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Buy or rent, with a twist

Hi everyone. Me and the Mrs have been looking to upgrade to a bigger place, so I’d like to hear you thoughts.

This is in Eastern Europe, keep that in mind when you hear the numbers, but I’ll put all values in USD.

Cost of new place: 390K USD. New built.

Mortgage rate: 4.4% APR, fixed for 10 years. Then resets for another 10years (total 20)

Mortgage payment: just under 1500/month

Tax: no RE tax in this district, but there are closing and insurance costs.

Subsidies: if we play our cards right and chose a suitable place, we could claim a “large family” subsidy of 30K and a “green” loan on 2.2% APR.

RE market: capital of the country, only really had 2 corrections in the past 30 years: GFC and a small blip during bc of the pandemic, from which it recovered. I think inflation will stay with us and we could maintain 5-10% yearly price increase for RE.

Income: 5.8K NET per month, coming from my FT salary, my wife’s PT and 2 rental flats we own (clear of debt, yielding 3-4%)

We are currently renting a big flat ourselves, 950USD/month.

We want a big place on the long term to have family gatherings. Not necessarily in the capital (and probably inherited). So this might mean we’d sell in 10-15 years and move to the countryside.

The type of place we’d buy is not easy to rent out, or at least not to cash flow positive.

We have 10-15% of the cash we need for downpayment. We can mortgage any of the rentals for the remaining downpayment (min 20%)… or we could sell one of them.

Option A) buy the bigger place, claim subsidies. Higher monthly costs “offset” by immediate net worth bump up, and long-term potential asset appreciation rewarding our leverage. Downside of 2 mortgages, if I lose my job we would be tight.

Option B) keep renting ourselves, buy a 3rd rental flat. We would remain exposed to RE appreciation with less leverage. We could leave the city whenever and not be tied down by the big place.

I’m inclined to A) but I’m weary of buying a liability and not an asset.

Thoughts?

Thank you

submitted by /u/Choice-Region-8601
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source https://www.reddit.com/r/RealEstate/comments/qjlm1d/buy_or_rent_with_a_twist/
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