Buying a house that will never cash flow?

[Jonathan Marsh]

My lady and I are moving to Columbus next year and will be buying a in the $450-$500k range. With 10% down, PITI will be about $4,000/month which is around 25% of gross earnings per month.

Comps right now for 2-3 BR houses and condos are in the low $3,000s.

When we are ready to move to the suburbs in 4-5 years I’m not sure rental comps will jump $1,000 more.

At that point we can either sell, Airbnb, or hold and rent at a loss until rents catch up and/or maybe interest rates have dropped by this time.

I’ve also been considering putting this money in the market and just renting.

$50k down, call it 4% appreciation per year, after 4 years on $500k is about $80k. After taxes, closed costs, etc would be $60k unless we 1031.

If I put that $50k in the market, maybe I’d earn $16k after 4 years figuring a 8% return.

Is there anything I should be thinking about here?

[Chris Seveney]

Quote from @Jonathan Marsh:

My lady and I are moving to Columbus next year and will be buying a in the $450-$500k range. With 10% down, PITI will be about $4,000/month which is around 25% of gross earnings per month.

Comps right now for 2-3 BR houses and condos are in the low $3,000s.

When we are ready to move to the suburbs in 4-5 years I’m not sure rental comps will jump $1,000 more.

At that point we can either sell, Airbnb, or hold and rent at a loss until rents catch up and/or maybe interest rates have dropped by this time.

I’ve also been considering putting this money in the market and just renting.

$50k down, call it 4% appreciation per year, after 4 years on $500k is about $80k. After taxes, closed costs, etc would be $60k unless we 1031.

If I put that $50k in the market, maybe I’d earn $16k after 4 years figuring a 8% return.

Is there anything I should be thinking about here?

For my primary residence - I do not care if it never cashflows as I buy it for my needs and situation. I will want to buy in an area that I hope appreciates over time but if it is not a fit for a rental that is ok. I live in the DC area and most properties do not cash flow here, but if you lived in it for 7-10 years after that (and a very low interest rate) you could cash flow, but even if it did not - you will have appreciation.