Should I continue to rent my apt or buy/mortgage a similar apt?

[Steve Lee]

Hello BP!

I will cut to the chase. I am in a dilemma and need some experienced advise. Right now I am renting an apt in CA for $1800 for a 1bd/ba. Now that I some money saved up, my plan was to put a down payment(FHA loan) on an apt for around 200k-250k, size, condition, and location is similar to my current apt. The mortgage would be right around 1500-1700ish, so it would be cheaper than my current apt rent. I plan on only living here for a year to fulfill the fha requirement, then plan on using that equity/saved up money for a SFH rental which I would also do an FHA loan on and move in. My question is, would it be advantageous of me, to put a down on an apt, and have my monthly payments go towards my mortgage/equity as opposed to just renting?

I feel it is a good decision and one that would help save me money and build equity. However, after the 1 year mark I plan on moving out. When I move out, this unit will not cash flow since mortage is 1500-1700 and I can only charge about 1500-1700 for an apt this size. Factoring this in, would it still be a good move to buy an apt as opposed to renting?

Thank you,

[Joe Splitrock]

@Steve Lee based on what you shared, no I would not buy the unit. Assuming your mortgage is $1500-1700 for something similar to your apartment rented for $1800, you will probably end up paying more per month than renting. There are other ownership expenses like repairs, taxes and HOA. Also consider if you sell at the end of one year, that realtor fees will eat up any potential profit. You may argue the prices are going up fast in your market, but the market has been hot and is due for a pull back at any time. What happens if the market drops and you are stuck there? I would personally save up cash and try to buy a duplex, so you can live in one half and rent the other.