Buying vs. Renting

Those of you who have known me for some time know that I am never short on opinions.  I am however very comfortable saying that perhaps those opinions might only be important to myself.  However, most of them are obtained by years (too many to mention) of observation and working in the real estate market.  One of those hard held opinions has to do with home loan lenders.  I am a staunch believer in face to face.  Meeting “in person” with your lender sets the relationship with the personal attention and sets the stage for the true fiduciary relationship this connection must have.  Horror stories abound by on line promises that somehow don’t hold up once you get to closing.  Closing is not the time to find surprises.  It is a time for excitement and the prospect of being moments away from the joy of owning that home you worked so hard to obtain.  Knowing the face of your lender and that you will likely see him again, I believe, reinforces this fiduciary and ethical obligation.

With that said I always like to mention the lender that I have really enjoyed working with for a number of years now.  I first met Josh Kittel when the firm he is associated with “Opus Advisors” actually had a in office relationship with RE/MAX Integrity.  Since then that relationship is no longer official but my satisfaction with the way Josh takes care of “our” clients makes me recommend him to all I work with.  I don’t think I have ever had any of my clients be disappointed in this relationship!

joshua-kittel

Joshua Kittel
Mortgage Advisor

OPES Advisors
OR ML 4902
NMLSR ID 227887

More information on Josh Kittel

All of this is just to preface a new analysis that Josh has performed and put into chart/graph form.  It talks about the financial benefits of Buying vs Renting.  I think seeing it in graphic form better brings home the fact that home ownership is more than just pride and stability.  It is also about good financial investment!

Here is Josh Kittel’s new analysis project.

While this form was performed to specifically represent numbers in Corvallis it should be somewhat relatable to most mid valley areas.  At my suggestion Josh went to Craig’s List to get a good idea of what current rents look like this.  I discovered this trick a number of years ago at the prodding of local property managers in queries about typical rental numbers.

The analysis is done on a typical 3 bed 2 bath mid-range home.  You can see this hypothetical example starts with a purchase price of $275,000 assuming a 5% down payment  (lower down payment options may be available). This would result in a total payment of around $1933 with estimated taxes and insurance and home maintenance included (based on a fixed rate of 4.25% 4.292%APR).  That is compared with a typical $1820 monthly out go for rent of a similar home that increases over time. The chart shows the potential net cash flow difference between owning and renting over a 5 year period when comparing the difference in the estimated total amount paid for owning a home to that of renting a home.

cashflow results

Cashflow Results

 

He next goes through the three main wealth gains of; appreciation, equity paydown  and tax savings:

 

selling price, equity and tax benefit

Expected selling price, Equity Through Amortization and Tax Benefit and Adjustments

 

Josh finishes off with a quick look at historically supported past appreciation rates to give you new value and a snapshot buying overview with a “projected” net gain at the end of those 5 years. Of course,  the longer you own it the more you gain:

 

net gain by buying a home

Disclaimer: This data is for informational purposes only. Your results may vary. There are no guarantees, promises, representations and/or assurances
concerning the level of accuracy you may experience.

 

Hope you find this graphic narration helpful!

Please feel free to contact me or Josh with any questions.  You can reach Josh at 541-284-8032.  By now I am sure you know my number, 541-760-3099

Fred Adams Signature

Fred Adams