I recently sold my home in hopes of building a new home on a small acreage. I am very frugal by nature, so renting has always been hard for me since I learned the benefits of owning. I have turned some of my tenants into homeowners as well. I understand it is not for everyone, but I am happy to advise when it is a benefit to you.
My original plan was to start building shortly after closing on my previous home in hopes to have a new home by March. So, with that in mind, I rented a portion of a friend's house short-term so I could have my dog and flexibility of when I would move into the new place. Well...the trade wars started and building materials skyrocketed, therefore the cost of the new home skyrocketed, too. So...the best plan was to both wait it out and to go back to the drawing board to reduce cost with a lot of tweaks of design. I looked into renting despite my distaste of renting. Most of the options were over $2000/mo., a year lease and no pets. Well, we talked about options because staying in my friend's home for that much longer was just too much for my family. We needed our own space and they had guests coming so they needed their space, too.
After much contemplation, I thought about buying a starter home and maybe I could keep it as a rental or I would just resell it when I was done building. Regardless if I sold it not even a year later, it was still a benefit to me if I lost money on the sale. Here are the reasons why:
Rent: $2000/mo x 12 months = $24,000 plus first/last month rent plus dog fee if I could find one that allowed him. That is an additional $75-150/mo. $900-1800. Then there is the security deposit that may be the first/last or it may be additional.
$2000 x 12 mos. = $24,000 plus $4000 (first/last) plus $2000 security deposit plus $1800 (dog) = $27,800 plus utilities
If I bought a home for $350,000
Closing Cost $5270
20% down $70,000
Mortgage with Taxes/Insurance = $1605/mo. plus utilities
The benefits of owning versus renting:
I am in control
I can have my dog
I can move in less than 12 months
If I sell it in September for $360,000, I will pay around $19,800 in commission and additional closing cost for title insurance and a few items for around maybe $2000.
I lived here for an additional $8500. I am a Realtor so I have offset that cost with commission earned. I also looked at the increase in single-family homes in Belgrade, 7.8%, so it is possible the house will sell for $17,000 more next year if that continues further offsetting my cost. In addition, I will also be able to deduct the interest paid off of my taxes.
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