home buying vs. renting

14
Home buying vs. Renting Audrey Ranson, Braden Despain, Matt Jackson

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Home buying vs. Renting. Audrey Ranson, Braden Despain, Matt Jackson. This is Jennifer Barry. She is 25 yrs. old and is a few years out of college. - PowerPoint PPT Presentation

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Page 1: Home buying vs. Renting

Home buying vs. Renting

Audrey Ranson, Braden Despain, Matt Jackson

Page 2: Home buying vs. Renting

This is Jennifer Barry• She is 25 yrs. old and is a few years out of college. • She is $25,000 in debt. Right now she is living in a roommate

situation, she is paying $350 a month in rent, and she has a 10 year plan to own a home and a car. • Her annual income is $28,900. She is working on paying off her debt,

and there are several options for her to look towards in the future.• Her credit score as of right now is 698.• She is very interested in maintaining a savings budget.

Page 3: Home buying vs. Renting

Apartment Rental

Page 4: Home buying vs. Renting

The Redwood Apartments• Based on her current situation

she can choose to do three rental choices. • Studio for $585 increase in rent

by $235• Two bedroom for $890 with

roommate. Split cost: $445

Pros:• Convenient Location for Shopping and Public

Transportation. • Flexible (6 – 18 month lease)

Cons:• No investment• Increased rent• May not want to change location

Page 5: Home buying vs. Renting

Condo Option

Page 6: Home buying vs. Renting

Rental on a Condo

This option is variable• She will pay $740, split cost:

$390.• Increases rent by $40 if shared• Nontraditional rental – Possible

long term

Pros and ConsPros:• Meets basic needs• Pet friendly Condo• Allows her to save for a down payment on a

single family home

Cons:• Not an outright purchase.• Requires having a roommate for her to save

money for future purchase.• Less accessibility to Shopping

Page 7: Home buying vs. Renting

Single Home Purchase – In Budget

Page 8: Home buying vs. Renting

Purchase of a home in budget

Payments on the home - $563 mo.• This payment is on a $119K loanThe additional loan money can be used to fix up the property and pay taxes.The amount needed for a down payment is 28,300

Pros and ConsPros:• Meets all basic needs. • Has room for her to grow.• More permanent residence.Cons:• Yearly taxes• Upkeep of the property• Not able to afford right now

Page 9: Home buying vs. Renting

Single Family home – Out of budget

Page 10: Home buying vs. Renting

Single Family Home – Out Of Budget

This home has it all!• Basic needs are met and there is

nothing that needs to be fixed.• It is way outside of her budget

and may be feasible later on in life.

Pros and Cons• Pros: No work needed.• Additional amenities, and lots of

space• Cons: higher taxes• Higher risk of loss• Cannot afford it right now.

Page 11: Home buying vs. Renting

Buying vs. RentingWith Jennifer’s current situation, she would be much better off renting this Condo or an apartment rather than buying into a condo or home. The following graph explains why.

Page 12: Home buying vs. Renting
Page 13: Home buying vs. Renting

Renting vs. Buying

Buying• Build equity in a home• Potential tax deductions• More choice and freedom:

it’s your house so you can do what you want to do with it such as remodeling

• the longer the fixed mortgage, the higher the interest rate

• Maintenance responsibility

Renting• Flexibility to downsize: 6-18

month lease• No maintenance costs or repair bills• Access to certain amenities: pets,

washer and dryer, recreation, etc.• No real estate taxes• Usually no big down payment• Fixed rent amount• Lower utility costs• Lower insurance costs

Page 14: Home buying vs. Renting

Renting vs. Buying (cont.)

Jennifer doesn’t have a desire location to live, she plans on buying a house in the future, she wants to work on saving money, and she has lots of debt; therefore it would be most beneficial for her, immediately and in the future, to rent this Condo.