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Home buying vs. Renting

Home buying vs. Renting. Audrey Ranson, Braden Despain, Matt Jackson. This is Jennifer Barry. She is 25 yrs. old and is a few years out of college.

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Home buying vs. Renting

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  1. Home buying vs. Renting Audrey Ranson, Braden Despain, Matt Jackson

  2. This is Jennifer Barry • She is 25 yrs. old and is a few years out of college. • She is $25,000 in debt. Right now she is living in a roommate situation, she is paying $350 a month in rent, and she has a 10 year plan to own a home and a car. • Her annual income is $28,900. She is working on paying off her debt, and there are several options for her to look towards in the future. • Her credit score as of right now is 698. • She is very interested in maintaining a savings budget.

  3. Apartment Rental

  4. The Redwood Apartments • Based on her current situation she can choose to do three rental choices. • Studio for $585 increase in rent by $235 • Two bedroom for $890 with roommate. Split cost: $445 Pros: • Convenient Location for Shopping and Public Transportation. • Flexible (6 – 18 month lease) Cons: • No investment • Increased rent • May not want to change location

  5. Condo Option

  6. Rental on a Condo This option is variable Pros and Cons Pros: Meets basic needs Pet friendly Condo Allows her to save for a down payment on a single family home Cons: Not an outright purchase. Requires having a roommate for her to save money for future purchase. Less accessibility to Shopping • She will pay $740, split cost: $390. • Increases rent by $40 if shared • Nontraditional rental – Possible long term

  7. Single Home Purchase – In Budget

  8. Purchase of a home in budget Payments on the home - $563 mo. Pros and Cons Pros: Meets all basic needs. Has room for her to grow. More permanent residence. Cons: Yearly taxes Upkeep of the property Not able to afford right now • This payment is on a $119K loan The additional loan money can be used to fix up the property and pay taxes. The amount needed for a down payment is 28,300

  9. Single Family home – Out of budget

  10. Single Family Home – Out Of Budget This home has it all! Pros and Cons Pros: No work needed. Additional amenities, and lots of space Cons: higher taxes Higher risk of loss Cannot afford it right now. • Basic needs are met and there is nothing that needs to be fixed. • It is way outside of her budget and may be feasible later on in life.

  11. Buying vs. Renting With Jennifer’s current situation, she would be much better off renting this Condo or an apartment rather than buying into a condo or home. The following graph explains why.

  12. Renting vs. Buying Buying Renting Flexibility to downsize: 6-18 month lease No maintenance costs or repair bills Access to certain amenities: pets, washer and dryer, recreation, etc. No real estate taxes Usually no big down payment Fixed rent amount Lower utility costs Lower insurance costs • Buildequity in a home • Potential tax deductions • More choice and freedom: it’s your house so you can do what you want to do with it such as remodeling • the longer the fixed mortgage, the higher the interest rate • Maintenance responsibility

  13. Renting vs. Buying (cont.) Jennifer doesn’t have a desire location to live, she plans on buying a house in the future, she wants to work on saving money, and she has lots of debt; therefore it would be most beneficial for her, immediately and in the future, to rent this Condo.

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