person and, needless to say, are
hard to quantify.
In this article I will address the
logical, numbersbased approach
to the question of whether to buy
your own home as your first real
estate move, or rent and buy
The numbers tell the
story
A
If you are considering buying your
classic question I get when talking to own home, the price of the home matters, the
a wouldbe real estate investor is: rent required to rent that same home matters,
“Shouldn’t we buy a home to live in the local property taxes matter, the mortgage
interest rates matter, dwelling insurance rates
first before buying investment homes?”
matter, and even the new 2018 tax law weighs
in.
The answer, of course, depends on where you
live.
If you live in a market where property taxes
When considering owning your own residence, are relatively low (say, between 1 and 1.7
there are various layers of reasoning. Some are percent of the home price per year), and
logic and numbersbased. Some are emotional, insurance rates are reasonable, then if you
traditional and familial. are considering buying a home under about
$400,000, that should be a “no brainer” as
Owning your own home can be associated with your first step. Between $400,000 and
safety, security, having “arrived”, satisfying $500,000 would still be a reasonable range
family members’ aspirations, the stability of to consider buying the home. In such a
having a (hopefully) permanent place to live, market, once you step up to the $500,000
and so on. range and above, the math may well start to
turn as you climb higher in price, in favor of
Of course, everyone has a different set of renting a home in the area in which you live,
emotional considerations when it comes to and owning rental homes in more optimal
owning a home. These vary from person to places.
20
own home
investment homes instead.