Renting vs Buying in TV?
 

I'm about to hit the big 5-0 and my wife & I are starting to look at where we want to be when we become empty nesters in about 5 years. The easy answer is to roll the equity in our current home to a Villages home and keep on chugging. But not so fast.

According to this article the decision to rent vs buy is far from a slam dunk for 'buy'.

The prime factors I see are:

• How long you intend to stay in the home.

  On the buying side, the shorter time you plan to stay in a home, the more money is eaten up by closing costs, agent commissions, remodeling, etc. In our case, our child will go off to college and we MIGHT move to wherever she ends up to be near any grandchildren. So we could be in TV from four to eight years and then move away.

• The Price-to-Rent ratio.

  TV is a vacation area and rents vary greatly seasonally. I poked around in Zillow a bit, but it was hard to get a feel for the P/R for longer term leases.
  

• Appreciation

  If the article is to be believed, over the long run, home prices don't outpace inflation measurably. From what I've seen of TV, they are building new homes so fast with no end in sight, that it appears resales go for about the same as new. Maybe at some point FL will put a moratorium on new construction for environmental reasons and that will make the prices shoot up. But in the mid-term, I don't see a lost opportunity cost for holding out on buying.
  

One of the things that's impressed me about TV people is that many "do their homework" and did a lot of research before moving to TV. Anyone care to share any of the financial homework you've done or have seen others do on the rent vs buy in TV equation?

One of the first questions you need to ask is are you looking for a place to call home or an investment? Sounds like you are leaning to investment. There will be an option in 2020, The Lofts at Brownwood which will be minimum one year leases. There are many here who have moved 3 - 4 times, I assume they have made enough profit to meet their requirements....we have a couple in our neighborhood that are on home 3 and every move was an upgrade.

That an awful lot of mights and maybes. What if your daughter does not have grandchildren or if she moves to Florida. Planning for the unforeseen does not seem like much of a strategy to me.

Since I've been coming to TV since 2010, the prices for new and pre-owned homes has far outpaced inflation consistently. Saying that, it is NO guarantee that will continue! I have always been a buyer with the philosophy that the landlord bought the home, is making some money or breaking even on rent, and getting all the equity increase. There is no sure answer but, short term (I would say four years or less) renting may make sense, but given your perameters, I would be a buyer.

I agree.

IMHO, I would think buying would be the better option, but you need to consider:
1. Where are you getting the money from? Savings, investments. etc?
2. Possible lost income from using this money?
3. Current interest rates for home loans if you decide to finance. look at 15 year to 30 year for best rate.
4. You may want to talk to your financial advisor with regard to buying versus leasing. I consider leasing as "sunk money", you are throwing it away. Purchase should be lower monthly cost, possible tax deduction, and you are building equity.
Good luck with your quest.

PS, TV is great, and you can always travel to the grand-kids a couple for times (or more) per year.

Consider demographics
 

I would buy, here is why: The baby boomers started in 1946 but peaked in 1957. Those boomers will be 62 next year. In 2023 they will be 65. The demand for homes will continue at an accelerated rate for birth years 1958 -1964 Presumably, home sale price will exceed inflation based upon this demand.

As a rule, though, not all homes pay for themselves as rental income properties. Designers vary from 1500 to 2100 square ft. The spread in purchase price can be dramatic but the rent price... Not so much. In large part of depends if you handle the property as a business , or a hobby.

This site might help VH4R Home Rentals in The Villages

I would not want to be a landlord and would hold off on buying until I knew I wanted to live in the home. I am not considering financial gain in my decision.

The most important decision in buying investment property is the "purchase price" which includes all costs associated with the transaction. Often associated costs can add 5-10 to the actual cost of acquisition . The rate of return on the investment is then based on that total expenditure. Long term increases in house prices ( disregarding special circumstances) usually track generally with inflation. If you truly want to determine ROI, all expenses must be accounted for. The average "non professional" investor doesn't account for wear and tear costs. How old is the roof. If the house is new you may get 15 yrs with the roof. Cost of roof replacement $8000/15 = $500+ per year maint. reserve; Air conditioner, refrigerator , repaint inside/out , landscape maintenance--on and on. My guess is that most amateur's do not do well after considering time value of money, and the fact there are liquidity considerations with real estate. Just some issues to consider if RE investment is a new venture in retirement.

6 years ago I came here to visit Dad. He rented for 2 months a year for what I consider big money. Within a day I fell in love with TV, of course. For over 20 years I owned a beautiful waterfront lot on the Chesapeake Bay I was saving for retirement. All I did was pay taxes and cut grass. I sold that land and put my retirement cash into a home in TV. Now I have my own private home with everything being mine. I stay from 4-6 months a year for about the same cost as Dad paid for 2 months rent, plus Dad gets to stay in TV each year for FREE. The balance of my family and friends also love to come visit, another great ownership bonus.

If I sold tomorrow I would be ahead of the game and would be lucky enough to have many years of enjoyment.

This is, in my opinion, the best investment in life I could ever of made!

What a great guy you are, BayKid. I have always enjoyed your posts but now I know you have good common sense, a kind heart and a wise plan.

Agree with everything in the above post and will add that whenever we visit our Villages home we can jump on a plane and the only thing we need to bring is our IPad and house keys. It's so nice to get to our home, filled with our stuff, rather than a rental. We even have the exact same bed and sets of golf clubs in both Florida and up north.

The options are (1) Buy now; (2) Buy later.


I'm not a renter / leaser.


Sounds like you have some time here, so I would do your research and then buy. Good research will take less than a year. Decide New vs. Used?? Location?? Floorplan?? Obviously, price.


Prioritize the above items. Your top priority might answer the next item or two.


There are people who rent for a year.........really get to know TV and determine prioritize. Many are happy they went that route. Not me. I did a couple Life Styles (over 5 years) and pulled the trigger.


Good Luck.

Don't over think it. Renting before you buy is a great option to determine if you will really like it here and more importantly where would prefer to live and what style house you would like. We rented for 3 yrs Before we finally decided to buy (1wk,1mt then 3months). It's really a about the lifestyle. It's not for everyone but if your looking for Activity in a beatiful well planned community give it a try. If your thing is watching TV and keeping mostly to yourself I'm pretty sure you can find that here also but you can find it many other places for less.

Thank you for the replies. If you read the article, from a financial point of view buying is NOT always the wisest decision. And the shorter time you live somewhere, the more the balance sheet tips in favor of renting.

I agree with Toymeister's point that demand should stay high in TV for the next 10+ years, so buying should be a pretty safe "investment" even if the time in the home is relatively short (close to 5 years).

I think that's what I'm trying to sort out. Do we do some short-term rentals to learn enough to pick the "perfect" place, or do a long-term rental to really get to know TV and see if it's really where we want to stay?

Regarding the comments not to "over think" this. One person's over thinking is another's due diligence. I don't have hundreds of thousands of dollars to throw around. $20k one way or another seems worth several hours - or even days of analysis & planning.

I'll be in central FL with the family over the next two weeks; the wife & I hope to make a day visit to TV.