…and will more than likely be no worse off.
any one else care to chime in with another point of view???
