Buying vs. Renting??

[saint]

I wanted to run this by you guys to get some opinions. I know a lot of you here at MJs are experienced with this sort of thing. Here's the situation.

My girlfriend (likely future wife) is 22 years old. She has been out of college for 1 year, going on 2. She has a good job in sales and will be making 45 grand next year. We are in NC by the way. In any case, she is moving for her job and is considering buying versus renting a townhome/condo/home etc. We will most likely only be in NC for 2 more years, when I finish school and move somewhere else to specialize. I personally think that because we will only be here for 2 years, she should rent rather than buy. Even if we kept the place to rent out when we moved, I think it would be hard to manage as a landlord from hundreds of miles away. In any case, her mother wants to "help" with the loan as part of the investment, and says she will manage the property once we are gone. My only concerns with that is actually how we are going to determine how much "ownership" she would get if we do buy.

In any case, I just feel like it's not the best time. She has zero debt, 10 grand in savings from 1 year of work and is making decent money. If we were staying for a while, i can see buying, but since it will only be 2 years IMO buying isn't the right option. I am yound and inexperienced in this arena so I was wondering what you guys think. Her rent would probably be around 800 a month by the way.

Thanks for any help!

 

[skulldog]

Saint excellent questions, but the answers aren't as easy.

1. Is her mother going to be the bank(loan the entire amount and charge %), if so, she is the bank and therefore doesn't own the home, unless you don't make the payments, then she'll foreclose.

2. Most parents don't take an ownership interest when they help w/their kids buy a home. Some do to protect their kids in case of a break up in a marriage or relationship. Are you going on the deed and mortgage?

3. What are the prices of condos in your area? How much is her mother going to help( if not lending the entire amount)

4. 45K a year w/no debt and good credit and 10K, maybe you don't need the help w/the loan, or if her mother doesn't want any ownership, then I'd take her up on the offer. It's always better to use OPM(other people's money) when the terms are fair.

5. Does her mother have any experience in managing rental property?

Saint you have to find out all the details from her mother before you can make an informed decision. But IMO if the numbers are about the same as renting, I'd buy. The younger you start investing, the better off you are in the long run(usually).

GL

 

[wareagle]

i only rent my gloves...but i have a lease with an option to buy

 

[SixFive]

I think it would be wise to rent if the mother-in-law wasn't involved. However, if she wants to buy the house as an investment and let u live in it for maybe just the interest payment, that would be a good deal too. Not sure I would want to comingle funds/ownership with her.

" Even if we kept the place to rent out when we moved, I think it would be hard to manage as a landlord from hundreds of miles away. " Very wise statement. Try not to get involved with this type of deal.

If I remember correctly, Saint, aren't u going to have like 150K in student loans (since u are white )? With that in mind, and since u are planning on marrying this girl, I really think I would be renting until u pay off a good portion of those loans. You'll have those loans on top of whatever all your new equipment and office will cost I know you're going to be making bank, but still, that's a heck of a lot of debt to have in addition to a house (money pit). Hope you're still doing well in school, u are a likable guy!

 

[Eddie Haskell]

I think she should buy. If she is a native tar heelian, she will most likely remain in North Carolina for more than the next two years as once she figures out your personality I seriously doubt she will relocate with you (if she has any brains whatsoever) to follow you pursuing your specialty of drilling on healthy teeth.

Eddie

 

[Penguinfan]

I seriously doubt she will relocate with you (if she has any brains whatsoever) to follow you pursuing your specialty of drilling on healthy teeth.

Eddie

Better than what you lawyers drill

Sorry Eddie, but you really haven't left me any open doors lately and I just don't feel right without taking a shot now and then, try to be more disagreeable in the future will ya.

Penguinfan

 

[Eddie Haskell]

Penguin:

I am very disappointed. Way below your standards. You should be ashamed.

Eddie

 

[saint]

Thanks for taking a pot-shot at me Eddie, I was beginning to think you forgot about me. I think you and I have a future...once I drill on all those virgin teeth (because all of America isn't too lazy to brush right?!) I'll need a sleezeball lawyer to get me off the hook. You're my man eddie.


I believe her mother wanted to help with the down payment and maybe then with some upgrading we would do. The bank would be the loan. I think the price she could afford would be around 150g. Otherwise I believe my gf will be the one responsible for mortgage payments etc. Her mother has a lot of experience with renting, they have a beach house on the coast they rent a majority of the year.

Yeah sixfive I agree with you, this is sort of a joint-decision because we are likely going to get married, so we take my debts into consideration. I guess I would rather her not have the liability of the house, even if it is an investment in the long run. I think if she can just keep saving money so we have some liquid cash flow it will be good when I move to another city like boston/DC for 2 years. We will, however, be coming back to Raleigh most likely so it is an option.

Like you guys know, I'm fighting the nodding direction of my gf's mother, father and her sister/bro-in law. I'm afraid it might be a losing battle...i guess i better get used to dealing w/ those elements huh

 

[Eddie Haskell]

Watch it Dr. Payne or I'll commence a class action lawsuit against all manufacturers of popcorn to ban the same from your grocers shelfs. That'll put a significant dent in your future income.

By the way, you may want your girlfriend/fiancee to contact me to discuss a pre-nup. Sounds like she could probably use one.

Eddie

 

[Penguinfan]

Penguin:

I am very disappointed. Way below your standards. You should be ashamed.

Eddie

Accept my apology, I am ashamed and a little rusty, I'll be waiting though.

 

[skulldog]

Saint- you to take all the financials into account before making your final decisions. Will 150K get you a fairly new townhouse or house. I you decide to buy I would suggest a condo/townhouse with a good management because it's less of a "money pit" than having a home. If the pmt each month is about the same, then it would be smart to buy,

GL