To rent or buy, that is the question: This Maui condo example explains it clearly.
I am sharing this information provided by Alan Van Zee of Hawaii Mortgage Company Inc. It really shows how a person is much better off buying if they can afford it. Here on Maui, single family house prices are high, but there are other options, such as a condo. The nice thing about the condo market is that most of them are in the resort areas which are close to the beaches and shopping centers. And, we have a lot of condos to choose from on Maui. Search the Maui MLS for condos for sale.
Hands down, buying is significantly better.
All of the figures below are accurate. They are based on a current transaction about to close with our company.
Our case study today is buying a $300,000 condo on Maui. The buyers are only putting 5% down, or $15,000. Their closing costs are $3,500. So the total out of pocket at closing is less than $20,000. The mortgage is based on a rate of 5.375% with the mortgage insurance built into the rate.
The comparison is with a monthly rent of $1,250, which will increase each year by 4% - the current statistical annual rent increase for Maui County.
The comparison ends with the homeowner selling the property after 10 years. This analysis is so complete it takes into account everything – taxes, insurance, HOA fees during the time of ownership, and then also takes into account the taxes on the sale of the property, and even the real estate sales commission.
What’s the result? With less than $20,000 out of pocket, in a short 10-year period, the person that is buying versus renting will walk away $132,276 richer. The renter only rented, so they have nothing to show for their 10 years, other than paying off someone else’s mortgage.
If you would like a customized buy vs. rent comparison, please let me know. We have the data for all the islands in all different price ranges, down payments, loan programs, and how they compare you what you are currently paying in rent.
Thanks for reading my Maui blog...
Buying or selling real estate on Maui? That's what I do. Let me help YOU.
Georgie Hunter R(S) e-Pro, Hawai'i Life Real Estate Brokers
127 Hana Hwy. #G, Paia HI 96779
E-mail or call/text: 808 283-0635