Tampa Bay Area - Rent vs Buy a home

Next January, perhaps earlier, I plan on moving to St. Pete because it's kinda closer to work, and it's definitely closer to everything I do for fun/outside of work. The catch is I don't plan on staying here long term, hopefully no more than 3-4 years. Once I move, I would consider keeping this home as a rental property but for now let's keep that out of the equation to be conservative in costs.

My thoughts are buying is still a good deal, but not as great as before. I would like to get your opinions/ideas for my specific situation

The numbers: Renting: If I rented, I would probably downgrade the quality of the home to save some money. Rental prices have gone through the roof lately but let's pretend I found a deal for $1400 a month. This would be significantly less nice than a home I would buy, but oh well. Cable/water/electricity is a wash for either place so this is being kept out of the equation.

Buying: Mortgage Interest: $283 (for $140k home, 20% down @ 3.875%, total interest for 3 years/36) Taxes: $208 Insurance: ~$275 Flood Insurance: $150 - hard to get a solid estimate on this one...being conservative. Fixing things/replacing things: $200 - hard to estimate Closing costs amortized over 3 years : $278 ($10,000/36)

Total: $1394. Practically break even, without considering possible tax deductions and ,hopefully, increase in value of property after I get a hold of it. Ideally I would find a place for closer to $120k and do a 15 year loan instead of 30. Of course, if I stay longer than 3 years, the deal sweetens even more because closing costs/fixing things can get spread out over more time. What do you guys think? Not worth the risk and I should just cough up the extra dough and rent?

The reason that rental rates have gone up is that many people cannot afford the down payment involved in the purchase and financing anymore but they can cash flow the monthly payments of either transaction. Rather than dealing with the issues of being a "slum lord", the investor is buying middle-range houses out of foreclosure, short sale or other distressed situation and putting them on the rental market. You cant make money in interest; the stock market is too volatile so you find other places to invest the money.

Anyone else?

Buy cheaper, looks like it is close to the old Hong Norr secret skunks works lab near the airport.

http://www.auction.com/Florida/residential-auction-asset/1435981-3852-3902-N-OLA-AVE-TAMPA-FL-33603-O366

Looks like it has a small garage

clownkiller wrote: Buy cheaper, looks like it is close to the old Hong Norr secret skunks works lab near the airport. http://www.auction.com/Florida/residential-auction-asset/1435981-3852-3902-N-OLA-AVE-TAMPA-FL-33603-O366

Isn't that site kinda a scam. From what I understood, just because you are the winning bidder doesn't mean much. They just submit that offer to the sellers.

Enyar wrote: Ideally I would find a place for closer to $120k and do a 15 year loan instead of 30.

Just a comment... I thought about doing this, but still went with a 30 year. With the rates as low as they are right now, the difference between the 15 and 30 year payment would make more invested in a basic index fund over the next 15 years than it will save you paying off your house earlier.

Example: (numbers from Zillow, including est. taxes and insurance)

30 year fixed
3.881%
$638/month

15 year fixed 2.993% $849/month

Difference in payment is $211. In the market at ~7% (average return of a total market index fund), that would be worth 67,269.17 after 15 years, and you would have $58k in principal left on your house. Basically you could pay it off and walk away with $9k. If you maintain the same total expenditure over 30 years (remember taxes & insurance remain after payoff), the payoff early then invest method results in around $211k, the pay slowly, invest the extra results in $258k.

When I was shopping, the rate difference wasn't as large between the 15 and 30, so the savings was quite a bit higher. Note that it does require the self control/willpower to actually make that investment vs. just spending the "extra" $211 month you saved on cars :)

You also give yourself MUCH more flexibility in the case anything in your life goes south. If the mortgage allows you to "double up" on your payments without penalty, go for that instead of getting the 15 year amortization.

My first question would be "Are home values increasing or decreasing in the area?"

http://tbo.com/pinellas-county/property-values-rising-in-pinellas-county-20130604/

I'd buy, in a STABLE neighborhood...one that's had minimal foreclosures in the last 10 years with no "riff-raff" in the neighborhood...figuratively, or literally.

I'm no expert, but I'd bet my real, actual dollars on the fact that we hit the bottom in the housing market. Leave renting for the suckers who move in when you leave. It ain't gonna get any cheaper!

I'm going to bump and update this this thread as it unveils.

I've been looking at a home in Tampa, listed at $140k. It needs a new kitchen, a new bathroom and some minor renovation (let's round up and say $10k of work). A/C looks within last few years, roof in last 5. Water heater looks new as well. Floors are a cheap laminate but underneath may have terrazzo.

It's an a excellent school district. 4 of the closest neighbors houses are ~$375k. The other 5 are ~$90k to $120k. Community park at the end of the street and a little coffee shop. VERY close to my work, and pretty close to my girlfriends. 15 minute walk to bars/restaurants, not too far from highway, 15 minutes to boat ramp. Neighborhood is hit or miss. You have borderline ghetto houses next door to ~500k homes. I do think that this area is up and coming because 5-6 streets south this home would be $350k.

It's an older home with some weirdness, but mostly remediable. I'm considering making a move and any insight/ideas/things to look for would be greatly appreaciated! Is it ok to offer a ridiculously low price?

All start with ridiculously low offer. They might say yes.

Where is the house? Seminole Heights, West Tampa, South Tampa, SOG(old Port Tampa)?

Before the market turned a lot of houses were being bought is south Tampa, torn down, and built a bigger house that pretty much would go from property line to property line

It's in North Hyde park. It's in the plant district which is great even though I don't plan on sending anyone to school anytime soon. We looked at it again today and talked to the neighbors. I think it has a lot of potential but definitely needs some investment. They are asking $140k and its been on the market for 2.5 weeks. Is $112500 too low of an offer?