Decisions, decisions

While I am generally quick to make small matter decisions (what to order off a menu, selecting a paint color), the larger/significant ones tend to vex me. I’m attempting to determine the rent vs. buy (re: a home) scenario for myself right now and I have less than 2 months to decide . I’ve done the pros and cons list (I fret until they are weighted equally, which, of course, really helps), I’ve tried a decision tree and overthinking every angle. I’m now locked in ‘analysis paralysis’ which messes with my overall well-being (too anxious to sleep well, etc…).

For those Dopers that can relate: what strategies do you use to make difficult decisions? How do you stop chasing your tail over it and just call it - you know, without regrets! I’m feeling so bogged down by this, as it is a Catch-22 set-up whichever way I begin to turn. I won’t bore anyone with those particular details - just seeking a magic formula. Thanks!

The biggest factor in rent vs buy is how long you expect to live there.

Flip a coin. If you’re not relieved at the result, then do the other one. This works best if you’ve actually made up your mind, but you don’t want to admit it.

Past that, for your question in particular, you might want to look into this rent or buy calculator from the New York Times.

You’ll want to do research to find realistic interest rates, property tax rates, and so on. Don’t trust the givens. But that said, the idea that you should rent unless you plan on staying for a while is a good rule of thumb.

Here in the UK, we much prefer to buy.

From my family’s experience:

  • my parents buy a house in 1947 for £2,500; live in it for 57 years; finally they sell it for £250,000
  • my first house cost £30,000; sold it 1 year later for £41,000 :eek:
  • current house cost £60,000; 27 years later it’s valued at £180,000

Thanks - I had discovered the NY Times calc and it is a very good one and it indicated favor of buying.
I’ve heard the 5 to 7 year rule for remaining in a home after purchasing, yet I think I have enough strange variables in my situation to make that standard a bit fuzzy. I said I wouldn’t bore with the details, but forgive me for this sampling:

First, I’ll mention that I’m in a small town within a very small school district and have the intention (for my kid’s sake) to remain within the confines. Rental properties are fairly scarce as there are no actual apartment complexes - a house or condo unit (from either of the 2 condo communities in town) made available for rent are the options I have and rents generally hover in the $1700 to $2200 range.

Market sale prices on the condos haven’t quite recovered - $100K has not been an uncommon sold for price as of late - so obviously if I were to purchase the monthly payment would be far below the rental range.

One conundrum I have: I may only remain in the place for 3 years. Would it make sense to buy? I’ve run the #'s and if I were to turn around and sell it after 3 years, it could be a break even, which would be fine by me. I’d also feel confident that I could rent it out if I weren’t able to sell it at the time I’d prefer to.

Bring on the revelations!

I found that establishing a base criteria that will apply to nearly every decision we are faced with eliminates the need to make decisions in all but a few scenarios.

At break even it’s likely a bad choice to buy because you accept more risk for no expected gain. Who knows what the market will actually look like in 3 years. You also assume the risk of things like the furnace dying. What costs did you consider in making the comparison - loan closing costs? homeowners insurance? estimated maintenance costs across those 3 years?

You could also use a Decision matrix likeSquidmat I’ve used it coming from experience with DECMAT. The advantage is that going through the process forces you to make decisions about criteria that matter to you and how they are weighted against each other. A simple pros and cons list doesn’t weight stuff to your preferences.