Rent, buy, live at home?

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jb1
Posts: 165
Joined: Sun Nov 27, 2016 8:33 am
Location: NC

Rent, buy, live at home?

Post by jb1 » Thu Jul 13, 2017 6:36 am

Hey all,

Heres a quick background on me. Im 27 years old and currently live with my parents making about $40k a year which im confident can go up to 50k by next year. My long term goal is to become a real estate investor owning multiple properties and making a cash flow through it.

Right now I have about 50k invested with Vanguard. 34k in a taxable portfolio of 60% VTSAX, 20% in VGTSX, 20 in VBTLX. The remaining 16k is in a Roth consisting of an even split of VTTSX and VGSIX. I also have about 6k in a Goldman Sachs bank account.

Now here is the dilemma. I love living at home, love my parents, love having meals cooked for me, love saving money; however I wish I had my own space at time.. Sneaking girls in is actually tough...

My parents are telling me to save for 6 more months then look to buy (Property in North Carolina is cheap). I thought about it, however that means with a FHA loan, Id be using about 4-5k of my savings for the down payment then literally be living paycheck to paycheck to pay the mortgage. Ideally Id like to househack and get a roommate to help pay, but I always look at the "What if".

The rent Id be paying would be with my friends. It is ~500 a month with utilities. Over the year its around 6k which isnt bad since it is paid in monthly increments and not all in one shot. While doing this Id still be saving and hope to have 20k in my savings account by this time next year making it much easier to use for a down payment. Also we would look to Airbnb the place while we arent there (we travel a lot for soccer).

Anyway, do you guys think paying rent for a year for the experience of living on my own/with friends is wiser than buying a place right now?

Keepcalm
Posts: 183
Joined: Sat May 13, 2017 7:51 pm

Re: Rent, buy, live at home?

Post by Keepcalm » Thu Jul 13, 2017 6:48 am

jb1 wrote:Hey all,

Heres a quick background on me. Im 27 years old and currently live with my parents making about $40k a year which im confident can go up to 50k by next year. My long term goal is to become a real estate investor owning multiple properties and making a cash flow through it.

Right now I have about 50k invested with Vanguard. 34k in a taxable portfolio of 60% VTSAX, 20% in VGTSX, 20 in VBTLX. The remaining 16k is in a Roth consisting of an even split of VTTSX and VGSIX. I also have about 6k in a Goldman Sachs bank account.

Now here is the dilemma. I love living at home, love my parents, love having meals cooked for me, love saving money; however I wish I had my own space at time.. Sneaking girls in is actually tough...

My parents are telling me to save for 6 more months then look to buy (Property in North Carolina is cheap). I thought about it, however that means with a FHA loan, Id be using about 4-5k of my savings for the down payment then literally be living paycheck to paycheck to pay the mortgage. Ideally Id like to househack and get a roommate to help pay, but I always look at the "What if".

The rent Id be paying would be with my friends. It is ~500 a month with utilities. Over the year its around 6k which isnt bad since it is paid in monthly increments and not all in one shot. While doing this Id still be saving and hope to have 20k in my savings account by this time next year making it much easier to use for a down payment. Also we would look to Airbnb the place while we arent there (we travel a lot for soccer).

Anyway, do you guys think paying rent for a year for the experience of living on my own/with friends is wiser than buying a place right now?
I think it is great you have been able to benefit from living at home, and it looks like you have been responsible financially judging by your portfolio. Versus someone leaching off their parents and blowing all their own cash in the process.

However, at 27 I feel it is overdue to expose yourself to the realities and expenses that come with being out on your own. It would be in your own benefit to do so as it is mentally rewarding to establish your own life, under your own roof etc.

If you came on here with the tune of 27, no assets, and living at home I would have been a lot harder on you.

I would also recommend renting for a while before buying a home. You need to develop some history paying normal expenses that encompass someone living out on their own. It will give you time to hit an equilibrium with expenses and knowing what you can and can not afford. I can also promise you $500/MO with utilities is a hell of a lot cheaper then a mortgage/taxes/insurance would be. Which brings me back to my point, live on your own for a while so you can establish a baseline to what you can and can not afford.

Goodluck with everything.
Last edited by Keepcalm on Thu Jul 13, 2017 6:58 am, edited 1 time in total.

jlcnuke
Posts: 434
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Re: Rent, buy, live at home?

Post by jlcnuke » Thu Jul 13, 2017 6:57 am

If you can find friends to be roommates in a place you rent, I imagine that a year from now you could also get friends to rent from you. You're anticipating a $10k bump in pay in a year, which *should* be more than enough to cover your mortgage if you put 6+ months worth of "living at home" savings down on a modest home in a LCOL area like you're discussing. That would leave your current income to cover the other new expenses associated with home ownership and living on your own, but should hardly force you into a "paycheck to paycheck" life. If you can get one of those friends to rent from you it should make your financial situation even better (rent should cover all utility cost etc I'd wager).

My primary suggestion would be to modify your parents "plan" to save up a 20% deposit for the purchase of a home, which without more information I couldn't say how long you would need.

simmias
Posts: 219
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Re: Rent, buy, live at home?

Post by simmias » Thu Jul 13, 2017 7:17 am

jb1 wrote:(Property in North Carolina is cheap).
Where in NC? Properties in places like Charlotte and the Triangle are becoming increasingly more expensive, and the price range you'll be searching for has ridiculous demand. Almost anything decent under $250k is getting multiple offers the day it lists.
Also we would look to Airbnb the place while we arent there (we travel a lot for soccer).
Make sure your landlord is cool with this or you could get evicted.
Anyway, do you guys think paying rent for a year for the experience of living on my own/with friends is wiser than buying a place right now?
My advice would be to rent. You're young, you've never lived on your own, and you're dating. I'm a homeowner, and homeownership is great, but many people underestimate the costs and hassle of maintenance and upkeep.

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Watty
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Re: Rent, buy, live at home?

Post by Watty » Thu Jul 13, 2017 7:21 am

I would highly reccomend renting to get the experience of living away from your parents especially if you did not spend some time at college living away at from them.

I have known people that went from living with their parents to getting married and living with a spouse and that never lived independentely and they sometimes regret not having had the chance to develop their own identity. They were always in the roll of being someones kid or someones spouse.

Depending on your cultural background living with your parents may also be a barrier to developing serious relationships too, especially for a guy.

I would wait on buying a place until you have some experience with living on your own since your will not have a good feel of what is most important to you when it comes to things like selecing a house that requires either a lot of little maintenace.

Since you want to get into real estate when you are ready to buy then one option to consider would be to buy out a duplex and rent the other half. An advantage of this is that you can get a regular mortage for it and eventually rent out the side that you were living on. The plan of renting a room to friends is problematic since that could ruin the friendship or five years from now none of your friends may need to rent a room.

JGoneRiding
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Re: Rent, buy, live at home?

Post by JGoneRiding » Thu Jul 13, 2017 6:52 pm

I second the idea of a duplex when ready to buy. Its what I wish I had done. I now own 4 rentals and my original primary is very cash flow positive but I still would have done it different if someone had suggested it to me. I also second the idea of move out with friends now!!

You could do both when ready. buy duplex, rent half, and have roommates in other side. When you are ready to marry convert the second half and buy a SFH

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patriciamgr2
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Re: Rent, buy, live at home?

Post by patriciamgr2 » Thu Jul 13, 2017 11:46 pm

I suggest you start making faux-mortgage payments to yourself immediately--while you're living at home. You'll have practice living within a tight budget (you need to deposit the amount each month no matter what else is happening in your life) & the extra savings eventually can go towards a higher down payment. Spend your free time finding a type of housing in your area which will be easy to live in with renters.

Good Luck.

123
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Re: Rent, buy, live at home?

Post by 123 » Thu Jul 13, 2017 11:53 pm

Many people that need private space on short notice use motels and hotels. With a little more advance planning Airbnb could be useful.
The closest helping hand is at the end of your own arm.

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