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Buying while renting

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  • Buying while renting

    I'm a second year attending and just made partner at my practice. We are currently renting a townhouse (and like it!) and decided to look at houses for fun. We ended up finding something we liked for a reasonable price. Of course, I just renewed my lease restarting in June of this year.

    Now I'm not sure what to do. If we end up buying this place we will likely close and move in within 2 months. I contacted my management company who said that when this happens they try and find someone else to take the lease. I am fairly sure someone will take it, as there are only 5 non-apt rentals in our large suburb. However I have this nagging worry no one will take it, and we will be on the hook for the whole balance.

    In a worst case scenario where no one is found we would owe 12,600 (7x 1800). Cash flow wise we can afford it (gross averages 30-35k/mo depending on bonus). We have a 20% down payment for a 15 year mortgage saved up (72k on 360 purchase).

    Obviously timing moves when buying is hard. Am I shooting myself in the foot if we do this so early in my new lease? My thought is that either way the remaining rent is already owed so it doesn't matter but I feel like an idiot walking away.

  • #2
    Everything is negotiable when it comes to a lease, even after it is signed.

    For example, I had a clause written into my lease that allowed the renters to move out early with 60 days notice without prejudice if they agreed to make a payment equal to two months rent with the notice on top of their regular monthly rent. So they could have potentially gotten out of say six months of rent in exchange for giving plenty of advance warning and would have spent $2,400 rather than paying the remaining $7,200 for the rest of the lease. This was never used, but the tenants liked it since they were on a 2 year lease and had aspirations of buying a home down the line.


    • #3
      If u like renting why not keep doing that for awhile?  Home ownership is over rated in my opinion.  It's way more expensive than you expect it to be.  Not only that but right now prices are up considerably.  If you like where you're at, you're better off just staying put and continuing to save and pay down any remaining debt (student loans?).  To paraphrase what someone else said on here recently:

      Your rent is the max you'll spend on housing each month

      Your mortgage is the minimum you'll spend


      • #4

        My thought is that either way the remaining rent is already owed so it doesn’t matter but I feel like an idiot walking away.
        Click to expand...

        No, you are spending an extra $12,600. You will be making double payments during those months.

        Does your lease have a clause addressing subleasing? If you are allowed to do this, you should be able to solve your problem.
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087