The eternal question: Rent vs. Buy?

At least for me it is. Jim from Blueprint for Financial Prosperity lays down his results in this interesting article. Looks like he’s going for it! He also introduced me to Dinkytown.net, home of tons of neat financial calculators.

I remember running these numbers over and over about a year ago. As Jim also concludes, the most important variable is the expected appreciation of the house. It can change your break-even point from 10 years to just three or less. Another friend of mine just got an interest-only loan with 5% down on his townhouse, and it’s starting to wear on me. Am I missing out? Every time I write my rent check, I wonder…

But then I think of how high interest rates might be in three years… and how difficult it was for people like my parents to sell their houses in previous markets. For such a short time frame. if we have to move, paying two mortgages can make a big difference. Finally, I think my current area is more “Bubble-icious” than others. Not sure if there will be a rash of foreclosures in the coming years, but I guess we’ll see.

Comments

  1. I still think property is the invesetment. Look at 100 proerties, make offers on 20, and you will probably end up buying 1. Even if you can’t sell it, you should be able to rent it out.

  2. I continue to be amazed at how you can own all these properties in different countries! Do you have tips on choosing a good property manager? I’m intrigued by the idea of being a landlord, but since I plan to move in a few years, I don’t want to do it remotely, and I don’t know how to find a good property manager.

  3. If you can visit the place, where you buy just bought call up several PMs. Interview them as though you were giving them a job (which you are).

    Ask them what service they provide, how much it costs and how they differ from other companies.

    If you can’t visit the place, you will need to use other methods like the Internet and references from other people.

    In the end, you can’t just forget about the property and let the PM do all the work – you need to be on to them all the time.

  4. Yes, you are missing out ;)

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