To Rent Or To Buy?

[Fay Chen]

Dear BP family, 

I have a difficult decision to make and would like your opinion.

Decision: I'm looking to move to Pasadena, CA in June. Should I buy or should I rent?

Background:

• I love Pasadena! I regretted moving away few years ago and would love to move back.
• For a 1-bed apartment, the rent is ~$1900
• To purchase a 1-bed condo with FHA, the downpay+closing is ~ $15,000; monthly payment is ~ $2300 (including PITI, PMI & HOA)
• My investment goal is to purchase 1 property a year, which is why I don't want to put 20% for a primary residence
• A multi-unit in Pasadena is out of reach for me. I don't have enough for 20% down. And the rents are not high enough to qualify for multi-unit FHA

Options:

• Buy a condo in Pasadena with FHA. Hold on to the rest of my cash in case an investment opportunity comes up later 2016.
• Rent in Pasadena. Purchase a multi-family as "primary residence" somewhere the numbers make sense.
• Others (please advise).

[Eric Dowling]

Fay Chen that is the same dilemma we are in. We are very set on living in a specific area of west LA, so buying is almost out of the question for now. A couple of years ago we bought a house in Palm Springs and we rent it as a vacation rental, and we rent here in LA. It is working out well.

Obviously it is better to buy, and house hacking is a great way to do that, but when you have such a limited area it makes it hard. If you can expand your search FHA owner occupied multi is a great way to start.