If you move to the country is leasing a home better than buying one?

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What are the pros vs cons of buying versus leasing a home? So many people have said one should buy but how can one be sure one can keep up the payments. Will the prices of homes drop?

-- Tomcat (tomcat@tampabay.rrl.com), January 19, 1999


I would think that in general it would be absolutely better to outright buy if that is possible, because then as long as you keep your taxes paid up, its yours free and clear. However, for most this is not feasible, in which case the way to go is to indeed get financing and make sure you keep up with the payments. And my bet is that as we get closer to 2000, the price of rural land will soar as people get wind of what is about to come down, and en masse all try to secure Y2K survival property.

-- Jack (jsprat@eld.net), January 19, 1999.

We live five miles from a town of 3K in a county that only has 70K year-round residents, total. Lots of houses available everywhere. By the time most people actually want to pull the trigger in 99, it will be too late to make something happen no matter how many houses there are.

Fact is, very few people are going to move to the country or they already would have. City and suburb people are RIGHTLY as nervous about living in country as country folk are about cities.

No one knows zip about whether they'll be able to make payments unless they can buy outright. Y2K = uncertainty. If you want to move to country, do it NOW so you have a few months to meet the neighbors and begin understanding country ways. They're different.

-- BigDog (BigDog@duffer.com), January 19, 1999.

The biggest con of leasing is the scenario where your landlord evicts you to house his family/friends/himself if TSHTF.

-- Lisa (lisab@shallc.com), January 19, 1999.

Lisa, is this your opinion? Has this happened, say, in the depression, or during a war or emergency?

If the landlord tried to force me out, it would become a question of whether I would be willing to resist. If the economy get so bad that the landlord is lusting over his property, most people are not going to have the ability to pay their rents. If you pay your rent, your landlord he'll be happy to have the money and might be able to get a better place.

In the depression, rents decreased. Mortgage payments stayed the same and some taxes actually went up (if you counted taxed in the deflated dollars).

If you have a mortgage that remains the at the same high fee and taxes that will rise to pay for the collapse you could lose everything. So it seems that leasing is a something one should consider.

-- Tomcat (tomcat@tampabay.rr.com), January 19, 1999.

Tomcat, depends on whether or to what extent normal human behavior deteriorates post-Y2K (or even pre-).

If the landlord lives in, say, a fully-leveraged $250,000 home and values collapse, he/she may well ditch the expensive home and move back into the cheaper home, which may have some semblance of equity.

If his daughter, son-in-law and grandchildren are renting a nice place in downtown NY, very close to the rollover they might want the rental house.

Of course these would be illegal breaches - but again, if things get bad, and sheriffs have much more pressing concerns than eviction disputes, renters might easily get the short end of the stick.

It probably didn't happen much in the Depression, because that crept up on - not slammed down upon, as Y2K will - the renters.

If you think Y2K is only going to be a 1 or 2, then definitely rent. Wait for prices to come down - although you might have a harder time qualifying for/managing a loan after the event.

But if it's a 9 and you can't pay your rent, you could be quickly homeless at the worst possible time in human history. (And try finagling a U-Haul during a 9!) Foreclosure, though, takes a year or more before the sheriff shows up at your door with the paperwork.

It just occurred to me that you might be a 1-2, and I originally answered the question from a 9 perspective. Apologies.

-- Lisa (lisab@shallc.com), January 19, 1999.

Good question. There is a thread a couple days back on this (What should I be doing?) and I think another as well.

Lets look at the options (for sake of argument assume 100K rural property):

Situation A: Buy property outright (cash).
PRO: Can't be evicted as long as you pay taxes.
CON: If property values really plunge, your just lost a bundle.
CON: This is the most painful up front. Unless you're related to Micheal Jordan, plan on selling your soul and everything else you own to make it happen.

Situation B: Put minimum down (say 10%), and mortgage the rest.
PRO: Can't be evicted as long as you pay mortgage.
PRO: If property values plunge, default on loan and refinance
CON: Those damn mortgage payments. Plan on being on the street after 120 day past due, unless y2k is a 7 or more, in which case you're probably home free

Situation C: Pay down your mortgage as much as possible
PRO: This can reduce your monthly payment
CON: Can be evicted at anytime after 30 day notice.
CON: Same as Situation A, not quite as bad.

Situation D: Rent.
PRO: Most economical solution
CON: Can be evicted at anytime after 30 day notice.

Looks like Option B has 2 PRO and Option A & C have 2 CON.

-- a (a@a.a), January 19, 1999.

Rent a house with an unbreakable lease from Jul-Aug/99 through summer of 2000 - check lease with a lawyer if necessary, pay rent on time and don't do anything to allow the landlord to call your lease on you. You should make it through the bad parts.

-- Laurane (familyties@rttinc.com), January 19, 1999.

a@aa When was the last time you tried to evict someone?? 30 days?? The landlord should live so long!! Try closer to 180 days, and then only if the tennant doesn't fight too hard!! It can take as much as a year, if the tenant knows the "system" as it is in most urban areas today. In rural areas, the legal fight might only last 6-9 months, and the LANDLORD can go to jail if he/she decides to "hurry things along". (Harassment, doancha' know?)


-- Chuck, night driver (rienzoo@en.com), January 19, 1999.

Thanks for all of these answers. Great group. Here are some of the pros of leasing.

1. Lease for 12 months and get (or purchase) an option to renew.

2. If you find that you do not want to stay in the area, it will be easier to leave.

3. If incomes drop dramatically you can try to negotiate a new lease.

4. The monthly payment for leases I have seen were less expensive that mortgage payments (plus insur plus taxes plus repairs) when a small down payment is made.

5. I was told it would cost me about 22K (including fees) to get a 170K mortgage with 10% down. To get into a similiar home lease was 2.6K (1st, last and deposit) but that includes two months of payments. If you lease you have the 22K that you can hold on to (or buy over 100K rolls of toilet paper to barter with:).

-- Tomcat (tomcat@tampabay.rr.com), January 19, 1999.

Consider this:

What happens if you're renting and the *landlord* can't pay the mortgage or the taxes on the property? He loses his investment and you lose your home--rent or no rent. Not a pretty picture.

I can't believe I even have to think about any of this!

Time to pray....

-- Scarlett (ohara@tara.net), January 19, 1999.

Chuck: yeah, I know. Pacific Heights syndrome. It took my sis 6 mo to get rid of a dude that "rented to own" during a closing that went bad.

30 days is the legal notice required. But that's for a renter, and yes he'll be hard to remove. But when the mortgage lender comes calling, you ain't seen nothing yet.

-- a (a@a.a), January 19, 1999.

Hold on to the 22K! (Or as much of it as feasible.) And be prepared to move if the landlord or the bank or whoever commandeers the house. If the economy tanks, there will be much lower price rental properties and much lower price purchase properties begging for people with cash. But new mortgages will be virtually nonexistent, and watch out for property taxes. Even if prices drop substantially, property taxes probably (surely?) will not drop proportionately.

Jerry B

-- Jerry b (skeptic76@erols.com), January 19, 1999.

Can I say something here about moving to the country here? Sure hope so ! I am in the starting phases of building a new home in the country. Let me inform all of those who read this post, that it is really all most too late for many to start building a new home, at least in my neck of the woods. WHY , because the builders are already swamped with building new homes. General Contractors are so busy they are doing at three homes at once. And their sub-contractors are also busy doing the same thing. And land in my area is going for $7,000 an acre,not bad but it will be on a hill. And getting that hill cleared so you can get trucks up that hill to start building will be another headache. Weather has been really favorable for building ,but it's the raining season now and it's very difficult to get trucks up a soupy hill of red clay So if you didn't start two or three months ago ,I feel it's almost too late for those to come to the country and think they will be able to build a new home. It's like the computer industry - NOT enough Programmers ,well here it's NOT enough builders. But there are alots of homes to buy,alots of them, but be ready to settle for what you can get. Don't expect a Mountain Home w/a view of a lake or Creek. You will pay dearly for it. And besides that you will need to drill a well,usually at $7.00 a ft. The depths are various but usually about 250 to 400 ft down. So I hope I haven't dampened anyones idea to move to the country, but my thoughts are,I think it would be too late for you. Just ask the RE agents in the area you decide on and ask How backed up are the Builders? Hopefully they will tell you the honest answer you are looking. GOOD LUCK TO US ALL >>>>

-- Furie (furieart@dnet.net), January 20, 1999.

I think that if you're only considering building a house/digging a well as the only considerations to moving to the country you are thinking way too rigidly inside that proverbial box. If in a bind, time wise or financially, there are many other at least short term options available there. There are cheap trailers, straw bale homes, small owner built cabins, and such that can be built cheaply and quickly, and are suitable for the short term. Wells don't have to be dug immediately. there are other options at least short term. Rain catchment, streams (after purification, of course), possible other things would be more affordable, short term options. More to the point with regard to the question of renting or leasing, for me, is development of the property. If leasing, you might have a garden, maybe some small livestock, but things like putting in an orchard, or other more or less permanent homestead options are probably out. Has anyone thought about this, or have had to deal with this in their y2k preps? We are moving to the country soon, and will be renting for a little while, but are considering whether to buy or rent. The main consideration for us is this development option. If TSHTF, property would be much cheaper next year, but the supplies needed to develop it would not be available easily. Any thoughts?

-- Damian Solorzano (oggy1@webtv.net), January 20, 1999.

Someone just suggested something that seems to be between leasing and owning: Buy the with 3 percent down! There is very little to lose. I did not even know that this was possible.

Several nationwide banks have a program to do this. Chase Manhatten Mortgage Corp is one of them. 1 800 879 4000. If you qualify they will loan to you in any state that they have an office.

The problem with this approach is that you have to have great credit.

-- Tomcat (tomcat@tampay.rr.com), January 20, 1999.


You're right about focusing on development as a big issue in buying or not. One cheerful (not) note: there may be plenty of supplies to scavenge from abandoned homes and land next year. I expect lots of local "eBays" on the back of pick-up trucks (if they bring us stuff we'll need, we'll share a little fuel and other things with them).

-- BigDog (BigDog@duffer.com), January 21, 1999.

More infor is coming in and I am changing my plans. What I found out was very helpful. Here it is.

If you have a lot of money, say double the price of the home you want, it is best to own the home outright. However, after fully paying for the home, you also need enough for all of your preparations. Since you will only be obligatged to pay for taxes, you can now keep your overhead very low. You might not have the option to move, however. You might feel the need to stay too long to protect you investment.

If you have very little available cash you obviously have to rent or lease.

If you sell your home and have $20K to $50K to put down on the home then you have to work out what your projected income will be. If you don't anticipate working for awhile or forsee a meltdown then by buying you can be assured of losing your deposit and home if the economy tanks.

If you lease you might have to face a landlord who wants the home for himself. I came across several people who did not want to have this kind of confrontation. I then saw that what you chose to do and what is best for you, really depends on what you are prepared to handle.

I changed my plans to buy and I will lease a large home on 4 acres for $1000 per month. The 22K I was going to put down on a home will go into a fund to assure 22 months of payments. It could also be used to buy a home after Jan 2000. The possiblity of being kicked off the property does not bother me. I will do a background check, a deep one, on my landlord. Someone suggested that if the landlord gets insistent then the 22K could be used to get a better place at a lower price or to buy off the landlord!

Leasing gives you flexibility with moving and having more cash. If rents decrease you can also renegotiate. But for many, there is a special form of security in ownership that a lease won't give you.

So there is no pat answer. Leasing will not work for someone who wants to avoid a landlord confrontation.

Thanks to all who helped me.

-- Tomcat (tomcat@tampabay.rr.com), January 23, 1999.

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