Rent or Buy, when buying doesn't meet a 1% rule? Time Sensitive!

[Jacob Eddy]

We currently rent a townhouse in the very hot market of Asheville, NC.  Got an unexpected notice to vacate at the end of June due to the owner selling the townhouse and have less than 30 days to get out.  Townhouse is a 2 bedroom that rents out for $1200 and asking price is going to be $169K, yet the seller says they are willing to take $155K from us since we aren't working with a realtor.  This does not meet even the 1% rule and it is an extreme challenge to find much in the Asheville market that does meet a 1% rule as we've been looking for a while now.  The least we can move into another 2 BR apartment is still $1200 per month.  If the place had a fresh coat of paint with the fixtures updated, it would probably rent for $1300.  Also has HOAs of $95 per month.   We would not want to live there long term as we're house hunting in the $300-500K range but can't seem to find anything worth buying right now.  The idea would be to buy this townhouse as a short term solution and keep it as a rental or Airbnb once we find the home we're looking for long term.  What is a the most we should be willing to pay so we're not throwing away our money in rent for another year? 

[Lynn McGeein]

If it's an updated, newer unit in good shape, not needing any major expenses like roof, HVAC, siding, flooring, etc., then I'd contact lenders to see their special programs like 3% down or 5% down conventional with no PMI, whatever the lowest down payment you can get with no PMI, find out what your total payment would be. If you can get it under market for very little down payment, live in it 2 years for less than you are paying now in rent, then sell and take the profit tax-free with the homeowner tax exemption, then it could be a very good answer as long as it does not need repair. If systems are not newer and you could be looking at major expense in next 2 years, or if it's in a flood zone or termite damage or other weird issue that could mean more expense, then you're just buying their problems, so better to move. I don't know your market, but be willing to offer less and see as you are saving them the trouble of listing and selling, so you may have some negotiating strength as long as you are willing to move if they don't meet your numbers.