Reconsidering our decision to rent

[MDPhDWife]

DH and I just got back from our house hunting trip in AZ and although we thought we were sure we wanted to rent instead of buy since his residency is only three years, I'm having some serious second thoughts. Because we are adamant about having a pool in the backyard for the kids, we found the rental houses with pools get snatched up VERY fast and command top dollar. I was hoping we would be able to negotiate rent because we are willing to sign a three year lease and have immaculate credit and no pets, but we found that's an uphill battle when the rental market is so tight. Competition is fierce for those pool properties! In the end, we found one that we were able to get 7.5% lower than asking price. It's an awesome house with everything we were looking for, but the rent is considerably more than I had hoped to pay. The house we just sold had a RIDICULOUSLY low mortgage (you couldn't get a 1 bedroom apt for what we were paying) and allowed us to have a decent lifestyle during med school. The rent on this house is three times what we were paying on our mortgage so perhaps my cold feet are just sticker shock.

I haven't talked to a mortgage broker yet, but it appears like we could buy a house with a pool in our desired neighborhood/school district for about $600 cheaper a month. This savings coupled with the low interest rates and what appears like a bottomed out market has me really tempted to buy instead of rent. Even if we needed to sell in three years and broke even, the monthly savings alone would make it worth it. Wouldn't it? Or if we decided to rent, I've seen firsthand how hot those pool rental homes are. I need to make a decision quickly because the landlord is waiting for us to Fedex the signed lease and we're supposed to be moving in 4-5 weeks. Ugh, this is all so late in the game for a change of plans! Am I nuts to change horses now? Or would it be financial stupidity to rent when we could buy for so much less?

Please someone help me make a decision. The indecision is making me crazy and I think DH is about to wring my neck...

[SuzySunshine]

Keep in mind that if you rent you will not be responsible for any issues. Are you responsible for the pool maintenance as a renter? I would suspect homeowners insurance is also higher with a pool.

I would rent, three years isn't long.

[Pollyanna]

Hmmm, it's hard to say. What district are you looking to buy in? If you're going to buy I would stay in certain districts and avoid others. Also, a new Basis school (it's a charter that ranks in the top in the US every year) is being built on River and Craycroft. A home with an easy commute to Basis plus in CFSD16 would be a good investment and likely easy to sell. There is a Basis out in Oro Valley but the commute would suck for you and your dh and the public schools are just okay. Yes, the market sucks now and Tucson is #1 in foreclosures currently and you can get a good mortgage rate but even when the market was hot there are certain areas to buy where you know your investment will be safe and you will be able to sell when you need to. You also might not want to sign a 3 year lease because you might not like the area you initially choose. A one year would give you more flexibility.

[Michele]

I also say rent. Remember the stress of showing a house? The scramble to find temporary housing? Plus the maintenance stuff SuzySunshine mentioned.... You will not be in a better position financially the first year of attendinghood to manage the two housing payments if your house doesn't sell. Save yourself the hassle down the line and rent now. Then when you move for the job, you can just worry about relocation and not have to deal with selling a home too.

[niener]

I'm in a similar situation (we're about to move for a 4-year gig) and we're renting. Once we tallied up the direct costs of buying and selling (closing costs, agent fees, inspections, appraisals, etc.) plus what we'd estimate yearly maintenance costs of a house would be, we really wouldn't have saved that much - at least not enough to warrant the hassle of selling a house, to me. I'd really look at the numbers and see if it's worth it to you. And keep in mind for those first few years most of your mortgage payments will just be going to interest, not the principle, so what you will owe the bank three years from now might not be much less than what you borrowed.

[diggitydot]

Just a heads-up, selling a house in the Phoenix area is tough. Some of our friends from med school were *just* able to sell recently. They lost over $100K and it was on the market for a little less than 4 years. And this was a house with a pool in a great neighborhood with amazing schools.

AZ is tough.

[weeniegeniewife]

DD, the good news is, selling in PDX is really getting better. Houses in my neighborhood are only on the market for a few months before they sell. There was an article in The Oregonian this past week indicating that the PDX real estate market is one of the best in the country right now. Our rental house ($500K+) was only on the market 5 days before it sold a year ago. Things are looking up!

[MDPhDWife]

Hmmm, it's hard to say. What district are you looking to buy in? If you're going to buy I would stay in certain districts and avoid others. Also, a new Basis school (it's a charter that ranks in the top in the US every year) is being built on River and Craycroft. A home with an easy commute to Basis plus in CFSD16 would be a good investment and likely easy to sell. There is a Basis out in Oro Valley but the commute would suck for you and your dh and the public schools are just okay. Yes, the market sucks now and Tucson is #1 in foreclosures currently and you can get a good mortgage rate but even when the market was hot there are certain areas to buy where you know your investment will be safe and you will be able to sell when you need to. You also might not want to sign a 3 year lease because you might not like the area you initially choose. A one year would give you more flexibility.

Good question! The zip code of the house we're planning on leasing is 85737. It's in Canada Hills right next to the golf course. The school district would be Wilson K-8 which gets very good reviews. The rating was a 9 out of 10 on greatschools.com. I also love the idea of the girls staying together since they would otherwise be separated (3rd grader and 6th grader). We know that DH's commute will be horrible, but we both loved the area and the school. The other zip code we were targeting was 85750 because the schools are awesome and the commute would be much better. Unfortunately we couldn't find ANYTHING there even close to our price range with a private pool. That would have been ideal.

Is it accurate to believe that both 85737 and 85750 would be solid investments?

This house has caught my eye: http://m.longrealty.com/mobile/homes...drive-67959425

It only adds 5 minutes to DH's commute, and the sellers just dropped their asking price $185K! We didn't see it while we were there because we were focusing our efforts on looking at rentals.

Does anyone here have an idea of how much it costs to maintain a pool? Weekly pool service is included in our lease agreement now, but one property manager mentioned to me it runs about $50 a month.

[HouseofWool]

I think $50/mo sounds really low. I know that in BFE Wisconsin, my folks pay roughly $100/mo just to run the pump. That doesn't include any chemicals.

[SuzySunshine]

That house is nice but how nice is the rental? If they can't sell it now why would you risk not being able to sell it in 3 years? I'd still rent.

[Pollyanna]

I'll post more later but a pool will run you a minimum of $100-$300/month. Also consider the age of the pool and you will need to up your service during monsoon season. Whoever said $50/month doesn't realize all the extra costs like water, gas, and electricity.

[MDPhDWife]

That house is nice but how nice is the rental? If they can't sell it now why would you risk not being able to sell it in 3 years? I'd still rent.

The rental is nice but doesn't have all the nice updates the one I'm eyeing does. The home for sale has a spa with the pool and a built in BBQ. The rental has neither of those. The rental is 300 sq ft smaller which is way more than enough space for us. In fact I consider it a bonus because of the cost to cool the house nearly year around.

I honestly think they couldn't sell it because they had an unrealistic initial asking price. These people are clearly losing their asses on this house since they paid $450K in 2007, but now at $240K which is only $79 a sq ft, I really can't see it going down any further in value. They just did their $185K price drop on 5/9 so I think it'll sell pretty fast at this point.

[SoonerTexan]

Any chance they might be willing to rent it to you?

[MDPhDWife]

I'll post more later but a pool will run you a minimum of $100-$300/month. Also consider the age of the pool and you will need to up your service during monsoon season. Whoever said $50/month doesn't realize all the extra costs like water, gas, and electricity.

$50 a month was only for weekly pool service which I'm not entirely sure includes chemicals. Water, gas, and electricity will be absorbed by me either way. I'm just wondering what kind of potential issues we would end up paying as an owner VS. tenant.

[MDPhDWife]

Any chance they might be willing to rent it to you?

Good question! I'll email the realtor to check. The thing is if they paid $450K for it, I doubt they would have a mortgage lower than what I've already negotiated on the slightly smaller house.

The landlord put the total amount in rent that I'm agreeing to pay over the three years on the lease and the number made my jaw drop and quite frankly scared the crap out of me. Made me really second guess the whole darn thing. There were a couple of other issues in the lease that gave me a pause as well. I'm researching my rights as a tenant today to ensure what's in the lease is legal.