I have this impression that it’s seen as a riskier decision to buy a home, knowing you won’t live in it long enough to pay off the mortgage and then sell it when you’re ready to move away, when compared to renting a home. Am I off base on that, and if so, why is this the case?
In: Economics
I did it. I bought a house near the university my son was attending and rented out the other rooms. It worked out very well. The rents paid for the mortgage and taxes, he got to live rent free, and the house sold for 20% more that I paid for it.
It can be a good idea. I’ve done both.
When you rent, you know you’re “throwing away money”. (You’re not, but that’s what it feels like.)
When you buy, you’re also “throwing away money”.
1. Closing costs
2. Realtor commissions
3. Taxes
4. Insurance
5. Repairs
6. Listing fees
7. Regular maintenance
None of those are recovered when you sell. Add in the risk of a downturn in the market about the time you need to sell, and short term ownership starts to look a little less like a sure thing.
My first house, the air conditioner died a week after I bought it. Needed a new one. $5000. I had a home warranty (which I made the seller pay for), so I was okay. But if I hadn’t had it…
The house I’m in now developed a crack in the foundation. $17,000. Insurance doesn’t cover that.
There are risks…
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