Let’s Talk Rent

I’ve been in my apartment complex since December 2014. My neighbors are friendly, the grounds are well-kept, maintenance is fairly receptive, and the location is great for my job / social circle.

Currently my rent is about $843/mo. I consider this on the lower end of the spectrum for what passes as safe and livable.

rentpayments

Just because someone lives in a fancier apartment is no guarantee of increased safety. or higher living standards. The below image was posted to Facebook by a friend and happened just last week in Plano. In the comments a guy said his bike was stolen out of his garage of another place, when his rent was the highest of his entire life. In the “ghetto” he never had such problems. Bad things can happen anywhere.

truckonblocks

Poor guy whose rims were stolen

Let’s say a starter home here in the North Dallas area goes for $150k.

20% Down: $30k
10% Closing costs: $15k
Taxes per year 3%: $4500
Fixed Mortgage Rate: 3.5% 15yr mtg = $858/mo * 12=$10,296
Fixed Mortgage Rate: 4.2% 30yr mtg = 590/mo * 12=$7,080
So for the first year costs would be approximately $60k and about $15k per year after that assuming no maintenance costs. Some say put 2% aside for maintenance. That adds an additional $3k/yr. Also say $200/mo for HOA. That’s about $20k/yr for a house. For a 30 yr mortgage: about $58k the first year and $14k/yr after that.

Long story short unless my income hits $100k+ I probably won’t be buying a house anytime soon. At 33 I think it would be more of a burden than anything else. Aggressive ramp-up of my retirement in these coming years. Soon as the credit card is gone I think I can comfortably set aside over $1000-1500 more a month toward it than I do today. Bedtime… zzzz

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2 thoughts on “Let’s Talk Rent

    • Nice article. I had never heard of the rule of 15 but think it makes a lot of sense. Pretty close to the house for $150k I said I wouldn’t be able to afford. $840*12=$10,080 * 15 = $151,200. I also found houses near that prices to be depressing to look at and in need of significant upkeep. When you focus on the monthly payment alone the house looks like a smarter option. When you look at all the expenses, assuming the market goes up renting is a lot better proposition. Or if housing goes south, there might be some good bargains on the market.

      My folks in New York have two homes and are house poor. I love them but I don’t want to be in that situation. Dad is looking to sell his at some point this year, doing a FSBO. Long Island is not very affordable and the taxes will eat you alive. $10k per house annually if you’re not on the STAR (https://www.tax.ny.gov/pit/property/star/) program. Who knows, I could end up buying from them at a discount. Unless I run my own business and they get rid of the messy gang / economic problems I’m not sure I’ll be moving back anytime soon.

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