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Interesting break down by state of the rent vs. buy decision

By John Corey

The author does not provide a methodology so it is hard to say how he arrived at his conclusions. At the same time the results appear reasonable for a number of states (and cities in CA as the there is city data for CA). Maybe worth a minute or two to review.

My comments are based on direct experience in a few of the states listed as both a landlord or homeowner over 20 or so years. Nothing more than seat of the pants from my side as I would need to know more than what was presented to really comment.

See MarketRisk’s entry (including graphs)

This entry was posted on 7 March 2007 at 1:39 am and is filed under Economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Interesting break down by state of the rent vs. buy decision”

  1. Beach_babe9711 Says:
    14 March 2007 at 9:43 am | Reply

    they said to get a mortgage you need to have at least 2 years of work. which is good because that forces me to save more money since im young. so in two years i would have $100,000 in my savings. so even though im taking out 100% loan, i have a lot of money in my savings. and im buying the house as a primary house, and i plan on living in it while i add value, or if its a pre forcloser, ill live in it till it sells. so since im living in it, the holding cost is less. other people that invest are all older then me and they already have a mortgage on their house, or pay rent for their apartment, AND have to pay the monthly payments on their investment house. but im living in it, so id still have to be paying rent or a mortgage somewhere if i wasnt investing.

    Sounds reasonable. Very good move if you can save $100K over a short period of time.

    and i would just move out after i added value to it, and rent it till it sells which could take 3-5 months. the monthly payments would be 2,500 , and the rent rates are 2,000. and ill rent someplace else for 500-700 a month. so im only paying rent 500 plus the other 500 and thats only 1000, since the rent is paying the other half, so im saving monthly cost for me, during the 3- 5 months it takes to sell the house plus the closing and escrow holding time. and the lease would be month to month. or i would just rent it out for 2 years, then sell it and not have to pay capital gains. no tax 250,000 if your single. and 500,000 no tax if your married.
    i was trying to find the best ways to lower the risk of investing and not have to pay a lot of holding cost. most mistakes other people make is not having the money to keep it for a few years if they have to since its a buyers market. do you have any experience on lowering the risk and holding cost?

    Again, a very large topic. Time to hit the books.

    One thing that jumps out is how you are doing the math on the monthly cash flow. You are looking at a loss of $700 a month (rent vs. mortgage payment). If you have large cash reserves then this could work. You are assuming that feeding the aligator will be profitable when you sell. It might work out that you can not get the price you want or you have to hold longer than expected. Watch out when doing a deal with a negative cash flow property.

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