Can Buying Save You Money?

by Osman Parvez

Can Buying Save You Money? Here's how to save $18,000 to $33,000.

Scenario 1: The 3 BR Condo/Townhome. There are currently 51 attached dwellings with 3 bedrooms on the market in Boulder. Pick one reasonably close to campus that has three bedrooms, like MLS #461039. It's a 3BR property that has been on the market for 145 days and had a price reduction (twice) from the original list of $210,000 to $205,000. Using my analysis model (see images below), plug in assumptions for holding period, downpayment, mortgage rate, anticipated maintenance, HOA, rental income, and anticipated appreciation rates. Using conservative assumptions and renting out 2 of the 3 bedrooms that your child won't use, a parent/investor can incur the same cost as renting on the property at ZERO percent appreciation. If the property appreciates at a conservative 2.5%/year, you'll actually save nearly $18,000 versus renting!

Scenario 2: The Single Family Home. You hate HOA fees and know that single family homes tend to appreciate higher than attached dwellings. You want to buy a house, would like a better deal than a starter home in Boulder (about $325,000), and don't mind a 15 minute or so commute. Take a look at MLS #468330, our listing at 205 Agate Way. The price was recently reduced to 203,000, far less expensive than anything in this neighborhood (our client is motivated). Take the same conservative assumptions, drop the rent price to $350/bedroom for Junior's friends to drive the 15 minutes to Broomfield, and at 2.5% appreciation you'll save over $22,000 versus renting. If the appreciation rate climbs to 4%, still conservative given recent history and Colorado's demographic/economic forecast, you'll make over $9,000 and save over $33,000 versus renting in Boulder.

Below are screen shots from the model (click for a larger view). If you'd like us to do a custom analysis for you, please contact us.

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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

Please Note

This document contains forward-looking statements. You are strongly cautioned that investment results are subject to business, economic and other uncertainties. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time. Always consult your financial advisor before making an investment decision.