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Moving to new City - To buy or to rent?
Posted on 11/23/22 at 5:23 pm
Posted on 11/23/22 at 5:23 pm
Got a new job, and my girlfriend and I will be moving to Minneapolis in January.
We currently own a house on the Northshore locked in at a low rate and don't want to sell, so we'll be renting it out. It's in a very good location so not worried about it losing value or not finding renters. I foresee us returning at some point in the distant future.
My first instinct is to buy a condo in Minneapolis because I hate the idea of throwing money away renting, even if it's short term. I expect us to be up there for at least 5 years, if not longer. My thought process is if we buy in a good enough location and build some roots in this new city, we will want to keep the condo for the long term. If we relocate, we could similarly rent it out or just sell it.
My other line of thinking is I don't want to commit to another mortgage in a new city right off the bat. Real estate values in Minneapolis are just starting to pull back, but are still near all time highs. I don't want to be stuck at a loss if the real estate market pulls back in the next couple of years.
For those that have relocated, any advice?
TIA
We currently own a house on the Northshore locked in at a low rate and don't want to sell, so we'll be renting it out. It's in a very good location so not worried about it losing value or not finding renters. I foresee us returning at some point in the distant future.
My first instinct is to buy a condo in Minneapolis because I hate the idea of throwing money away renting, even if it's short term. I expect us to be up there for at least 5 years, if not longer. My thought process is if we buy in a good enough location and build some roots in this new city, we will want to keep the condo for the long term. If we relocate, we could similarly rent it out or just sell it.
My other line of thinking is I don't want to commit to another mortgage in a new city right off the bat. Real estate values in Minneapolis are just starting to pull back, but are still near all time highs. I don't want to be stuck at a loss if the real estate market pulls back in the next couple of years.
For those that have relocated, any advice?
TIA
13
Posted on 11/23/22 at 5:41 pm to rintintin
"My other line of thinking is I don't want to commit to another mortgage in a new city right off the bat. Real estate values in Minneapolis are just starting to pull back, but are still near all time highs. I don't want to be stuck at a loss if the real estate market pulls back in the next couple of years."
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This would be my thinking.
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This would be my thinking.
Posted on 11/23/22 at 5:55 pm to rintintin
quote:
throwing money away renting
You have to live somewhere. Renting is an option when you are not sure about buying.
I’ve bought. I’ve rented. Leaving was easier renting. Buying allows you to personalize the space more. All in all, buying or renting will not make or break your long term wealth. Owning properties in different states can be expensive.
Not every real estate purchase goes up in value every year.
Some people have really good timing. If you are fortunate to buy close to the bottom and sell near the top, it can create wealth. If you get it reversed, it can be a significant drag.
Posted on 11/23/22 at 6:23 pm to rintintin
Paying $20k in rent a year might be cheaper than buying at the top of the market if you think the market is inflated.
Posted on 11/23/22 at 6:45 pm to rintintin
I used to rent the first year when I moved around to get a lay of the area. I didn't want to buy in an area that wasn't my vibe or not close to the areas I spent time in.
Posted on 11/23/22 at 8:40 pm to rintintin
Generally, I am a big fan of renting and learning new cities prior to purchasing. Minimal downside of renting for a year or two while you decide what and where you would want to buy.
In a city like Minneapolis, you could hate the winter and be out after a year.
In a city like Minneapolis, you could hate the winter and be out after a year.
Posted on 11/23/22 at 9:29 pm to rintintin
New city that I know very little/nothing about?
I'd rent for the first year to get the lay of the land and have an idea whether I may stick around for a few years or not.
I'd rent for the first year to get the lay of the land and have an idea whether I may stick around for a few years or not.
Posted on 11/23/22 at 10:48 pm to rintintin
Rent for a year for sure if you know nothing about the city you’re moving to
Posted on 11/24/22 at 6:29 am to rintintin
Sign a 12 month lease.
1. Rates will improve between now and end of lease
2. You'll have a year to find where you actually want to buy
It's a drop in the bucket with all things considered.
1. Rates will improve between now and end of lease
2. You'll have a year to find where you actually want to buy
It's a drop in the bucket with all things considered.
This post was edited on 11/24/22 at 6:32 am
Posted on 11/24/22 at 8:54 am to rintintin
Have relo'ed many times.
Thinking going in is about framing the risk, of home value loss vs. given "loss" of rent
More time = more given loss of rent so might lean buy
Propensity matters (prices driven up last few years and higher interest rates is slowing demand) - down risk is high, unless you can enjoy the softening market in your price
Most critical is buying where people want to be. This staves off some of above risks.
The record went as follows, FWIW:
Home value:
+11% in 2 years (mid 90s)
+22% in 6 months (silicon valley/.com bubble)
10% in 2 years (late 90s)
0% in 5 years (early 00's)
-13% in 2 years (Katrina)
-20% in 6 years (Katrina-related) - company offset loss so risk mitigated beforehand.
10% in 2 years
Never moving again.
Good luck!
Thinking going in is about framing the risk, of home value loss vs. given "loss" of rent
More time = more given loss of rent so might lean buy
Propensity matters (prices driven up last few years and higher interest rates is slowing demand) - down risk is high, unless you can enjoy the softening market in your price
Most critical is buying where people want to be. This staves off some of above risks.
The record went as follows, FWIW:
Home value:
+11% in 2 years (mid 90s)
+22% in 6 months (silicon valley/.com bubble)
10% in 2 years (late 90s)
0% in 5 years (early 00's)
-13% in 2 years (Katrina)
-20% in 6 years (Katrina-related) - company offset loss so risk mitigated beforehand.
10% in 2 years
Never moving again.
Good luck!
Posted on 11/24/22 at 11:00 am to Turf Taint
I moved from Baton Rouge to northern Virginia almost 13 years ago now. I am so, so, so glad that we chose to not buy right off the bat. You’re not moving from the north shore to Slidell. You may think you know the area, but until you live and work there it’s really hard.
We rented for the first three years before we bought. This allowed us to move around to a couple of different areas to get a better feel to then ultimately decide on a permanent spot.
I would rent IMO. Unless the condo you are buying could easily be rented and out for positive cash flow after a year or so.
We rented for the first three years before we bought. This allowed us to move around to a couple of different areas to get a better feel to then ultimately decide on a permanent spot.
I would rent IMO. Unless the condo you are buying could easily be rented and out for positive cash flow after a year or so.
Posted on 11/24/22 at 12:51 pm to Im4datigers
I have a friend who lives in a beautiful townhome on the edge of downtown Minneapolis, very close to the Mississippi River. Walking distance to stadiums, restaurants and bars. I’m sure it’s a 7 figure investment. She and her husband have recently indicated they are very concerned about the escalating crime over the last few years and are considering moving.
Rent until you understand the landscape.
Rent until you understand the landscape.
Posted on 11/24/22 at 5:33 pm to BThibodeaux
quote:
Rent until you understand the landscape.
Always been my thought. You might buy in what looks like a great neighborhood during a quick visit, but if you rented in the area first you might learn that the traffic is terrible at rush hours or when school is in session, the better school/grocery store/golf course, etc. is across town, or the HOA in that hood is awful. Rent, learn, then maybe buy where you learn is the best area for you.
Posted on 11/25/22 at 8:16 am to rintintin
Minneapolis was literally burning to the ground two years ago. The city is down over 1000 cops and crime is rising. I wouldn’t buy anything there, particularly if you are thinking you could leave in 5 years.
Posted on 11/25/22 at 9:05 am to Im4datigers
quote:
We rented for the first three years before we bought. This allowed us to move around to a couple of different areas to get a better feel to then ultimately decide on a permanent spot.
Market high/downside risk high makes sense to rent for a period of time.
If "get a feel" takes 3 years, perhaps the "feel" machine needs a tune up. The internet, a few days driving, and some conversations with trusted people about the place has delivered for us over 8 relos, incl. Int'l and coast to coast US.
The lesser of pissing away rent vs. pissing away market loss is the magic equation to solve.
Posted on 11/25/22 at 9:49 am to Turf Taint
Fair point but it was two 18 month leases. Toss in a (first) newborn into the mix and we had other pressing items that took a lot of attention away from buying something. Plus went from DINK’s making great money to Single income with a kid once we moved (and somewhere that’s about twice the COL as Baton Rouge). Didn’t want to just jump in financially either as there was already a big adjustment, and we truly didn’t know if we were going to like it and stay long term.
Posted on 11/25/22 at 10:09 am to lynxcat
quote:
Generally, I am a big fan of renting and learning new cities prior to purchasing. Minimal downside of renting for a year or two while you decide what and where you would want to buy.
This, I have moved a lot the last 10 years, I think it would be foolish to buy something without really knowing the city.
Posted on 11/25/22 at 9:27 pm to rintintin
No brainer, rent for at least a year
Posted on 11/25/22 at 9:30 pm to rintintin
I’ve lived in 4 different cities. Rent for a year or more if you’re not sure how permanent your stay will be, learn the city, then buy. I never bought until I married and had a kid. A house isn’t an investment imv, it’s a place to live and a responsibility you may not want when you’re young and concentrating on career and going out.
Posted on 11/25/22 at 11:01 pm to rintintin
I get that you wouldn’t be working towards anything if you rented, but at least you have a roof over your head. I wouldn’t call that throwing money away.
This post was edited on 11/25/22 at 11:04 pm
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