hey group, there is a thread talking about buying short term in Cleveland, but I wanted to ask esteemed participants from all over the state.

 

The conversation was talking about the costs involved with renting vs. buying and the time needed to make it a cost justification.

 

Anyone want to walk me through the variables?

 

I am looking to buy in New Orleans, but I know me.  Given half a chance, I'll probably move back to Chicago within 5 years. 

 

I was told with the $8,000 tax credit this year, you could reasable buy a place and sell it in three years and still make out.  The houses I am looking at will be roughly $200K

 

I look forward to being schooled, and hopefully this will be a good resouce for other UOers.

I made an elaborate spreadsheet in which inputs can be changed (i.e. loan amount, interest rate, property taxes) and corresponding total costs of ownership each year would change as a result.  Then I compared the annual ownership cost against cost of renting.

 

When I purchased my place, I had the intention of staying for between five and ten years.  The spreadsheet helped me plot out scenarios for years six through ten.

 

I found it to be an extremely helpful resource.  But when I've sent it to friends and others, they couldn't comprehend it.  I'll think about posting it here this weekend.

hey group, there is a thread talking about buying short term in Cleveland, but I wanted to ask esteemed participants from all over the state.

 

The conversation was talking about the costs involved with renting vs. buying and the time needed to make it a cost justification.

 

Anyone want to walk me through the variables?

 

I am looking to buy in New Orleans, but I know me.  Given half a chance, I'll probably move back to Chicago within 5 years. 

 

I was told with the $8,000 tax credit this year, you could reasable buy a place and sell it in three years and still make out.  The houses I am looking at will be roughly $200K

 

I look forward to being schooled, and hopefully this will be a good resouce for other UOers.

 

Child a house is a LONG TERM investment not a ponzi scheme.  I just NoLa and I would buy a house there if YSL, Gianfranco Ferre & Versace all came back from the grave to design, build and furnish it!

 

In that market I highly doubt you would make any ROI!  The 8k tax credit is not a reason to buy.

 

PASS!!!

I think an important first step is to realize exactly how much more it costs to rent than to buy.  There are some decent mortgage calculators online but you have to be sure to look at one that includes estimates for PMI, tax and interest; many do not.  I like this one:  http://cgi.money.cnn.com/tools/mortgagecalc/

 

Once you have that cost vs. what you are paying in rent, then you also have to factor in costs for whatever utilities you are currently not paying for (or if you're paying them, double them for a house vs. an apartment unless they are fixed such as a phone or cable).  For example, electric in an apartment is really cheap compared to electric bill for a house.  Then there's water and sewer, which isn't a ton, but should be added in as well.  Then there's the big monster of gas - even if you pay for the heat where you live, it's nothing close to what you'll pay in a gas bill for a house.  Then there's an initial cost of things you'd need to buy to take care of a house in the first year that you don't need as a renter - snow shovels to snow blowers, rakes, mowers, lawn care tools of all types, a toolbox full of tools so you can fix broken things, and then whatever you need to purchase for the house (appliances, possible major repairs, etc.).  Then there's external repair costs - say an appliance quits working, you have to have someone in to fix it.  Sink stopped up, toilet broken and you don't know how to fix it, that's all repair costs. 

 

Considering the big initial outlay of $ when switching from renting to buying and the costs you'll generally incur as outlined above to get started in being a homeowner, it's no wonder we haven't bought a house yet :)

Consumption vs. Investment.

 

Basically if you won't be somewhere for more than 3 years, it's likely not worth buying.