Can You Own for Less Than You Can Rent?

Posted on Sep 9, 2010 by Cari McGee in Mortgages, Tri-Cities Market, Tri-Cities, WA

Yes!

As I have posted before, it’s near impossible to get a rental here.  Apartments are at 99% occupancy.  Finding a house to rent is like finding a needle in a haystack.

KEPR-TV broadcast a story last night that shows how the problem isn’t going away, and in fact, is getting worse because, as the story relates…

At the end of a lease, many landlords have the ability to reevaluate apartment rental rates based on market demand. Since demand has been steadily increasing in the last year, most apartment managers have increased prices between $25 and $45 a month each time a lease is renewed.

So, not only can you not find a place to rent, if you do, you’re paying a premium for the privilege.

This is where buying a house comes in….

If you bought a house a 3-bedroom, 2 bath home with a garage for $150,000, at a fixed interest rate of 5% over a term of 30 years…

and put 3,5% cash down ($5,250)…

and taxes hovered in the $1700 range…

and your homeowners insurance was about $750 annually…

Your mortgage payment would be less than $1,000 a month!

(Calculations courtesy of the iPhone Mortgage Calculator application)

And you’d have more bedrooms than the apartment provides you with, and a yard for a pet or a BBQ AND you’d be building equity.  You’d be working toward owning something instead of supporting someone else’s ownership of property.

Of course, every person’s financial picture differs, and for some it might make more sense to rent.  However, this might just be the right time to buy since it costs so much to rent.