Renting Versus Owning

What is best for you?

          VS.                  

These are real MLS data points, albeit a 1 bedroom scenario, but just goes to show that a young person just starting out has a shot to start small and build up to a larger place in the future.  The mistake so many make is:

• • • #1 Not getting started

    • #2 Starting off too BIG

The above example was a decision a person could have made, and the end result is after 10 years as of this very month the two paths equals very different results.  The renter spent $250,370.92 in rent assuming they stayed in the same 1 bedroom place and it went up with the same averages of rental increase that all of the OC experienced

On the other hand if that personal selected to purchase a 1 bedroom place, they would have spent with the all in mortgage payment, mortgage insurance, taxes, interest, and HOA dues of $239,780 which just happens to be a touch less than renting the same place, but the MAJOR factor is that the property on average in Orange county is worth $455,000 to $493,000 (original price was $250,000 to $473,000)

3 benefits stand out

1. 1. The rents moved higher but the mortgage payment is fixed
   2. There is tax advantages with being able to write of the interest and property taxes with home ownership
   3. The equity built up over the last decade has been over $200,000

The amazing thing is that if this person was 25 years old, they at 35 years old would have approximately $250,000 of equity to now put down on a larger place.

If you are young, my advice is get started to save up your down payment.

• • • Make it a goal to do and get started.

    • I would also ask a parent or grandparent to match what you saved up, all to come up with your initial down payment.

    • Start small, don’t initially shoot for the big house.

    • Lastly, make sacrifices now while your expenses are low. You life gets more expensive the older you get.

Reach out if you want help to come up with your plan!

Happy buying!

Mike Rains

Professional Realtor