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Me: Single 24 year old male looking to purchase first home in AZ.

Let me start by saying I've been reading many rent vs. buy threads on this forum. I would appreciate feedback on my specific situation.

Finance situation:
ZERO debt (No car payment, credit cards (PIF each month), or student loans - NOTHING) Credit score is about 780.
Salary is $49,300 plus $5,000 yearly bonus at a very stable fortune 500 company. Job security is high (recently promoted). Have a BS in Finance (Please don't bash me about this post).
$25,000 in scottrade account (Index Funds)
$6,000 in roth IRA
$13,300 in 401k
Working on building liquid savings . I know I should have some liquid savings but I simply continue to stock away in my Scottrade account.

Currently, my living situation involves renting a room from a friend who owns a house out in Peoria, AZ. I pay $450 rent and half utilities (~$120 ish) which amounts to about $570 total per month. So far, this situation has worked out okay. I'm fine with staying here a little longer, but I want to start thinking of my next move.

I've been browsing properties online and the houses in the area I would like to live range from about $130K - $150K, although I would like to stay closer to the $130K range. I'm not looking for a house so much as an investment, but a place to live and make my own. I would like to possibly rent one of the rooms out, however, I am not considering this as an ideal situation just yet. I'm the mechanical type, so a man cave garage is definitely calling my name for my hobbies (cars & quads). I would like to finance this house with a 30 year fixed mortgage, and put as little down as possible (FHA?). I know by not having the 20% down, I'm paying PMI, and that is something I am fine with. I know many people will ask how long I plan on living in this house, truth is, I do not know. I would definitely live in the house for atleat 5-7 years, possibly much longer, I would then look to rent it out or possibly sell it depending on how the market is at that time. However, I've also never lived in an apartment entirely on my own and it's one of this things I sort of want to experience while I'm still young before commiting to home ownership. My fear is if I rent an apartment, interest rates may move against me. Apartments will rent for roughly anywhere from $500 - $750 where I am looking.

What do you FWF's think? Should I buy or rent?

Thanks.

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Buy and rent a room out = Ideal IMO. Just keep in mind home ownership comes with lots of duties such as home maintenance, repairs, etc meaning you may be putting more into the house than just the mortgage, taxes, hazard and PMI.

$130k vs. $500-750 a month = the latter. Rents would have to go up considerably in order for the $130k to be better from a financial perspective, but you may already have your heart set on more luxury than a tiny apartment. Just realize that if all you need in terms of space is a small apartment than let's at least call getting more space for the additional roughly few hundred dollars a month in total additional home ownership cost for what it is: luxury spending.

Let's say you do feel like that extra couple hundred dollars a month for additional space and a 'man cave garage' is a justified pay off in terms of luxury expenditure; i.e. the personal joy and happiness out of spending an extra few hundred dollars a month on a place is more than:
A) What you could get out of spending that cash on any other category of luxury spending(vacations, a more active nightlife/social life, a different car, whatever) and
B) The value you place on what an extra few hundred a month for a few years(assuming you'll actually get married and have kids at some point) would grow to on an inflation adjusted basis would bring to you in future joy, happiness, financial security, etc.

If we took that assumption as a given(that the luxury expenditure was better for you than anything else it could be used for) than the only question remaining is just how much of a good deal are we talking about here? So key question: How much would those ~$130k places you're looking at fetch in rent if they were rented out today?

If it's less than $1000 a month than probably forget buying the place and go look for someone renting one out and go take them up on it and get your luxury spending on additional space and a 'man cave garage' via a rent payment. If instead such a place would rent for more than $1000 a month than go ahead and buy it because it's likely a better deal for you to own such a property and lock in your housing cost at or around the cost of rent and you will likely be able to profitably rent it out in the future if you ever decided too.

Now if you can get a place at $130k that would easily rent for more than $1300 a month than by all means buy it. You could live there if you wanted(maybe at least for a time to get owner occupied rates), but either way it'll make sense because you would have the choice of 2 reasonable options living in that home or still personally renting an apartment for yourself while holding that as an investment property(assuming you were okay with being a landlord).

hdeucedeucen said:    I know by not having the 20% down, I'm paying PMI, and that is something I am fine with.

Rent. There's your answer.

1. To answer the original question, unless you can get a foreclosure for less than 100 months' rent (that's full cost after all repairs and planned upgrades), rent.

2. I call false advertising on this thread. It isn't 24 years old, it isn't even as old as the IBJanky thread.

I'd rather go all out into stocks.

so you have a degree in finance but you are asking complete strangers on the internet for financial advice?

Squeezer99 said:   hdeucedeucen said:   BS in Finance (Please don't bash me about this post).

so you have a degree in finance but you are asking complete strangers on the internet for financial advice?


LOL. I guess that didn't work.

misterspaghetti said:   Squeezer99 said:   hdeucedeucen said:   BS in Finance (Please don't bash me about this post).

so you have a degree in finance but you are asking complete strangers on the internet for financial advice?


LOL. I guess that didn't work.


No, it did not work. Thanks for your useless input, Squeezer99.



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