Rent or Buy?
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  1. #1
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    Default Rent or Buy?

    I'm looking for other points of view, things to think about, pros, cons......any advice whatever you want to call it.

    The situation:
    I moved to Louisiana one year ago to be a contract employee. My parent company (full-time employee) and the company I'm contracted to both like me and my work. The company I'm contracted has had my salary added to the annual base budget. I know there are NO GUARANTEES in the contract world, I understand that. All of the contract employees in my group are long-term contract employees at this location (5-10 years).

    Currently I'm paying $1,000/month rent - OUCH! There is an opportunity to buy a 2 bedroom house for $40k that's an additional 30 minute drive to work. The house needs some work but DH is from here, is a carpenter by trait and has lots of friends in that industry that would be willing to help.

    Negatives:
    Own house but lease the land. It's on an island that is family owned but there is a legal contract stating that the highest the lease can be is $1800/year, currently $1200/year.
    Tiny yard and not much room for a garden.
    House is built on stilts but the road can flood.
    30 minutes to get groceries. (Negative for DH because he runs to the grocery store everyday....or so it feels)
    3rd house in 3rd state.
    Cell phone service is spotty.

    Pros:
    $1,000 rent = paid for in 40 months using very raw numbers of course. We have enough for 50% down and can easily $2,000 a month.
    Remote closed/close knit fishing community - DH has many friends in this community and that's how we found out about the property.
    Can plant fruit trees
    DH can put sweat equity in the house.
    Small shop for Dh to do wood working in.
    If my job moves me the house can be rented out.
    I really like the community - it's not show houses. It's a community of people that make their living off the bayou - fishing, crabing, shrimping...

    OK - let me have it! Positive, Negative, Things to think about, questions....whatever it is. All I can see the rent going down the toilet with nothing to show and that kills me but I don't want to make an "emotional" decision based on that one aspect. DH wants to do this (emotional) and I want to make a more financial based decision.
    2021 Goals:

    January - Fruit Trees
    February - Insulate and moisture barrier in the crawl space and insulation in the attic
    March - Metal Roof installed and gutters
    Dig a pond - check into grant money
    New goat fencing - check into grant money

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    I would do it because it sounds a lot like where I lived as a kid... So, probably an emotional decision for me as well.

    That said, I would not like to own a house, but lease the land beneath.

    I wouldn't worry too much about the job, sounds like between the two of you, it can work even if one of you ends up temporarily unemployed.

    I would do it. 30 min drive is nothing, it can take me that long to go a few miles here in town.

    Floods mean carp, and carp means smoked carp

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    Registered User Buckeye5's Avatar
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    Well, I don't understand the buying the house but not owning the land. This confuses me, I have never heard of that probably cuz of where I live. You also said additional 30 minute commute to work, so how long is the total commute?

    This is just my opinion so take it for what it is worth. LOL It sounds like a wonderful living atmosphere and being surrounded by people you enjoy, love, and would like to be a part of. For me, this is VERY important. Myself I would buy it, you already know financially you can afford it and your DH is more than willing to do repairs and updates. So the $$ part seems like a win win to me. DH just won't be able to go to the grocery store all of the time, he will just have to adjust to that and plan ahead and shop for your needs on your way home from work. For me, a quality of life is more of being surrounded by love, support, a community, etc. It is top on my list of living a great life. The negative for me would be the road flooding etc. and also, will you need flood insurance and the cost. However, since this has happened periodically I am sure that the locals and community have solid ways of dealing with it etc. since they obviously still live there, and they haven't moved. Not sure if you have children or not, or they are in the future, but if so, what are the schools like and the commute for that. I would find out that info if needed, but realistically, I know for myself I would
    buy and move to a place that is affordable and where a home isn't just brick and mortar but is surrounded by a community of people that you want to share your life with.

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    Super Moderator Spirit Deer's Avatar
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    Your last paragraph makes it mostly make sense to me, the part about not having anything to show for the rent you're paying.

    I understand about the lease aspect though. It may also make the property harder to sell if/when the time comes. Who owns the land? Is the leasing arrangement common in that area and has it been stable for decades? Leased land is common here and usually the land is owned by the state or a mining company and most leased properties have been leased for decades, often through many generations of the same family leasing the land but owning the cabins on it, so people in this area don't think it's unusual. We did have a situation here however where people had to either buy the land or move their cabins. If you ended up in that situation, would you be able to handle that upheaval financially and emotionally?

    Can you sell one of the other houses? If it's to your advantage, I mean.

    Island living has always seemed like a pain to me, but maybe it's different down there. There are a lot of cabins and houses up here on islands and I know building them is incredibly expensive because power lines have to be put in underwater and building supplies have to be barged to the site, etc. Will the fact it's an island be a problem for you to get supplies there to to do the work on the new place? What about moving furniture, etc? It sounds like you have resources there in the form of people who may have boats, so maybe getting supplies out there wouldn't be any, or much, extra expense.

    Is the place a hurricane target? Will your insurance be high because of it?

    You have to decide for yourself about the longer commute, and I'm sure, knowing you, you've already factored in the extra expense for gas, etc. Possibly you could find someone to carpool with later, too.

    If your husband likes to grocery shop, is there a store on the island and is it more expensive than the store that's farther away?

    That's great your husband can do the labor to fix up the house, but materials will still cost money. Can you make a list and try to ballpark what those costs might be? (All these questions are rhetorical, btw, so I'm not expecting answers. )

    As far as the setting itself, it sounds beautiful and unique. I hope if you go for it, you can share some pictures.

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    This is on an island and the original family still owns the property. 90% of the @100 people who live there lease the land. That's just the way it is. Houses out there don't come up for sale very often and usually sell quickly because of the quality of the neighborhood.

    Its an island with a normal road bridge connecting the two It's not anything long. Think of a bridge like when crossing a medium sized creek at the largest. To be honest, if DH didn't tell me it was an island I never would have known. So, to me, it wouldn't be like living on a "true" island if you get what I mean. Its one road through the swamp. Meaning when you drive down the road there is the bayou on one side and houses on the other side. At the end of the road is a boat dock when you turn around and drive out on the same road. Then behind the houses is the swamp - think alligators in your yard. The houses are rather close together and my DH is friends with the one would-be neighbor and his family.

    Flooding - the road at places is only inches above the level of the bayou. Local were telling us that the biggest thing with the flooding is that when the water levels are high is the direction of the wind and how hard it is blowing that mostly causes the road flood. Probably will need flood insurance but out there the houses are built on 18-24" tall stilts for lack of a better word.

    I could sell one of the other houses but not sure if I really want to. The one in Idaho is being rented and the payment covers the note. The one in Ohio I have to keep to keep my per diem. IF I buy a house here in my name I will lose my per diem - $735/week - OUCH! IF if we buy a house we will have to do some creative accounting. I'm going to talk with my CPA on Friday while I'm getting my taxes done. I'm also thinking of rental income in retirement. I'll ask the CPA how the rental income effects my taxes.

    The new drive will be about 45 minutes. It's longer than I like but this will be the 3rd time I've had such a commute. Plus 80% of it is through country and 20% is the main drag through a town of @5,000.

    YES, it is most definitely in hurricane territory!! Look up Bayou Gausche Louisianna. If you look up houses on Zillow they only have the big new fancy houses you drive by to get back where we are talking about buying.

    We haven't even toured the house yet. from looking in the windows the house looks to be in good shape. It is ready to move into. Most of the things, that I saw, look to be external - new porch, fix up the little out building....nothing that should cost thousands and nothing that has to happen right away, so we would be able to save up the money and pay cash as we go.

    Hubby loves to fish and he could walk across the road. We were at the bar for a little while yesterday and were invited to stay and eat what they were grilling - noutria (sp??) you know, a large swamp rat. it was made into sausage and was good.

    Hope I answered your questions! Thanks because this helps me find things I'm haven't thought about.

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    It sounds wonderful! It also sounds like you better move fast if you want it.

    When you said "island" my mind said "water access only." Sorry. That's the way it is here, no bridges to islands, at least that I've noticed. Some of the islands around here sell for millions and that's before anything is built on them or any amenities are installed.

    The commute doesn't sound that bad, if you don't mind the time. Is there any bad weather that would make the commute difficult or dangerous at certain times? Here, that would be snow and ice, there I guess it would be maybe driving wind and torrential rain.

    It sounds like the lease would not be an issue, and neither would resale.

    The people down the road live on a peninsula and their driveway floods every spring. They park their cars on the road side of the water. We've never actually seen how they get to their house. Maybe they have a boat or canoe to get home.

    Sometimes living in a wonderful place is worth the inconveniences. That's how we feel about where we are.

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    SD - Thanks! Last night we put a call in to go look at the house.

    Yep, bad rain and wind would be the only weather I would have to deal with - Thank goodness!! I grew up in Ohio and spent 8 years in Idaho and do not miss the snow and ice.

    We've been kicking the lease part around and agree with you. This land had been in the family for lots and lots of years and IF something like that did happen it would not happen over night, try evicting 50 families. As long as we spent 5 years there we could "walk away" with a break even. We picked 5 years with comparing to $1000/month rent vs $40k house plus $1200/year lease payment and 3k/year (??) flood insurance. I wouldn't think flood/hurricane insurance would be that much on a 40k housebut I"m a Yankee - What would I know??? lol

    IF the road flooded so bad that I couldn't get to work I could work from home. I had it all set up on my personal laptop before I went to Ohio 2 weeks ago.

    OK, time to do some serious number crunching to see if we can pay cash and to research to see how low they will go for a mortgage.
    2021 Goals:

    January - Fruit Trees
    February - Insulate and moisture barrier in the crawl space and insulation in the attic
    March - Metal Roof installed and gutters
    Dig a pond - check into grant money
    New goat fencing - check into grant money

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    Registered User CookieLee's Avatar
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    Sounds like a vacation house, not a place for you to live full time. If you want it for recreation purposes, be prepared to pay for it while also paying for rent.

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    Quote Originally Posted by CookieLee View Post
    Sounds like a vacation house, not a place for you to live full time. If you want it for recreation purposes, be prepared to pay for it while also paying for rent.
    Nope - not a vacation place - unless you call it a working vacation. I finally got the best job at the best location. Just need to figure out some cheaper/better housing now that it sounds like I'm going to be here a while.
    2021 Goals:

    January - Fruit Trees
    February - Insulate and moisture barrier in the crawl space and insulation in the attic
    March - Metal Roof installed and gutters
    Dig a pond - check into grant money
    New goat fencing - check into grant money

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