Purchasing a house is the biggest financial decision many of us make. We are told it is the American dream, and the surest path to wealth. Renting is just throwing money away, and you have to live somewhere, right?
I’m going to deconstruct our purchase and subsequent sale of the house we lived in throughout residency, and then take it a step further by following two other imaginary residents that bought the same house after me.
We had an open house on what was probably the most beautiful day of my five year residency and within a day had three solid offers on the house, two of which wanted to pay us more than we asked for.
1. We spent countless hours tearing off wallpaper and repainting. (There was wallpaper in EVERY room.) 2. We retiled the kitchen and hallways. 3. We tore up carpet and refinished the hardwood floors.
The price-to-rent ratio is simply the purchase price/annual rent. The higher the ratio the worse it is for buyers, and better it is for renters.